Base metals upbeat, crude oil gains 1.2%
Asian stocks traded on a positive today on the back of expectations of easing monetary policy in China coupled with an improving US economic scenario. European equities are also trading in the green after Spain and France sold bonds at lower yields.
Spot gold prices increased 0.2 percent, taking cues from dollar weakness and overall stable global market sentiments. Prices touched an intra-day high of $1669.75/oz and trading around $1664.29/oz today till 4:30pm IST. On the MCX, prices increased by 0.1 percent today and were hovering around Rs.27512/10gms till 4:30pm IST.
Taking cues from rise in gold prices and upside in base metals, Spot Silver increased by 0.9 percent today till 4:30pm IST. Prices touched an intra-day high of $30.86/oz and hovering around $30.74/oz till 4:30pm IST. On the MCX, prices increased by 0.6 percent and was trading at Rs.53741/kg till 4:30pm IST.
Base metals are trading on an upbeat note, with copper trading around 1.6 percent higher on the LME at around $8388/tonne.
Prices on the MCX tested a high of Rs425.70 till 4.30pm IST today. Sentiments in case of base metals have turned bullish on market expectations of a reversal in China’s monetary policy following slow GDP growth in the fourth-quarter of 2011 coupled with a fall in inflation. Another factor that supported upside in base metals in the international markets is the weakness in the US Dollar, which is trading lower on the back of positive risk sentiments.
Nymex crude oil prices gained by 1.2 percent today on the back of expectations that Iran will disrupt crude oil supplies from Middle East. Additionally, a weaker dollar also acted as a positive factor for the commodity. Prices touched an intra-day high of $101.82/bbl and hovering around $101.78/bbl till 4:30pm IST. On the MCX, prices increased by 1.3 percent and trading around Rs.5116/bbl till 4:30pm IST.
The US Energy Department (EIA) is scheduled to release it weekly inventories report today and crude oil inventories is expected to rise by 2.8 million barrels for the week ending on 13th January 2012. Gasoline stocks are expected to increase by 2.6 million barrels whereas distillate inventories are also expected to boost by 2.0 million barrels for the same period.
Outlook
Overall global market sentiments are bullish and on the back of this we expect the US Dollar is expected to trade on a weaker note. Gold and silver prices are expected to trade higher, taking cues from dollar weakness and upbeat market sentiments today.
Base metals are expected to trade on a positive note on expectations of a reversal in Chinese monetary policy and as optimism in the markets rises after IMF’s proposal to boost its lending limits.
Potential supply disruptions from Iran, dollar weakness and hopes of an easy Chinese monetary policy are expected to support crude oil prices on the upside today.
Courtesy: Angel Commodities
Base metals edge higher on macroeconomic concerns
The base metals pack closed in the green on Monday as news that the IMF would boost its lending resources coupled with hopes of an easing monetary policy in China supported upside.
The US Dollar Index weakened sharply and this factor too lent support to prices. Overall, in the current context it is the macroeconomic developments which are providing cues to prices.
China is allowing its five largest banks increase lending and is also weighing a plan to relax capital requirements. This news has also boosted market sentiments at a time when the global economy grapples with the economic crisis in the Euro Zone.
A slowing Chinese economy is detrimental to global economic growth and the move by China to boost lending will bring in a sense of relief in the global markets.
Copper the leader of the base metals pack gained 0.7 percent on Wednesday and touched a high of $8263/tone and closed at $8257/tonne.
Courtesy: Angel Commodities
Crude oil ends higher on global economic concerns
Oil prices write off the gains and however closed in the positive territory on Wednesday on news that the White House rejected a Canadian company’s proposal to build a pipeline from the US Canada border to the Gulf of Mexico.
The Obama refused a permit for TransCanada Corp’s Keystone Pipeline which would have carried crude to the US Gulf Coast refineries from Alberta’s oil sands.
Although crude oil came under pressure, the commodity closed above the $100/bbl mark yesterday. But a factor that protected sharp downside in crude oil prices was the unexpected decline in oil supplies by 4.8 million barrels in the week ended January 13th.
Despite the disapproval of the pipeline due to which inventories at Cushing Oklahoma could rise, we feel that crude oil prices will continue to trade above the $100/bbl mark on account of potential supply disruptions from Iran.
EIA Inventories Forecast
The US Energy Department (EIA) is scheduled to release it weekly inventories report today and crude oil inventories is expected to rise by 2.8 million barrels for the week ending on 13th January 2012.
Gasoline stocks are expected to increase by 2.6 million barrels whereas distillate inventories are also expected to boost by 2.0 million barrels for the same period.
Courtesy: Angel Commodities
Precious metals settle higher on dollar weakness
In yesterday’s trade, Spot Gold increased by 0.5 percent on account of dollar weakness and increase in crude oil prices which supported demand for the yellow metal as an inflation-hedge.
