Daily Outlook

Soybean meal July futures rose 4.86% overnight to new yearly high at 407.80USD, posting 21.8% May gain. Production issues in key soybean producing countries, Argentina and Brazil, drove the price higher in the past months. Unfavourable rain forecast in the U.S. plains grain belt added to the supply concern overnight. Soybean meal is facing a perfect storm where end users are scrambling for near term delivery in short supply market, with speculative players looking to profit from the trend. There are also rumours of forced short covering of hedges by South American producers unable to meet CBOT margin call.

European stocks led global equities higher for second day in a row. Risk events abating  and relatively settled economic data drove flows into yield assets such as equities. Greece , Euro zone miniters and IMF succesfully concluded debt deal talks. IMF’s agreement is seen as very positive but requires IMF’s board approval. The refocus on monetary policy divergence between ECB and US Fed may have swift higher allocation of assets to European stocks, potentially resulting in outperform of European stocks over US stocks.

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Trade AUD/USD Intraday: bullish bias above 0.7170. Pivot: 0.7170 Our preference: long positions above 0.7170 with targets @ 0.7225 & 0.7255 in extension. Alternative scenario: below 0.7170 look for further downside with 0.7140 & 0.7105 as targets. Comment: a support base at 0.7170 has formed and has allowed for a temporary stabilisation. Supports and resistances: 0.7275 0.7255 0.7225 0.7192 Last 0.7170 0.7140 0.7105

Ticker : AUD

Trade Soybean Meal‏ (Jul 16 – CME) ST: the RSI is overbought Our pivot point is at 373.0. Our preference:the upside prevails as long as 373 is support. Alternative scenario: the downside breakout of 373 would call for 350.9 and 337.8. Comment: the RSI is above 70. It could mean either that the price is in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case). The MACD is positive and above its signal line. The configuration is positive. The price is trading above both its 20 and 50 day MA (respectively at 360.7 and 316.1). Soybean Meal (Jul 16 – CME) is currently trading near its 52 week high reached at 398.3 on 23/05/16. Supports and resistances: 460.5 ** 447.3 * 434.0 ** 420.7 393.3 last 381.6 373.0 ** 350.9 * 337.8 **

Trade Euro Stoxx 50‏ (Eurex)‏ (M6) Intraday: the upside prevails. Pivot: 2997.00 Our preference: long positions above 2997.00 with targets @ 3057.00 & 3070.00 in extension. Alternative scenario: below 2997.00 look for further downside with 2965.00 & 2945.00 as targets. Comment: investors have to remain cautious since these levels may trigger profit taking. Supports and resistances: 3095.00 ** 3070.00 ** 3057.00 ** 3047.00 Last 2997.00 ** 2965.00 ** 2945.00 **