Commodities Report: December 18, 2011

European markets traded on a mixed note today as the European Central Bank (ECB) stated that the steps taken by them may not be the final solution to the underlying debt issues in the 17-nation Euro region and we feel that positive sentiments could be short-lived if the provided measures do not yield the desired results.

Spot Gold prices traded slightly higher by 0.1 percent today mainly on the back of a weaker dollar that made dollar-denominated commodities cheaper for the holders of other currencies. The yellow metal touched an intra-day high of $1754/oz and was trading at the level of $1746/oz till 4.45 pm IST today. On the MCX, Gold prices declined around 0.3 percent on account of Rupee appreciation and was hovering around Rs29,040/10 gms till 4.45 pm IST.

Taking cues from rise in gold price and a weaker dollar, silver gained around 0.9 percent till 4.45 pm IST today. However, further gains were capped as silver being an industrial metal also took cues from movement on the base metals. Prices touched an intra-day high of $33.32/oz and were trading at $33.11/oz till 4.45 pm IST. MCX Silver March contract rose by 0.6 percent and hit an intra-day high of Rs55,927/kg till 4.45 pm IST today.

Rising concerns with respect to Euro Zone debt worries coupled with weak manufacturing data from China exerted downside pressure on base metal prices today. Additionally mixed sentiments in the global markets also acted as a negative factor. However, further decline was cushioned on account of dollar weakness.

Nymex crude oil prices increased by 0.3 percent today, on the back of expected supply concerns from the Middle East. Additionally a weaker dollar also acted as a positive factor for the commodity. Prices are hovering around $100.66/bbl after touching an intra-day high of $100.99/bbl till 4:45pm. On the MCX, prices declined by 0.8 percent on the back of Rupee appreciation and were trading around Rs.5177/bbl till 4:45pm today.

Outlook
US Dollar weakness is expected to support gold and silver prices in the international markets today. But downside risks remains if European concerns heighten.

Base metals are expected to witness downside pressure today on account of weak Chinese manufacturing data. But technically we expect buying to emerge at lower levels.

On account of potential supply disruptions from Iran coupled with the ongoing winter season, crude oil prices are expected to trade on a positive note today.

Courtesy: Angel Commodities


India gold climbs on weak US dollar

Gold future climbed for the third day in a row as central banks around the globe acted jointly to provide cheaper US dollar liquidity to European banks. The immediate delivery future rose 1.83% at the COMEX and the same has been observed at MCX.

The US and European equities rose on optimism to tame the European crisis as six central banks led by the Fed agreed to cut the cost of providing dollar funding via swap deal  Fed, ECB, BOJ, SNB, Bank of Canada lower rates on dollar swap lines by 50 basis points. Purpose of reducing this is to ease strains in financial markets and credit constraints.

Peoples bank of China said it will cut the Reserve ratio by 0.5% from the record level of 21.5% with effective from December 5. This move will be helping ease liquidity after previous tightening measures cooled credit growth and may have added to the risk of hard landing for China.

The Euro shot up on the same optimism to settle with near a percent gain. Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded slightly rose to 1298.53 tons from 1297.32 tons as on 30th Nov.

Courtesy: Karvy Commtrade Ltd.


Base metals finish higher on global debt concerns

Base metals witnessed a bull rally in yesterday’s evening session as most of the Central Banks around the globe reduced their reserve requirements providing some cushion for the investors.

At this point, the markets are very sensitive and any positive news that’s building are clinging the markets to move northwards. Metals like Copper, Aluminum and Zinc posted a gain of more than 5 percent at LME.

Today, the metals are trading slightly low in the morning at the LME, because of the profit booking from yesterday’s rally. The Chinese HSBC manufacturing data is having a negative impact as it reduced to 47.7 below the 50 mark for the month of November.

The manufacturing data from Germany, UK and US may come negative. However, the Asian equities are trading positive indicating that the Fed’s easing dollar liquidity to European Banks and supporting economic growth will have an impact in the markets for the near term.

The Dollar index is trading negative and the Euro is expected to appreciate further from the present levels helping base metals to march upwards. Hence, the retreating prices are just a short term phenomenon; overall base metals are expected to be in the positive side for the day.

Aluminium
Aluminum prices ended up by 5.71 per cent on LME while in India closed up by 3.76 per cent after a long time. This made the metal to be the highest gainer among all other base metals.

Aluminum cancelled warrants have reduced, the prices have increased for the spot but the major concern is the contango indicating the dicey trend in the future.

Copper
Copper prices ended up by 5.27 per cent while in Indian market was up by 4.53 per cent.

The Cancelled warrants ratio reduced from 7.2 percent to 6.24 percent, whereas there has been a drawdown of Inventory at the LME.

The open interest for the three month forwards contract at LME is also increasing suggesting the future demand for the metal.

