Gold remains under pressure, crude oil falls
European equities came under pressure and retreated from a fivemonth high as talks between Greek officials and private creditors still continue with no clear solution in the immediate future.
Concerns have re-emerged that Greece may not be able to pay their debt and this factor led to downside pressure on the Euro, which slipped around 0.4 percent till 4.30pm IST.
The US Dollar Index on the on the other hand, recovered from its intra-day low of 80.18 and bounced back around 0.2 percent to 80.53 currently.
Gold prices continued to remain under pressure today and Spot Gold prices declined 0.6 percent to $1646/oz till 4.30pm IST. Prices on the MCX fell 0.3 percent but sharp decline was cushioned on account of Rupee weakness. The yellow metal came under pressure due to dollar strength in the international markets and as sentiment remains uncertain especially ahead of the weekend.
Spot Silver prices also succumbed to the bears but continue to trade above the $30/oz mark. The white metal took cues from the fall in gold and base metal prices. Dollar strength is also acting as a negative factor as it makes dollar-denominated commodities look unattractive for holders of other currencies.
Despite hopes of an easing monetary policy in China, copper prices came under pressure and fell 1.4 percent on the LME to around $8272/oz till 4.30pm IST as European economic concerns reemerged.
On the MCX sharp downside in copper prices was protected due to Rupee weakness. Prices slipped around 0.7 percent on the domestic bourses and traded around Rs421/kg till 4.30pm IST.
Crude oil prices on the Nymex fell below the crucial $100/bbl mark today, falling 0.5 percent till 4.30pm IST as slow progress over Greece negotiations led to re-emergence of concerns over the European debt crisis. Oil prices had also slipped in yesterday’s trade on concern over gasoline consumption in the US and as inventories monitored by the Energy Information Administration also witnessed an increase.
Outlook
With concerns over the European economic front re-emerging, we expect the US Dollar Index to strengthen. On the back of this, precious metals, i.e. gold and silver prices are expected to trade on a negative note today.
Base metals are also expected to trade with a negative bias, taking cues from weak global market sentiments and dollar strength.
With concerns over gasoline consumption in the US coupled with worries over Greece re-emerging, crude oil prices are expected to trade on a negative note today. Dollar strength will add further downside pressure on prices.
Courtesy: Angel Commodities
Base metals settle higher on China's economic concerns
Bulls are dominating the base metals space as optimism continues that China will step forward to stimulate its economy after following a tight monetary policy in 2011. China is allowing its five largest banks increase lending and is also weighing a plan to relax capital requirements.
This news has also boosted market sentiments at a time when the global economy grapples with the economic crisis in the Euro Zone. A slowing Chinese economy is detrimental to global economic growth and the move by China to boost lending will bring in a sense of relief in the global markets.
Copper prices touched a high of $8410/tonne on Thursday and we expect the positive trend to continue in the near-term. On Thursday, copper prices on the LME increased 1.6 percent while prices on the MCX gained by 1.2 percent and closed at Rs.424/kg in yesterday’s trading session.
Courtesy: Angel Commodities
Crude oil tumbles on global supply concerns
Nymex crude oil prices decreased by 0.2 percent yesterday on the back of gasoline consumption which fell to its lowest in 10 years.
However, further downside in prices was restricted because of a weaker dollar. Oil Prices touched an intra-day low of $99.98/bbl and closed at $100.4/bbl. On the MCX, prices declined by 0.3 percent and closed at Rs.5047/bbl after touching an intra-day low of Rs.5031/bbl on Thursday.
But overall fundamentals for the near-term remain bullish on account of rising supply-side concerns. Potential supply disruptions from Iran are helping oil prices sustain above the crucial $100/bbl mark.
EIA Inventories Data
As per the US Energy Department (EIA) report last night crude oil inventories decreased by 3.4 million barrels for the week ending on 13th January, 2012. Gasoline stocks rise by 3.7 million barrels and whereas distillate stockpiles also shoot up by 400,000 barrels for the last week.
Courtesy: Angel Commodities
Precious metals trade down on selling pressure
Although gold prices advanced to a one-month high on Thursday, prices succumbed to selling pressure in the later part of the trade.
But overall in Thursday’s trade, prices traded higher as the yellow metal which is currently moving like a risky asset took cues from upbeat global market sentiments and dollar weakness.
