CPO Trading Ideas For June 21, 2012

CPO trading range for the day is 548.53-575.13. The market is looking to take support at 555.8, and a break below could see a test of 548.5 and resistance is now likely to be seen at 569.1. A move above could see prices testing 575.1.

Crude palm oil yesterday traded with the positive node and settled 1.96% up at 563 as investors bet on higher demand for palm oil after hot and dry weather in the US threatened to curb the soy crop available for crushing into edible oil.

BMD CPO futures hit their highest in almost three weeks on Wednesday (MYR3,058), driven by higher demand and weather woes at US. Market players were also optimistic ahead of the US Federal Reserve's policy meeting later in the day, hoping for a new round of monetary stimulus that could boost global growth and commodity demand. However, it turned out to be a damp squib as the Fed kept its policy unchanged while extending Operation Twist.

Palm oil stocks could dip further if export demand remains strong for the rest of the month, potentially falling to 1.70 million tons at the end of June. In yesterday's trading session crude palm oil touched the low of 554.6 after opening at 554.6, and finally settled at 563.

Palm oil prices crossed above the 3,000-ringgit mark for the first time since June 11, signalling traders were less cautious after the Greece elections helped ease concerns over the eurozone debt crisis.

Base Metals Trade Negative, Nymex Crude Oil Falls 1.6%
European equities are trading on a negative note today on the back of unfavorable economic data from the region. Asian markets ended on a mixed note and US stocks futures are trading in the red. European Current Account  are  at a surplus of 4.6 billion euros in April from previous surplus of 10.3 billion euros a month ago. 

European Flash Manufacturing PMI declined by 0.3 points to 44.8-level in current month from previous 45.1-mark in May. European Flash Services PMI marginally increased to 46.8-mark in June  as compared to 46.7-level in last month. 

Spot gold prices declined around 0.4 percent today on the back of strength in the US Dollar Index (DX). The yellow metal touched an intraday low of $1,593/oz and hovered around $1,598/oz till 4:30pm IST today. On the domestic front,  prices declined by 0.5 percent today and were trading around Rs.30,120/10 gm today.

However, depreciation in the Indian rupee cushioned further fall in the prices. Taking cues from a fall in gold prices coupled with downside in base metals pack, spot silver prices declined around 0.6 percent today. Additionally, strength in the DX also exerted downside pressure on silver prices. 

The white metal touched an intra-day low of $27.70/oz and was trading around $27.91/oz today. On the MCX, the silver July contract declined around 1 percent and hovered around Rs.54,003/kg after touching an intra-day low of Rs.53,770/kg till 4:30pm IST today.

Base metals complex are trading on a negative note owing to rise in the LME inventories and decline in China Manufacturing index. Additionally, lingering concerns of the eurozone debt crisis coupled with stronger DX also added pressure on base metal prices. LME copper declined by more than 1 percent today on the back of rise in the LME copper inventories by  0.7 percent and stood at 252,150 tonnes. The red metal touched an intra-day low  of $7,388/tonne and hovered around $7,417/tonne. 

Nymex crude oil prices declined  around 1.6 percent today on the back of unexpected rise in US crude oil inventories coupled with escalating European debt crisis. Additionally, a stronger DX also acted as a negative factor for the commodity. Crude oil prices slipped below the $80/bbl and hovered around $80.50/bbl till 4:30pm IST. On the domestic bourses, prices declined around 1.4 percent and was trading around Rs.4,580/bbl today.

In the evening session we expect precious metals, base metals and crude oil prices to trade on a negative note on the back of rise in risk aversion in the global markets coupled with strength in the DX.