Commodities Report: December 21, 2011

The base metals complex traded higher on the LME on Tuesday, on account of favorable economic data from the US and the Euro Zone.

Additionally, easing concerns over Europe’s debt worries coupled with upbeat sentiments in the global markets also acted as a positive factor for the metal prices yesterday.

Copper

Copper, leader of the base metals, rose sharply by 1.7 percent on the LME and by 1.4 percent on the MCX on Tuesday. Upbeat sentiments in the global markets coupled with favorable economic data from US and German supported prices.

Additionally, fall in the metal inventories also acted as a supportive factor. Copper inventories dropped almost 1 percent to 370,850 tonnes on the LME warehouse on Tuesday.

The red metal touched an intra-day high of $7470/tonne and closed at the level of $7423/tonne yesterday. On the MCX, Copper February contract touched an intra-day high of Rs.402.40/kg and ended its trading session at Rs396.4/kg on Tuesday.

Aluminium output in China rises by 1.7 percent in Nov – IAI According to the data from the International Aluminium Institute (IAI), China’s daily average primary aluminium output increased by 1.7 percent to 48,900 tonnes in November as compared to 48,100 tonnes in October.

Courtesy: Angel Commodities


Crude oil surges on fall in inventories

Nymex crude oil increased by more than 3.5 percent in yesterday’s trading session on the back of more than expected fall in US crude oil inventories. Additionally, improved economic data from US and Euro Zone also acted as a positive factor for prices on Tuesday.

Oil touched an intra-day high of $97.45/bbl and closed at $97.2/bbl yesterday. On the MCX, prices increased by 3.4 percent and closed at Rs.5153/bbl after touching an intra-day high of Rs.5170/bbl on Tuesday.

API Inventories Data

As per the American Petroleum Institute (API) report last night, crude oil inventories decreased sharply by 4.6 million barrels for the week ending on 16th December 2011. Gasoline inventories increased by 394,000 barrels and distillate inventories declined by 2.8 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release it weekly inventories report today and crude oil inventories are expected to decline by 2.3 million barrels for the week ending on 16th December 2011. Gasoline stocks are expected to increase by 1.2 million barrels whereas distillate inventories are expected to shrink by 0.4 million barrels.

Courtesy: Angel Commodities


Precious metals edge higher on weak US dollar


Spot gold prices rose around 1.3 percent in yesterday trading session due to dollar weakness. It touched an intra-day high of $1618/oz on the international markets and closed at the level of $1614/oz on Tuesday.

On the MCX, Gold February contract rose around 0.6 percent yesterday. It touched an intra-day high of Rs27,905/10 gms and closed at 27,867/10 gms on Tuesday.

Silver

Spot silver prices surged around 2.7 percent on Tuesday on the back of rise in gold prices coupled with upside in base metals.

Prices touched an intra-day high $29.60/oz and closed its trading session at $29.52/oz yesterday. On the MCX, Silver March contract rose sharply by 1 percent and touched an intra-day high of Rs53,575/kg on Tuesday.

Courtesy: Angel Commodities


NCDEX turmeric settles higher on domestic demand

Turmeric Futures continued to add to the gains of the previous day and settled at the upper freeze of 4% on Tuesday owing to short coverings by the market participants.

Spot prices however settled 0.14% lower yesterday on account of decline in the offtakes amidst increased arrivals.

Production, Arrivals and Exports

Arrivals in Nizamabad and Erode mandi are steady around 1,500 bags and 10,000 bags respectively on Tuesday.

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- October 2011 stood at 50,000 tonnes as compared to 32,000 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 edges higher on rising demand

Jeera prices witnessed mixed trades throughout the day and settled 0.08% higher on Tuesday. Demand from the local stockists amidst reports of surge in the exports of jeera led prices to strengthen.

According to Gujarat farm ministry, area sown under jeera till December 13, 2011 stood at 2.32 lakh hectares (lh) up 26.68% 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 arrivals of 2500 bags 500 bags lower as compared to Monday amidst off takes of 4,000 bags on Tuesday 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-Ocotber 2011 stood at 20500 tonnes as compared to 19,800 tonnes in 2010-11, an increase of 3.5%.

Courtesy: Angel Commodities


NCDEX pepper tumbles on active selling

Pepper Futures after trading firm in the last few sessions witnessed short coverings and settled at the lower freeze of 3% on Tuesday. Spot prices traced the Futures and settled 0.30% lower yesterday. Demand from the local stockists amidst lower arrivals may support prices in the coming days.

Pepper stocks wih Vietnam are expected to be around 10 thousand tonnes while that in India is expected to be 12 thousand tonnes. Indian parity in the international market is being offered at $7,150- 7,200(c&f) a tonne and remained competitive while Vietnam 550 gl was quoting its pepper at $7,250 per tonne (fob).

Exports

According to Spices Board of India, exports of pepper during April 2011- October 2011 stood at 13,750 tonnes as compared to 10350 tonnes in 2010-11, rise of 32.8%.

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 the domestic mandi on Tuesday stood at 12 MT as compared to 6 MT on Monday while offtakes on the other hand stood at 22 tonnes.

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).

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 declines on long liquidation

NCDEX January soybean futures witnessed long liquidation by the market participants and settled 0.90% lower on Tuesday. However drought like situation in South America might control prices from falling sharply. Total arrivals of soybean in Madhya Pradesh were 1.70 lakh bags, Maharashtra was 1.00 lakh bags and Rajasthan was 55,000 bags(Bag=90-100 Kg). Soybean prices in Indore were at Rs2320- 2360/qtl (auctions in Mandi) and plant delivery was quoted Rs2420- 2450/quintal.

Brazil has exported a total of 31.51 mln tonnes in January to November 2011 an increase of 2.73 mln tonnes as compared to previous year.

China was the largest buyer of 354,200 tonnes. Cumulative soybean sales stand at 63.7% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 68.5%. Meal sales came in at 103,700 metric tonnes for the current marketing year and 3,600 for the next marketing year for a total of 107,300. Net oil sales came in at 5,500 metric tonnes which was near the low end of expectations. As per local statistics bureau of China, soybean output in China's Heilongjiang province, the top-producing area, fell 7.5% to 5.42 million metric tons this year.

Rape/mustard Seed

NCDEX January RM Seed futures ended lower on account of profit taking after continuous rise in the last week. Sowing acreage of Rabi oilseeds in India was 7.56 million hectare as compared to 8.15 million hectare a year ago. Oilseeds area in the Maharashtra declined 23% to 207,000 ha, with safflower acreage falling 17.4% to 121,600 ha.

Mustard seed accounts for about 70% of India's winter-season oilseed output. As per WASDE (USDA) monthly supply & demand report which is released on December 09, 2011 shows that the Canada rapeseed production raised 1.3 million tons to 14.2 mln based on the latest survey results from Statistics Canada.

Refine Soy Oil

NCDEX December refined soy oil futures traded lower on account of profit taking after sharp rise in the last two days. Weak overseas market also provided support to the bears. Malaysian Palm Oil exports from 1-20 December fell by 10.1% to 9.34 lakh tonnes as compared10.37 lakh tonnes in the same period previous year.

As per Solvent Extractors Association of India, India imported 827,684 tonnes of vegetable oils in the first month of oil marketing year (November to October), up 27 percent from 652,262 tonnes a year ago.

Marker share of palm oil imports was about 90% of total vegetable oil imports. However, soybean oil’s share was less than 1% and rest was sunflower oil. India imports palm oil from Indonesia and Malaysia and a small quantity of soy oil from Argentina and Brazil.

Courtesy: Angel Commodities


NCDEX sugar remains higher on short covering

Sugar prices continued to remain firm on account of short coverings by the market participants. Prices had declined sharply last week on reports that Maharashtra Sugarcane crushing and Sugar output improved and is up from the year ago period. Further, sufficient supplies and lower demand from the bulk manufactures amidst winter season kept prices under pressure.

Government has released 19.1 lakh tonne (tn) of Sugar for the month of December which includes 2.07 lakh tn of levy quota, 17 lakh tn of non levy quota and 600 tn of Sugar refined from imported raw.

The Food Ministry has issued permits for the export of nearly 37,000 tonnes of sugar so far out of the one million tonnes that the government has allowed for overseas shipment in the ongoing 2011-12 marketing year.

Liffe white sugar and ICE Raw settled almost range bound on Monday and would continue to remain sideways until more details emerge about the size and availability of the crop from Brazil and India in the next season.

Domestic Sugar updates

Sugar output in Maharashtra rose 9% between Oct 01 and Dec 15 to 18.6 lakh tonnes compared with the 17 lakh tonnes same period last year. The output was earlier down by 6%. Recovery rate also increased to 10.07% from 9.70% a year ago.

According to ISMA, India is likely to have crushed 14.4 mln tn cane during Oct 1-Nov 23 and produced 1.3 mln tn sugar during the current crushing season. Maharashtra Oct 1-Dec 8 sugar output is up at 1.45 mln tn vs 1.31 mln yr ago due to higher recovery at 9.8% from 9.344% last year. 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 mn 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 in the first half of November fell 13.8 percent from a year ago, as more mills ended crushing the 2011/12 cane crop. Sugar production in the period totaled 1.26 million tonnes, compared with 1.46 million tonnes 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 profit booking

Chana futures witnessed profit booking in the January contract and settled 0.92% down on Tuesday. Spot prices also settled on weak note owing to reports of better output for this season too. According to the farm minister Chana output is likely to stand around 18 mln tonne.

Rajasthan, rabi pulses area is 1.60 mln hectares as compared to 1.56 mln hectares as on 16th December 2011. Area covered under Chana stands around 1.56 mln hectares as compared to 1.54 mln hectares in the same period previous year(State Farm Ministry)

However there are concerns over unfavorable weather in AP, Maharashtra coupled with lower area under cultivation in these states which might revise the Chana output in the coming season.

Forward Market Commission (FMC) has scrapped special margin of 10% on Chana on long side on all running contracts with effect from Friday December 09, 2011.

Sowing 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.

The area under pulses has been marginally lower by 0.8% on account of lack of rains. Area under Chana, a dominant pulse crop has been lower at 83.55 lakh ha against 86.36 lakh ha in corresponding last year.

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.

According to the first advance estimates, Kharif Pulses output for 2011- 12 season is down by 9.6% at 6.43 mt. Tur output estimates is up by 0.35% while moong & Urad is down by 21% & 16% respectively. Kharif Pulses sowing is down by 9% as on 23rd September, 2011. 109.41 lakh ha has been covered against 120.3 lakh ha in the last year.

Courtesy: Angel Commodities


NCDEX guar seed zooms on firm export demand


Guar seed and Guar gum futures extended gains of the previous day and settled at the upper freeze of 4% on Tuesday. Demand from the overseas buyers is keeping the prices supported. Unconfirmed reports of decline in the arrivals in the major mandi also supported prices.

Prices traded higher despite of high margin 30% on the long side of Guar seed and Guar gum contracts.

Reports of discrepancies in the latest export figures released by the APEDA (Agricultural & Processed Food Products Export Development Authority) coupled with talks of high manipulation has led to high volatility in the Guar prices.

As per the NCDEX circular dt 16/12/2011, further Special Margin of 10% in cash on the Long side of Guar seed and Guar gum will be imposed w.e.f. from Monday, December 19, 2011 on all running and yet to be launched contracts.

Indian Guar gum Association has sought the FMC’s intervention so as to curb rising Guar seed and Gum prices. They clarified that the price surge is not only defeating the futures trade, but also hurting the export prospects. (Newswire 18).

Besides imposing special margin, FMC is also considering various measures like cutting position limits on Guar seed , soughing data on top guar traders in NCDEX etc.

Although long term fundamentals remain supportive for the prices, such rise was not expected at the time when arrivals are at its peak.

Arrivals of late sown Guar crop is ongoing in Rajasthan. Arrivals currently in Rajasthan and Haryana stand around 1.35 lakh bags (Newswire 18).

Production

Guar seed output in Rajasthan is estimated at 11.36 lakh tonnes for 2011-12 season, down by 25% compared to 15.46 lakh tonnes in 2010-11 (Rajasthan Farm Dept). Production of Guar in Haryana and Gujarat is expected to be 0.2 lakh tonnes and 0.07 lakh tonnes respectively in 2011- 12.

Thus, with lower carryover stocks and lower 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 July of the current fiscal year 2011-12 stood at 1.93 lakh tn a rise of 82% compared to 1.02 lakh tn during the same period last year. However, the latest figures from April to August are 5% lower than the April – July number published last month. This has created panic in the markets.

Courtesy: Angel Commodities


CBOT Updates:Soybean gains on crop concerns

CHICAGO (Commodity Online): US soy futures end higher, supported by the positive influence of external financial markets and lingering concerns about weather threats for South American crops.

Short-covering also underpinned prices as traders reduced risk exposure ahead of Christmas and year-end.

But as a broader cross-asset rally kept soy sellers idle, advances were limited by traders unwilling to take on risk in thin holiday trade, analysts note.

CBOT March soybeans ended up 7 3/4c at $11.54 1/2 a bushel.

March soymeal climbed $2.70 to $299.20/short ton and March soyoil rose 0.33c to 49.75c/pound.

Courtesy: CME Group


CBOT Updates:Wheat rises on short covering

CHICAGO (Commodity Online): US wheat futures end higher, as weakness in the US dollar sparked a short-covering rally.

Spillover support from corn and positioning ahead of year's end also prompted some buying, analysts say.

KCBT wheat rallied, shaking off bearish impact of needed moisture in the form of snowfall in some dry areas of the Plains hard red winter wheat belt. Broader based advances across asset classes limited selling interest.

CBOT March wheat ended 8 cents higher at $6.07 3/4/bushel, KCBT March was 9 1/2 cents higher at $6.68 and MGEX March closed 12 cents higher at $8.39 1/4.

Courtesy: CME Group


CBOT Updates:Corn surges on firm demand

CHICAGO (Commodity Online): US corn futures settle at a three-week high, fueled by broad-based support from external financial markets.

US dollar weakness, strength in equities and energy sector provided a supportive backdrop to keep sellers sidelined, analysts say.

Lingering concerns about yield threats in South America and ideas recent declines left futures oversold was enough to underpin prices, analysts add.

However, the rally lacked any strong follow through buying, as traders remained cautious of taking on risk heading toward the holiday weekend. CBOT March corn finished up 6c at $6.07/bushel.

Courtesy: CME Group