By the end of the trade, Spot Gold prices decreased by 0.2 percent yesterday and touched a low of $1648.5/oz in intra-day. Prices on the MCX declined by 0.5 percent to close at Rs27,347/10gm. The near term trend in case of gold remains bullish, taking into account of the ongoing optimism in the markets.
Taking cues from upside in base metals, silver continued to trade higher on Thursday. Spot Silver prices touched an intra-day high of $30.86/oz and closed at $30.60/oz on Wednesday. On the MCX, prices decreased by 0.1 percent and closed at Rs.53387/kg in Thursday’s trading session.
Courtesy: Angel Commodities
India soy complex settles higher on fresh buying
Soybean prices gains towards end of the day. Emergence of fresh buying at lower levels had kept the prices higher towards closing.
CBOT soybean prices ended higher owing to the weakening dollar index along with the lower production estimates of Argentina. Rains were supposed to have not caused major change in production estimates which supported the prices.
Soy oil prices gained substantially on lower level buying at futures. Southern American crop concerns are still prevailing which is having major impact on prices. CBOT prices closed slightly higher due to weak dollar and the lower revised production estimates of Brazil and Argentina.
Mustard seed prices closed positive Thursday in line with the soy complex as weather over rajasthan regions is now posing problem to the crop. Spot prices have remained stable with weak buying activities which is different to the price movement at futures.
Courtesy:Karvy Comtrade Ltd.
NCDEX turmeric under pressure on weak domestic demand
Fresh arrivals in the domestic market coupled with fragile demand from the domestic and overseas buyers led Spot prices to settle 0.24% lower on Thursday. Futures traced the Spot prices and ended 1% lower yesterday.
Production, Arrivals and Exports
Arrivals in Nizamabad mandi stood around 3,000 bags while Erode mandi witnessed arrivals of only 2000 bags on Thursday.
Turmeric production for the year 2011-12 is projected at historical high of 82 lakh bags (1 bag= 70 kgs) compared to 69 lakh bags in 2010- 11. Erode is expected to produce45 lakh bags of turmeric a rise of 29% as compared to previous year. According to Spices Board of India, exports of Turmeric during April 2011- November 2011 stood at 58,000 tonnes as compared to 35500 tonnes in 2010-11, rise of 56%.
Targets set by the Spices Board have already been met till October 2011. Exports are expected to touch new historical levels in 2011-12.
Courtesy: Angel Commodities
NCDEX jeera declines on poor domestic demand
Spot prices of jeera traded steady throughout the day and settled 0.05% down on account of lacklustre trades at the domestic markets. Reports of better area covered under jeera in Gujarat and thereby better output in 2012 are restricting prices from trading higher.
Futures however, witnessed short coverings by the market participants and settled 1.06% higher yesterday.
According to Gujarat farm ministry, area sown under jeera till January, 18th 2012 stood at 3.682 lakh hectares (lh) up 50% as compared to last year while area covered in Rajasthan till date is expected to be 3.03 lakh hectares as compared to 3.30 lakh hectares in the same period last year. Carryover stocks of jeera is expected to be around 9-10 lakh bags as compared to 4-5 lakh bags in the last year.
Prices in the global markets of Indian origin are quoting around $2,800-2,950/tn while Syrian origin is quoting at $3,100-$3,150/tn.
Production, Arrivals and Exports
Unjha markets witnessed arrivals of 3,500 bags while offtakes stood at 4,500 bags on Thursday.
Production of jeera in 2011-12 is expected to be around 35 lakh bags as compared to 29 lakh bags in 2010-11. (Each bag weighs 55 kgs). (Source: spot market traders).
According to Spices Board of India, exports of Jeera during April 2011-November 2011 stood at 26500 tonnes as compared to 20,750 tonnes in 2010-11, an increase of 27.7%.
Courtesy: Angel Commodities
NCDEX pepper settles higher on weak arrivals
Pepper prices in the Spot and Futures extended gains of the previous day and settled 0.42% and 0.86% higher respectively on Thursday owing to limited arrivals in the Kochi market.
Demand from the overseas buyers remains dull currently as buyers remain absent from the market. Fresh arrivals from the domestic will gain momentum at the end of the month (January 2012).
