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Crude Palm Oil – April Delivery (FCPO:MYX) RM 3,506

Commodity prices are soaring, with a number of industries facing a squeeze in supplies. Agricultural commodities especially have surged amid high demands from emerging economies and the expansion of the biofuels industry. Recent news that severe snowstorms have damaged China’s rapeseed crop are key to a number of agricultural products, and we suggest going long on palm oil. Mainly traded on the Malaysian Stock Exchange, rapeseed has been booming after finding a new use as a biofuel. The China rapeseed crop may be smaller than last year, but a clearer assessment will come later in the spring. Meanwhile, China has to find substitute, which is used to make animal feed and cooking oil. The price of soybeans, which is used as a substitute, has already shot up and palm oil is on an upward trend too, with further strong gains to be made.

ACTION: BUY Palm Oil • Target RM 3,855 • Stop Loss RM 3,290

TIME TARGET: 8 WEEKS