1/8/04 (Business Line - India) - MALAYSIAN crude palm oil futures on MDEXclosed lower on Friday due to persistent weakness in CBOT soya oil valuesand absence of any crucial leads, which lead to weekend liquidation ofpositions.

Markets are keenly awaiting the export estimates of palm oil for the monthof July due from the two cargo surveyors on Monday. Societe Generale deSurveillance (SGS), the cargo surveyor whose figures are more closelywatched, estimated that July 1-25 exports were at 889,068 tonnes comparedto 816,853 tonnes, it estimated for June 1-25.

Recovery was seen in crude palm oil futures after prices hit a low of 1368Malaysian ringgit (MYR) a tonne earlier on better export performance.Renewed demand from China and India helped palm oil prices hold firmduring the week in spite of a unstoppable CBOT soya oil decline.

Strong domestic selling prices and declining stock levels have encouragedfresh demand this week from China, one of the world's largest consumers ofpalm oil. The Indian monsoons situation will be watched closely for signsof pickup in demand.

Oilseeds crop this year would be lower in India than the previous year dueto deficient monsoons so far. However, revival of rains in recent dayscould limit the damage.

The third month active contract is consolidating at the current levels.Prices are trapped in a range now with support at 1410 MYR/tonne andresistance at 1435-40 MYR/tonne. Our view now remains neutral, with a biastowards the upside as long as 1400 levels hold.

Resistance will now be between 1450-57 MYR/tonne. However, a break below1380 MYR/tonne will be bearish for CPO futures as our short term bullishview will be negated there. Preferred view still, is to look for thesupport levels to hold for an initial move to 1535 MYR/tonne level andpossibly higher from there to 1615 MYR/tonne levels, which is thefibonnaci 38.2 per cent retracement level for the move from 2003 MYR/tonneto 1368 MYR/tonne.