Tuesday, May 6, 2014

FCPO: Sentiment Is Dampen By Weak Demand 6th May 2014

Tuesday, 6th May 2014. Time has swiftly passed and we are running into the month of May, a lackluster month for equity and most of the commodities in the financial market ? We'll just have to wait till the middle of the month to judge that. Other news to follow.

"- U.S. stocks closed higher on Monday, as investors shrugged off earlier worries over the slowing economy in China and deteriorating situation in Ukraine. Better-than-expected data on the U.S. services sector aided markets. The S&P 500 SPX +0.19% ended the day 3.51 points, or 0.2%, higher at 1,884.65, trading near record levels. Utilities and health-care sector stocks led the gains. The Dow Jones Industrial Average DJIA +0.11% turned a more-than 100-point-loss to a gain of 17.66 points, or 0.1% to 16,530.55. The Nasdaq CompositeCOMP +0.34% finished the day 14.16 points, or 0.3%, higher at 4,138.06."

"- Oil futures finished lower on Monday, with concerns over a slowdown in China putting pressure on prices after they briefly recaptured the $100 mark amid deadly clashes in Ukraine that threaten the flow of crude supplies from Russia. Crude oil for June delivery CLM4 -0.01%  declined by 28 cents, or 0.3%, to settle at $99.48 on the New York Mercantile Exchange."

"-Palm Oil Output in Indonesia Seen Hurt by Golden Agri on El Nino
By Fitri Wulandari  May 5, 2014 6:05 PM GMT+0800
 Palm oil production in Indonesia, the world’s largest grower, will probably be less than a forecast this year with the emergence of an El Nino set to cause more damage in 2015, according to the country’s largest producer. Output may be 5 percent to 10 percent less than the company’s 30 million-metric-ton estimate for this year, said Franky Widjaja, chief executive officer of Golden Agri-Resources Ltd. The country produced 26 million tons in 2013, according to the Jakarta-based Indonesian Palm Oil Association. Futures in Kuala Lumpur surged to an 18-month high in March as the most-severe drought in 17 years threatened supplies from Indonesia and Malaysia, which account for 86 percent of global output. Forecasters from the U.S. to Australia are strengthening predictions for the arrival of an El Nino in 2014, and Goldman Sachs Group Inc. last month listed palm oil among the crops that could be hurt. “El Nino will develop in the second or third quarter. The impact will be next year,” Widjaja told reporters in Jakarta today. The extent of the impact will depend on the severity of the weather pattern, he said. During the first-quarter dry spell futures on the Bursa Malaysia Derivatives rallied to 2,916 ringgit ($897) a metric ton in March, the highest price since September 2012. The benchmark traded at 2,665 ringgit by 5:09 p.m. in Kuala Lumpur today. The drought in January and February was the worst in parts of Sumatra and Peninsular Malaysia for that period since 1997, Donald Keeney, a meteorologist at MDA Weather Services in Gaithersburg, Maryland, said April 24."

El Nino
Indonesia sees a weak El Nino to start developing in August or September, Andi Eka Sakya, head of Meteorology, Climatology and Geophysics Agency, said April 29. The weather pattern won’t be as massive as 1997-1998 and will have limited impact to agricultural crops, he said. At that time Indonesian production dropped 7.1 percent and Malaysian output fell 5.5 percent, U.S. Department of Agriculture data show.
Drought has a delayed impact on the bunches of cherry-sized palm fruits which are harvested all year round. Output would start dropping about six months after the tropical plants are deprived of sufficient moisture, Joelianto, trading director in Jakarta at PT Sinar Mas Agro Resources & Technology, a unit of Golden Agri (GGR), said April 25. A potential El Nino may extend dry conditions in Southeast Asia, which would have “major repercussions on palm oil production in 2015 and 2016,” according to Oil World, a Hamburg-based industry researcher. Shares in Golden Agri, listed in Singapore, have advanced 13 percent to 61.5 Singapore cents this year. PT Astra Agro Lestari, Indonesia’s biggest listed plantation company by market value, has risen 18 percent to 29,675 rupiah in Jakarta."


FCPO- Welcome To The Month Of May, Month Of Slowness & Weakness


At least for FCPO and some grains market traded on CME, the start of second quarter have been sluggish price recovery and slow price movement. Nothing spectacular is expected throughout this quarter maybe as palm oil futures has been going into sleep mode for the moment. The benchmark month barely move over forty points at any given time compare to previous one month. Even though it is a tough week for longer term trader (believe me it does), we can still grind most of the profit by staying intraday. Overall, market is still weak on my count, with the July contract breached below 2,570 last Friday, medium term support level has been broken. Is the Bulls done rallying and we should abandon any thoughts going Long ? In market, there is no 100% right or wrong answer when it comes to making call, but you have to prepare a contingency plan or exit plan for any of your positions. Avoid over trading and if your exit plan calls for an action, stop hoping, execute the exit plan right away. Your own tailored system or plans work all together, that is the only edge you need to trade. For today, palm oil futures is expected to open lower due to overnight weakness in Soy oil that dropped to 41.10 level. Fortunately, Soy oil recovered about 0.17 cents to 41.32 cents per pound at the time of writing today. Pivot support for the benchmark July is located around 2,548 while resistance is pegged at 2,604.

Daily Pivot Point
R2= 2626
R1= 2604
S1= 2565
S2= 2548
 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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