FCPO: Went Down On USDA Estimation 27th March 2014

Thursday, 27th March 2014. The benchmark June traded lower amid recent estimation of USDA that claim palm oil production seen climbing. Other news to follow.

"-The U.S. stock market finished lower Wednesday after mid-afternoon selling intensified when President Barack Obama, in a speech in Brussels, called for further economic sanctions against Russia over its annexation of Crimea. Stocks rose in the morning on the back of a strong headline number for durable-goods orders, as well as hopes for additional European and Chinese stimulus measures. However, gains soon evaporated. The S&P 500 SPX -0.70% ended the day 13.06 points, or 0.7%, lower at 1,852.56. The Nasdaq CompositeCOMP -1.43% finished the day 60.69 points, or 1.4%, lower at 4,173.58. The tech-heavy index turned negative for the year and is now underperforming the benchmark S&P 500. The Dow Jones Industrial AverageDJIA -0.60% dropped 98.89 points, or 0.6%, to 16,268.99." 

"-Stocks rallied across Asia on Wednesday, tracking gains in U.S. shares after consumer confidence in the world’s largest economy rose to an over six-year high. However, traders say the gains could be fleeting as the focus turns to local factors. The Australian S&P/ASX 200 increased 0.8% to 5,383.70, tracking the S&P 500, which rose 0.4% to 1,865.62 after the release of the Conference Board’s consumer confidence index for March. The reading of 82.3 was the highest since January 2008. Japan’s Nikkei 225 opened 0.9% higher before paring gains. It was last trading 0.1% higher at 14,450.65 as the dollar bought ¥102.33. Traders say sentiment is fragile ahead of the end of the quarter and a hike in consumption tax due next week. Hong Kong stocks opened higher tracking the gains across Asia, after a selloff yesterday on fears of mounting problems in corporate credit markets. The Hang Seng Index opened 1% higher at 21,952.26."

"-Oil futures closed above the $100 level for the first time in roughly two weeks as gasoline prices scored their first gain in three sessions. A U.S. government report revealed a weekly drop in gasoline stockpiles that was nearly three times more than the market expected and showed that demand for the fuel rose over the last four weeks. The news offset pressure from a hefty jump in crude supplies as falling supplies and rising demand for gasoline indicate the likelihood of higher crude consumption to produce more of the fuel. On the New York Mercantile Exchange, May crude CLK4 -0.09%  rose $1.07, or 1.1%, to settle at $100.26 a barrel. That was the first close above $100 and highest settlement for active futures contract prices in roughly two weeks. Prices were trading around $100.07 immediately before the supply data were released."


FCPO- Production Is The Main Headlines 

You heard it right, climbing production would be curb price from recovering substantially for now. Increasing production will likely raise inventory level eventually and this condition is not conducive for the palm oil futures price to recover. We do not need to wait until next Aprl 10th to take advantage of this estimation, what we can do now was always re-act to it. According to USDA foreign Agricultural Service websites, palm oil output seen at 20.35 million metric tonne,  compares with 19.2m a yr earlier small increase in yield and planted area to boost production. This news somehow spook market sentiment and force it to close lower to 2,690 level yesterday, breaching below 2,700 level for the second time. The Bulls have attempt numbers of time to push up the price but most rallies always end up with lower closing value. Judging from five minutes to hourly time frame chart, short to medium term basis will be negative. Therefore, most price recovery attempt will create safer level to go Short instead of Long. Zooming in to lower time frame, i.e. 15 minutes time frame, much lower high and lower low candle formation have formed for the past two sessions. These signifies Sellers are mostly in control as there are significant attempt of fail rallies. For today, the benchmark June immediate support is located around 2,680 level. Anything that fall below this level is a gold pit for Short traders. Short setup is more suitable for the current market condition as there is no sign for the price to recover yet.

Daily Pivot Point
R2= 2747
R1= 2718
S1= 2674
S2= 2659
 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.