Wednesday, July 24, 2013

Soy Oil Sell-Off Overnight, Prepare For Palm Oil Futures Further Retracement 24th July 2013

Wednesday, 24th July 2013. Palm oil futures is likely retracing further judging on weaker than expected closing value for Soy oil recently. Other news to follow.

"-U.S. stocks ended mostly lower on Tuesday after a decline in a regional manufacturing gauge prompted concern, but the Dow industrials climbed to a record close.

Snapping a four-session winning streak, the S&P 500 index SPX -0.19%  fell 3.14 points, or 0.2%, to 1,692.39, with information technology leading losses and telecommunications leading gains among its 10 major sectors. The S&P 500 rose to its 23rd record close this year on Monday. The Nasdaq Composite COMP -0.59%  lost 21.11 points, or 0.6%, to end at 3,579.27 on Tuesday. After a 58-point climb to an intraday record of 15,604.22, the Dow Jones Industrial Average DJIA +0.14%  ended up 22.19 points, or 0.1%, at 15,567.74, its 28th record close this year."
"-Asian stocks extended gains Tuesday on expectations Beijing will fine-tune its policies to support China’s economic growth and as the Japanese government upgraded its view of the economy for a third straight month. The Shanghai Composite IndexCN:SHCOMP +1.95%  rose 2%, and Hong Kong’s Hang Seng Index HK:HSI +2.33% rallied 2.3% to lead the region’s advance. The gains came after a state newspaper cited Premier Li Keqiang as saying last week at a meeting of the State Council, China’s cabinet, that the government would take action to ensure economic growth doesn’t fall below 7%."
"- Oil futures found their footing above $107 a barrel on Tuesday, settling modestly higher as some traders bet that data due this week will show a fourth weekly drop in U.S. crude inventories. Oil for September delivery CLU3 +0.05% , now the front-month contract, tacked on 29 cents, or 0.3%, to settle at $107.23 a barrel on the New York Mercantile Exchange."

"-August Soybeans finished down 57 3/4 at 1462 1/2, 63 3/4 off the high and 2 1/2 up from the low. November Soybeans closed down 28 1/4 at 1260 1/4. This was 1 1/4 up from the low and 35 3/4 off the high. August Soymeal closed down 14.6 at 487.8. This was 5.1 up from the low and 33.2 off the high. August Soybean Oil finished down 0.63 at 44.78, 0.83 off the high and 0.06 up from the low. The soybean market traded down sharply today, led by losses in the August contract which was down over 55 cents. November soybeans traded down 10-12 cents midday but came under heavy sell pressure late in the session to end the day over 25 cents lower. Meal and oil are also trading down with December soybean oil trading at its lowest level since June 28th. Basis fell apart in the interior of the US and in the export market which pressured front-end calendar spreads in meal and soybeans lower. The nearby CIF market was indicated to be down 70 cents for July shipment and 25 cents in the first half August shipment slot. There was some talk that the Chinese intended on releasing 3 million tonnes of inventory out of reserves to their domestic market for crushers but no confirmation has been made. The move could spark some export sales cancelations or mean that open old crop sales with the US are rolled into the 13/14 marketing year. Weather is seen as a negative force for the new crop soybean market after steady rainfall fell in central IA, southern WI, and northern IL in the last 48 hours. Temperatures are holding at moderate levels and appear non-threatening to the crop. Scouts in the southeast and delta indicate that soybean yield potential looks impressive so far given recent moisture trends in the region."

FCPO- More Downside To Come

External shock such as Soy bean and Soy oil weakness would dampen most chances for the palm oil futures to recover for the moment. Palm oil futures is likely getting more pressure from the gradual increase in stockpiles concern as demand fall for the  third times this month alone. Price action does not provide any hint for any major rallies yet. There is new lower high formed on hourly chart, signifying that the Bulls are giving up the fight yesterday. It become obvious when the market just starting to retrace from 2,282 level to the day low 2,255. The game plan for today was to Short on the opening if the benchmark Oct open lower, but not opening lower more than 25 points from previous 2,258 closing value as we expect there might be Short covering if it open too low. Profit target for Short position will be placed at previous low level around 2,222 for the moment. For today, the benchmark Oct important support level is located around 2,245 follow by 2,232 while resistance is pegged at 2,277.

Daily Pivot Point
R2= 2296
R1= 2277
S1= 2245
S2= 2232

 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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