25/01/2011 (Bernama), Putrajaya - A technical analyst and strategist says that crude palm oil pices have been overbought with the price likely to consolidate between RM3,300 and RM3,550 in the next two to five months.

"Price is currently at the extreme high level based on 15 years regression channel," Nextview Sdn Bhd's chief strategist Benny Lee said today.

Speaking at Reach & Teach Friends of The Industry Seminar: Challenges and Opportunities in 2011, here, he said the regression line median was currently at RM2,600.

"Once price breaks below the short term support level at RM3,600, the mid term consolidation is expected to begin," he said.

Palm oil futures for delivery in April was last traded at RM3,751 on Monday, the highest level in more than two years as demand surpassed supply.

Lee expects crude palm oil price to trade between RM3,600 and RM3,800 in the next two months due to short supply until next month.

He said the short-term forecast was slightly bullish as supply normally "bottoms out" in February amid robust export.

"Price is expected to rally after the rebound as the market is already anticipating lower supply at least in the next one month," he said.

However, lee said the price might not be able to move beyond the resistance level at RM3,800 because of the weak momentum and RM3,800 was technically overbought.

He said the palm oil production forecast for March based on three year trend was 1.125 million tonnes.

Malaysia's palm oil exports during january1-20 period rose 9.7% from a month earlier, to 852,607 tonnes, he said citing cargo surveyor Intertek Agri Services.

Lee also said that the strengthening of the ringgit and the yuan against the US dollar was expected to continue in the short= term and this supported the short term slightly bullish target.

"But, if the US dollar continues to weaken, the price may rally further and cause the medium term forecast to extend longer," he said.

The yuan has a positive correlation against the price of futures crude palm oil futures (FCPO), while the US dollar has a negative correlation against the price of FCPO.

Lee has beem a practitioner of technical analysis for 10 years and a certified trainer for the Securities Commission.