Precious metals, crude oil settle higher on macroeconomic concerns
Precious metals traded firm, with gold prices managing to settle above the psychological levels of US$1,650/ounce, aided by a weaker US dollar. Euro was underpinned by improvement in Germany's ZEW sentiment index, which rose to -21.6 from -53.8 in December, although still in negative territory.
On European debt front, Portugal aims to sell up to 2.5bn euros of treasury bills today. Germany is looking to raise around 4bn euros in the bond market today, followed by Spain and France tomorrow. Meanwhile, International creditors plan to resume talks with Greece on a debt swap plan. On the physical front, India has hiked its gold import duty by 90% and doubled the duty on silver, in order to seek increase in revenues.
LME base metals settled with gains, deriving strength from the outflow of better macroeconomic numbers from China. China’s GDP during fourth quarter of 2011 expanded at 8.9%, as compared with the forecasts of 8.7% growth.
China’s industrial production grew at 12.8% in December, as compared with 12.4% growth in November. Moreover, speculation is rife that Chinese policy makers will shift focus towards an easier monetary policy by lowering reserve requirement and interest rates. In fact, there are signs that some loosening is taking place, with the People’s Bank of China apparently allowing banks to set aside less of their deposits as reserves during last month.
Aluminium prices continued to remain underpinned by production cutbacks. On supply/demand front, ILZSG reported that global zinc market was in surplus by 337,000 tons in the first 11 months of 2011.
Crude oil futures extended gains, supported by escalating tensions between Saudi Arabia & Iran and better macroeconomic numbers in US. Iran has warned Gulf Arab neighbors of severe consequences, if they raised oil output to make up for any shortage caused by an embargo on Iran’s crude oil exports. However, supply concerns have eased to a certain extent, after European Union has delayed the ban on imports of Iranian crude by six months.
In US, manufacturing activity in the New York region expanded at the fastest pace in nine months. In this regard, Federal Reserve Bank of New York’s general economic index rose to 13.5, from a revised 8.2 in December. On supply front, US Energy Department report is anticipated to show that U.S. crude stockpiles rose 3mn barrels.
Courtesy: IIFL
Base metals settle lower on global economic concerns
In the last week, data from China also indicated that inflation in China eased in December, further supporting views that the country would opt for an easy monetary policy as inflation concerns subside.
Also, in the current scenario, the world’s fastest growing economy is also facing the impact of the ongoing European economic crisis. Worsening of the economic crisis in Europe could affect exports from China and an easy monetary policy would be the way to protect further deterioration in economic growth.
Copper
Although copper prices witnessed sharp gains yesterday, in the short-term the red metal remains vulnerable to the current European economic crisis and any negative news or development could lead to re-emergence of selling pressures Hopes that China would move forward to loosen its monetary policy boosted the base metals complex on Tuesday.
Copper, the leader of the base metals pack jumped to the highest in three-months as reduced interest rates in the country could help increase demand from copper fabricators in China who have held back consumption due to increased borrowing costs.
Courtesy: Angel Commodities
Crude oil trades up on weak US dollar
Crude oil prices closed higher by around 2 percent on Tuesday, above the crucial $100/bbl mark on the back of better-than expected Chinese economic growth, dollar weakness and expectations of a reversal in monetary policy by China.
Improvement in the US economic scenario and positive data releases from Germany also provided a sense of re-assurance in the global markets yesterday. Moreover, comments from Iran advising Saudi Arabia to not replace Iranian oil supplies if sanctions are actually enacted also supported oil prices.
In the current context, supply-side worries are a dominant factor in providing direction to oil prices. In order to discourage Iran’s nuclear program, the European Union has proposed sanctions to block oil imports from the country.
We expect this factor to continue to support prices in the near-term as an actual implication of this sanction could disrupt oil supplies and affect the global oil supply scenario.
API Inventories Forecast
The American Petroleum Institute (API) is scheduled to release its weekly inventories today and crude oil inventories are expected to increase by 2.8 million barrels for the week ending on 13th January 2012.
Gasoline stocks are expected to rise by 2.6 million barrels and distillate inventories are also expected to shoot up by 1.6 million barrels for the last week.
Courtesy: Angel Commodities
Precious metals edge higher on China's positive economic data
In yesterday’s trade, gold witnessed a good rally on account of dollar weakness and sharp increase in crude oil prices which supported demand for the yellow metal as an inflation-hedge.
Positive economic data from China also helped stabilize market sentiments and supported gold as it is mainly performing like a risky asset in the current scenario.
