Tuesday, January 8, 2013

Palm Oil Is Going To Have A Rough Ride 9th Jan 2013

Wednesday, 9th Jan 2013. Palm oil futures went Sell-off yesterday as market participants are expecting lower demand on the beginning of 2013. Other news to follow.

"- U.S. stocks ended lower on Tuesday as investors braced for fourth-quarter earnings releases. The Dow Jones Industrial Average DJIA -0.41% dropped 55.44 points, or 0.4%, to 13,328.85. The S&P 500 index SPX -0.32% fell 4.74 points, or 0.3%, to 1,457.15, with telecommunications the biggest weight among its 10 major sectors. The Nasdaq Composite index COMP -0.23%declined 7.01 points, or 0.2%, to 3,091.81"

"- Asian stocks fell Tuesday as investors locked in profits after strong recent gains and on caution ahead of the U.S. earnings season, with Japanese shares dropping as the yen strengthened.

Japan’s Nikkei Stock Average JP:100000018 -0.86%  and Hong Kong’s Hang Seng IndexHK:HSI -0.94%  each ended 0.9% lower. China’s Shanghai Composite CN:000001 -0.41%  and Taiwan’s Taiex XX:Y9999 -0.43%  gave up 0.4% each, South Korea’s Kospi KR:SEU -0.66%  slid 0.7%, and Australia’s S&P/ASX 200 index AU:XJO -0.57%  shed 0.6%."

"- Oil futures finished above $93 a barrel Tuesday for a third session in a row, little changed for the day, as traders weighed expectations for a sizable increase in weekly supplies against support from the anticipated completion of a key U.S. pipeline expansion. Oil for February delivery CLG3 +0.02%  fell 4 cents to settle at $93.15 a barrel on the New York Mercantile Exchange. It traded between $92.67 and $93.80."

"-January Soybeans finished up 22 3/4 at 1411 3/4, equal to the high and 30 3/4 up from the low. March Soybeans closed up 19 3/4 at 1387. This was 30 up from the low and 2 1/2 off the high.
January Soymeal closed up 10.3 at 408.5. This was 10.5 up from the low and equal to the high. January Soybean Oil finished up 0.08 at 49.5, 0.38 off the high and 0.18 up from the lowMarch soybeans traded a wide range on the day seeing both sides of the unchanged but ultimately closed sharply higher into the closing bell. Thoughts that demand is beginning to shift to South America from the US favors the bear camp along with the mostly favorable weather conditions. Support was found from technical short covering ahead of Friday's USDA report after sharp losses last week. Brazil will see light showers this week with the exception of Northeast Brazil which is trending too dry at the moment. A local analyst increased their production estimate for Brazil to 83.11 million tonnes vs. 83 in December. The USDA is estimating production at 81 million tonnes. Argentina looks drier to start the week but temperatures are expected to back off to more normal levels. Export Inspections fell in line with market estimates this morning but the shipment pace is certainly beginning to ratchet lower. Shipments were reported at 39.7 million bushels vs. 35.5 last week. Inspections needed each week to reach this crop years USDA export estimate are now 15.4 million bushels, down from 16.1 last week. Cumulative shipments are 60.5% of the USDA estimate vs. the 5 year average of 47%."

FCPO- Weakness Building Up

What turn out to be a minor set back for the Bulls have now manifest into something worse. Yesterday, the benchmark March continue to head south and what worth to mention here was the ability for the price to head down lower than previous Support. Forget about how competitive the palm oil market is going to be in the future after the new export tax scheme introduced, fear of sloppy demand is getting worse. To make thing worse, palm oil background is plague with record high stockpiles and weak demand. This time, the new palm oil tax scheme alone is not sufficient to support price to rally. On technical perspective, the benchmark March short and medium trading range is likely heading down lower this week. This is because it has breach below at least 10 days support level plus lower high and lower low Bearish candle formation yesterday. Chances for the market to recover significantly has dim out if there was a lower low and lower high formation formed on hourly chart. Previous Support at 2,425 level has now turn out to be immediate resistance level for now. Although the sentiment has become Bearish, price might able to rebound temporary and continue to retrace after that rebound as these event would eventually create another lower high in the chart. For today, pivot support for the benchmark March is located around 2,358 while resistance is pegged at 2,416 level.

Daily Pivot Point
R2= 2440
R1= 2416
S1= 2375
S2= 2358
 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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