• A strong 2.7% rebound in Feb after registering a three-month losing streak. FCPO recorded three consecutive monthly losses in Nov (-7.5%), Dec (-4%) and Jan (-0.3%) amid a confluence of negative news flows such as weaker-than-expected exports data, persistent worries of rising stockpiles, stronger RM as well as the EU decision to curb biofuel imports. Nevertheless, recent positive 1-25 Feb exports data and gains in rival oilseeds, coupled with weaker RM triggered a strong rally of 4.6% from Feb low of RM2445 (5 Feb) to end at RM2558 on 28 Feb, translating into a monthly gain of 2.7%.

• A bullish breakout to lift FCPO higher towards RM2588-2600 zones. In wake of the bullish triangle breakout formation and FCPO’s strength to form a strong support near RM2475 or 200W SMA levels, the index is likely to advance further towards RM2588 (23.6% FR), RM2600 and the stiff 200d SMA at RM2611 territory. On the flip side, failure to hold at immediate 50% retracement support of RM2529 will witness further pullback towards RM2500 and RM2475 (200w SMA) zones.

Source: Hong Leong Investment Bank Research - 1 Mar 2018