• FCPO fell 5.9% from YTD high of RM2641. After tumbling 19.6% to RM2498 in 2017, FCPO rebounded 5.7% to RM2641 on 9 Jan amid firmer related edible oils and improving export data coupled with expectations of a confirmed La Nina. However, a confluence of negative news flows such as weaker-than-expected exports data, persistent worries of rising stockpiles in anticipation of production upcycle after March, strong RM as well as the EU decision to curb biofuel imports triggered a 7.9% selloff to a low of RM2433 on 19 Jan.

• Crucial support near 200w SMA near RM2475. On the back of FCPO’s failure to stage a decisive breakout above congested resistances at RM2500-2528 (50% FR) levels, the index may trap in sideways consolidation for a little longer with key supports situated near RM2475 (200W SMA) and RM2453 (support trendline) levels. A decisive breakdown below RM2453 will witness further selloff towards RM2433 and 52W low at RM2417 (22 Dec). On the flip side, a successful breakout above RM2500-2528 will lift the index higher towards RM2555(38.2% FR) and 2588 (23.6% FR) zones.

Source: Hong Leong Investment Bank Research - 21 Feb 2018