Crude Palm Oil (CPO) prices have been under pressure over the last few weeks. The CPO futures contract on the Bursa Malaysia Derivatives Exchange has come off sharply over the last couple of weeks after hovering at MYR2,200 per tonne.
The contract made a high of MYR2,223 per tonne on February 19. Subsequently, it plummeted over 14 per to a low of MYR 1,908 on February 26. But, the contract has bounced back and is currently trading at MYR1,992 per tonne.
On the domestic front, the loss in the CPO futures contract on the Multi Commodity Exchange of India (MCX) was limited. The contract fell just 4 per cent from its high of ₹575 per 10 kg and made a low of ₹548.7 per 10 kg. However, it has bounced back slightly from this low and is currently trading at ₹553 per 10 kg. The near-term outlook is negative for CPO. Immediate resistance is at MYR2,030 for the Malaysian CPO. As long as it trades below this hurdle, a dip to MYR 1,900 is possible in the coming days. However, the region around MYR1,900 is a key support.
A break below it looks less probable at the moment. A bounce from this support will see the contract moving higher to MYR2,000 again. A strong break and a decisive close above MYR2,050 is needed for the contract to gain fresh momentum. Such a break will increase the likelihood of the contract rallying to MYR 2,350 and MYR 2,450 over the medium term.
On the domestic front, the MCX-CPO contract can fall to ₹540 or even ₹530 in the coming weeks. A further break below ₹530 looks less likely at the moment. A bounce from the ₹540-₹530 support zone will see the contract revisiting ₹570 and ₹575 levels again. A strong break above ₹575 will pave way for the contract to extend its rally targeting ₹600 and ₹610 over the medium term.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.