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Monday, November 13, 2017

FCPO Commentary: 9th Nov 2017

9th Nov 2017


  • Palm oil hipments rose 2.3% from 1,384,665 tons in Sept. 1-30, according to Societe Generale de Surveillance.
  • In another report, palm oil shipments rise 8.3% from 1,105,555 tons during Sept. 1-25 period, according to cargo surveyor Societe Generale de Surveillance.
  • MPOB fundamental data, Palm oil stockpiles in Malaysia, world’ second-largest producer, rose 4% to 2.02m metric tons in September from month earlier, output fell 1.7% m/m to 1.78m tons; exports rose 1.8% to 1.52m tons. 
9th Nov 2017: Soy Oil Dec Traded 0.12 cents Lower to 35.12 cents, On-Sho
re Ringgit Traded Firmer@ 
RM4.2070 Per USD.
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The Jan contract had some mild setback yesterday when it retrace in the evening session. I guess Buyers has to give back some gain as soy oil was losing some traction and slide lower on Asia evening session. Correlation is something that I would call a coin toss, it works sometime and most of the time we could not use it as a reliable barometer because of timing issue. Market do not need to be efficient and it does not have to, that is why trader who use purely on correlation alone will likely stopped out pre-maturely. To my dismay, rain does not seems to stop for the time being, and according to  our meteorological department, ample rain is expected towards the mid of Nov. I do not think we will have severe flooding issue in the east coast and south side of Malaysia but traders are advise to keep a updating latest forecast via www.met.gov.my, there are tons of useful information and apps you can download there. Nothing much has change on the candle chart, it is still positive in the long term outlook and perhaps some small turbulence for uptrend to continue in the short term basis. If you look at 30 minute chart, yesterday last 30 minutes Sell-off is quite noticeable to make some changes to the overall short term technical outlook to Bearish. On the news side, analyst are blaming yesterday palm oil price retracement on weaker demand expectation. Major fundamental data such as palm oil stocks, export and production is due to release today around noon couple with export report from SGS and ITS at the same time (+8 GMT). For today, palm oil futures is likely open lower due to soy oil for Dec contract was traded 0.14 cents lower 35.12. Range for Jan contract is likely moving within 2,790 ~ 2,830.   

Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Friday, July 7, 2017

5th July 2017: FCPO Market Commentary


4th July 2017: Soy Oil Aug Traded At 33.17 cents, On-Sho
re Ringgit Traded Unchanged @ RM4.2980 Per USD.

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I find the velocity of market news flowing is so complex and mis-leading at most point of the time. Unless you are taking news from the reliable source, chances are you are reading the wrong news. Everyone has their own opinion about using the news, but when some people claim that price flow mostly due to news is tough to agree on. Price movement on any market can be due to anything, it could be technical, rumors, facts, weather and so on. If you are just trading in short term, news is mostly irrelevant for you. We cannot pinpoint one element and use it as a major reference as every element in the market is co-relevant at some point. A very short term trader, i.e intraday trader would only use price to make their move on the market, while a longer term trend trader might want to incorporate weather and some fundamental data into his technical analyst before making any trades. The point is, those analyst can write anything they want after the price has move, you just have to pick and choose which source of news you can rely on making your decision. Palm oil futures for Sept contract is showing good sign of further recovery. As you can see on daily chart, the Sept contract has breached above the resistance trend line for the 2nd time and stay above 2,500 level yesterday. There is a small U shape pattern formed on daily chart as well if you look closely but the Sept contract still need to go above 2,520 level before it can change current negative momentum to positive momentum, hopefully soon. For today, palm oil futures for Sept contract is likely moving this range, 2,490 ~ 2,530.    


 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Thursday, March 9, 2017

9th March 2017: FCPO Commentary

8th March 2017: Soy Oil Traded 0.43 Cents Lower, On-Shore Ringgit Traded Unchanged @ RM4.4580 Per USD.