Lead
Lead prices ended up by 3.89 percent in LME while in MCX closed up by 3.61 per cent

The cancelled warrant ratios are continuously maintaining above six per cent mark indicating that the spot demand is still there.

The open interest at futures markets had increased providing a slight bullish trend in the near term.

Nickel
Nickel prices at LME ended slightly up by 2.64 per cent while in MCX it ended up by 1.54 per cent.

The cancelled warrants though have been improving but now are in the down side trend and reduced from 3.04 per cent to 2.92 per cent indicating a fall in the spot demand, the least gainer in yesterday’s rally.

The backwardation effect is slowly reviving indicating increase in future demand for the metal.

Zinc
Zinc prices witnessed up trend and ended the session at $2071 up by 5.77 per cent, while in MCX the metal closed up by 5.22 percent.

The cancelled warrant ratios decreased slightly from 5.76 percent to 5.57 percent.

The future trend may turn bearish as we can see the metal slowly going towards Backwardation.

Courtesy: Karvy Commtrade Ltd.


Base metals settle higher on positive US economic data

Collective measures by major global central bankers in order to tackle with the Europe’s debt crisis led to positive sentiments in the global markets. This coupled with a weaker dollar helped base metals to trade higher on the LME on Wednesday.

Additionally, favorable economic data from the US also acted as a positive factor for the metals prices yesterday.

Copper
Copper was the top performer on Wednesday, as the metal surged around 5.5 percent on the LME and almost 6 percent on the MCX.

Favorable economic data from the US coupled with central banks steps to control the debt crisis acted as a positive factor for the red metal prices yesterday. Copper touched an intra-day high of $8000/tonne and closed its trading session at the level of $7868/tonne on Wednesday.

Workers at the Collahuasi copper mine in Chile have ended the strike on Wednesday. This will ease the supply concerns from the world third largest copper mine which may affect sharp gains the red metal.

Courtesy: Angel Commodities


Crude oil edges higher on global supply concerns

Nymex crude oil prices gained by 0.6 percent yesterday on the back of steps by US Federal Reserve and other central banks to tackle the Euro Zone debt crisis.

Additionally, supply concerns due to political turmoil in the Middle East and a weaker dollar also helped upside in the commodity.

Oil prices touched an intra-day high of $101.75/bbl and closed its trading session above the crucial level of $100/bbl on Wednesday.

On the MCX, prices increased by 0.6 percent and closed at Rs.5219/bbl after touching an intra-day high of Rs.5274/bbl yesterday.

EIA Inventories Data
As per the US Energy Department (EIA) report yesterday, crude oil inventories increased by 3.9 million barrels to 334.75 million barrels for the week ending on 25th November, 2011.

Gasoline stocks rise by 213,000 barrels and were at 209.85 million barrels whereas distillate stockpiles also climbed by 5.53 million barrels and remained at 138.49 million barrels for the last week.

Courtesy: Angel Commodities


Precious metals regain on weak US dollar

Spot Gold prices increased almost 2 percent on Wednesday and dollar weakness helped support upside.

The DX slipped below the 78-mark yesterday as concerns over Euro Zone debt crisis eased after collective measures by the major global central bankers.

Apart from that the yellow metal also received support from rising crude oil prices which helped boost inflation-led demand for the commodity.

Silver
Silver prices on the other hand gained more than gold as the white metal also took cues from upside in the industrial metals space.

In the international markets, gains in silver were almost 3 percent and the commodity touched a high of $32.80/oz.

Courtesy: Angel Commodities


India soy complex plunges on global cues

Soybean prices declined on Wednesday following weak international markets. Weak buying from china kept CBOT soybean prices under pressure. In domestic markets millers and crushers were into hand to mouth buying despite arrivals being higher at 3.5 lakh bags.

CBOT soybean prices ended higher due to broad buying in commodity markets supported by weakened dollar index.

Decrease in rates of dollar swap line by Fed, ECB, BOJ, SNB AND Bank of Canada kept dollar index under pressure as investors were more inclined towards euro.

Soy oil prices extended losses on Wednesday as bleak demand and domestic crushing activities have kept the prices under pressure.

Overall demand for edible oils was not reported so good which also had bearish impact on Indian soy oil prices as well as CBOT soy oil and Malaysian palm oil prices.

Courtesy: Karvy Commtrade Ltd.


CBOT Updates:Soybean rises on firm export demand

CHICAGO (Commodity Online):US soybean futures end higher, fueled by broad speculative buying as macroeconomic fears ease for the moment following the central-bank coordination aimed at improving liquidity for European banks.

Sharp declines in the US dollar served as the catalyst for soy's gains as traders are optimistic the weaker dollar will spur export demand.

However, futures ended well off intraday highs, paring gains amid lingering fears of slower-than-expected demand. CBOT January soy ends up 6 1/4c at $11.31 1/4 a bushel.

Courtesy:CME Group


CBOT Updates:Corn edges higher on fresh buying

CHICAGO (Commodity Online):US corn futures end higher, fueled by broader based buying across asset classes on more upbeat macroeconomic outlooks.

