Daily Report 130115 2015-01-13
Macro Economy

The sale price of domestic oil products lowered since today, precisely, gasoline and diesel prices reduced by RMB 180 and RMB 230, respectively. Moreover, oil product consumption tax was raised, partially be allocated into anti-air pollution special fund to support Beijing, Tianjin and surrounding areas for smog prevention. Import and export year-on-year data and trade surplus data of December are set for release at 10.00 a.m., are expected to post an increase of 6% for export, and a decrease of 6.2% for import, focus on the released data.


Domestic 1506 dominant gold futures contract extended the rebound trend in the night session, moving averages bullishly arranged.

Operation advices: long positions established on an intraday breakthrough at RMB 247 resistance can be held, stop loss at RMB 246 and stop win at RMB 249 and RMB 251. Intraday correction risks might occur, concern the performance at RMB 248. Greek election is approaching, Syriza—the head of the left party is still leading the election, newest poll revealed. Greece would have to facing the risk of exiting E.U., which drew risk-aversion sentiment of funds, and U.S. debt yields slid further while gold prices surged.

For funds perspective, positions of gold ETF remained the same for 3 days after 2.99 tons increase on last Saturday, funds modestly bull the gold price in a short-term. However, improvement of U.S. employment data would pressure gold price in midterm. The U.S. Labor Market Conditions Indicators (LMCI) of December is 6.1, and the previous value was 5.5 corrected from 2.9. Synthetically, the market intense sentiment would support the gold price before the result of Greece election on 25th this month, but U.S. interest raise in midterm forces the price to extend towards the bottom.


Domestic 1506 dominant silver futures contract edged up in the night session, but performed weaker than gold price.

Operation advices: concern the effectiveness of the intraday support at 5-day moving average, if an intraday breakthrough over RMB 3,600 can be set, can lightly short long positions, and stop loss at RMB 3,570.

Overall, the silver price move along with the gold price, but performed as weak metal compared with gold. The silver price, yet, pressured at RMB 3,700, hard to change weakness in midterm. Funds show that positions of silver ETF remained sell-at-rally since December 2014, indicating funds’ bearish view for the silver price though it bounced back. Funds positions rose then plunged last week, ended up with a total decrease of 14.89 tons.

Stock Index

The stock index shocked and closed down yesterday. Since 22 new shares subscribed this week, reverse repo rate surged apparently, pressures of funds are obvious. Adding that heavyweights overturned previous growths and plunged significantly yesterday; dragged indexes. Yet from a longer-term view, the expectation of risk-free rate decline remains unchanged, hoping that there are some supports under the index, but the rebound range seems limited. Short-term index volatility is inevitable; suppose a lower gravity comparing to last week.


LME copper dipped again on Monday, set an intraday breakthrough below $6,000, still met some supports in this status, and closed down by $73 at %6,032. Goldman Sachs warned oil prices to fall. United Arab Emirates insists the plan of expanding the output to 3,500,000 tons till 2017, led to plunge by 5% which drove copper prices drop. Furthermore, China’s PPI and CPI indicated a lack of domestic demand, also pressured the copper market. The M2 data, new RMB loans and import and export data would be released recently. European Central Bank (ECB) is discussing the scope of adapting QE, concern the speech of sovereign bond purchasing in the central bank conference of ECB on 22nd this month.

In relation to fundamentals, LME spot premium ascended by $8 at &84, with a high volume of stock for 187,400 tons. Precisely, recent increase of copper inventory is mainly related to Asia and Europe, while warehouses in New Orleans U.S. presents continuous drop, indicating structural characteristics of current global copper demand. Anyhow, inventory increase has suggested copper market pressures from surplus supply.

Domestic discount expanded by RMB 20 at RMB 200-100. Trading volume is during the light season. Continuous high processing prices activated smelt manufacturing, while fundamental stresses remained. In relation to techniques, copper prices acquires certain supports at $6,000 in short-term, might struggle at the same status in short-term, resistance is set at 5-day moving average of $6,130. Domestic 3-month copper will test the effectiveness at $43,560 resistance; critical resistance point is lying at the gap of $43,800.


Overnight U.S. soybean dramatically plunged influenced by bearish impact of USDA demand and supply report of January. The report revealed that yearly U.S. soybean yield of 2010/15 is 47.8 bushel per acre (expected 47.6; last month: 47.5); overall soybean output is 39.69 trillion bushel (expected: 39.56; last month: 39.58); yearly ending U.S. soybean inventory: 4.1 trillion bushel (expected: 3.93; last month: 4.10); U.S. soybean export last week is 100,000 bushel to 17.7 trillion bushel; U.S. soybean harvested area decreased 300,000 acres to 83,100,000 acres; yearly Brazil soybean output of 2014/15 increased 1,500,000 tons to 95,500,000 tons; Argentina remained at 55,000,000 tons. Global yearly soybean storage of 2014/15 is 80,780,000 tons (expected 90,200,000, last month 89,900,000); Chinese yearly soybean import of 2014/15 remained 74,000,000 tons. This report influenced the increase of supply more than demand. U.S. soybean output and inventory, global inventory and South America output are higher than expected. Short-term U.S. soybean will encounter the test of the support at $1,000.

Impacted by overseas market, DCE soybean returned decline, pay attention to the ultimate delivery volume of 1501 soybean No.1 contract. Domestic soybean spot is stable but weak-oriented, the rebound of later 1505 and 1509 contracts are being pressured by later delivery selling. Soybean meal futures fell to RMB 2,800 in the night session, spot will keep falling with the market, and import soybean arrivals are significant in January. There are plenty of short-term market bearish elements, thus the weakness will keep going. Operation advice: hold short position of DCE soybean meal.
                                                                                   Dong LV (Investment Certificate NO. TZ008452)