Business Times CPO futures -- the bull is very tired

OBSERVATIONS: The signs do not bode well for a continuation of the five-month bull run on the Kuala Lumpur CPO futures market, at least in the short-term future. If anything, this market is likely to sag, maybe even take a sharp dive in the near term future.

Consider the following:
Despite taking heart at first from an encouraging export performance - Societe Generale de Surveillance (SGS) estimated May 2009 exports up some 59,000 tonnes or 5.1 per cent at 1,227,894 tonnes (April: 1,168,628 tonnes) - the actively-traded August 2009 contract closed last week at RM2,520 a tonne, down RM32 or 1.25 per cent over the week;

This market did not - or refused to - take the cue from bull runs on world commodity markets overall, particularly crude oil, which surged to a new high for the year above US$69 a barrel, and soybean oil futures' surge to eight-month highs;

The appearance of not one, but two, bearish engulfing bear candlesticks last week; short-term momentum and stochchastics indicators are all pointing this market to a southerly course.

Conclusion: Although the immediate outlook is one of weakness this market is still a bull, though a very tired and weary looking one.

However, this market will have to penetrate the RM2,430 immediate support level on the downside before it can be said to have morphed from a short-term bull to a short-term bear.