Up 0.7% at MYR2,250/tonne on 19/09/19, Palm Oil prices have been lifted by a weakening Ringgit and firmer Soy Oil prices. Indications are that further gains may be in store.
Off from the July 10 low of MYR1,916/tonne, traders may continue to take long positions following cue from Indonesian Palm Oil Associations on lower than expected production in Indonesia. Palm oil inventories have already been on a decline in both Malaysia and Indonesia as exports outpaced production, driving inventory levels in Malaysia alone to a 13-month low.
The current haze in South East Asia is likely to dampen productivity and choke output from the sector, slowing inventory replenishment and thereby further supporting higher prices in the near term.
CPO is currently testing resistance at the upper boundary of downward sloping wedge formation dating back to early 2017. A convincing breakout from this resistance level, accompanied by rising volume traded, should be viewed as a bullish reversal of the recent downtrend. Resistance can be expected at MYR2,316, MYR2,370 and MYR2,459.
