Crude Not the Only Oil Rocketing
Soybean Oil – December Bean Oil jumped to new contract highs yesterday on the strength of export sales figures. Exports jumped to 26,400 metric tonnes, surpassing analyst estimates ranging between 5,000-15,000 MT, as foreign buyers attempted to capitalize on the weak U.S. Dollar. Bean Oil has been rising, mainly on the strengthening Soybean prices. The skyrocketing Crude Oil market could support prices further, with Bean Oil being the preferred choice of many biodiesel plants due to its ease of use in starting the reaction process. The daily chart looks bullish, with the market breaking out to new highs. However, things are looking a bit overextended at the moment, which could trigger profit-taking. Both the RSI and slow stochastics are registering overbought readings, coming in at 74 and 76 percent, respectively. Momentum is trending higher, which suggests continued strength. Support comes in at 40.00 and 38.55, while resistance can be found in the 42.00 area.
Euro – The Euro jumped to all-time highs against the greenback, with currency traders expecting the Fed to continue with its expansionist policies. Several banks have posted disappointing earnings, leading many to believe that no financial institution is immune to recent subprime woes and the housing slump. With economic indicators weakening, some economists have been jumping the gun to declare a recession, even though the data does suggest snail-paced growth. Like most foreign currencies, the Euro is beginning to look a bit overbought. Also, other than the Aussie and Yen, there has been bearish divergence between momentum and RSI in the major currencies, which suggests traders may be taking profits in the coming days. Both the RSI and slow stochastics are coming in at overbought levels, and the stochastics are close to crossing to the downside, which would be bearish near-term. Support comes in at 1.4050 and 1.3900, while resistance will likely come in around 1.4350 and 1.4500.
Copper – Copper had a meltdown yesterday, shedding 6 cents. The weak U.S. housing market and technical selling were the main drivers in the market. Worker turmoil has subsided in recent weeks, which may result in higher supplies of the base metal. Adding to oversupply worries, U.S. jobless claims came in higher than expected, suggesting that a turnaround in construction spending may be coming later rather than sooner. Copper has bounced back a bit this morning on a weaker U.S. Dollar and traders closing positions before the weekend. The December Copper chart confirmed a double top reversal pattern, which may send prices into the mid-3.30's. The market is beginning to look a bit oversold on the recent wave of profit-taking, with the RSI coming in at 26 percent and the slow stochastics at 25.71, which could lead to some consolidation or even a bounce. Support comes in at 3.46 and 3.40, while resistance can be found at 3.66 and 3.74.
Rob Kurzatkowski, Commodity Analyst
