MALAYSIA DERIVATIVES EXCHANGE >>> FCPO



BUY into dip 3600 level
SELL into strength 3725 level

 Mielke: Palm oil to slip into discount against soyaoil  
Malaysian palm oil will flip from its current premium to competing soyaoil and trade at a discount, as production recovers in the second half of this year, a leading analyst said yesterday.

Palm olein now trades at a US$70 (RM210) premium to a tonne of Argentine soyaoil, triggering concerns that demand will slow and weigh on benchmark palm oil futures that is set to post its worst monthly loss in February in more than a year.

Thomas Mielke, editor of Hamburg-based Oil World, said the fading La Nina weather condition in coming weeks will aid the recovery in Malaysian and Indonesian output that has been curbed by heavy rains and floods in early 2011.

The same can be said for the Argentine soya crop that has now experienced favourable rains after a prolonged dry spell owing to the weather condition.

"A discount will emerge soon. Palm oil will then further widen the gap as production yields will recover," Mielke said ahead of the Bursa Malaysia Palm Oil Conference on March 7-9

TECHNICAL ANALYSIS : Soybean Oil Futures

May soybean oil closed up 71-pts. at 59.48.
May soybean oil closed higher on Friday as it extends the rally off last week's low. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near-term. If May extends the rally off last week's low, February high crossing at 60.50 is the next upside target. Closes below the 10-day moving average crossing at 57.22 would temper the near-term friendly outlook.

 

First resistance is today's high crossing at 59.68.

Second resistance is February's high crossing at 60.50.

First support is the 20-day moving average crossing at 58.02.

Second support is the 10-day moving average crossing near 57.22.

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