Palm Oil Market Outlook 2011

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Claude Patterson
5 years ago
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1 REACH & TEACH FRIENDS OF THE INDUSTRY SEMINAR Palm Oil Market Outlook 2011 Presented by: Benny Lee, NextVIEW

2 CONTENTS: PALM OIL MARKET OUTLOOK Short term analysis of crude palm oil futures price Trend Analysis 2 Pattern Analysis 4 Momentum Analysis 6 Supply Analysis 8 2. Short term price forecast (1 to 2 months) Medium term analysis of crude palm oil futures price Trend Analysis 12 Pattern Analysis 14 Fibonacci and Moving Average price objectives Medium term price forecast (2 to 5 months) Other crucial factor affecting price of FCPO US Dollar and Chinese Yuan 21 Production and Exports 24 Disclaimer The author will not be responsible for any losses or loss profits resulting from investment decisions based in the use of the information contained in this printed material, or otherwise. This course / printed material is intended to provide accurate and authoritative information with regard to the subject matter covered. It is taught or distributed with the understanding that the author is NOT engaged in rendering any investment or other professional advice. If investment or other professional advice is required, the services of a competent professional person should be sought. Copyright 2010 NextVIEW (

5 1. Short term analysis of crude palm oil futures price Trend Analysis from previous pages: 1. Intermediate term trend, represented by a 90-day moving average is UP 2. Short term trend, represented by a 30-day moving average is UP 3. Price is above these averages and currently supported by the short term moving average. 4. The relationship between the price and the short to long term moving averages shows that price is in a steady up trend * 90-day moving average represents the mid-term traders group and the 30-day moving average represents the short-term traders group Copyright 2010 NextVIEW ( 3

7 1. Short term analysis of crude palm oil futures price Pattern Analysis from previous pages: 1. Price movement has formed an up trend channel from July Price is currently at the bottom channel (support) level of the channel. RM3,600 is the current support level 3. Top Channel (Resistance level) is currently at RM4,100 Copyright 2010 NextVIEW ( 5

9 1. Short term analysis of crude palm oil futures price Momentum Analysis from previous pages: 1. Volume and Momentum (The RSI indicator) is in divergence with the price trend. 2. The RSI indicator is like a tug of war indicator. The bulls side is above the 50 points level while the bears side is below the 50 points level. 3. The RSI is currently above the 50 points level, indicating that the bulls are still dominating but because the peaks are declining, the bulls strength is weakening. 4. Therefore, these indicators suggest that up trend has weakened and there is a low change that the price is going to make a new high from the current high of RM3,888 / ton Copyright 2010 NextVIEW ( 7

11 1. Short term analysis of crude palm oil futures price Malaysian Palm Oil supply analysis, from the previous page 1. Supply normally bottoms out in the month of February. 2. Therefore, supply of palm oil is expected to decline at least until February. 3. From the chart, the palm oil production forecast for the next month based on a three year trend is 1,125,000 tons. 4. Export remains robust. Malaysia's palm oil exports during the Jan period rose 9.7% from a month earlier, to 852,607 tons, cargo surveyor Intertek Agri Services said Thursday. Copyright 2010 NextVIEW ( 9

12 2. Short term price forecast (1 to 2 months) Price is near the support level and it is natural that we expect price to rebound. Price is expected to rally after the rebound as market is already anticipating lower supply at least in the next one month. However, the price may not be able to move beyond the resistance level at RM3,800 because of the weak momentum and RM3,800 is technically overbought. There is a strong support level at RM3,600 and if this level is broken, then I would expect price to move into a major correction/pullback. The short term forecast is slightly bullish. Price expected to trade between RM3,600 and RM3,800 in the next two months Copyright 2010 NextVIEW ( 10

14 3. Medium term analysis of crude palm oil futures price Trend Studies Parallel line from line L, the extreme high of the long term trend 15 years linear regression line, L Parallel line from line L, the extreme low of the long term trend Copyright 2010 NextVIEW ( 12

15 3. Medium term analysis of crude palm oil futures price Trend Analysis from previous page: 1. Price is currently at the extreme high level based on the 15 year regression channel. 2. Price is overbought and is likely going to consolidate as there is little room to move on the upside. 3. The regression line median is currently at RM2,600. Copyright 2010 NextVIEW ( 13

21 3. Longer term analysis of crude palm oil futures price Chart Pattern Analysis from previous pages: 1. The head and shoulders chart pattern is confirmed when price breaks below RM3, Target price for the head and shoulders pattern is RM3, RM3,350 is the projected medium term 90-day moving average (ref. page 2). 4. Fibonacci retracement for the mid-term, the 38.2% retracement is at RM3,280. Copyright 2010 NextVIEW ( 19

22 4. Medium-term Price forecast 2 to 5 months The price objective Once price breaks below the short term support level at RM3,600, the mid term pullback/consolidation is expected to begin. Based on mid-term moving average price objective: RM3,350 Based on head and shoulders pattern price objective: RM3,300 Based on 38.2 Fibonacci retracement level: RM3,280 Therefore, I d expect price to consolidate between RM3,300 to RM3,550* in the next 2 to 5 months. * Monthly volatility is RM250 on average. Copyright 2010 NextVIEW ( 20

24 5. Other crucial factor affecting price of FCPO - Malaysian Ringgit against the Chinese Yuan (MYR/CNY) FCPO MYR/CNY MYR/CNY The spread between the Chinese Yuan and FCPO has closed FCPO Copyright 2010 NextVIEW ( 22

25 5. Other crucial factor affecting price of FCPO US Dollar and Chinese Yuan 1. The Chinese Yuan has a positive correlation against the price of FCPO. The widening spread on FCPO and Chinese Yuan since last year price has almost closed, after price of FCPO rallied in the past three months. 2. The USDollar has a negative correlation against tthe price of ffcpo. The spread between the US dollar and FCPO widens. Prices of FCPO and USD/MYR are currently at a level similar to the level in The strengthening of the Malaysian Ringgit and Chinese Yuan against the US Dollar is expected to continue in the short term and therefore supporting the short term slightly bullish target. 4. However, if the US dollar continues to weaken, then price may rally further and cause the medium term forecast to extend longer. Copyright 2010 NextVIEW ( 23

27 5. Other crucial factor affecting price of FCPO US Dollar and Chinese Yuan 1. Exports and supply was weak for the past two months. 2. While supply may only bottom out in January, Malaysia's palm oil exports during the Jan period rose 9.7% from a month earlier, to 852,607 tons, cargo surveyor Intertek t kagri Services said Thursday. 3. Therefore, price should increase in the short term at least until the next two months (as forecasted in the short term forecast earlier page 10) Copyright 2010 NextVIEW ( 25

CPO PRICE ANALYSIS AND OUTLOOK FOR 2H JULY 2013 Presented by: Benny Lee, Private trader/ Chief Market Strategist

CPO PRICE ANALYSIS AND OUTLOOK FOR 2H 2013 1-2 JULY 2013 Presented by: Benny Lee, Private trader/ Chief Market Strategist CONTENTS: 1. Technical analysis of crude palm oil Trend Analysis short term 1 Chart