13th Feb 2017: Soy Oil Traded 0.11 Cents Lower, On-Shore Ringgit Traded Slightly Weaker @ RM4.4495
Palm oil futures continue to dive yesterday, most probably on soy oil weakness. I believe market is taking some negative cue from the production spike up in some report. The fear of palm oil output returning to normal cycle in Indonesia and recent palm oil export drop about 3.1% also force price to head down below 3,050 level yesterday. I did not get any chance to enter any trade as there is no Long trade setup. Palm oil futures is likely heading downwards for more times to come due to production spike fear. The long term Support level is still located around 3,014 ~3,000 area, which is previous one and half week low. Soy oil is still going to head down even further judging from its 7 weeks downtrend channel. You will find that the daily chart on soy oil lower high and recent lower low is just too obvious to ignore. Meanwhile for palm oil chart, the Apr contract is relatively trading quite close to the Support area. Despite recent price action on the benchmark Apr, I still believe that this two days major price drop is just a temporary correction. It is unlikely that price will turn into a downtrend that soon just because some traders feel that stockpiles will continue to build up due to recent palm oil output spike in the Southern region in Malaysia. Maybe we will be able to see the Apr contract continue to drop to around 3,100 area if the soy oil price continue to drop further but weak Ringgit is likely providing some Support if the price gone down too steep. For today, palm oil futures is likely open slightly higher judging on yesterday oversold reading. Without any surprise, palm oil futures might even follow the same morning session pattern yesterday, where the price open higher and fell mostly on the afternoon session. Range for Apr contract is likely moving within 3,000 ~ 3,150, prone to have new weekly low this week.
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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