Thursday, February 21, 2013

Mild Retracement After Gaining For Past Few Sessions 21st Feb 2013

Thursday, 21st Feb 2013. Palm oil futures is set to weaken judging from it rival, Soy oil that went down substantially overnight. Other news to follow.

"-U.S. stocks fell sharply on Wednesday, retreating from multiyear highs, after minutes from the Federal Reserve's last meeting illustrated differing views over continued stimulus. "If the Fed is talking about ending its asset-purchase program, it's because they view the economic landscape as better," said Dan Greenhaus, chief global strategist at BTIG LLC. But some correction from an extended rally that has the S&P 500 index SPX -1.24% up 6% so far this year "is hardly the worst idea, especially in front of the coming sequester and budget debate," he added. The Dow Jones Indusrial Average DJIA -0.77% fell 108.13 points, or 0.8%, to 13,927.54. The S&P 500 declined 18.99 points, or 1.2%, to 1,511.95. The Nasdaq Composite COMP -1.53% lost 49.19 points, or 1.5%, to 3,164.41."

"- Asian stocks advanced Wednesday as overseas economic data sparked buying in the region’s exporters, with South Korean shares outperforming the rest of the region.

South Korea’s Kospi KR:SEU -0.33% jumped 2% to 2,024.64 for its best percentage gain so far in 2013. The benchmark, among Asia’s worst performers in recent weeks, turned positive in the year to date following Wednesday’s rally. Japan’s Nikkei Stock Average JP:100000018 -0.40%  rose 0.8%, Australia’s S&P/ASX 200AU:XJO -1.06%  added 0.3%, Hong Kong’s Hang Seng Index HK:HSI +0.71%  gained 0.7%, China’s Shanghai Composite CN:000001 +0.60% CN:000001 +0.60% advanced 0.6% and Taiwan’s Taiex XX:Y9999 -0.30%  rose 0.9%."

"-Oil futures dropped Wednesday with the expiration of the March contract adding to volatility. March crude CLH3 -1.96% dropped $2.20, or 2.3%, to settle at $94.46 a barrel on the New York Mercantile Exchange, the lowest close for a front-month contract since Jan."

"-March Soybeans finished up 8 3/4 at 1479, 13 off the high and 12 1/2 up from the low. November Soybeans closed up 12 1/4 at 1287. This was 16 up from the low and 4 1/4 off the high.
March Soymeal closed up 6.7 at 432.0. This was 7.3 up from the low and 2.8 off the high.
March Soybean Oil finished down 0.46 at 52.07, 0.72 off the high and 0.07 up from the low. March soybeans traded higher on the day despite mostly negative market sentiment in the commodity complex. Energy and metal markets fell sharply lower and the US Dollar was higher. Support in the soybean complex continues to come from logistical hiccups in Brazil and dry conditions in key growing regions of Argentina. There continues to be rumblings that a port strike will occur at all the major ports in Brazil soon and the vessel bottleneck to load has already exceeded levels for this time last year. A private satellite company cut their 2012/13 Argentina soybean harvest outlook to 49.6 million tonnes vs. 51.6 previously. The USDA has production pegged at 53 million tonnes. The company also pegged Brazilian soybean production at 81 million tonnes vs. 80.3 previously. The USDA has production pegged at 83.50 million tonnes. The production declines in Argentina and uptick in Brazil is consistent with most market estimates at this point in time."


FCPO- Possible Retracement As Market Is Overbought

Palm oil futures closed slightly lower yesterday after it headed above 2,580 level but quickly retrace after that. The benchmark May closes lower about RM4 to 2,561 level, volume was recorded slightly higher to 17,477 lots. Shying away after hitting previous high around 2,570 level, market is likely trading lower today as Bulls need to rest, paving way for some retracement. Even thought market is expected to correct soon, these overbought condition may not prolong as medium term reading on technical perspective remain Bullish. Another note, export data that released yesterday seem weak, which turn out to be a negative effect on price as most trading participants are expecting higher percentage of export recovery due to implementation of March export tax. The missed expectation may also dampen the palm oil futures to head higher today as traders assume that palm oil demand remain sluggish at the moment. For today, market is poised to open lower as there was substantial correction occur on Soy oil overnight. The white line shown on hourly chart above simulates the overall direction for today. Although the market may weaken further from here, I expect the market to recover after it retrace as there is no significant sign for the market to have long term (major) correction yet. The higher low and higher high formed on hourly and daily chart still suggest that the Bulls still in control at the moment. Pivot support for the benchmark May is located around 2,525 while resistance is pegged at 2,581.  

Daily Pivot Point
R2= 2601
R1= 2581
S1= 2543
S2= 2525
 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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