Expanding inventories, rising production and favorable situation in Thailand and India are driving rice prices down. According to the United States Department of Agriculture there will be an oversupply of 3,5 million metric tons in the 2011/13 season and inventories will rise to 104,9 million metric tons reaching the highest level since 2002. USDA and FAO claim that rice prices should continue declining reflecting this fundamental background.
The drop of prices can be also supported by exports levels. Taking into consideration the end of the Thailand’s stockpiling program and lift of a three-year ban on exports of non-basmati rice from India, the rise of global shipments can be another bearish signal for the next few months for the rice market. In such circumstances only extreme weather conditions constitute a threat for prices which are still relatively high level considering a long term perspective.
Rice (W1) – a judgment day seems to be close for rice which drew a large H&S formation with a head as high as 18,45 USD and a neckline around 13,50 USD; unless bulls defend it we are in for a steep decline, taking us at least towards 9,50 USD (‘10 low);
Aluminum, D1 – Aluminum is another make-or-break market with the price moving downwards within a wedge formation; such a steep wedge should help bulls trigger some upward correction, especially as we are testing a multi-month low of 1945 USD; the bulls better take those opportunities cause the alternative scenario is pretty dire; there is a monster H&S formation on the monthly that could send prices to as low as 1200 USD