Tuesday, June 3, 2014

FCPO: Bearish Across The Board 3rd June 2014

Tuesday, 3rd june 2014. Palm oil futures retrace to at least 8 months low to 2,386 yesterday amid weak data on export and potential increase in inventories. Other news to follow.

"- The U.S. stock market ended Monday generally higher, with the S&P 500 and Dow Jones Industrial Average closing at record levels. The main benchmarks moved lower in early trade, after the ISM reported erroneous data showing a downbeat reading in the manufacturing index. Stocks regained footing in the afternoon, once correct data on manufacturing showed factories grew at the fastest pace this year. Marginal gains on the S&P 500 helped the benchmark close at a record level for the 15th time while the Dow closed at a record for the sixth time this year. The S&P 500 SPX +0.07%  closed 1.40 points, or 0.1%, higher at 1,924.97. The Dow Jones Industrial Average DJIA +0.16%  added 26.46 points, or 0.2%, to 16,743.63. The Nasdaq Composite COMP -0.13%  ended the day down 5.42 points, or 0.1%, at 4,237.20."

"-Asian stocks ended Monday’s session broadly higher, with Japan regaining momentum after a record Wall Street close on Friday and upbeat Chinese manufacturing data over the weekend. Meanwhile, Chinese markets were closed for a holiday. Both the S&P 500 SPX +0.07% and the Dow Jones Industrial Average DJIA +0.16% closed at record levels on Friday , gaining 0.2% and 0.1% respectively. On Sunday, data from China’s National Bureau of Statistics showed that Chinese factory activity expanded faster than expected in May, rising to 50.8 from 50.4 in April.

Boosted by the U.S. gains and Chinese data, Japan’s Nikkei 225 JP:NIK +0.76% staged another rally on Monday, ending up 2.1%. The index has increased in 7 of the past 8 sessions, with Friday providing a small setback with a 0.3% loss. The broader Topix index JP:I0000 +0.74% also finished 1.6% higher. Australia’s S&P/ASX 200 AU:XJO -0.29% settled 0.5% higher, and South Korea’s Kospi index KR:SEU -0.54% closed up 0.4%."
"- Oil futures fell on Monday to mark their lowest close in nearly two weeks as traders gauged the outlook for energy demand following a spate of global economic data, including a correction to a U.S. manufacturing index reading. July crude CLN4 +0.01% dipped 24 cents, or 0.2%, to settle at $102.47 a barrel on the New York Mercantile Exchange. Prices, tracking the most-active contracts, haven’t closed at a level this low since May 20, FactSet data show. On Friday, crude oil settled lower and lost ground for the week, but still managed to climb 3% for the month."

FCPO- It Is Not Over Yet For The Bears

Palm oil futures outlook is red all the way, at least for this week due to weak fundamental and Bearish price outlook on Soy oil as well. The benchmark August went down to 2,386 yesterday, a level unseen since Oct 2013 but manage to recover up to 2,419 just before the closing bell. This recent low caused more and more stop loss order being taken up when it market continue to dropped and forcing most intraday Long holder to give up. There is no sign for the market to recover from this point, not even from technical perspective. Ohh, if you are looking at the yesterday hammer candle shown on daily chart, it is not a strong sign for the market to recover yet, market can continue to head south this week. Additional risk factor for palm oil market is the anticipated surge in soy bean production in the northern hemisphere, especially in the US, in the coming months. The US is forecast to harvest 99 million tonnes soya bean this year, up from 89 million tonnes last year. At the same time, demand outlook is weak because China has built huge stocks and Brazil is holding inventories beyond what is normal in the export season beginning March. On the technical side, market outlook is still Bearish judging on more lower lows and lower highs so far. Even though you can find oversold reading on most time frame, we are yet expecting any major recovery for this few sessions. The Bears are still outnumbered Bulls for the moment. For today, pivot support is located around 2,373 while resistance is pegged at 2,426.

Daily Pivot Point
R2= 2439
R1= 2426
S1= 2393
S2= 2373
 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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