Drought may reduce stockpiles of major producers
The Philippine International Rice Research Institute (IRRI) has released its forecast of slumping rice stocks in major exporting countries. This may happen in the second half of the current year due to the drought. Philippines are high-volume rice importer and their economy may suffer from the probable rice deficit. Will the rice become dearer?
The gross stockpiles of Thai, Vietnam, Pakistan and US may fall to the lowest since 2008 to 19mln tonnes, according to International Rice Research Institute (IRRI). During the recent peak of stockpiles in 2013 they reached 41mln tonnes. The rice was worth 3 times more in 2008 than now. Major world rice producers including India imposed restrictions on its export because of poor crops. Philippines usually purchase 1.5-1.7mln tonnes of rice in the global market but now the state agency National Food Authority is willing to acquire the additional 0.5mln tonnes of rice to replenish supplies. Late in March the Agriculture Ministry of Vietnam reported 160 thousand hectares, or 10% of the country’s rice seedlings suffered from droughts.
On the daily chart Rice: D1 is in downtrend and is approaching the resistance. The MACD and Parabolic indicators started giving bullish signals. RSI is neutral and below 50, no divergence. The Bollinger bands® have contracted which means lower volatility. The bullish momentum may develop in case the rice surpasses the last fractal high, the Parabolic signal and the resistance of the downtrend at 10.34. This level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal, Bollinger band and the last fractal low at 9.53. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. 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 at 10.34 without reaching the order at 9.53, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Buy Buy stop above 10.34 Stop loss below 9.53