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    Technical Analysis #C-RICE : 2015-11-10

    Asia fills up rice inventories

    Thailand has sold to Indonesia 500 thousand tonnes of new rice crop for 8bn bahts. The talks around this intergovernmental deal pushed the grain prices up but when the deal was cut the prices went down. Will the rice continue growing?

    Judging by the details of the deal between Thailand and Indonesia, the approximate contract price for rice was $445 which is 4.3% above the price of $426.6 a tonne for 300 thousand tonnes of the Thai rice sold to Philippines in September. Meanwhile, the current rice quotes on the CME are below those of September. Thailand is negotiating selling 1mln tonnes of rice to China with delivery early next year. In Philippines the rice crop has fallen 3% hit by typhoon Lando. Now the officials are going to import extra 1.3mln tonnes of rice next year. According to the UN Food and Agriculture Organization (UN FAO), this year the global rice production will be 0.6% less than in 2014 totaling 491.4mln tonnes. In fact, the contraction may prove to be much more severe in case of El Nino effect.

     

    Rice

    On the daily chart the Rice: D1 has switched from the downtrend to the neutral and is above its 200-day moving average line. Parabolic indicator and MACD have formed buy signals. RSI is neutral and below 50, no divergence. The Bollinger bands have widened which may mean high volatility. The bullish momentum may develop in case the rice surpasses the last fractal high and closes the price gap at 12.74. This level may serve the point of entry. The initial risk limit may be placed below the last fractal low at 11.51. Having opened the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signal. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level of 1.133 without reaching the order of 1.101, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

     

    Position Buy
    Buy stop above 12,74
    Stop loss below 11,51

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