• FCPO rallied 4.1% after hitting a 52-week low at RM2350. A confluence of negative headwinds saw FCPO plunged 11% from YTD high of RM2641 (9 Jan) to a low of RM2350 (12 Mar) before staging a relief rally to end at RM2446 yesterday, recording its 7th gains out of the last 8 sessions.

• Another upleg. In the wake of weaker ringgit and expectations of improving exports ahead of the Ramadan season, coupled with positive technicals, FCPO may advance further towards key resistances at RM2459 (50% FR), RM2473 (200w SMA) and RM2500 psychological levels.

• Nevertheless, further rebound could be capped as sentiment remains cautious due to seasonal production recovery from April onwards and Indian government’s recent move to raise import duties coupled with narrow price spread between CPO and soybean oil.

• On the flip side, failure to hold at immediate supports of RM2419 (10d SMA) and RM2400 levels could end current rebound with further downward retracement towards RM2373 (13 Mar low) and RM2350 levels.

Source: Hong Leong Investment Bank Research - 22 Mar 2018