FCPO : Better Export Numbers Expected Today, Prices Sustainable

Fundamental

Palm oil settled slightly higher as estimates of slowed domestic production and higher demand lead to positive price outlook.

Positive undertone in the competing soyoil in Asian trading hours coupled with the significant rise in Indonesian palm oil exports in May, helped strengthened sentiment which continued to hold the market firm. In addition, weaker Malaysian ringgit was seen as another supportive influence.

Meanwhile, investors will look closely on June 1-20 day export estimates out later today. NYMEX crude retreated alongside the external markets as US Federal Reserve signals on reducing bond purchases later this year sparked selling across equity and commodity markets. Additional pressure stemmed from an unexpected build up in US crude inventories according to EIA weekly report, contrasted with earlier API report that showed a decline. US soyoil soared on lower forecast of soybean plantings and yield in both US and Argentina.

Expect palm oil futures to trade higher in anticipation of an encouraging export figures to be released today.


Technicals

Futures gained 4 points to settle at 2472. Prices opened lower tracking overnight weakness in CBOT soyoil and Dalian palm oil. Futures were then traded with a downward bias throughout the morning session within narrow range as investors opted to be cautious.

 

However, futures recovered on speculative buying which lifted prices to revisit 3-month high and towards positive territories into the close. Formation of a larger white candle indicates a stronger buying force in the current uptrend. Expect positive fundamental outlook and technical strength to keep the buying momentum.

 

Referring to the MACD histogram, it is building up in the positive zone. As always, intraday support and resistance levels will be eyed.

Technical indicators:

MACD= Positive, ADX= Positive

Intraday technical support & resistance for 20th June 2013

1st support 2,450; 2nd support 2,435-20

1st resistance 2,480; 2nd resistance 2,500

As such support and resistance can be pegged at 2450 and 2500 respectively.

Strategy

Trade may long with a stop on or below 2450.