Thursday, March 13, 2014

FCPO: Some Demand Adjustment At The Peak 13th March 2014

Thursday, 13th March 2014. Palm oil futures settled lower on yesterday session, crawling down for some price retracement after rallying to 18 months high at 2,916. Other news to follow.


"-U.S. stocks finished little changed on Wednesday after erasing early losses that followed a selloff in Asian and European equities. Analysts attributed the morning selling to worries about China’s slowdown and Russia-Ukraine tensions, and they also emphasized a lack of new catalysts. The S&P 500 SPX +0.03%  ended up 0.57 point, or less than 0.1%, at 1,868.20, with utilities and tech faring best among the index’s 10 sectors. The benchmark, which had been down 0.7% intraday, snapped a two-day losing streak and stands just 0.5% off Friday’s record close.

The Dow Jones Industrial Average DJIA -0.07%  dipped 11.24 points, or 0.1%, to close at 16,340.01, slipping for the third day in a row. The Nasdaq Composite COMP +0.38%  gained 16.14 points, or 0.4%, to finish at 4,323.33, halting a four-session losing streak."
"-Asian markets fell on Wednesday, with Japan and Hong Kong leading the region lower, as concerns over China’s economy continued to weigh heavily. The state of the world’s second largest economy remained in focus as the effects of a much weaker-than-expected decline in Chinese exports that rocked markets at the beginning of the week continued to be felt. “Global stock markets are struggling to regain their upward momentum due to concern over the slowing situation in China,” said Matthew Sherwood, head of investment market research at Perpetual in Sydney. “China has gone from being one of the saviors of the world to one of its weakest links.Japan’s Nikkei lost 2.2% as the yen strengthened against the dollar. The greenback fell below the ¥103 level in Asian trading to ¥102.89, adding to a 0.3% fall overnight. However, it picked up slightly and was last trading at ¥103.02. Elsewhere in Asia, South Korea’s Kospi lost 1.2% and Australia’s S&P/ASX 200 lost 1.1%, and Singapore’s Straits Times Index fell by 0.7%.” 
"- Oil prices slumped in electronic trade on Wednesday, weighed by lingering concerns about a economic slowdown in China and a bigger-than-expected rise in U.S. inventories. April crude oilCLJ4 +0.13% lost $1.43, or 1.4%, to $98.60 a barrel, after settling at the lowest level in a month on Tuesday. "

FCPO- Demand Might Slow Down

Words out that India is cutting down palm oil export up to 30% which likely due to record price hike. While, China also reducing their cargoes on Soy products after Soy oil has rallied about 14%. Commodities prices main force were drive by supplies and demand, and when one of these element strayed off from equilibrium price would have to adjust itself back to balance. With the sentiment of major consumers cutting demand, palm oil prices would be fundamentally Bearish. Now, the bad news is we would not know how low the price would need to be adjusted, maybe it could be just 5%~8% retracement from 2,916 peak. On the technical side, it seems that price for May contract has breached below the first support trend line shown on the daily chart above. This signifies a sign of further retracement as the support trend line got blown off by yesterday retracement. When there is a impending retracement in an uptrend market, round number price level would serve as psychological support and in this case, the benchmark May immediate support level would be place around 2,800 level. Further downside is likely if the benchmark May went down below 2,800 level. Overall, long term technical perspective remain Bullish and we are likely looking at upside resume once the demand return to normal after the price has been adjusted.

Daily Pivot Point
R2=2888
R1=2854
S1=2797
S2=2774
 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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