Wednesday, October 10, 2012

Palm Oil Futures Succumb To Weak Demand

Thursday, 11th Oct 2012. Bursa derivative commodities futures ended yesterday session slightly higher as MPOB fall within expectation. Other news to follow.

"- U.S. stock futures were nearly unchanged on Wednesday as investors considered corporate earnings and looked to the Federal Reserve’s Beige Book of regional economic conditions. U.S. stock markets closed near session lows Tuesday as traders got jittery ahead of Alcoa’s results and after the International Monetary Fund cut its global-growth outlooks. The Dow Jones Industrial AverageDJIA -0.95%  sank 110.12 points, or 0.8%, on Tuesday to close at 13,473.53. The S&P 500 index SPX -0.62%  dropped 1% and the Nasdaq Composite COMP -0.43%  tumbled 1.5%."

"You have to learn the rules, and play it better than anyone else." - Albert Einstein.


"-Japanese stocks fell sharply to lead losses across most of Asia on Wednesday, with technology and steel firms taking a hit as concerns about growth and earnings weighed. Japan’s Nikkei Stock Average JP:100000018 -1.98%  retreated 1.8% to extend losses made so far this week to 2.8%, putting the index back at early-August lows. South Korea’s Kospi KR:SEU -1.56%  dropped 1.1%, while Australia’s S&P/ASX 200 indexAU:XJO -0.32%  lost 0.3% to back away from a 14-month high. Hong Kong’s Hang Seng Index HK:HSI -0.08%  slipped 0.2% but the Shanghai Composite Index CN:000001 +0.22%  reversed early losses to rise 0.1%."

"- Oil futures closed with a 1.2% loss on Wednesday, pressured by a weaker oil-demand forecast ahead of U.S. government data on petroleum supplies that are expected to show an increase for last week. Crude for November delivery CLX2 +0.09%  fell $1.14, or 1.2%, to settle at $91.25 a barrel on the New York Mercantile Exchange. The contract tapped a high of $93.66 a barrel, on the heels of crude futures rallying 3.4% Tuesday to reach their best settlement level in more than a week."

"-November Soybeans finished down 26 3/4 at 1523 1/4, 26 3/4 off the high and 5 1/4 up from the low. January Soybeans closed down 25 1/2 at 1523 3/4. This was 5 3/4 up from the low and 25 1/4 off the high. December Soymeal closed down 8.4 at 462.6. This was 2.8 up from the low and 8.1 off the high. December Soybean Oil finished down 0.62 at 50.63, 0.92 off the high and 0.07 up from the low. November soybeans traded sharply lower and made a new low for the week as traders took profits ahead of a USDA report that many feel will show an increase in the average US soybean yield and production. The trade is expecting a US average soybean yield near 37 bushels per acre vs. the September estimate of 35.3. Production is expected to rise to near 2.75 billion bushels vs. 2.63 in September. Despite the lower trade midday, many in the market believe that any increase in the average soybean yield and production will be offset slightly by increases in demand. Soybean demand continues to be robust and it the USDA announced this morning that US private exporters sold 120,000 tonnes of soybeans to China for 2012/13 delivery. Soybean basis has held steady to firm in the Gulf of Mexico despite the selloff in futures, however basis bids in areas of Corn Belt have declined as harvest advances. Outside markets were mostly negative on the day with US stocks trading lower along with crude oil."

FCPO- Further Sign Of Recovering. 

Palm oil futures is struggling to record steady gains session after session as more negative news emerged from bad palm oil data. Palm oil sentiment is getting weaker due to significant increased in Sept stocks level. To make things worse, palm oil export data dive to negative territory yesterday. It was a bad start fundamentally as both crude palm oil stocks increased to record 2.48 millions tons together with lower export figures. These news will limit recovery made in palm oil futures. On the contrary, things that happen on palm oil prices yesterday might be least expected by news trader or some called it fundamentalist. These types traders who solely take advantages to trade on certain news, found it market does not re-act according to the news immediately or data announced yesterday. Instead of Selling-off frenzy because of record high stocks and lower demand, instead of going down, the benchmark Dec start to ascend up to 2,483 level and only start to descend  from the high down to 2,417 level after 4.30pm. If any of the fundamentalist start to Short right after the news was released, which is around 3pm, be prepare to expect at least 30~40 points stop loss margin. Else you will get whipsawed as market continue to rally up to 2,483 level and only descend after 4.30pm. Technically, market is still hovering on recovery mode on short term time frame judging from series of higher lows and higher highs price action formed on hourly chart. Traders are reminded that palm oil futures outlook on longer time frame remain Bearish as any significant Sell-off on Soya bean products will likely drag down palm oil futures as well. For today, pivot support for the benchmark Dec is located around 2,421 followed by 2,386 while resistance is pegged at 2,487.

Daily Pivot Point
R2= 2518
R1= 2487
S1= 2421
S2= 2386
 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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