Golden Agri

Golden Agri: Counter has broken out of its 200 MA and testing its resistance at $0.59 today. A close above may portend towards its next resistance level at $0.61, while support is at $0.565. This is in line with CPO's price breakout of the 200 MA in mid-October, after its 10% rebound in the past month due to heavy rain affecting US soybeans. Fundamentally, as biodiesel refining gets underway with a push from government policies, subsidies and mandates. Policies at this point are still unclear, but certainly a positive sign since it is equivalent to 3m tons of additional CPO demand in 2014 and will therefore take up the entire (even exceed) 1.5-2m tons p.a. increase in CPO supply expected for this and the following year in Indonesia.