Palm oil slumped to five weeks low yesterday on concerns inventories, already at sixteen months high, would rise further to level above 2 mil tonnes. Investors worried that higher export demand will not be enough to offset improving output as the tropical oil recover from its low production yield period during the past two years. Overnight crude oil rebounded on higher demand forecast from IEA and better jobless claims and housing data in US.
Soy oil however settled lower in tandem with soybeans amid sell off in boarder grains market as external uncertainties prompted investors to reduce positions in riskier assets. Expect futures continue to trade under pressure today weighed by spillover weakness from soy oil as well as absence of fresh supportive factors from local front.
Futures erased all its current week’s gain and settled at day’s low to conjure a long black candle. Daily RSI is posing towards oversold territory but unlikely to create attention just yet as MACD bearish divergence likely to haunt investors along with expectation of higher stocks and production.
Look for futures to trade lower to test its June’s low of 3148 with support and resistance pegged at 3145 and 3250.
1st support level 3145
1st resistance level 3250
ZLBT Trade Strategy
Aggressive trade may short with stop on close above 3360.
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