Plantation Theme

Plantation stocks have been correcting for 2 weeks now in line with the fall in CPO prices. Soy Bean prices have also been falling for almost a month now & coupled with lower oil prices the past week this has led to a correction in plantation stocks. Oil prices may rise this week because of worries about hurricanes in the US Gulf, the latest being Ernesto. Its the season for hurricanes. There have also been press reports on worries that if CPO rises above RM1700 or RM1800 (differing reports) biodiesel may not be feasible & would be more expensive than oil. All these have kept CPO down & with it plantation stocks.

Plantation Index is still rising. It is above the 5,10 & 15 day & within the upper channel of the Bollinger Band (BB) so it is still positive. Daily MACD & RSI h'ever are negative. Weekly RSI & MACD are still positive. It will turn very positive if it can take out the recent high of 3742. Vol has fallen significantly. I think PI is being kept up by interest in the larger index stocks like IOI, KLK & PPB. Fundamentally if CPO prices keep falling I expect PI to also start correcting down, but if oil prices rise & soy prices also rise then CPO will rise & so will Plantation stocks.


Kulim is bucking the trend & rose strongly the last 2 days. It has stayed in the upper BB channel which is a positive sign & its also above the 5,10 & 15 day MAV. Resistance is at 4.88 & 5.20 but it has to break above the 4.60 recent high first. After falling, the daily RSI & MACD are starting to rise though the MACD has not yet made a golden cross. The weekly RSI is h'ever VERY overbought at 97 & may have to correct soon. Technically on a daily basis it looks like the rise will continue but it is hard to say for sure as I am concerned that it is rising when others in the industry are flat or falling & the weekly RSI is overdone. Anyone who buys at this time should only do so if it breaks 4.60 but be very cautious.


RSawit - is starting to flatten. Its right on the central line of the BB & also the 7, 14 & 21 day MAV. Vol has fallen considerably & RSI & MACD are sharply down. We may see a sideways trend this week & a rise will be dependent of CPO prices & the trends of the bigger stocks like IOI & KLK which have to lead the market again.


Other stocks - Most other stocks are following the trend of RSawit: so IJM Plantations, Kretam & PPB Oil are all correcting & then staying quite flat. IOI & Asiatic are rising very slowly but may turn flat soon.