Friday, February 22, 2013

Tough Ride Ahead For FCPO 22nd Feb 2013

Friday, 22nd Feb 2013. Palm oil futures is heading for some deep correction soon as yesterday gap down signifies Bears are making a come back. Other news to follow.

"- U.S. stocks fell Thursday, with the S&P 500 tallying its first two-day losing run this month, as a weak regional manufacturing index and uncertainty over U.S. monetary moves hit sentiment. After falling as much as 93 points, the Dow Jones Industrial Average DJIA -0.34%  closed down 46.92 points, or 0.3%, to 13,880.62, with two thirds of its 30 components in the red. The S&P 500 index SPX -0.63%  retreated 9.53 points, or 0.6%, to 1,502.42, with information technology falling the most among its 10 major sectors. The Nasdaq Composite index COMP -1.04%  declined 32.92 points, or 1%, to 3,131.49, leaving it down 0.3% for the month."

"-  Asian stocks tumbled Thursday after minutes from the latest Federal Reserve policy meeting stoked concerns that central-bank policy-tightening moves will reduce global liquidity, which has supported stocks in recent months. Hong Kong’s Hang Seng Index HK:HSI -0.29%  dropped 1.7%, while the Shanghai Composite Index CN:000001 -0.13%  plunged 3%, with worries about liquidity tightening by the central bank adding to the selling pressure. In Japan, the Nikkei Stock Average JP:100000018 -0.81%  lost 1.4%, South Korea’s KospiKR:SEU -0.20%  declined 0.5%, and Australia’s S&P/ASX 200 index AU:XJO +1.12%  skidded 2.3%."

"- Oil futures fell Thursday, marking the lowest close for a front-month contract this year, as a rising dollar and soft economic data fed demand concerns. Oil for April delivery CLJ3 +0.23%  dropped $2.38, or 2.5%, to settle at $92.84 a barrel on the Comex division of the New York Mercantile Exchange, oil’s weakest closing price so far in 2013."

"-March Soybeans finished up 5 3/4 at 1488 1/2, 6 off the high and 18 up from the low. November Soybeans closed down 10 at 1277. This was 8 1/4 up from the low and 8 3/4 off the high.

March Soymeal closed up 3.7 at 437.3. This was 8.5 up from the low and 1.7 off the high. March Soybean Oil finished down 0.76 at 51.31, 0.66 off the high and 0.1 up from the low. March soybeans traded slightly higher into the closing bell but the November 2013 contract was sharply lower on the day. The US Dollar was sharply higher which limited gains along with negative action in the corn and wheat markets. The USDA Outlook Forum pegged 2013/14 US soybean production up 13% from this year to 3.405 billion bushels. This helped to pressure the new crop soybean contract along with active weather patterns throughout the Midwest this week. Buying support held up on the setback in the market due to fears that a Brazilian port strike may delay the loading of vessels further in the coming days. It was also reported this morning that US exporters sold 130,450 tonnes of soybeans to an unknown destinations. The sale was split between the 2012/13 and 2013/14 crop year."

FCPO- Brace For Weakness.


Get ready to switch your sail to head south as palm oil futures is likely heading downwards soon judging from the recent correction occur on Soy. The benchmark May ended about RM25 lower to 2,536, the day low was 2,513. The negative price momentum occur as trading participants are sceptic about the month end export data that may not hike much even though with zero percent export tax. With the coming export tax implementation on March, you can expect that export figures is going to weaken further and limit most attempt for price to recover. Technically, medium term Bullish trend might halt due to gap down occur yesterday. Although the market recover some of the losses made yesterday, this open gap down is a significant sign for short to medium term market correction. The last defence for the medium term Bullish trend to remain intact was around psychological support at 2,500. If this support area is breached, we might looking at major correction sequence that will took the major support level around 2,476 level. For today, my initial assessment will be reflected on the hourly chart above. Palm oil futures is likely recover in the early session based on yesterday closing which just ended 3 points below the high of the day. But things could quickly change to negative if the price approach the first pivot resistance around 2,548 today. Be prepare to welcome the Bears if the benchmark May retrace down below 2,500 level.

Daily Pivot Point
R2= 2560
R1= 2548
S1= 2518
S2= 2500
 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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