Monday, August 24, 2015

24 August 2015: FCPO Its Heading Down Lower

Monday, 24 August 2015. Every morning I wake up with some hope in my mind that the downfall of Malaysia stock index and commodities futures are just another nightmare. It is not going to end anytime soon, and it is a nightmare that would not go away.

FCPO- The Start Of 16 Years Plunge, Slowly. 

Yes, you read it correctly, palm oil futures is trading at the low of 1,958 last week and that would be 16 years low. The good all days of Ringgit supporting the commodities market when it weaken did not happen anymore. Where does the bargain hunters went all these days ? 16 years low and no sign of palm oil futures price recovery after seven weeks already. Palm oil is just heading lower and lower since 9th June 2015, it is heading to South ever since then. Now the interesting part is here to come, there was no support or whatsoever when the benchmark Nov hit below 2,000 level. There should be in the name of the main stream technical analysis studies written by John J' Murphy or any popular technical analysis book, but unfortunately there is no such thing as strong or sure support at that level. Maybe I am looking at the wrong pointers, maybe it is not technical analysis that is pushing the price down, perhaps it is something else. Looking at different perspective, Indonesia palm oil production has surpassed Malaysia for years and there is no surprise more and more major palm oil consumption country will turn to Indonesia first for their supplies. Putting quality of oil aside, Indonesia palm oil is cheaper, easily available and abundant enough to supply for the whole world. If some of you still wondering why Malaysia palm oil demand remain low and stockpiles is on uptrend, most of the major consumption country need to finish their stocks from Indonesia before Buying from us again. That might explain why Malaysia palm oil stockpiles kept on gaining momentum month after months this year. Fortunately, even with the fall of Ringgit value approaching 1997/98 financial crisis, Malaysia might manage to survive from this pre-crisis as it has adequate foreign currency reserve, minus the casualty of unemployment and social unrest. With all things said, the worst economical effect would be witnessing the property market come tumble down, I hope that day would not materialize.

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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