Sunday, November 11, 2012

Palm Oil Futures Continue To Weaken 12th Nov 2012

Monday, 12th Nov 2012. Local commodities futures continue to show resilient heading down, this time there  would not be any straight line down or up. Market tend to move frantically when there is a new low. Other news to follow.

"- U.S. stocks ended with modest gains on Friday, as a report that had consumer sentiment rising to the highest level in more than five years offset postelection worries about the so-called fiscal cliff. After a choppy trading session, the Dow Jones Industrial Average DJIA +0.03% rose 4.07 points, or 0.03%, to end at 12,815.39, but it dropped 2.1% for the week. This was Dow’s third consecutive week of losses. The S&P 500 SPX +0.17%  climbed 2.34 points, or 0.2%, to end at 1,379.85, but it declined 2.4% for the week. Technology led sector gains Friday, while utilities performed most poorly among the 10 industry groups. The Nasdaq CompositeCOMP +0.32%  added 9.29 points, or 0.3%, to end at 2,904.87, but it dropped 2.6% for the week, posting its fifth consecutive week of losses."|

"- Asian stock markets gave up further ground on Friday, extending their losses for the week, after getting only a brief bump from data showing a pickup in China’s industrial production. Japan’s Nikkei Stock Average JP:100000018 -0.90% ended 0.9% lower, to mark its lowest closing level since Oct. 16. South Korea’s Kospi KR:SEU -0.52%  finished 0.5% lower, and Australia’s S&P/ASX 200 index AU:XJO -0.49%  likewise closed with a 0.5% loss. In China, Hong Kong’s Hang Seng Index HK:HSI -0.85%  traded down 0.9%, bringing its loss for the week to 3.3%, while the Shanghai Composite Index CN:000001 -0.12%  fell 0.1%, marking its fifth straight losing session. The Shenzhen Composite Index ended 0.4% lower."

"-  Crude-oil futures climbed Friday, settling above $86 a barrel to log a gain of over 1% for the week, buoyed by prospects for higher demand, following upbeat economic data out of China and the U.S., and supply worries linked to Iran. A firmer dollar, worries over the fiscal cliff in the U.S. and Europe’s growth concerns remained in the backdrop. Crude for December delivery CLZ2 +1.27% rose 98 cents, or 1.2%, to settle at $86.07 a barrel on the New York Mercantile Exchange. For the week, futures prices gained 1.4%."

"- November Soybeans finished down 47 1/4 at 1452, 49 off the high and 1 up from the low. January Soybeans closed down 44 1/2 at 1451 1/4. This was 1 1/4 up from the low and 47 3/4 off the high.

December Soymeal closed down 13.2 at 449.7. This was 0.5 up from the low and 14.4 off the high. December Soybean Oil finished down 1 at 47.77, 1.09 off the high and 0.07 up from the low. January soybeans traded sharply lower following the release of the November USDA report and the pressure extended into the closing bell. The report was considered bearish against traded expectations after the USDA pegged US soybean production at 2.971 billion bushels which was 80 million bushels above trade expectations and compared with the October estimate of 2.860. The average US soybean yield rose to 39.3 bushels per acre vs. trade estimates of 38.16. The USDA also increased domestic crush demand by 20 million bushels and exports by 80 million bushels to offset the increase in overall supply which left ending stocks at 140 million bushels vs. 130 million bushels in October. Trade expectations were near 135 million bushels. World ending stocks for the 2012/13 season came in at 60.02 million tonnes as compared 57.56 million tonnes in last month's estimate. The trade reacted negatively to the report as the increase in world ending stocks was looked at as a significant concern to the bull camp. In addition to the negative fundamental influences, outside markets were negative for most of the day as politicians attempt to come to an agreement on the fiscal cliff deadline and this added to the negative sentiment."

FKLI- Short Term Correction Yet Over.

Stock index ended unchanged at 1641.08 level while index futures went down about 2.50 points to 1,634.50 level. The index futures and cash composite finished in huge discount, signifying weak derivative market at the moment. Concern over U.S fiscal cliff also dampen most major stock index to recover further towards year end. Most global market participants think that fiscal deficit are the next market headlines which will be the first economy test on Obama administration. Short term reaction for high fiscal deficit will be negative as U.S mounting debt continue to increase over time. Another function, fiscal deficit help country to climb out from recession in long term. Back to our local index futures, the Nov contract downside potential remain active as there is no promising sign for recovery yet. For intraday basis, market correction might pause judging on long lower shadow candles formed on previous Thursday and Friday. Both of these candles suggest that Buyers were able to closed both of the day by finishing higher than the day low. These candles formations will provide early hint for the market to head to next but they are not a strong indication for the market to rally for sure. For today, pivot support for Nov contract is located around 1,628 while resistance is pegged at 1,643.

Daily Pivot Point
R2= 1643
R1= 1638
S1= 1628
S2= 1623

FCPO- Heading Down In Zig Zag Way

The benchmark Jan ended RM20 lower to 2,316 due to mounting concern on palm oil stockpiles towards year end. Most market participants are expecting worse stocks data over the weekend. Moreover, palm oil futures price outlook will be grim after taking pressure from Soy oil Dec weakness that went down about 0.28 cents to 49.48 per pound during previous Friday Asia time, 6.04PM +8GMT. Unfortunately, Soy oil for Dec contract ended 1.00 cent  lower to 47.77 cents per pound. Palm oil futures is expected to open at least RM40 lower due to Soy oil overnight Sell-off on previous Friday. And judging from technical perspective, the down trend for the palm oil futures will be intensify from previous Bearish price action. It started by gaping down on 31st Oct and another on 5th Nov, plus continue to formed lower highs and lower lows last week. These noticeable Bearish formations are stern warning for those who are still holding their Long position few weeks ago, they should think what kind of risk they are taking at and "hope" the market will recover for them to break even. With the nature of palm oil trending market, it will be allow to free fall in a down trending market or surge in an positive trending market. Do take note that, by the meaning on free fall, most pivot support level will be breach easily.

Daily Pivot Point
R2= 2385
R1= 2350
S1= 2294
S2= 2273

P/s: Bursa Derivative will be closed for Depavali on 13rd Nov Tuesday, and 15th Nov Wednesday public holiday.
 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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