OBSERVATIONS: Despite the industry registering its best ever half-month export performance, the CPO futures market seemed barely bothered.
Swiss export monitor Societe Generale de Surveillance ) and Intertek Agri Service put December 1-15 palm oil exports at 895,693 tonnes and 868,629 tonnes. Both figures were not only the highest for a similar period for any month this year but also the highest for any similar period in the history of the industry. Yet all it seemed to elicit were yawns.
The actively traded March 2009 contract, after going through a narrow-range undulating session, settled at RM1,536 down RM45 or 2.85 percent over the week.
Why?
For one thing crude oil prices went where no one imagined it could ever go – down to US$36 a barrel (US$1 = RM3.47).
For another, the appearance of a bearish engulfing pattern last week when the stochcastics indicator was in overbought position strongly suggested that prices were coming down.
You can call it a case of fundamentals versus technicals and the technicals won.
One last reason could be the uninspiring lead from the bellwether US soyabean oil futures market, which also appeared to be in narrow range undulating mode. Soyabean oil for January 2009 delivery on the Chicago Board of Trade, after going through an insipid session trade settled at 30.6 US cents a pound, down 0.32 US cents or 1.03 per cent.
Conclusion: The cyclical downturn of this market has not run its course yet. The probability is for more price weakness in the short-term future.
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