Tuesday, February 26, 2013

CPO Futures Weakness Continues 26th Feb 2013

Tuesday, 26th Feb 2013. Palm oil futures weakness is likely continue today amid recent retracement on Soy oil due to weather condition that will produce active harvest in South America. Other news to follow.

"- U.S. stocks fell sharply on Monday, with the Dow Jones Industrial Average having its worst session this year, as Italian elections and looming spending cuts in the U.S. hit sentiment. After an 81-point rise, the Dow Jones Industrial Average DJIA -1.55% fell 216.40 points, or 1.6%, to 13,784.17, with all but three of its 30 components finishing in the red. The S&P 500 index SPX -1.83%  fell 27.75 points, or 1.8%, to 1,487.85, with financial companies the worst performing of its 10 sectors, all of which closed lower. The Nasdaq Composite index COMP -1.44%  shed 45.57 points, or 1.4%, to 3,116.25."

"- Japan shares neared a four-and-a-half-year high Monday, standing out among mostly higher regional stocks as reports that Asian Development Bank chief Haruhiko Kuroda could be the country’s next central bank spurred buyers. The Nikkei Stock Average JP:100000018 -1.73%  leapt 2.4% to end at its highest level since September 2008, following reports that Kuroda would likely head the Bank of Japan and that Kikuo Iwata will be one of his two deputy governors. Both Kuroda and Iwata are believed to favor bold measures to end deflation in Japan. Elsewhere in the region, Australia’s S&P/ASX 200 AU:XJO -0.74% ended up 0.8%, Hong Kong’s Hang Seng Index HK:HSI +0.17% advanced 0.2% and the Shanghai Composite Index CN:000001 +0.50% rose 0.5%. Taiwan’s Taiex XX:Y9999 -0.84%  ended little changed, while South Korea’s KospiKR:SEU -0.38% fell 0.5%."

"- Oil futures settled Monday with a slight loss, holding above $93 a barrel. A stronger dollar, as uncertainty over the outcome of Italy's general election contributed to a fall in the euro, weighed on dollar-denominated oil prices, and a slowdown in Chinese manufacturing fed concerns over energy demand. April crudeCLJ3 -0.84% shed 2 cents to settle at $93.11 a barrel on the New York Mercantile Exchange."

"-May Soybeans finished down 8 1/4 at 1435 1/2, 17 1/2 off the high and 14 up from the low. July Soybeans closed down 16 at 1413. This was 5 up from the low and 26 3/4 off the high.

May Soymeal closed up 0.1 at 426.5. This was 6.5 up from the low and 4.7 off the high. May Soybean Oil finished down 0.29 at 50.44, 0.31 off the high and 0.69 up from the low. March soybeans traded lower on the day as technical signals favored a bearish bias after Friday's reversal lower. Calendar spreads were under pressure as traders take profits after recent gains as well. Weather patterns look active in South America this week with rainfall expected in Brazil and Argentina. Weekend showers came in slightly better than expected in Argentina. This morning's export inspections report was slightly below market estimates but still better than what's needed each week to hit the USDA export estimate. Shipments were pegged at 27.3 million bushels, down from 40.4 the week prior. Shipments needed each week to hit the USDA export forecast are 8.7 million bushels, down from 9.3 the week prior. The cumulative shipment pace is now 82% of the USDA forecast for this marketing year vs. the 5 year average of 67%. The USDA also announced this morning that private exporters sold 120,000 tonnes of US soybeans to China for the 2013/14 marketing year."

FCPO- It Does Not Looks Like A Profit Taking Anymore

Say anything you would on the recent corrections on palm oil futures but it doe not resemble the picture of profit taking. Gapping down is not a good way to start any session because most of the movement has happened for that session. Furthermore, most market that done through even a serious profit taking would not be gaping down twice unless we are dealing with five digit index point such as Hang Seng and Dow futures. Recent weakness that occur on palm oil was rather a major correction that shift the current short and medium term price outlook into Bearish. Although we expect some recovery after some oversold reading occur yesterday, there is no telling when the benchmark May will rebound. Even though the export data was slightly up, it is insufficient to support palm oil prices to recover at the moment. Instead, trading participants might be looking at different correlation such as palm oil rival products, Soy bean and Soy oil. Technically, the candle formation formed so far is a clear cut indication that the market weakness is yet over. Recent lower low formation has strengthen Bears influence on the chart and it will continue to stay unless there is any sign of recovery (higher lows) form. As the benchmark May has breached below major support level yesterday, further weakness is expected if it breached below yesterday low's around 2,460 level.

Daily Pivot Point
R2= 2492
R1= 2481
S1= 2460
S2= 2450
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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