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CPO

MCX CPO prices had traded lower during month of May month, as there had been decreased buying in the domestic market for vegetable oils including Mustard and Refined Soy Oil. Stronger rupee with respect to dollar had led to support higher imports of vegetable oil. According to Solvent Extractors Association (SEA), Palm Oil Imports rose by 33.26% in Apr'21 to 7.01 lakh tons from 5.26 lakh tons in Mar’21. Similarly, imports in Crude Palm Oil for the year (November 2020-April 2021) were reported at 37.92 lakh tonnes, higher compared to 32.70 lakh tonnes in corresponding period last year. Moreover, India’s palm oil imports from Thailand in May have increased by almost ten times from a month before as Thai-origin palm oil has become more price-competitive than Indonesian and Malaysian supplies, although by a slim margin. By 31st May, MCX CPO futures closed at Rs.1181/kg, lower by 3.17% compared to Rs.1218.5/kg reported on 30th April.

Fundamentally for the coming month, we expect MCX CPO futures to be bearish as weaker demand from China due to rising covid-19 cases in the Asian markets is weighing on the prices. Moreover, the global exports fram Malaysia and Indonesia has weakened. As per MPOB data, CPO production has been reported at 1,522,865 tonnes for Apr’21, higher compared to 1,423,483 tonnes reported in Mar’21. Palm Oil exports port wise from Malaysia during Apr’21 has been reported at 1,338,697 tonnes, higher compared to 1,188,697 tonnes of Mar’21, and higher compared to Feb’21 of 900,339 tonnes. Although the demand scenario in India is uncertain even though the lockdown situation in various states have started to ease for agricultural activities, the industries continue to stock in lesser Crude Palm Oil as the retail and cosmetic demand is lower in major parts of India. Overall, we expect bearish trend in MCX Crude Palm Oil prices for the coming month,

On the daily chart, MCX CPO (Jun) future has been trading in Ascending Broadening Wedge which indicate reversal momentum in the near future. In addition, the price has shifted below the 21 Exponential Moving Averages which confirms bearish trend in the near term. Moreover, the trend indicator Parabolic SAR also indicated a bearish trend. Moreover, the RSI indicator has also sustained below 50 which Indicate bearish strength in near future. However, on a four-hourly chart, an oscillator Stochastic RSI suggested positive crossover, which indicates slight recovery in the counter till the level of 1150. Hence, based on above mixed technical structure, we are recommending sell on rise strategy in MCX CPO (Jun) future around 1145 or arise in the price till 1150 levels can be used as selling opportunity for the downside target of 1070. However, the bearish view will be negated if MCX CPO (Jun) future close above the resistance level of 1185.

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