Monday, August 12, 2013

Palm Oil Likely Open Gap Down Due To Soy Oil Weakness 112th Aug 2013

Monday, 12th Aug 2013. The benchmark Oct is likely getting a bad start this week as it will open gap down due to continues weakness on Soy oil. Other news to follow.

"- U.S. stock indexes declined Friday, with the Dow Jones Industrial Average halting its longest weekly winning streak since August of last year. The Dow Jones Industrial AverageDJIA -0.47% halted a six-week winning stretch, its longest since one that ended Aug. 17, 2012. It declined as many as 152 points Friday, but ended with a loss of 72.81 points, or 0.5%, at 15,425.51, leaving it down 1.5% on the week. After rising to a session high of 1,699.42, the S&P 500 index SPX -0.36%  fell 6.06 points, or 0.4%, to 1,691.42, off 1.1% for the week, with telecommunications leading sector declines and materials faring the best."


"- Mainland Chinese and Hong Kong stocks posted modest gains early Friday after data showing a steady increase in monthly consumer prices in China. The Shanghai Composite CN:SHCOMP +0.36% added 0.4% to 2,052.55, while in Hong Kong, the Hang Seng Index HK:HSI +0.70% added 0.3% to 21,727.65 and the Hang Seng China Enterprises Index gained 0.8% to 9,561.10."
"-U.S. crude-oil futures extended a rebound Friday in the wake of a pickup in Chinese industrial production and a rise in the International Energy Agency’s global demand forecast, allowing crude futures to trim a weekly loss as they snapped a five-day losing streak. Crude oil for September delivery CLU3 +2.54% rose $2.57, or 2.5%, to close at $105.97 a barrel in Nymex floor trade. That left the contract with a 0.9% weekly fall."
"-August Soybeans finished down 15 at 1340 3/4, 25 1/2 off the high and 3/4 up from the low. November Soybeans closed down 2 at 1182 1/4. This was 2 1/4 up from the low and 12 1/4 off the high. August Soymeal closed down 2 at 420.5. This was 8.5 up from the low and 8.5 off the high. August Soybean Oil finished down 0.25 at 41.4, 0.41 off the high and equal to the low. The soybean market was trading higher this morning but by midday old vs. new crop spreads collapsed and this took the market lower. Strong old crop cash markets and talk of an oversold technical condition were seen as supportive factors but this failed to offer upside momentum ahead of the weekend. Traders noted light volume today and positioning ahead of the weekend and next Monday's USDA report where the market expects to see a decline in 2013/14 production and ending stocks. This runs counter to favorable condition ratings of the crop to date and the fact that August weather is the determining factor when it comes to yield potential. So far, weather has been quite conducive to favorable yields but many crops in the northwest portion of the Corn Belt remain well behind in growth. China saw a nice slate of economic data this week which has added to the long term optimism over their economic growth. Copper is up over 1% today which generally trades off the sentiment in China given that they are the world largest importer of the industrial metal. The US Dollar was slightly higher midday but was down sharply for the week which added a boost to many components of the commodity complex that relate to China."

FCPO- The Worst Is Yet To Come.



On fundamental side, palm oil futures is likely weaken further due to high output season due to favorable weather condition coming this fourth, making this current down trend even stronger. If you think gaping down is the worse thing to expect on the opening bell, it is just a beginning. Market opening gap down likely mean strong commitment to either pushing the market up if it gap up or push it down even swifter if it gap down. Now, the next question most traders would inquire the next would be whether the market is still going to head inline with the direction of the gap. For this case, the question would be whether the market still have the force to go down further after it gap down. To answer this question, price have to move first after the market gap down. We will likely see some technical rebound if there is a Bullish candle right after the gap down but if the price kept on heading down, there might be less chances for the market to recover. Selling pressure will always overcome Buyers in the end judging from how bad Soy oil has dip since last Thursday. The Aug Soy oil contract has went down about 1.8% since last Thursday when Bursa Derivatives is shut for Hari Raya holiday. Technically, the benchmark Oct rally will come to an end soon when it does open gap down today. Lower high and lower low Bearish candle formation are becoming visible on hourly chart, making current down trend even more potent. For today, more weakness is about to occur if previous low around 2,139 level and there is no telling how low palm oil futures can go if this level is taken out.

Daily Pivot Point
R2=2245
R1=2227
S1=2196
S2=2183

 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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