Wednesday, March 13, 2013

Further Correction Expected On Palm Oil Futures 13th March 2013

Wednesday, 13th March 2013. Palm oil futures is likely retracing further today amid recent correction that went down below 2,426 support level yesterday. Other news follow.

"-U.S. stocks ended mostly lower on Tuesday, but the blue-chip Dow Jones Industrial Average staged a late-session turnaround to finish at a record high.

Less than 14 points from its all-time closing high, hit in October 2009, the S&P 500 index SPX -0.24%  closed down 3.74 points, or 0.2%, to 1,552.48, snapping a 7-session winning streak.
On Tuesday, the CBOE Volatility IndexVIX +6.14% rose 6.1% to 12.27, a day after the gauge of investor uncertainty fell 8.2% to 11.56, its lowest level since February 2007.  After climbing 31 points and falling 35, the Dow DJIA +0.02%  ended up 2.77 points to close at 14,450.06, its sixth consecutive closing high and eighth rise in as many trading sessions, its longest win streak since Feb. 9, 2011. The Nasdaq Composite index COMP -0.32%  declined 10.55 points, or 0.3%, to 3,242.32. 

"- Chinese stocks reversed direction on Tuesday, with Shanghai falling to lead the Asia region mostly lower as optimism over supportive policy measures from Beijing soured. The Shanghai Composite Index CN:000001 -0.25%  sat 1.9% lower on the Chinese mainland in late afternoon trade, while Hong Kong’s Hang Seng Index HK:HSI -0.41%  was down a milder 0.3%. Trading with losses in Shanghai, Ping An Bank Co. CN:000001 -0.25%  fell 3.3%, while China Citic Bank Corp. CN:601998 -0.67%   lost 1.5%, and China Merchants Bank Co.CN:600036 0.00%  declined 0.5%."

"- Oil futures settled higher Tuesday for their fourth session in a row, with traders becoming increasingly optimistic over the outlook for energy demand in the U.S. Crude oil for April delivery CLJ3 +0.25% rose 48 cents, or 0.5%, to settle at $92.54 a barrel on the New York Mercantile Exchange. 

"-May Soybeans finished down 11 1/2 at 1468, 12 1/2 off the high and 3 up from the low. July Soybeans closed down 9 3/4 at 1445. This was 6 up from the low and 11 1/4 off the high.
May Soymeal closed down 1.8 at 436.2. This was 2.5 up from the low and 2.7 off the high. May Soybean Oil finished down 0.44 at 50, 0.49 off the high and 0.14 up from the low. May soybeans traded lower into the closing bell and spent most of the day in negative territory on light profit taking. Buying support continues to show up due to the delays in loading at the ports in Brazil but local traders noted that cargos are loading and shipments should begin to increase through the month of March. A Brazilian consultant estimated Brazil's harvest at half way complete and top producing state Mato Grosso is estimated at 75% complete. Light rainfall will be seen in southwestern Argentina over the next two weeks and the remainder of the growing region will experience favorable conditions for crop development and fieldwork. Southern Brazil is expected to see mostly favorable conditions for crop development the remainder of this week, as well as the central growing regions of the country. Gulf bids for US soybeans held steady on day on steady export demand interest. Traders also noted that cash soybean meal prices were under pressure today."

FCPO- Bulls Are Giving Up Gradually.


Market is heading back to Bearish mode if continue to retrace today. There is more stakes to lose right now as price for palm oil futures have retrace significantly yesterday. The benchmark May is now susceptible to further correction as it has breach below last week support level 2,426 area. Apart from that, palm oil futures is likely to correlate with recent weakness from Soy oil May contract that went down another 0.40% on the time of writing to 49.78 per pound. Even though there was gradual reduce on stocks and production figures, market participants have re-acted negatively on the palm oil export which took a dive about 14%. Slow demand may have done enough damage for the market to recover this week. Technically, this would be the first attempt from the Bears to push down price, more evidence of weakness is likely to surface if it breached below today pivot support level at 2,398 and followed by 2,384. Nonetheless, if the benchmark May should recover, traders can opt to go Short around 2,420 ~ 2,426 area as this previous support has become resistance area for the moment.

Daily Pivot Point
R2= 2456
R1= 2420
S1= 2398
S2= 2384
 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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