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I manage to take some breather yesterday when trade #202 made some partial gain on the evening session. Trade #202 was a Long setup at 2,848 level and this position cannot hold overnight due to price is below 21 days-EMA on daily chart. Price for May was doing around 2,867 ~ 2,869 area when the clock strike 5.30PM, I had to make a call right at that time because that was the cut off time for me to exit any intraday position. Fortunately traded #202 manage to exit at 2,868 level right at that time, it was 20 points gains. This is after I had 4 losing streak in a row, since last two weeks. Negative news are circling around regarding high likelihood of production spike coming this end of month. Indonesia’s palm oil output was expected to reach 35 million tonnes in 2017 year from 32.10 million tonnes recorded in 2016 while Malaysia’s output would increase to 19.85 million tonnes from 17.32 million tonne previously. I think the gradual increase in palm oil production would curb palm oil price to recover for the time being. Of course that was the expectation on the fundamental side, but how market would re-act to it is a different story. If you look at the price action, the positive closed on yesterday daily candle suggest that there is abundant of upside today if the market open higher. If you still recall the 1-2-3 chart pattern on daily chart that I mentioned for the last two days, I didn't expect the retracement move from #2 to #3 would complete so soon. As you can see, the #3 move of the 1-2-3 chart pattern is complete if the May contract manage to breach above 2,900 level. If you are a conservative trader or a trend trader for a 1-2-3 chart pattern, a standard drill to enter Long position will be at the break of previous high, which is at 2,900 level. The risk reward for this trade setup would be at least 1:2, starting on placing your final stop loss at 2,820 (the new low of yesterday candle) and target about 200 points on the upside. That is how a 1:2 risk reward is properly derived, I know it will be a long shot looking from here but that is how those trend traders look at price when they enter their positions. For today, palm oil futures is likely open lower due to overnight soy oil weakness. The soy oil for May contract went down about 0.43 cents to 33.56 cents this morning. Range for palm oil May contract is likely 2,880 ~ 2,830.

 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Monday, March 6, 2017

6 March 2017: FCPO Commentary

3rd March 2017: Soy Oil Traded 0.20 Cents Higher, On-Shore Ringgit Traded Unchanged @ RM4.4565 Per USD.
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I remember a few successful traders mentioned about foreseeing what others would pay less attention to is what determined a great trend trader. I could not really grasp that set of skill yet till today, probably I rely much on the mechanical system to decide what is my next course of action. What is coming next on menu would likely be the tendency of Feds raising rates. According to the poll conducted on mainstream media such as Reuters and Bloomberg, Feds will likely raise another rates this month, the percentage is ranging from 70% to 85%. With that in mind, Ringgit is likely taking more hits and weaken further. Traders are likely Bullish if Ringgit deppreaciate further and paving more possibilities for further price recovery. Of course it is not a science or a certainty that price will go up due to Ringgit weakness, but very likely. Trade #198 hit full SL when that Short setup eventually have to deal with price rally in the afternoon session. A few while after trade #198, I had a Long setup for trade #199 which is to Buy at 2,857 level. Fast forward to 5.30PM I had exit and manage to took out some small gain for trade #199 as I am not going to hold any Long position when the price is below 21-days EMA. I have been using this strategy since late Oct last year and will be doing some review once it hit six months. I have done some tweaking within these period so that this strategy can cope with ever changing market volatility. Still, I believe there is much things I can do to make this strategy better. Finding the right risk management rules or sweet spot for money management is an never ending quest, but I believe we will all learn something valuable along the process. Recent export figure is something we need to look at, Palm oil shipments from Malaysia, the world's second-largest palm oil producer after Indonesia, fell between 12 percent and 14.2 percent in February from a month earlier, according to data from cargo surveyors on last Tuesday. For today, palm oil futures is likely open higher amid soy oil overnight recovery. The soy oil for May contract was traded 0.20 cents higher to 34.34 cents this morning. Range for May contract is likely moving within 2,850 ~ 2,900.

 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Monday, February 27, 2017

27 Feb 2017: FCPO Commentary


24th Feb 2017: Soy Oil Traded 0.04 Cents Lower, On-Shore Ringgit Traded Slightly Firmer @ RM4.4300 Per USD.
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Palm oil futures roller coaster ride continues to roll on last Friday. The May contact manage to hit weekly low and went to day high at the end of the session. This will be the third time that market make such price action, it tumbled to the low and recover in the afternoon session to end at the day high. I can tell that the market is trying to rebound, at least for the time being. It was too unfortunate that these kind of price action can result in very bad performance for trend trader because the price would turn around after I have enter a position. The edges position is mostly entered at the tip of a new high or new low, imagine if the price just reverse or there is no follow buying interest on the high for instances, that Long setup will likely hit stop losses. I guess there will be time for the market to trend and there will be a time where market just swing wildly. Trade #190 meets its SL points when the May contract choose to retrace 30 minutes before the market close for morning session. Trade #191 filled on the opening at afternoon session, taking higher Short position, I was just one point away from SL when the May contract touches 2,790 level. I got lucky and the May contract price did came down for me to take partial profit at 18 points. The next Long setup was ignore as the signal only valid at 5.35PM, and I am not suppose to hold any Long position overnight with price below 21-days EMA. I did feel wasted because the May contract did moved about 12 points higher at that evening session. Palm oil price outlook remain Bearish for the time being as there is no strong signage that the price action is turning to Bullish from hourly chart. All I can see for the time being is higher closing value in the closing session for the past 3 sessions, and market just open lower the next day. Palm oil production spike concern will stay as the main headlines for the price to stay Bearish in the medium term. For today, palm oil futures is likely open unchanged due as there is not much movement in soy oil price. The soy oil for May contract was traded 0.04 cents lower 32.79 cents this morning. Range for May contract likely moving within 2,790 ~ 2,840.