Indian parity in the international market is being offered at $6,625/tonne while Vietnam 550 GL was being offered around $6,225/tonne.
Exports
According to Spices Board of India, exports of pepper during April 2011- November 2011 stood at 17,000 tonnes as compared to 11,850 tonnes in 2010-11, rise of 43.6%.
According to International Pepper Community (IPC) exports of black pepper during January to October 2011 from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was around 2.04 lakh tonnes a decline of 4.6% as compared to 2.14 lakh tonne in the same period last year.
Exports from Indonesia posted significant decrease of 40% as compared to previous year. Exports stood at 29,000 tonnes as compared to 48,500 tonnes in the last year.
During Jan to Oct 2011, Brazil exported 25,331 tonnes of pepper a rise of 4.74% as compared to previous year. U.S. remained the major destination of the pepper imports.
Production and Arrivals
Arrivals of pepper in Kochi market stood at 10 tonnes while offtakes stood at 10 tonnes on Thursday.
Global Pepper production in 2012 is expected to increase 7.2% to 3.20 lakh tonnes as compared to 2.98 lakh tonnes in 2011 with sharp rise of 24% in Indonesian pepper output and in Vietnam by 10%. Pepper production in Vietnam and Indonesia is projected at 1.10 lakh tonnes while that in Indonesia is projected to be 41 thousand tonnes. (Source: Financial Express). Domestic consumption of Pepper in the world is expected to grow by 3.03% to 1.25 lakh tonnes while exports are likely to grow by 1.48% to 2.46 lakh tonnes in 2012. (Source: Peppertradeboard)
On the other hand production of pepper in India in 2011-12 is expected to be scale down further by 5% to 43 thousand tonnes as compared to 48 thousand tonnes in the last year.
Courtesy: Angel Commodities
NCDEX soybean trades up on short covering
Soybean: NCDEX February soybean futures ended in green on account of short covering after yesterday’s sharp fall and some fresh buying was witnessed at lower levels. Total arrivals of soybean in Madhya Pradesh were to 1.50 lakh bags on Thursday (Bag=100 Kg).
Soybean prices in Indore Mandi auction were quoted in a range of Rs 2370-2420 per qtl and plant delivery prices were in a range of Rs 2460-2500 per qtl (which is higher Rs 30-40 Rs per qtl as compared to previous day). As per WASDE, USDA which is released on January 12, 2012, U.S. oilseed production for 2011/12 is estimated at 91.2 mln tons, up 0.2 million tonnes from last month.
Soybean production is estimated at 3.056 billion bushels, up 10 mln tons based on increased yields. The soybean yield is estimated at 41.5 bushels per acre, up 0.2 bushels from the previous estimate. Global oilseed production for 2011/12 is projected at 457.4 million tons, down 0.3 mln tons. Global soybean production is projected at 257 million tons, down 2.2 million mostly due to lower production forecasts for South America.
The Argentina soybean crop is projected at 50.5 mln tons, down 1.5 mln tons due to lower projected area and yields. The Brazil soybean crop is reduced 1 mln tons to 74 mln reflecting hot, dry conditions in recent weeks. Global oilseed ending stocks are projected at 74.8 mln tons, down 0.7 mln tons.
Rape/mustard Seed: NCDEX April RM Seed ended higher on account of short covering after yesterday’s sharp fall and some fresh buying was witnessed on output concern as lower sowing acreage this year as compared to last year.
Gains in other oilseeds and vegetable oil also provided support to bulls. For the long term perspective, RM seed is expected to trade higher as lower production estimates of RM Seed as lower sowing acreage coupled with crop damage report. Rabi sowing acreage of mustard seed in Gujarat declined to 13.8% to 186,800 hectares as of Monday (January 16, 2012), showed data released by the state's agriculture department, Gujarat.
As per PIB, Total area under oilseeds cultivation is reported to be 80.96 lakh ha against 85.5 lakh ha last year as January 13, 2012. The country's RM seed sowing has totaled 64.83 lakh ha as on January 13, down 4.96% from 68.21 lakh ha in the year-ago period. RM seed accounts for about 70% of India's winter-season oilseed output.
