CPO: A sudden surge

 CPO broke above its "horizontal line" at RM2230 two days ago. The sudden surge was brought on by reports of falling production, soaring export & El Nino fears. Falling output at this time of the year is not a surprise because of the wintering effect. A lot has been made about the impact of El Nino on FFB output but it often never panned out.

 
Chart 1: CPO's daily chart as at Jun 4, 2015 (Source: ifs.marketcenter.com)

Compared to the more sedate price rise in soyabean, the jump in CPO prices look excessive. However, the breakout above the RM2230 resistance is welcome. We hope that it will translate to better selling prices for CPO and better earnings for our plantation companies.


Chart 2: Soyabean's daily chart as at Jun 4, 2015 (Source: ino.com)