Palm, the most-consumed cooking oil, will probably slump as much as 21 percent in the next three months to the lowest level in four years, according to technical analysis by TransGraph Consulting Pvt.
The most-active contract on the Malaysia Derivatives Exchange may decline to 1,900 ringgit ($614) a metric ton as the moving average convergence-divergence indicator signals weakness on the monthly chart, said Ravi Chandra, vice president of Hyderabad, India-based TransGraph.
“Futures are in a long-term downtrend,” said Chandra, who has predicted prices for the past 12 years. “The monthly MACD falling below the zero line indicates the existing weakness to stretch further,” he said in an e-mail yesterday.
The MACD indicator is a gauge of momentum derived by subtracting a 26-day exponential moving average from the 12-day average. A second measure, called the signal line, uses the nine-day moving average of the MACD indicator.
The tropical oil, used in everything from candy bars to biofuels, plunged to a three-year low of 2,217 ringgit on Dec. 13 as stockpiles climbed in Malaysia and Indonesia, the main producers. Futures declined 0.8 percent to 2,392 ringgit today.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.