In line with the correction in the prices of many commodities, our CPO has similarly given up some of its recent gain. From Chart 1 below, we can see CPO prices have dropped from its recent high of RM4500 per tonne to RM3250 per tonne. Currently, CPO prices are holding onto its medium-term uptrend line.
Chart 1: CPO's daily chart as at March 20, 2008 (source: ifs.marketcenter.com)
Another edible oil, soya oil has broken below its medium-term uptrend line yesterday. See the chart below.
Chart 2: Soya Oil's daily chart as at March 20, 2008 (source: futures.tradingcharts.com)
As noted in the earlier post, the correction in commodity prices is now underway, due to the strengthening of the USD. I believe that our CPO index will follow closely the trend of CRB index. Nonetheless, I hope that the CPO index can maintain above the uptrend line at RM3250 per tonne. A failure to do so will lead to further downside and will also lead to further correction in the prices of plantation stocks.
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