Refined Soy Oil: NCDEX Feb refined soy oil futures ended higher on account of short covering after yesterday’s sharp fall and some fresh buying was witnessed at lower level. As per SGS (cargo surveyor), Malaysian Palm Oil exports in the first 15 days of Jan 2012 fell by 11% to 575,833 tons as compared to last month of during the same period. As per SEA of India, India imported 654,714 tons edible oil in December, down 21% from the month of Nov 2011. In the first two months of the current oil year (Nov- Dec), edible oil imports were at 14.82 lakh tons against 13.82 lakh tons a year ago. Current stock of edible oils as on 1st Jan, 2012 at various ports is estimated at 620,000 tons(CPO 420,000 tons, RBD Palmolein 100,000 tons, Degummed Soybean Oil 35,000 tons and Crude Sunflower Oil 65,000 tons) and about 720,000 tons in pipelines.
Courtesy: Angel Commodities
NCDEX sugar rises on firm fundamentals
Sugar prices witnessed mixed trades and settled 0.08% and 0.68% higher on Thursday on the reports that Food Minister would soon take up the matter of sugar sector decontrol with Finance Minister Pranab Mukherjee. Further, expectations that government may soon decontrol sugar industry also supported prices. On the other hand better supplies in the domestic were seen capping sharp gains.
India produced 10.45 mln tn sugar in the first three-and-a-half months of the season that began Oct 1, 19% higher than 8.77 mln tn a year ago.
The government has released lower monthly quota for the month of January at 17.16 lakh tonnes which includes 2.16 lakh tonnes of levy quota and 15 lakh tonnes of non levy quota.
According to the Food Minister, Ministry is planning to discuss with States, the Finance and Agriculture Ministries on removing some of the controls such as doing away with the mandatory obligation to offer sugar for the public distribution system (PDS) in the New Year(Source: Hindu Business Line.
Liffe and ICE Raw Sugar prices jumped sharply to touch 2 month high on talks of a possible late start to the harvest of Brazil’s main centre south cane crop. Prices settled 1.74% and 2.54% higher on Thursday.
Domestic Sugar updates
Maharashtra, the country's largest sugar producer, crushed 34.6 mln tn cane during Oct 1-Jan 15 against 31.5 mln tn a year ago, ISMA said. Sugar recovery in the state was also higher during the period at 10.71% versus 10.25% a year ago.
Uttar Pradesh, India's largest cane producer, crushed 34.7 mln tn cane during the period under review, compared with 27.1 mln tn a year ago, it said. Though the quantum of cane crushing was higher, recovery was lower at 8.49% compared with 8.85% a year ago as crushing began early Indian Sugarcane production is estimated higher by 0.9% at 342 mn tn for 2011-12 season starting October 1, 2011. ISMA has projected sugar production at 26 million tonnes for 2011-12.
With the opening stocks of 6 mn tn, domestic Sugar supplies are estimated at 32 mn tn against the domestic consumption of around 23 mln tn. Thus there is a wide scope for exports from India.
Global Sugar Updates
Thailand has crushed 9.4 mn tn cane this season against 3.3 mn tn a year ago. Thailand sugar output could reach to 9.9 million tonnes in 2011-12 compared to 9.64 million tonnes in 2010-11.
According to UNICA, Sugar output in Brazil's center-south from the start of the season to January 01,2012 stood at 31.2 million tonnes down 7% for this time a year ago. Total 2011-12 crush of sugar stood at 492.23 million tonnes down 11% from a year earlier.
Swiss sugar consultancy Kingsman lowered its global 2011-12 sugar surplus estimate by 940,000 tn to 8.22 mln tn.
Courtesy: Angel Commodities
NCDEX chana settles lower on short covering
Chana futures after trading weak bounced back owing to short coverings by the market participants and settled 0.88% lower on Thursday. Fresh arrivals crop in Maharashtra are pressurizing prices. Further, reports of rains in Northern parts of India (mainly Rajasthan), may favor the crop growth and may revise upward the Rajasthan government first advance estimates of Chana. However the downside was limited in the spot markets as fresh demand was seen emerging at lower levels.
According to the Rajasthan farm department’s first advance estimates for Rabi crops, Chana output is estimated 7.8% lower at 14.75 lakh tonnes in 2011-12 season against 16 lakh tonnes in 2010-11.