Weakness in the US dollar following actions by major central banks to increase liquidity for European banks sparked investor confidence to add risk, analysts say.

However, futures retreated from the initial highs, briefly slumping into negative territory, as traders' bearish psychology will need confirmation of a pickup in demand before they become aggressive buyers, Allendale's Rich Nelson says.

Traders took profits on the early gains. CBOT March corn ended up 2 1/2c at $6.08/bushel, well off the intra-day high of $6.16.

Courtesy:CME Group


CBOT Updates:Wheat weakens on weak fundamentals

CHICAGO (Commodity Online):US wheat futures end lower, failing to sustain strong early gains. The absence of supportive fundamental news specific to wheat, left futures without a demand based to justify higher price levels, analysts say.

Futures initially spiked with other commodity markets on news of central bank's actions, but without a sign of fresh demand surfacing from recent declines, traders viewed that as a signal that US wheat remains uncompetitive in world export markets, analysts add.

CBOT March wheat dipped 2c to $6.14/bushel, March KCBT wheat dropped 9c to $6.61, and March MGEX wheat ended down 10c at $8.23 1/2.

Courtesy:CME Group


NCDEX turmeric declines on poor overseas demand

Turmeric Spot and Futures remained bearish and settled 2.38% and 2.68% lower respectively on Wednesday on account of weak demand from the domestic and overseas buyers. Anticipation of better crop output for the 2011-12 season is also inducing market participants to create sell positions.

Production, Arrivals and Exports
Arrivals in Nizamabad stood at 600 bags while Erode market remained closed due to local festival on Wednesday.

Turmeric production for the year 2011-12 is projected at 82 lakh bags (1 bag= 70 kgs) compared to 69 lakh bags in 2010-11. However, area covered under turmeric till 21st September 2011 stood at 0.67 lakh ha 2.9% lower as compared to 0.69 lakh ha in the previous year.

According to Spices Board of India, exports of Turmeric during April 2011- September 2011 stood at 41,500 tonnes as compared to 28,500 tonnes in 2010-11, rise of 46%.

Courtesy: Angel Commodities


NCDEX jeera plunges on weak exports

Spot prices dipped by 0.87% yesterday on reports of increase in area sown under jeera in Gujarat. Jeera Futures also traded weak since the beginning of the session and settled at the lower freeze of 2% on Wednesday tracing spot prices. Lacklustre trades at the domestic also pressurized prices yesterday.

Sowing of jeera in Rajasthan has gained momentum due to favorable weather condition. According to Gujarat farm ministry, area sown under jeera till November 30, 2011 stood at 1.55 lakh hectares (lh) up 67.5% as compared to 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 steady arrivals of 3,000 bags amidst offtakes of 2,500 bags on Wednesday.

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- September 2011 stood at 16,000 tonnes as compared to 18,800 tonnes in 2010-11, decline of 15%.

Courtesy: Angel Commodities


NCDEX pepper edges higher on extended buying

Black pepper prices extended gains of the previous day and settled 0.38% higher owing to improved buying at support levels on Wednesday. Spot prices also ended firm on account of demand from local buyers yesterday. Reports of lower pepper crop in India in 2011-12 are expected to support pepper prices.
 
Lower stocks with Vietnam and Indonesia, the major suppliers of pepper till fresh arrivals commence next year (April and July respectively) will also support prices.

Indian parity in the international market was at $7,450-7475(c&f) a tone and remained competitive and was attracting overseas orders while Vietnam 550 gl was quoting its pepper at $7,350 per tonne (fob).

Exports from the major countries
According to Spices Board of India, exports of pepper during April 2011- September 2011 stood at 11,250 tonnes as compared to 9,250 tonnes in 2010-11, rise of 22%.

According to International Pepper Community (IPC) exports of black pepper during January to September 2011 exports of pepper from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was around 188,000 mt, 4% lower from the corresponding period of 195,000 mt. Vietnam has reportedly sold 1.12 lakh tonnes of pepper from January to September 2011 a rise of 14% as compared to previous year.

Sharp fall of 38% in pepper exports was witnessed in Indonesia during above period. Exports stood at 26,300 tonnes as compared to 42,082 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 the domestic mandi on Wednesday stood at 6 tonnes as compared to 7 tonnes on Monday. Offtakes on the other hand stood at 8 tonnes.

Global Pepper production in 2012 is expected to increase 4% to 2.70 lakh tonnes with Vietnam the largest producer producing around 1.40-1.50 tonnes. Carryover stocks are projected at 50,000 tonnes as compared to 60,000 tonnes in 2011. (Source: Peppertradeboard). While, production of pepper in India in 2011-12 is expected to be 43 thousand tonnes according to the market sources a decline of 5% as compared to 48 thousand tonnes in the last year.

Courtesy: Angel Commodities