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CPO

News & Development MCX CPO prices had traded lower during month of June month, as there had been decreased buying in the domestic market for vegetable oils including Mustard and Refined Soy Oil. Moreover, reports of higher supplies with regards of demand had also weighed on the prices. According to Solvent Extractors Association (SEA), RBD and Palm Oil Imports rose by 33.26% in May'21 to 7.69 lakh tons from 7.01 lakh tons in Apr'21. Similarly, imports in Crude Palm Oil for the year (November 2020-May 2021) were reported at 45.62 lakh tonnes, higher compared to 36.71 lakh tonnes in corresponding period last year. By 30th June, MCX CPO futures closed at Rs.1042.9/kg, lower by 12.92% compared to Rs.1177.6/kg reported on 31st May.

Fundamentally for the coming month, we expect MCX CPO futures to be Bullish as higher demand from China is expected to spur on the prices. Moreover, the global exports from Malaysia and Indonesia has improved over the month. As per MPOB data, CPO production has been reported at 1,571,523 tonnes for May'21, higher compared to 1,528,121 tonnes reported in Apr’21. Cuts to Indonesia's export levies are likely to encourage crude palm oil (CPO) exports in the second half of 2021. Indonesia has made multiple revisions to its levy structure in the last three years and we think the latest rates may be adjusted further in response to CPO and crude oil price movements to allow it to collect sufficient funds to subsidise biodiesel consumption in the country; effective from 2nd July onwards. Although, the government of India has recently cut import duties from 15% to 10% recently, the demand scenario in India is expected to exceed the supplies amid reapening of the Indian retail market. Moreover, sluggish monsoon in central India has raised worries of soybean sowing; eventually lifting the prices of soy oil and mustard oil. This has also supported competitive vegetable oil price to rise as well.

Ona weekly chart, after a healthy correction the MCX CPO (July) future has been taking support of prior demand zone. Also, the price has taken immediate support of 50 Exponential Moving Averages & settled above lower Bollinger band, which indicates further recovery in the counter. In addition, the spurt in volume has been noticed in last few trading session, which point-out positive trend for the long term. Moreover, an oscillator Stochastic RSI suggested positive crossover, which is again an upside confirmation. Hence, based on above technical structure one can initiate a long position in MCX CPO (July) future at CMP 1010 ora fallin the price till 999 levels can be used as buying opportunity for the upside target of 1110. However, the bullish view will be negated if MCX CPO (July) future

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