Rajasthan is the third largest Chana producing state in India contributing around 10-12% share in total Indian Chana output after MP and Maharashtra. Although sowing of Chana is higher in Rajasthan, unfavorable climate is expected to lower the yield of the Chana crop in the coming season harvesting of which would begin in February in Rajasthan.
Chana sowing across India as on January 13th 2012 is 5.23% down at 8.722 million hectares as compared to 9.22 million hectares in the same period previous year. Highest decline in area is witnessed in Maharashtra where sowing is down 23%, while in Karnataka it is down by 19%.
Crop Progress and Production
Chana is the main Rabi Pulse crop grown in India, sowing of which is done during October-December, and harvesting begins in January. Sowing of Chana began on a brisk note; however, the progress was not satisfactory in Maharashtra, Karnataka, UP, Bihar and AP and thus acreage has declined drastically.
Further, unfavorable weather in Central and Southern India may lower Chana yield in the coming season. Except in Rajasthan, all other major producing states i.e MP, Maharashtra, Karnataka and AP are likely to witness a fall in output in the coming season harvesting of which would begin after mid January.
Indian government is targeting total pulses output of 17 mln tn in the current crop year that started July 2011, down marginally from last year's record production of 18.09 mln tn on account of 10% decline in Kharif Pulses output.
Although government has targeted higher Rabi Pulses output, it is difficult to achieve the same taking into consideration the sowing progress and prevailing weather conditions.
Courtesy: Angel Commodities
NCDEX guar seed edges higher on firm fundamentals
Guar seed and Guar gum extended gains of the previous day on account of firmness in the spot markets and settled 3% on Thursday. Despite FMC taking stricter measures to curb the spiraling Guar prices strong fundamentals are keeping prices firm. Expectations of tight supplies in the long run pushed spot prices higher by 13.18%.
Forward Market Commission on Monday, January 16, 2012 has imposed additional special cash margin of 20% to be collected in cash.
Thus, total margin levied on the long side will be 60% which shall be collected in cash. This will be effective from January 18, 2012. Also no fresh position can be created in the January 2012 contract including intraday and only squaring of the existing position would be allowed.
Before imposing the additional special margin, FMC on Wednesday January 11, 2012 took another measure to curb the rising price of Guar seed and gum viz- Cut in position limits w.e.f. FMC on 11th January, 2012, directed the exchanges to cut position limit in Guar seed by 20% for brokers and clients and in Guar gum by 40% for brokers. Position limit in Guar gum for clients remain unchanged.
The revision aggregate position limit in Guar seed for member would be 1200 lots and for client 240 lots and for the near month contract member limit would be 400 lots and client limit would be 80 lots. The revision aggregate position limit in Guar gum for member would be 300 lots and for client 100 lots and for the near month contract member limit would be 60 lots and client limit would be 20 lots.
According to the second advance estimates from Rajasthan farm department, Guar seed output has been revised upward from 11.36 lakh tonnes to 12.09 lakh tonnes and area covered has been revised upward at 30.9 lakh ha against 29 lakh hectares in the first advance estimates.
Production
After harvesting a record 15 lakh tonnes of Guar crop in Rajasthan in 2010-11season (Oct 10- Sep 11), output in the current season has declined to around 12.09 lakh tonnes (Second advance Estimates).
Despite higher production prices had touched record levels of Rs 4770 per qtl in2010-11 on the back of robust exports which doubled from 2.1 lakh tonnes to 4.03 lakh tonnes in 2010-11.
In the current season 2011-12, which started in October 2011, output is estimated 25% lower than previous year, while exports continue to remain firm registering 68% growth during the first 6 months of FY 2011- 12 (Apr 11-Mar -12). Further. Carryover stocks of Guar in the current season is at lowest levels around 1.5-2 lakh tonnes against normal 4-4.5 lakh tonnes.
Thus, with lower carryover stocks and drop in output, the supplies would not be sufficient in the long run if Guar gum export trend continue to remain the same as last year, thus supporting the upside rally in the longer term.
Exports
Exports of Guar gum from April to September 2011 stood at 2.86 lakh tn a rise of 68 % compared to 1.70 lakh tn during the same period last year. In 2010-11 fiscal, Guar gum exports were almost doubled to 4.03 lakh tonnes.
Courtesy: Angel Commodities