Thursday, July 3, 2014

FCPO: Holding Up,But Not For Long 3rd July 2014

Thursday, 3rd July 2014. Pal moil futures recover slightly yesterday as Soy oil futures hold steady around 39 cents per pound but all that might change to Bearish soon. Other news to follow.

"- U.S. stocks mostly inched higher Wednesday, building slightly on the prior day’s sizeable advance, as a better-than-expected report on private-sector hiring underscored the economy’s recent strength. The Dow industrials DJIA +0.12%  rose 20.17 points, or 0.1%, to end at 16,976.24, putting it once again within striking distance of 17,000, while the S&P 500 SPX +0.07%  nudged up 1.30 points, or 0.1%, to finish at 1,974.62. Each index scored a record close for the second straight day.

The Nasdaq COMP -0.02%  bucked Wednesday’s positive trend, falling 0.92 point, or less than 0.1%, to close at 4,457.73. The tech-heavy index snapped a three-session winning streak."
"-Gold futures on Wednesday found some support, as traders stretched the metal’s price advance to a fourth session in a row, reluctant to sell the precious metal ahead of Thursday’s much-anticipated monthly U.S. jobs report and a long holiday weekend. Gold scored gains even after a stronger-than-expected estimate of U.S. private-sector payrolls fed expectations for a strong employment report. August gold futures GCQ4 -0.35%  tacked on $4.30, or 0.3%, to settle at $1,330.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices, which tallied a gain of nearly $10 an ounce over the past three trading sessions, settled at their highest since March 21, based on the most-active contracts."

"-China Palm Oil Imports Seen Falling on Slower Economy
By Bloomberg News  Jun 23, 2014 4:13 PM GMT+0800 
Palm oil purchases by China, the second-biggest buyer, may decline by about 11 percent this year as economic expansion slows and banks tighten lending to commodity importers, a survey shows.
Imports may fall to 5.9 million metric tons in the 12 months to Sept. 30 from a year earlier, according to the median of five researchers and traders surveyed by Bloomberg News. That’s steeper than the 4.4 percent drop to 6.3 million tons estimated by the U.S. Department of Agriculture on June 11. China’s first-quarter gross domestic product growth slowed to 7.4 percent, the weakest pace since 2012. Declining Chinese purchases may further weaken the price of the commodity traded in Kuala Lumpur, which has slipped 8.2 percent this year as demand for the edible oil fell. It has been a favored vehicle for Chinese traders who use commodities as collateral to obtain credit and this may begin to change amid a probe at Qingdao port that will make banks more stringent about lending, Liu said. “Palm oil is used commercially rather than in homes, making it more sensitive to the slower economy,” said Liu Xianwu, general manager at researcher China Cereals & Oils Business Net. “With less commodity-finance lending and abundant soybeans, there’s no reason for imports to increase.” Crude palm oil for delivery in September rose 1.4 percent to 2,477 ringgit ($770) a ton on Bursa Malaysia Derivatives at 4:03 p.m. in Beijing. Refined palm oil on the Dalian Commodity Exchange rose 1.6 percent to 6,034 yuan ($969) per ton, with the most-active contract losing 0.1 percent this year.
Quality Control
China’s palm oil imports rose to a record 6.6 million tons last marketing year partly because traders rushed to get shipments in before the introduction of stricter quality requirements on Jan. 1, Liu said. Rising imports of soybeans also cut the market share of palm oil, according to Liu. On average, 19 percent of the yield from crushed soy beans is oil, said Liu. Soybean shipments into China increased 31 percent in October to May from a year ago, customs data show. That added about 2 million tons of soybean oil into supplies of cooking oil, according to calculations by Bloomberg News."


FCPO: We Are Yet Out Of The Woods 

The probably reason for the palm oil futures to tumble was due to dry weather condition, and perhaps its rival oil prices that move so far. But for the remaining of this first week of July, palm oil futures is susceptible for further price drop. Volume was not recorded higher for yesterday recovery and this would likely mean most of the Short holders are still in the market, probably waiting for adding up their Short position when the price going lower. On the external side, demand is not something we can count on anymore with merely few 5% reported higher on Jun vs May 2014, supplies will be sitting on record high again. Not only that, more reason behind palm oil futures price cool down would include price weakness from Soy oil due to steady production increament on South America, and weak demand for palm oil itself even Ramadhan festive season is just weeks away. However, palm oil futures would not tumble swiftly as dry weather condition would likely curb price from falling too fast. Technically, major Bearish signal is likely appear if the benchmark Sept breach below 2,400 today and form another lower low if it breach lower than 2,385, previous Tuesday low. All these support level are the sign that most Short holder would look whether to hold their position or to exit part of their positions while liquidating their Short positions if the Sept contract manage to breach above 2,436~2,439 level. For today, pivot support for Sept contract is located around 2,408 while resistance is pegged at 2,439.

Daily Pivot Point
R2= 2453
R1= 2439
S1= 2408
S2= 2391
 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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