Monday, October 15, 2012

Palm Oil Futures Bearish Mode Activated 16th Oct 2012

Tuesday, 16th Oct 2012. Malaysia Stock index closed slightly higher after retracing for few sessions while commodities futures had the early sign of further downside due to stocks concern. Other news to follow.

"- U.S. stocks closed higher on Monday, buoyed by strength in the health-care and bank sectors after data showed some improvement in the economy and Citigroup Inc. reported core earnings that topped analyst expectations. The Dow Jones Industrial Average DJIA +0.72%  climbed 95.38 points, or 0.7%, to 13,424.23, posting its second daily gain in a row, with 25 of its 30 components trading higher.The S&P 500 Index SPX +0.81%  rose 11.54 points, or 0.8%, to 1,440.13, with health care the best performing sector and telecom the worst."

"-HONG KONG (MarketWatch) — Most of the major Asian markets fell on Monday after a set of Chinese economic data offered mixed signals to investors and led to doubts Beijing would act soon to further loosen its policies. Japanese shares ended higher, bouncing off a string of recent losses, as shares of beaten-down exporter found buyers, although Softbank Corp. tumbled further as investors awaited details on the company’s acquisition of U.S. mobile carrier Sprint Nextel Corp. S -0.52% China’s Shanghai Composite Index CN:000001 -0.30%  lost 0.3%, South Korea’s KospiKR:SEU -0.40%  dropped 0.4%, Australia’s AU:XJO -0.07% AU:XJO -0.07% fell 0.1% and Taiwan’s Taiex XX:Y9999 -0.24% slipped 0.2%."

"- Oil futures bounced back from a dip below $90 a barrel on Monday in New York to finish nearly unchanged, as traders mulled over economic data from the U.S. and China, developments in the Middle East, and strength in the U.S. dollar. Crude for November delivery CLX2 -0.10%  fell 1 cent to settle at $91.85 a barrel on the New York Mercantile Exchange."

"- November Soybeans finished down 30 at 1492 1/2, 27 1/2 off the high and 6 3/4 up from the low. January Soybeans closed down 30 1/4 at 1491 3/4. This was 7 3/4 up from the low and 27 1/2 off the high.

December Soymeal closed down 9.1 at 456.1. This was 1.5 up from the low and 9.0 off the high. December Soybean Oil finished down 0.66 at 50.01, 0.62 off the high and 0.6 up from the low. November soybeans closed sharply lower on the day and made a new low for the move at 1485 3/4. Long term support is linked to an explosive export pace, mainly to China, but liquidation by funds kept the bears in control throughout the day. Export inspections for the week ending October 11th were reported at 57.8 million bushels vs. 45.6 the week prior. Only 20 million bushels are needed each week to meet this year's USDA forecast. NOPA crush was positive with 119.7 million bushels which was in line with market expectations but fell against August crush of 127.7 million bushels. South American weather looks favorable with weekend showers favoring northern and eastern Mato Grosso. Rainfall will favor areas of Argentina and western Brazil this week and heavy rainfall will be seen in Southern and Eastern Argentina by mid-week. The heavy rainfall could slow the planting pace for these regions but a dry period is expected to develop thereafter. Brazil's 6-15 day outlook calls for expanding rainfall which should favor summer row crop development."

FKLI- Another Lower High Formed ? 

The FBM KLCI closed slightly unchanged yesterday as uncertainties mount over economy slow down regionally. Volume was traded thin on both FBM KLCI and spot month index futures as well. Technically, we are likely to see another formation of higher low on spot month index futures if market continue to closed on positive value today. With the candle formation of higher high and higher low on daily chart shown above, the spot month index futures is ready to topple previous new high above 1,671.50 level if there is no negative external shock or worst performer occur this week. For the mean time, the Bullish momentum is likely to sustain as the spot month index futures manage to recover and close on positive territory. We could use yesterday low around 1,642.50 to serve as immediate support if anything should go wrong from here. For today, pivot support level for the spot month contract is located around 1,647 while resistance is pegged at 1,662.50.

Daily Pivot Point
R2= 1667
R1= 1662.50
S1= 1647
S2= 1637

FCPO- Selling Pressure Begin

CPO futures closed substantially lower yesterday as concern over record high stocks will continue to climbed until the end of 2012. To make things worse, price outlook for palm oil futures is facing terrible downside risk as export will not mange to catch up overwhelming stocks build up at the moment. In other words, market is filled with negative sentiment that will spur more Selling pressure if there is any correction below psychological support level around 2,400. Palm oil market was Struggling to recover for the past week but less effort and time was needed when it goes down for some correction yesterday. Traders are advised to be cautious as demand for edible oil including palm oil will be disappointing throughout the year. The export of Malaysian palm oil is expected to register a shortfall this year from the record RM80.4bil in 2011. For the first nine-months of this year, Malaysian palm oil exports stood at RM54bil. It is understood that the declining palm oil prices, contributed mainly by the revised tax regime in Indonesia, will be the major factor for lower exports, in terms of value this year. Following the decline in palm oil prices since September this year and an increase in domestic palm oil stocks to 2.48 million tonnes last month, the Malaysia ministry had announced that effective Jan 31, 2013, the CPO export tax rate will be between 4.5 per cent and 8.5 per cent. Even with the positive news announcement on palm oil export tax rate cut which is only happen on next year, palm oil futures is still susceptible for Sell-off soon. Te reason behind will be Bearish price action shown on yesterday chart. The first sign of market return to its preceding downtrend was shown on lower high formed on yesterday hourly chart. Although, most of the traders would agree that it still early to say that market will turn to downtrend, let's not forget that longer term perspective on palm oil futures is still Bearish.   For today, pivot support for the benchmark Dec is located around 2,383 while resistance is pegged at 2,466.

Daily Pivot Point
R2= 2499
R1= 2466
S1= 2408
S2= 2383
 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.

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