Downtrend Signs in CPO?Market posted weekly losses and closed at 5566.
Let’s have a look on what caused the market move.
1.Peace talks between Russia and Ukraine raised hopes for ceasefire as Russia claimed they will scale down their military operation around Kyiv, which will further de-escalate the conflict between both countries.
2. On the other hand, Russia said it will ban export of sunflower seeds and impose export quota of sunflower oil which may force foreign buyers to substitute with other edible oils.
3. China announced fresh 9-day lockdown in Shanghai and Southern part of Shenzhen region to tackle with latest COVID-19 outbreaks which resulted lower demand for cooking oil in food and beverage industry
4. Weakness in crude oil prices after reports that the White House announced to release 1 mil barrels per day for next 6 months from Strategic Petroleum Reserve to calm spiking in oil and gas prices.
5. Soybean oil prices plunged as market reacted to US Department of Agriculture (USDA) forecasts US 2022 soybean planting at record high of 91 mil acres.
6. Malaysia Palm Oil Board, Malaysia Palm Oil Council, Fitch Rating and Bank Negara Malaysia shared similar outlook on palm oil production. Factors that influencing in palm prices including slow recovery in production as easing of labor shortage.
While heavier rainfall early this year helped to moisture and increase oil palm yields in latter part of the year.
MPOB forecast for 2022:
Production increase by 4.9% y/y or 19m tonnes
Exports increase by 9.2% y/y or 17m tonnes
End stockpiles increase by 21% y/y or 1.95m tons
Technical View:
1. Long bearish bar formed after broken previous week low at 5695 which indicates sell signal.
2.Stochastic showed down sign in both weekly and daily chart.
We expect market may bounce before further drop with immediate support level at 5200.
Suggestion Trade:
Short if stay below 5500
Target Stop Loss (resistance level) 5707
Target Profit level (support level)
TP1 5293 TP2 4879
Long if stay above 6050
Target Stop Loss (support level) 5843
Target Profit level (resistance level)
TP1 6257 TP2 6671
Disclaimer: Trading Carries Risks.
Happy Trading!! Cheers.
