Daily Report 250215 2015-02-25
LME copper fluctuated at highs during the spring vacation, and burst in the last day—closed at $5,783, $38 higher than the data before the vacation. The spotlight focused on the Greece problem during the whole vacation. Greece pledged to reform the tax policy and to integrate pension policy, and defined to carry on selling state-owned assets. Ultimately, euro zone ministers approved to extend the succor for 4 months, ended worries about Greece exit euro zone, significantly support the market. Another focal point was U.S.’s interest rate raise. There are significant divergences about when the U.S. would raise its interest. Fed Chairman Yellen said to ansider about interest raise in every conference, what is to say, there should be months for it truly being launched.
Chinese economic data went on slowly for months, e.g. PMI has been lower than 50 for 2 weeks. The market expectation about the government to lift the economy is warming up.
View the fundamentals, LME inventory had some decreases and increases, basically leveled off around 295,000 tons. The inventory dropped 4,175 tons intraday on Tuesday—the biggest drop since the year beginning. The inventory cut mainly happened at Antwerp (in Europe), and some in Americas and Asia. LME premium is fluctuating around $10.
Overall, the rebound trends of copper prices are remained. Technically, copper prices will reverse towards $6,000 provided that LME copper break above 10-week moving average of $5,833.
Operation strategy: keep holding long positions.
Iron Ore
European Central Bank (ECB) permitted the proposal of extending the succor towards Greece for 4 months on Tuesday, but showed worries about the lack of details of the reformation list.
On the domestic front, National Development and Reform Commission (NDRC) is going to promote a series of major traffic infrastructure, primarily to enhance the railway in Midwest areas, intercity railways and dead end highways. The government would like to fine-tune the economic growth target in order to quicken the transition and restructuring. On the spot hand, iron powder 66 percent in wet basis was 490-500 yuan/ton out of tax in Qian’an on 17th Feb., Tonghua Iron 66 percent in dry basis was 545-555 yuan/ton with tax. On the import front, main prices of Qingdao Port 61.5 percent pb powder were 460-465 yuan/ton.
Operation strategy: the market is projected to be stable. We suggest investors to wait and see in the first trading day, pay attention to resistances at integers.
There were five trading days in overseas markets while Chinese markets were having the vacation. U.S. soybean 3-month rose 20.6 cents or 2.07 percent, U.S. soybean 5-month 23.1 cents or 2.32 percent; U.S. soymeal 3-month increased $22.2 or 6.63 percent; U.S. soybean oil dipped 1.03 cents or 3.17 percent. The main bullish newsflow was the delay of U.S. inland transport and Brazil shipping strike. Other newsflow was relatively thin. The Outlook Forum estimated the soybean sown area to be 83,500,000 acres in 2015 (200,000 acres less than last year); the weekly soybean export data was located at the upper edge of the expectation—505,000 tons this week. Weathers in South America are bullish recently, no big hazard in the short-term. U.S. soybean has broken above $10 affected by recent transportation problem, plus the prediction of Outlook Forum was lower than expected, thus, short-term prices are likely to stable at $10, pay attention to shippings in Brazil.
Domestic soybeans have been promoted by overseas markets, would open high and go higher after the vacation, and are likely to follow overseas markets and to maintain the strong trend. Soymeal fluctuation platform would keep its legs at 2,800 yuan/ton.
Operation strategy: short positions established before the vacation are better off to pull off, and in the short-term, short at the rally.
Influenced by significant temporary purchasing and variations of the quality before the vacation, bullish sentiments surged gradually in customs market, thus merchants started to stock up and corn prices edged up. Peasant households would resume selling after 15th lunar January. The Spring Festival of this year is relatively late, that is to say, peasant households have demand for preparing farming before April, and there is going to be a small selling rally in March, market supply then would surge.
However, temporary purchasing would be a major impact after the vacation. On the other hand, the purchasing of grain consuming enterprises and merchants would promote the behavior of corn after the vacation.
                                                                          Dong LV (Investment Certificate NO. TZ008452)