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CPO

MCX CPO prices majorly traded higher during the month of August and later witnessed some correction in September month, as there had been increased buying in the domestic market for vegetable oils including Mustard and Refined Soy Oil. Although prices also witnessed a roller coaster ride due to global events such as Delta variant issues in Asia. According to Solvent Extractors Association (SEA), India’s August edible oil imports fell 14.69% month to month to 16.95 lakh tons from 19.87 lakh tons in July 2020. Palm oil imports fell 43.56% year to year to 4.65 lakh tons from 8.24 lakh tons in August 2020. By 13th September, MCX CPO generic futures closed at Rs.1111/kg, similar compared to Rs.1114/kg reported on 2nd August. Fundamentally for the coming month, we expect MCX CPO futures to be bullish as rise in competing oil prices, labour problems in Indonesia and Malaysia, demand from China and India and rise in production of crude oil. On-going festive season in India is expected to strengthen the prices of vegetable oil prices. Moreover, the global exports from Malaysia and Indonesia has improved over the month especially to India with reduction in import duties by the Indian Government. According to SEA India’s August edible oil stocks at ports and pipelines fell 14.69% to 16.95 lakh tons from 19.87 lakh tons in July 2021. Stocks of edible oil at ports in July is estimated at 585,000 tonnes and CPO at 170,000 tons. India is presently holding 20 days of edible oil requirement on 1st August, 2021 at 16.95 lakh tons compared to 24 days of requirements of 19.87 lakh tons on 1st July 2021. As per MPOB data, CPO production has been reported at 1,702,430 tonnes for August’21, higher compared to 1,522,703 tonnes reported in July’21. However, so far in the year 2021 palm oil production in Malaysia has witnessed a fall which is supporting price rise. Malaysia's Jan-Aug 2021 production stands at 11.59 MT which is lower compared to 12.72 MT of the corresponding period last year.

On a weekly chart, MCX CPO (Sep) future has been trading in Ascending Broadening Wedge pattern, which indicates reversal momentum in the near future. In addition, the price has also shifted below the middle Bollinger Band formation, which indicates bearish trend in the near future. Moreover, an oscillator Stochastic RSI is supportive for the short position with negative crossover. Furthermore, a momentum indicator RSI (14) showing weakness, which supports also the downward trend. Hence, based on above technical structure one can initiate a short position in MCX CPO (Sep) future at CMP 1115 or arise in the price till 1120 levels can be used as selling opportunity for the downside target of 1040. However, the bearish view will be negated if MCX CPO (Sep) future close above the resistance level 1160.

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