Huge Consolidation For Palm Oil. Stock Index Hit The Ceiling, For Now. 4th March 2013

Monday, 4th March 2013. Stock index and index futures took a step backwards as they hit previous resistance level, most of the movement we saw indicate market is still ranging. Other news to follow.

"-U.S. stocks rose Friday, with the major indexes finishing with weekly gains, as upbeat consumer confidence and manufacturing data countered concern about government-spending cuts.

Federal Reserve Chairman Ben Bernanke’s reiteration this week that monetary stimulus would continue helped support equities, with the Dow Jones Industrial AverageDJIA +0.25%   on Thursday coming within 15 points of its all-time closing high hit on Oct. 9, 2007. The S&P 500 index SPX +0.23%  advanced 3.52 points, or 0.2%, to 1,518.20, with health care faring best and industrials leading declines among its 10 major sectors. The index posted a 0.2% weekly gain. The Nasdaq Composite COMP +0.30%  climbed 9.55 points, or 0.3%, to 3,169.74, leaving it 0.3% higher for the week."

"- Stocks in Shanghai and Hong Kong pulled back Friday as lackluster data on Chinese manufacturing prompted a retreat after a solid rally in the previous session, while Japanese shares got a lift as real-estate firms advanced on an improved outlook. Hong Kong’s Hang Seng Index HK:HSI -0.61%  lost 0.6% and the Shanghai Composite Index CN:000001 -0.26%  fell 0.3% after jumping at least 2% in the previous session, while Australia’s S&P/ASX 200 index AU:XJO -0.35%  lost 0.4%. Meanwhile, Japan’s Nikkei Stock Average JP:100000018 +0.41% finished up 0.4%, extending Thursday’s 2.7% surge, with real-estate stocks jumping to offset a drop in some exporters as the yen strengthened. The South Korean market was closed for a holiday."

"-Crude-oil futures fell Friday to mark their lowest settlement of the year as disappointing Chinese manufacturing data and record euro-zone unemployment dulled the outlook for energy demand. Crude oil for April delivery CLJ3 -1.12% shaved off $1.37, or 1.5%, to settle at $90.68 a barrel on the New York Mercantile Exchange. That was the lowest close for a front-month contract since Dec. 24, according to FactSet."

"-May Soybeans finished down 5 3/4 at 1446 1/2, 11 off the high and 13 1/2 up from the low. July Soybeans closed down 8 at 1427 1/4. This was 10 up from the low and 13 1/2 off the high.

May Soymeal closed down 5.6 at 430.0. This was 1.0 up from the low and 7.8 off the high. May Soybean Oil finished up 0.58 at 49.7, 0.05 off the high and 1.03 up from the low. May soybeans traded lower for most of today's session on light profit taking ahead of the weekend and the US Dollar surged to a 7th month high which limited gains. Weather maps suggest rainfall in key growing regions of Argentina which many suspect will help improve soil moisture conditions and crop growth. Underlying support in the market continues to stem from strong crush demand in the US domestic market as well as long vessel lineup in the ports of Brazil. A closely followed private grains analyst released new estimates on South American production this morning and projects the Brazil soybean production at 84.5 million tonnes, up from 84 previously. The USDA is currently projecting production at 83.5 million tonnes. Argentina production is estimated at 51 million tonnes, unchanged from prior estimates. The USDA is currently estimating production at 53 million tonnes. The Brazil Trade Ministry estimated February soybean exports at 959,600 tonnes vs. 284 tonnes in January. The uptick in exports is consistent with the improved harvest pace in Brazil."

FKLI-Travelling Within The Range

Both stock index and index futures are still maintaining their course, which is hovering within the stipulated range within 1,590~1,640 level at the moment. These range was the most traded level prior to outcome of Malaysia general election for the first quarter. Matter of caution will be the ability for the market surge or free fall if it breach above the major resistance area around 1,640~1,642 or if it penetrate below the major support level around 1,590. Stock index can still surge above major resistance level if there is enough fuel for the Buyers to commit as most participants will think that the period to dissolve parliament is still months away. And there is nothing wrong being Bullish prior to that political event as Malaysia is expected to have 5% GDP growth this year. Technically, stock index is hovering on recovery mode at the moment judging from the hourly chart. Higher lows and higher highs were formed for the past five sessions last week. On contrary  for short term, there would be some profit taking activities going on as the Spot month contract has hit major resistance level at 1,640 level. Today, pivot support for the March contract is located around 1,623 while pivot resistance is pegged at 1,643.

Daily Pivot Point 

R2= 1643

R1= 1637

S1= 1627

S2=1623

FCPO- Long Term Consolidation

Yes, you are looking at a huge consolidation period for palm oil futures. Market was trying to recover up to 2,600 level but it fell soon after that as the price for palm oil is too expensive to rise further. Most of the price correction or most would like to call it resuming its preceding down trend was due to record high stocks level and diminishing demand as you can tell from the export data for the past two months this years. Shipment figures were not great even though the Malaysia government has placed zero palm oil export tax to make our palm oil products competitive. The only fundamental side for palm oil outlook to improve drastically would be unfavourable weather condition such as monsoon and flood that will disturb harvesting activities. The gradual reduce in productions will help stocks level to fall faster but we would not expect these kind of weather to occur during the first quarter. Technically, there is no sign for any recovery yet at the moment. Series of lower highs and lower lows were formed in most time frame you can stumble upon, signifying Bearish momentum across those time frames. For today, the benchmark May is expected to open higher judging on Soy oil price that surge 1.2% last Friday. In addition, there might be some mild recovery on short term soon based on oversold reading after the May contract has fallen for five sessions since last week. To sum, pivot support for May contract is located around 2,341 while resistance is pegged at 2,417.

Daily Pivot Point
R2= 2417
R1= 2392
S1= 2354
S2= 2341
 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.