 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Friday, February 24, 2017

24 Feb 2017: FCPO Commentary


23rd Feb 2017: Soy Oil Traded 0.20 Cents Lower, On-Shore Ringgit Traded Slightly Unchanged @ RM4.4465 Per USD.
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I apologize as previous Wednesday daily candle was not a "Hammer" candle but instead a Bullish Harami. A bullish Harami is a candlestick chart pattern in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body. The bullish Harami is a downtrend or bearish candlestick (red) engulfing a small bullish candlestick (green), giving a sign of a reversal of the downward trend. Since the bullish Harami indicates the bearish trend may be reversing, it may be a good consideration to go Long if the market recover higher than the high of the previous session. But unfortunately, the May contract never go above 2,814 level yesterday, it headed downwards most of the time instead. Although the previous Wednesday daily candle looks alike Hammer, the body and the top of the candle appears to be within previous Tuesday range, so it is more likely to identified as a Bullish Harami. Candlestick only provides us a guideline how to the market would probably re-act,it is not certain that the next price direction would follow the chart pattern identically even after all the chart criteria matched. I believe that the market is trying to rebound from here when it recover mostly from a new low, but that is just my gut feel. Price action for the May contract has been very nasty for the past two days, taking out my Short stop loss and then go back to my initial take profit area. It is a stormy weather to my equity right now, but I still have faith that this stormy weather will pass and I will get thru it.  Trade #189 Short setup at 2,768 ended with a 16 points stop loss when the market just open low and surge all the way to 2,784 level. To my horror, that May contract went down to 2,748 level after I have been stopped out. I guess most of you would know how does it feel after having the market stopped you out and move in favor after that. I do not see significant candle formation on daily today, it is safe to say we are likely having another Bearish session due to soy oil weakness. The soy oil for March contract is traded 0.20 cents lower to 32.38 this morning. Range for May contract likely moving within 2,750 ~ 2,790. 

Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Thursday, February 23, 2017

23 Feb 2017: FCPO Commentary

22nd Feb 2017: Soy Oil Traded 0.10 Cents Lower, On-Shore Ringgit Traded Slightly Unchanged @ RM4.4510 Per USD.
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Palm oil futures daily candle is showing a sign of rebound soon, it has formed a candle called "Hammer". The Hammer is a bullish reversal pattern that forms after a decline. In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers often signal a bullish revival. The low of the long lower shadow implies that sellers drove prices lower during the session. However, the strong finish indicates that buyers regained their footing to end the session on a strong note. While this may seem enough to act on, hammers require further bullish confirmation. The low of the hammer shows that plenty of sellers remain. Further buying pressure, and preferably on expanding volume, is needed before acting. Such confirmation could come from a gap up or long green candlestick on today opening session.  Hammer candles are similar to selling climaxes, and heavy volume can serve to reinforce the validity of the reversal. Vol for the May contract surge to 42,390 lots yesterday compare to 34,470 lots on previous Tuesday. Trade #188 has to hit break even stop loss when the market recover from a 19 points favorable move. I had to move the SL to break even points as it was part of the risk management regime and sometime the trade does went back to its potential take profit points after the SL level has been done. I guess you cannot win all the time when it comes to managing risk. There is a Long trade setup on yesterday closing bell, The valid Long level would be at 2,814 ~ 2,816 area for May contract. Now, I am not saying anything about the certainty of market rebounding today as soy oil is still trading slightly lower this morning, but the single hammer formation on daily chart is something worth looking at. For today, palm oil futures is likely open slightly lower on soy oil weakness. The soy oil for March contract was traded 0.10 cents to 32.85 cents as the time of writing. Range for May contract is likely moving within 2,790 ~ 2,840.

Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Monday, February 20, 2017

20th Feb 2017: FCPO Market Commentary

17th Feb 2017: Soy Oil Traded 0.06 Cents Lower, On-Shore Ringgit Traded Unchanged @ RM4.4575 Per USD.
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Palm oil futures Support level for the benchmark month is now officially broken, but not the end of the world yet. This will be the first picture of how strong the benchmark month has breach below the long term Support level at 3,014~ 3,000 area. Palm oil futures for May contract took the extra miles down on previous Friday when it tumble below 2,870 on the afternoon session, signaling more weakness along with soy oil price retracement. I believe traders are spook with the upcoming active production cycle coming this 2nd quarter, plus Indonesia palm oil planting is starting to return to normal cycle. Market fear that the low stockpiles number would not be able to hold its ground that long and will start to increase starting April month. For more pressing correlation, I believe that this weak soy oil weakness has most thing to do with palm oil price correction. Just look at how swift the soy oil for March contract fell from 34.49 cents in 13th Feb to previous Friday @ 33.03 cents, a whopping straight $1.49 cents decent without stopping. Trade #182 Short @2,870 is holding overnight align with risk management rules. I hope that the soy oil will keep its ground below 33.00 cents until the palm oil futures opening. If the May contract price open above 2,870, it will close off immediately as right now trade #182 stops is at break even point after the market has moved more than 15 points last Friday. For today, palm oil futures is likely open unchanged as soy oil did not move much from its last Friday closed. Soy oil for March contract was traded 0.06 cents lower to 33.00 cents this morning. I think market is oversold and should be time for the market to rebound, the range for May is likely moving within 2,850 ~ 2,900.

Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Thursday, February 16, 2017

16th Feb 2017: FCPO Commentary

15th Feb 2017: Soy Oil Traded 0.20 Cents Lower, On-Shore Ringgit Traded Slightly Firm @ RM4.4475 Per USD.
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Palm oil futures had a small recovery going on currently as there was no surprise correction happen on soy oil during Asia trading session. Market volume for Apr contract seems quite active with 17k contract traded while more and more traders are shifting their positions to May contract gradually. The May contract recorded about 14k contracts traded, that was just 3k contracts behind the Apr contract. The 3rd palm oil futures months will be May contract today, taking on the helm of active benchmark month. Maybe some of you did not notice on the spread for March April has widen about 125 points !! It was huge backwardation if you look at it. Usually an unusual price hike caused by un-expected weather changed such as extreme El-Nino last has forced near month price to rise faster and higher than the forward months price. I had no trade setup so far after trade #181 had met its doom on previous Tuesday, but I am not sitting there like a duck either. I have a new idea to incorporate some other oscillator so that there is other signal or trade setup in-line with the trend while waiting for the next position. I have tested a few indicators and it seems by combining Parabolic SAR, it yield better results. I still have a lot of data to go thru and back testing before I can conclude anything. Palm oil export for 1-15th Feb vs Jan 2017 only rose about 1.4%, it was reported by ITS cargo surveyors. You are advise to be wary on this particular price recovery as it does not show a promising strength so far. The rally we seen starting from previous Tuesday is not as strong as how it came down previously. This would also mean, the Buyers are still cautious overall. For today, palm oil futures is likely open lower on overnight soy oil retracement. The soy oil for March was traded 0.20 cents lower to 34.02 cents this morning. Range for the new benchmark month May is likely moving within 2,930 ~ 2,970.

 Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.

Wednesday, February 15, 2017

15th Feb 2017: FCPO Commentary

14th Feb 2017: Soy Oil Traded 0.06 Cents Lower, On-Shore Ringgit Traded Slightly Weaker @ RM4.4500
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When you try your best and you dont succeed, dont fred because you might just need to dig another inch to discover your gold. Just like the image above, success can never be easy to achieve and as easy as it seen, trading is an time consuming exercise to be good at. If trading is easy as advertise or if there is any results proven robot trading, most of the people in the world would have quit their job and just let that robot did all the work !! Trade #181 had to take some SL before the morning ends, it was a good call not to hold any position over the lunch. The Apr contract open 7 points lower from 3,035 to 3,028 and kept heading down to 3,024 before showing any sign to recover for the rest of afternoon session. I think most of the traders felt market is oversold or too good not to go Long when Apr price fell down below 3,014 level. Let us not forget that major support and resistance usually can be seen in the daily chart, is a strong pivot point for price to bounce up for Support and price to retrace down if it is a major resistance level. It is not in 100% certainty that price will re-act exactly at certain support or resistance level, but it likely on those area. For instance, I mentioned that on previous Monday that major Support is likely located at around 3,014 ~ 3,000 area, this is where the benchmark price likely to re-act if the major Support should hold. Do note that on yesterday, the Apr contract somehow dip to 3,011 level before it could recover all the way to 3,058 in the afternoon session. Now, lets take another scenario where the price re-acted differently on the Support area. Lets just say that, hypothetically the Apr contract went down slightly below 3,000 level, before it stop and start to recover 40 points from that low. Would my major Support area suggestion came out entirely wrong because price has went out of my boundaries ? What matters here would be setting an expectation and have the courage to find out what would the price do next, and if you are better than anyone else, you get the chances of making money out of it. For today, palm oil futures is likely open slightly lower due to soy oil weakness. The soy oil for March was traded 0.06 cents lower to 34.18 cents. Range for Apr contract likely moving within 3,020 ~ 3,070.



Disclaimer: Information and opinions contained in this report are for educational purposes only. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness.