LME, MCX Copper rises over 1%, gold, crude oil also post gains
European markets traded higher today after Spain sold doubled the targeted amount in debt auction. Spain sold 9.98 billion Euros ($12.7 billion) of notes at an auction as against a target of 5 billion Euros. The country sold about 4.3 billion Euros worth of a new three-year bond at a yield of 3.384 percent and sold 2.5 billion Euros worth bond maturing at 30th April 2016, at an average yield of 3.748 percent.
The country sold 3.2 billion Euros of bond maturing at 31st October 2016 at a yield 3.912 percent. Italy has also planned to sell debt today. Germany received more than double the target in a sale of notes yesterday.
India's industrial output increased sharply by 5.9 percent (y-o-y) in November as against a decline of 5.1 percent in October. During the period between April-November, the country’s industrial production increased by 3.8 percent. Manufacturing output in India rose by 6.6 percent (y-o-y) in November as compared to a fall of 6 percent in the prior month.
Spot gold prices gained around 0.8 percent today on account of a weaker dollar and hit an intra-day high of $1653/oz till 4.30 pm IST. On the MCX, Gold February contract rose 0.4 percent as further gains were capped due to a stronger Rupee.
Taking cues from rise in gold prices and upside in base metals, spot silver also surged almost 2 percent today. Additionally, weakness in the dollar also acted as a positive factor.
Revival in the European markets after a successful bond auction in Spain coupled with a weaker dollar acted as supportive factor for the base metals complex to trade higher on the LME today.
Copper is the top gainer of the day, as the metal rose 1.5 percent on the LME and around 1.2 percent on the MCX till 4.30 pm IST. The red metal inventories declined sharply by 1.6 percent to 358,250 tonnes on the LME warehouses today. This factor helped copper prices to move in the upward direction.
Nymex crude oil prices increased by 1.2 percent today, taking cues from crude oil supply concerns from Iran and Nigeria. Additionally, a weaker dollar and revival in the European markets also acted as a positive factor for the commodity. On the MCX, crude oil prices came under pressure on account of appreciation in the Indian currency.
Outlook
Successful auction of Spanish bonds reduced the concerns over Euro Zone debt worries and this will lead to revival in the global markets today.
On account of this, we expect precious metals, base metals and crude oil prices to trade with a positive bias today. Additionally, a weaker dollar will also provide further support.
In case of crude oil, supply concerns from Iran and Nigeria will also help further upside in oil prices today.
Courtesy: Angel Commodities
Crude oil weakens, to trade sideways
Nymex crude oil prices declined by 1.3 percent on Wednesday on the back of sharp rise in US crude oil inventories coupled with a stronger dollar.
However, further decline was cushioned on account of supply concerns from Iran and Nigeria.
Oil prices touched an intra-day low of $100.55/bbl and closed at $100.9/bbl yesterday.
On the MCX, prices declined by 0.6 percent and closed at Rs.5285/bbl after touching an intra-day low of Rs.5234/bbl on Wednesday.
EIA Inventories Data
As per the US Energy Department (EIA) report last night crude oil inventories increased by 5.0 million barrels to 334.6 million barrels for the week ending on 6th January, 2012.
Gasoline stocks rise by 3.61 million barrels to 223.8 million barrels and whereas distillate stockpiles also shoot up by 3.99 million barrels to 147.6 million barrels for the last week.
Outlook
We expect crude oil prices to trade with a sideways bias today, taking cues from dollar strength and deepening concerns over Euro Zone debt crisis which will exert downside pressure on oil prices.
While supply concerns from Iran and rising expectations that China may take steps to boost the economy may provide support.
Courtesy: Angel Commodities
Silver tracks gold higher, dollar strength limit uptrend
Spot gold prices rose to a one-month high of $1,646/oz on Wednesday after the news of a sharp increase in China’s gold imports which indicated improved demand from the world’s second largest consumer of gold.
China is preparing for the Lunar New Year this month which is a key gold-buying period.