Spot Gold prices touched an intra-day high of $1667.41/oz and closed at $1652/oz in yesterday’s trading session. On the MCX, prices increased by 0.4 percent and closed at Rs.27588/10 Gms on Tuesday.
Silver
Silver prices also witnessed upside and the white metal closed above the $30.0/oz mark as dollar weakness, upside in gold and a rally in base metals supported upside.
Spot Silver prices touched an intra-day high of $30.56/oz and closed at $30.1/oz on Tuesday. On the MCX, prices increased by 1.7 percent and closed at Rs.53207/kg in yesterday’s trading session.
Courtesy: Angel Commodities
NCDEX turmeric finishes down on higher stocks
Bumper crop of Turmeric this year and sufficient carryover stocks is keeping market sentiments bearish. Spot mandis remained closed on the occasion of Pongal while Futures ended 1.21% down on Tuesday.
Production, Arrivals and Exports
Arrivals in Nizamabad mandi stood around 1,000 bags while Erode mandi witnessed arrivals of 10000 bags on Friday.
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 under pressure on higher sowing
Lower arrivals in the domestic market led Spot prices to settle 0.47% higher while Futures witnessed mixed sentiment and settled 1.77%% lower on Tuesday.
According to Gujarat farm ministry, area sown under jeera till January 9, 2012 stood at 3.649 lakh hectares (lh) up 49.2% 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 4,100 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-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 weighs down on arrival pressure
After trading bearish in the last few trading session Pepper prices bounced back from the support levels on account of improved buying by the market participants. Prices in the Spot and Futures settled 1.40% and 1.68% higher on Tuesday.
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 $6,800/tonne while Vietnam and Indonesia are offering its ASTA pepper at $6,500/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 10 tonnes while offtakes stood at 30 tonnes on Tuesday.
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 down on global cues
Soybean: NCDEX February soybean futures traded lower as weak overseas market as lower demand due to euro zone concern. Total arrivals of soybean in Madhya Pradesh increased to 1.50 lakh bags on Tuesday from 1.25 lakh bags Monday, Maharashtra 1 lakh bags from 75,000 bags and Rajasthan was 40,000 bags (Bag=100 Kg) Tuesday, unchanged from Monday. Soybean prices in Indore Mandi auction were quoted in a range of Rs 2390-2420 per quintal and plant delivery prices were in a range of Rs 2470-2500 per quintal.
As per WASDE, USDA which is released on January 12, 201, U.S. oilseed production for 2011/12 is estimated at 91.2 million tons, up 0.2 million tonnes from last month. Soybean production is estimated at 3.056 billion bushels, up 10 million 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 million tonnes. 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 million tons, down 1.5 million due to lower projected area and yields. The Brazil soybean crop is reduced 1 million tons to 74 million reflecting hot, dry conditions in recent weeks. Global oilseed ending stocks are projected at 74.8 mln tons, down 0.7 million tons.
Rape/mustard Seed: NCDEX April RM Seed futures traded lower as weakness in other oilseeds and vegetable oil. However, for 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. 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 February refined soy oil futures ended lower on account of lower global demand of edible oil at prevailing prices. Rupee appreciation against US dollar also provided support to the bears. As per SGS (cargo surveyor), Malaysian Palm Oil exports in the first 15 days of January 2012 fell by 11% to 575,833 tonnes as compared to last month of during the same period.
As per Solvent Extractors Association of India, India imported 654,714 tonnes edible oil in December, down around 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 tonnes as against 13.82 lakh tons a year ago. Current stock of edible oils as on 1st January, 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 declines on production concerns
Sugar prices continued to decline in the initial trade on the reports of 19% increase in Sugar output estimates during the period Oct 01, 2011 – 15th Jan , 2012. However prices recovered marginally towards the end after Food Minister K.V. Thomas said he would soon take up the matter of sugar sector decontrol with Finance Minister Pranab Mukherjee. 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 Futures traded rangebound and settled 055% higher on Monday on account of lacklustre trades.
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 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 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 slumps on fresh arrivals
Chana futures declined sharply by 3.99% on Tuesday as the arrivals of fresh crop started in Maharashtra. 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. This was also seen pressurizing Chana prices.
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 by19%.
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 plunges on profit booking
After touching record high level for the 10th consecutive session on Tuesday, Guar seed and Guar gum were unable to sustain at higher levels and settled at lower freeze of 4% as the FMC took stricter measures to curb the spiraling Guar prices.
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