However, sharp gains in the yellow metal were capped on account of a stronger dollar in yesterday’s trading session. On the MCX, Gold February contract rose around 0.4 percent on Wednesday and touched an intra-day high of Rs27,736/10 gms.
Silver
Taking cues from rise in gold prices, spot silver also rose around 0.2 percent on Wednesday. But strength in the US dollar resisted sharp gains in yesterday’s trading session.
The white metal touched an intra-day high of $30.24/oz and ended at the level of $29.9/oz on Wednesday.
MCX Silver March contract gained marginally by 0.1 percent and touched an intra-day high of Rs52,968/kg yesterday.
Outlook
Gold and silver are expected to trade slightly higher today as sharp gains will be capped due to a stronger dollar.
Courtesy: Angel Commodities
Gold Sharp gains capped by stronger dollar
Asian markets are trading on a subdued note as worries about Euro Zone sovereign funding kept investors risk-averse ahead of a Spanish debt sale.
Spain is scheduled to sell up to 5 billion Euros of 2015 and 2016 paper today. Italy planned to offer up to 4.75 billion Euros of five year bonds on Friday.
China’s Consumer Price Index (CPI) declined to 4.1 percent (y-o-y) in December from the previous level of 4.2 percent in November. The country’s inflation eases to 15-month low in December which has also increased expectations that China may go for monetary easing to boost the economic growth.
The country’s Producer Price Index (PPI) also increased at slow pace to 1.7 percent (y-o-y) from previous 2.7 percent a month earlier.
UK’s Trade Balance stood at a deficit of 8.6 billion Pounds in November from the previous deficit of 7.9 billion Pounds a month earlier.
Japan’s Leading Indicators increased by 92.9 percent in November as against a previous rise of 92 percent a month ago. Japan’s Bank Lending increased by 0.4 percent in December as against a previous rise of 0.2 percent in November.
The country’s current account stood at a surplus of 0.48 trillion Yen in November from the previous surplus of 0.52 trillion Yen a month ago.
The Euro traded lower around 0.5 percent on Wednesday taking cues from rising worries over Euro Zone debt concerns coupled with a stronger dollar.
Additionally, choppy sentiments in the global markets also exerted further downside pressure on the currency yesterday. The Euro touched an intra-day low of 1.2661 and closed at 1.2702 on Wednesday.
The US dollar Index (DX) strengthened around 0.6 percent on Wednesday on the back of mixed sentiments in the global markets which fuelled demand for the low yielding dollar.
Escalating concerns over Euro Zone debt crisis led to fall in the Euro yesterday which also acted as a positive factor for the DX. The index touched an intra-day high of 81.79 and closed at the level of 81.56 on Wednesday.
China imported nearly a fifth more gold from Hong Kong in the month of November as compared to the previous month. The country imported a record 102.525 tonnes of gold from Hong Kong in November. According to the data from the Hong Kong Census and Statistics Department, the total gold imports stood at 389.295 tonnes in the first 11 months of 2011.
Courtesy: Angel Commodities
Cardamom may witness recovery on rising export demand
Cardamom January resumed down trend on long liquidation on Wednesday.
Fall in spot market prices further added to the down side and futures ended in red.
Outlook
Cardamom futures are expected open on slightly lower on corrections. Further fall in spot prices might weigh on prices. However, rising demand from domestic and export front might support the prices later in the day.
Good demand for Pongal and Sakaranti festival in domestic market is likely to keep prices stable despite of heavy arrivals.
Total Daily arrivals at spot market in Kerala were reported around 1,08,434 Kgs. on Wednesday. According to data released by Spices board, cardamom exports during Apr-Nov, 2011 were up by 444% to 3,100 tons against same period in last year.
According to derivative analysis, prices, volumes and open interest have declined. It is a good indication that the price decline is being caused by disgruntled long position holders being forced to liquidate their positions.
Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.
Courtesy: Karvy Commtrade Ltd.
NCDEX Chilli Feb to get support on adverse weather
Chilli February futures extended the recovery on short covering at previous losses on Wednesday.
Reports of rains in Guntur regions have created threat to crop as harvesting is going on which pushed the prices on higher side and futures ended in 4% upper circuit.
Outlook
Chilli February prices are projected to continue the recovery during early trading hours. According to trade sources, if rains prevail for some more days than it might cause crop damage, which might push the prices.
Otherwise, overall trend is still weak amid higher production estimates due to increased acreage. Andhra Rabi chilli area is reported 0.49 lakh ha as on 11th January v/s 0.43 lakh ha yr ago.
As per trade sources, production in coming season is expected to be higher by 20-30% to 12.5-13 lakh tonnes.
According to derivative analysis, prices and volumes have increased while open interest has declined. It is a good indication that Market has a lot of traders initiating from both sides but larger traders may be liquidating into the higher prices.
The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of day.
Courtesy: Karvy Commtrade Ltd.
Jeera fundamentals weak, NCDEX Jan Jeera to decline
Jeera January futures witnessed smart recovery on short covering at lower level on Wednesday.
Despite of bearings fundamentals futures resumed uptrend and ended on higher note.
Outlook
Jeera futures are expected to trade on slightly positive note during early trading session. Rumours of crop damage due to prevailing foggy weather conditions in major jeera growing regions might support the prices.
However, overall fundamentals are still weak amid higher acreage under jeera sowing. Therefore, in medium term prices might resume down trend amid higher production estimates.
As per Rajasthan Agricultural Ministry Till date sowing in Jodhpur is around 1.5 time more than previous year but seed germination is down to 60-70 percent from last year 85-90 percent.
However, in Naguar district, sown is around 2 times more. According to derivative analysis, volumes and open interest have declined while prices have increased.
It is a good indication that Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions. A higher probability the market is set to retrace in price lower.
Courtesy: Karvy Commtrade Ltd.
NCDEX Pepper to be weighed down by subdued exports
Pepper January futures took smart recovery on short covering on previous huge fall.
From opening on the session futures traded down extending the down trend.
However, later on prices reversed the trend and traded up witnessing slightly positive closing.
Outlook
Pepper January futures are expected open on slightly positive note on continued short covering.
However, prevailing fundamentals fresh crop arrival along with subdued export activity might weigh on prices later in the day.
Overseas buyers are in wait and watch mode as they are waiting for Vietnam crop to hit the market. Despite of lower Indian prices in global pepper market export demand is remaining very sluggish due to prevailing volatility in prices.
According to IPC, global pepper production is likely to increase by 7% while consumption & exports are expected to increase by 3% & 2% respectively. According to derivative analysis, volumes and open interest have declined while prices have increased.
It is a good indication that Market is running out of traders willing to open or hold an open long/buy. Traders are liquidating both loosing short positions & closing winning long positions.
A higher probability the market is set to retrace in price lower.
Courtesy: Karvy Commtrade Ltd.
Guar seed to trade range bound on lack of fresh export demand
Guar seed and gum hit upper circuit levels for third straight session. Spot market arrivals are declining as peak arrivals season has come to an end across major spot markets.
Activities are also very low due to the cold weather conditions prevailing in north western regions.
Thus futures prices rallied due to bleak arrivals amidst modest demand.
Outlook
Guar seed and gum futures might remain in range while trend is not clear. Fresh export demand is also absent across major markets due to higher prices.
Chinese import demand is lower for textile and food industry. Importing at such higher price of guar gum might reduce profit margin in food and confectionary industries.
Position limit is imposed on the far month contracts of guar seed and guar gum with effective from 21st which might reduce the positions in the markets.
Courtesy: Karvy Commtrade Ltd.
Chana to trade positive on lower production estimates
Chana futures prices remained in very small range yesterday as the spot prices and arrivals remained stable and activities across spot markets were also very subdued.
Spot prices remained stable at Rs. 3400-3425/quintal across major spot markets.
Arrivals remained at 25-30 motors and imports tenders of desi chick pea kept the market cautious.
Outlook
Chana prices might remain with more bias towards positive side for today. Arrivals to start of soon from south India regions might limit any steep upside while supply crunch situation in pulses is in long run is also supportive for prices.
Production during 2011-12 might remain lower by2-3 million tons lower than last year where demand might out weigh supply.
Acreage in south India is lower than last year and crop estimation is lower by 0.5 lakh tons which might cushion prices.
Courtesy: Karvy Commtrade Ltd.
RM Seed gains tracking soy complex
Mustard seed prices gained on Wednesday in line with soy complex on the Indian commodity bourses.
Spot prices of oil and meal gained marginally which supported mustard prices to stay firm.
Production estimates are currently lower and acreage is lagging by 4 lakh hectares kept the prices higher.
Outlook:
Mustard prices might witness a downs side opening while overall positive trend remains intact on concerns of lower production estimates and the lower sown area.
Production estimates for current year is lower by 10 million tons than previous estimate. Production might remain at 5.5 million tons compared to initial estimates of 6.5 million tons.
Current weather across Rajasthan regions might help crop to recover from stress while it might not compensate for the lower production estimates as drop in acreage has a stronger stance in yields.
Courtesy: Karvy Commtrade Ltd.
Soyoil market volatile, CBOT soyoil ends lower
Soy oil prices remained very volatile by trading on both sides during the day. Rupee appreciations affected the market sentiments yesterday as the oil prices declined in line.
CBOT soy oil prices ended lower on concerns of crop recovery in Latin America and stronger dollar index.
Outlook:
Edible oil prices might extend losses initially while overall positive trend is still intact. Recovery in weather conditions over Latin American regions is affecting the sentiments while the amount of crop recovery due to this would be less as this has been the worst drought since 70 years.
Prices of soy oil from Brazil and Argentina have cooled off a tad which might further keep prices under pressure initially.
Estimations of lower imports in India during December and January might help the prices to rebound from lower levels.
Courtesy: Karvy Commtrade Ltd.
NCDEX Soybean gains strength on weak supply projections
Soybean prices traded lower in the first session while it recovered from the lows in the second session.
Strength in weak supply side projection supported the prices to recover from lower levels as estimates of the supply demand is also lower for soybean.
Spot prices remained stable along with arrivals of 1.6 lakh bags in M.P.CBOT soybean prices declined largely because of the rain which eased the crop stress in Latin American region and stronger dollar index.
Outlook:
Soybean prices might open lower in today’s trading session pressurized by recovering weather conditions over Latin American regions.
But these showers would be sufficient enough to combat for the losses so far.
The drought has been worst since 70 years which might not be easily eased with modest showers reported currently. Thus prices might recover towards the end of the day.
About 83% of crop is in flowering and pod filling stages which requires ample moisture in Brazil.
Absence of moisture at these stages in South American countries might lead to lower yields and production.
Domestic arrivals are also gradually declining across spot markets extending support to the price rally. Meal demand is surging currently which might further keep the prices positive. Estimations of lower edible oil imports might also support domestic buying in turn supporting the prices.
Courtesy: Karvy Commtrade Ltd.
Base metals gain on rising equities, China demand
Base metals gained yesterday as expected in our daily report. Due to better demand from Chinese bourses coupled with gain in equities the metals pack continued to be at the positive side. Among base metals Nickel was the only loser due to low demand as the metal users like steel manufacturers may be closely aligning with supply side to minimize losses.
Today morning the metals are trading slightly negative by 0.5 percent at the LME electronic platform. The Asian equities are trading mix with slightly on the gaining side. Fundamentally the inventory of base metals has witnessed drawdown coupled with increased cancelled warrants. The warrants of Copper and Lead have increased by 2 percent supporting the gain in prices.
The spot demand for the metals have improved ahead of the Chinese week long holidays. Better trade balance and fall in inflation has propelled the Chinese demand. From the economic data front, a host of data is expected to be mostly positive from the UK in the form of Industrial and manufacturing production. Much of investor’s eye around the globe will be on the interest rate from BOE and ECB and are expected to remain unchanged as the debt crisis is still mounting high in the region.
From US the retail sales are expected to increase coupled with a fall in inventories and may continue to support the gains in metals. The jobless claims are expected to remain mostly at a blend. Therefore with constant interest rates coupled with better manufacturing and retail sales followed by fall in inventories base metals may continue to be on the gaining side. Overall we recommend being at the buying side at lower levels for the day.
ALUMINIUM
Aluminum prices continued to gain and it came up slightly by 0.05 percent at LME, while it came up by 0.59 percent
The inventory has also witnessed drawdown and the cancelled warrants are hovering around 14.92 percent supporting the gains
Due to closure of smelters and force majeure by Alcoa, Rio-tinto and Norsk Hydro some of the major producers, the prices are continuing to gain as supply constraints may affect Aluminum market
COPPER
Copper was the top gainer for consecutive days and prices came up by 0.52 percent at LME and it came up by 0.87 percent at Indian markets
The inventory has witnessed drawdown and the cancelled warrants are also maintaining at 13.73 percent indicating rise in demand for the metal
Prior to the Chinese holiday, the red metal is witnessing stockpiling thereby resulting in gains.
LEAD
Lead prices also gained and it came up slightly by 0.05 percent at LME, and prices came up by 0.15 percent at MCX
The cancelled warrants were reducing but has improved yesterday and is presently at 9.12 percent and may further support gains due to better demand
The open interest has also improved with the contango indicating the future bullish trend
NICKEL
Nickel was the only metal that lost in yesterday’s session and prices came down by 0.28 percent at LME and by 0.45 percent at MCX
The cancelled warrants remained unchanged with slight gain in inventory indicates the poor demand
The open interest has declined but the contango is slowly building indicating the bullish trend for the metal in future
ZINC
Zinc prices came up by 0.31 percent at LME and the prices gained 0.60 percent at MCX
The cancelled warrants have been reducing day by day and presently is the lowest among all metals at 1.28 percent indicating the poor spot demand
The open interest for futures have reduced coupled with southwards contango indicates the dicey trend for the metal in future
Courtesy: Karvy Commtrade Ltd.
Turmeric to trade sideways on lacklustre demand
Depleting arrivals amidst dull demand in the domestic mandi kept Turmeric Spot prices steady on Wednesday. Futures however, witnessed selling pressure despite record high exports of Turmeric till Apr- November 2011 and settled 0.22% lower yesterday.
Production, Arrivals and Exports
Arrivals in Nizamabad mandi stood around 1,000 bags while Erode mandi remained closed on Wednesday.
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
Pepper may bounce back on buying at support levels
Lacklustre demand from the domestic buyers kept Spot pepper prices weak on Wednesday. Fresh crop arrivals in small quantities also are providing support to the bears in the market. However, Futures traded bearish in the early part of the trading session but bounced back from the support levels and settled 0.59% higher yesterday owing to reports of good exports registered in the month of November 2011.
Demand from the overseas and domestic 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 $6,500/tonne while Vietnam is offering its ASTA pepper at $6,775/qtl.
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 3 tonnes while offtakes stood at 7 tonnes on Wednesday.
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: Pepper trade board)
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 Feb gains on demand from crushers
NCDEX February soybean futures traded higher on 3rd consecutive trading session on account of improved demand from crushers and firm overseas market as weather concern in South America (Brazil and Argentina). Total arrivals of soybean in Madhya Pradesh were 1.80 lakh bags, Maharashtra 90,000 bags and Rajasthan was 50,000 bags (Bag=100 Kg) on Wednesday.
Production estimate of global soybean is expected to decline in the USDA’s monthly supply and demand report which is scheduled to release on January 12, 2012 as dry weather concern in South America also added bullish market sentiment.
As per Solvent Extractors’ Association (SEA) show oil meal exports jumped to 953,526 tonnes in December 2011, up by 24.48% as compared to 765,954 tonnes in the corresponding month last year.
During the first nine months of the current financial year, Indian traders managed to ship 38,68,831 tonnes of oil-meals — a rise of 23 per cent from 31,47,512 tonnes during the same period of last year. The major destinations for Indian soy oil meal exports were Japan, Vietnam, Indonesia, China and Thailand.
Rape/mustard Seed
NCDEX January RM Seed futures traded higher on 3rd trading sessions on account of strong gains in other oilseeds and vegetable oil. Lower production estimates of RM Seed as lower sowing acreage coupled with crop damage report also provided support to the bulls.
According to Rajasthan farm department first advance estimates for Rabi crop, mustard output is estimated at 35.3 lakh tonnes in 2011- 12 compared to 38.8 lakh tonnes in 2010-11 season. The country's mustard Rabi sowing has totaled 6.46 million hectares as on January 05, 2012, down 5.4% from 6.82 million hectares in the year-ago period. Mustard seed accounts for about 70% of India's winterseason oilseed output. Mustard Seed stock at NCDEX warehouses was 44,336 tonnes Monday as compared to 39,072 tonnes on Saturday.
Refined Soy Oil
NCDEX January refined soy oil futures traded higher on account of improved demand of edible oil as winter season demand. As per Malaysian Palm Oil Board, Malaysia’ s crude palm oil output fell 8.2% from a month ago 1.49 million tonnes also added bullish market sentiments. The country's palm oil output in 2011 stood at 18.91 million tonnes as against 16.99 million tonnes in the previous year.
December-end palm oil inventories fell to 2.04 million tonnes from 2.07 million tonnes in the earlier month. As per SGS (cargo surveyor), Malaysian Palm Oil exports in the first 10 days of January 2012 fell by 19% to 352,800 tonnes as compared to last month during the same period. Imported crude soy-oil price quoted Rs 66,500 /tonnes on Wednesday as compared to Rs 66,200/tonne on Tuesday. Imported crude palm oil price quoted lower at Rs 54,500 /tonnes on Wednesday as compared to Rs 54,200/tonnes on Tuesday (source: SEA).
Courtesy: Angel Commodities
Sugar to trade sideways to up on likely decontrol of industry
Spot prices settled marginally higher 0.25% on expectations that government might consider second tranche of exports shortly. Also, reports that government might discuss on decontrol of sugar and levy sugar supported prices yesterday. Discussion on the same is scheduled on January 16, 2012.
Sugar recovery in Maharashtra during October 2011-December 2011 stood at 10.35% as compared to 9.80% in the same period previous year.
However, Sugar recovery in U.P. is lesser at 8.47% till 3rd January 2012 as compared to 8.73% in the same period previous year.
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. The quota for January is much lower compared to January 2011 monthly quota of 19.18 lakh tonnes and last month’s quota of 19.07 lakh tonnes.
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.
Mixed sentiments prevailed across global Sugar markets with Liffe ending higher by 1.07% while ICE down by 0.09%. Although International Sugar prices have fallen drastically during the past few months, buyers are not hurrying to build fresh long positions on account of comfortable supplies.
Domestic Sugar updates
Sugar output in Maharashtra rose 18.8% between Oct 01 and Dec 31, 2011 to 27.5 lakh tonnes. The output was earlier down by 6%. According to ISMA, India is likely to have crushed 14.4 mln tn cane during Oct 1-Nov 23 and produced 7.58 mln tn sugar vs 6.46 mil tn during the current crushing season.
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
Chana futures gain on lower acreage
Chana spot as well as futures settled 0.2% and 0.79% higher on account of Lower area covered under Chana and thereby fears of lower output in the coming season. As the Rabi sowing season is almost nearing its end, area covered under the Pulses and Chana are probably to miss the target.
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 5th 2012 is 5.23% down at 8.72 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
Guar futures to weaken on cut in position limits
Guar futures settled at 4% upper limit for the third straight day during the week. Expectations of tight supplies in the long run owing to robust exports and lower output have led to whopping 120% rise in Guar prices since last 2 months.
FMC on Wednesday 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