Spot Gold prices touched an intra-day high of $1662/oz and closed at $1660/oz in yesterday’s trading session. On the MCX, prices declined by 0.4 percent on account of Rupee appreciation and closed at Rs.27475/10 Gms on Wednesday.
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 $30.59/oz and closed at $30.46/oz on Wednesday. On the MCX, prices increased by 0.4 percent and closed at Rs.53428/kg in yesterday’s trading session.
Courtesy: Angel Commodities
India soybean settles lower on weak domestic demand
Soybean prices remained in loosing spree for third consecutive session. Arrivals across spot markets are still prominent at 1-2.5 lakh bags during this week despite end of the arrivals season.
Buyers are away from the market awaiting for clear weather scenario in South American countries.
CBOT soybean prices ended higher marginally owing to the weakening dollar index while over all trend is still weak.
Soy oil prices declined steeply for third consecutive day on Wednesday owing to the weakness in demand at spot markets post festive season.
Appreciation rupee is also erasing the concerns of the lower imports making the imports cheaper. Weather over Southern American is also raising hopes of ample supplies of bean which is affecting the sentiments.
However CBOT prices closed slightly higher only due to weak dollar otherwise no fundamental factor is supporting the upside.
Mustard seed prices extended losses inline with the soy complex on concerns that the oilseeds supply situation is easing.
Weather over major mustard growing regions like rajasthan is congenial for crop as per trade sources which kept price sunder pressure.
Courtesy:Karvy Comtrade Ltd.
NCDEX turmeric gains on rising spot demand
Increased fresh arrivals in the domestic market coupled with fragile demand from the domestic and overseas buyers led Spot prices to settle 2.58% lower on Wednesday. Futures on the other hand witnessed mixed trades and ended 0.13% higher yesterday.
Production, Arrivals and Exports
Arrivals in Nizamabad mandi stood around 3,000 bags while Erode mandi witnessed arrivals of only 2000 bags 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
NCDEX jeera plunges on higher sowing
Reports of better area covered under jeera in Gujarat and thereby better output in 2012 led Spot prices and Futures to remain weak and settled 1.49% and 2.17% down respectively on Wednesday.
According to Gujarat farm ministry, area sown under jeera till January, 18th 2012 stood at 3.682 lakh hectares (lh) up 50% as compared to last year while area covered in Rajasthan till date is expected to be 3.03 lakh hectares as compared to 3.30 lakh hectares in the same period last year. Carryover stocks of jeera is expected to be around 9-10 lakh bags as compared to 4-5 lakh bags in the last year.
Prices in the global markets of Indian origin are quoting around $2,800-2,950/tn while Syrian origin is quoting at $3,100-$3,150/tn.
Production, Arrivals and Exports
Unjha markets witnessed arrivals of 4,500 bags while offtakes stood at 4,000 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-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 ends higher on short covering
Pepper prices in the Spot and Futures continued to add to the gains of the previous day and settled 0.28% and 0.63% higher respectively on Wednesday owing to nil arrivals in Kochi market caused by Mullaperiyar dam issue in Kerala.
Demand from the overseas buyers remains dull currently as buyers remain absent from the market. Fresh arrivals from the domestic will gain momentum at the end of the month (January 2012).
Indian parity in the international market is being offered at $6,800/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 falls on poor spot demand
Soybean: NCDEX February soybean futures fell sharply as lower demand coupled with increased arrivals in major mandis. Total arrivals of soybean in Madhya Pradesh increased to 1.70 lakh bags on Wednesday from 1.50 lakh bags Tuesday (Bag=100 Kg). Soybean prices in Indore Mandi auction were quoted in a range of Rs 2340- 2380 per qtl and plant delivery prices were in a range of Rs 2420- 2450 per qtl (which is lower Rs 30-40 Rs per qtl as compared to previous day).
As per WASDE, USDA which is released on January 12, 2012, U.S. oilseed production for 2011/12 is estimated at 91.2 mln tons, up 0.2 million tonnes from last month. Soybean production is estimated at 3.056 billion bushels, up 10 mln tons based on increased yields. The soybean yield is estimated at 41.5 bushels per acre, up 0.2 bushels from the previous estimate. Global oilseed production for 2011/12 is projected at 457.4 million tons, down 0.3 mln tons.
Global soybean production is projected at 257 million tons, down 2.2 million mostly due to lower production forecasts for South America. The Argentina soybean crop is projected at 50.5 mln tons, down 1.5 mln tons due to lower projected area and yields. The Brazil soybean crop is reduced 1 mln tons to 74 mln reflecting hot, dry conditions in recent weeks. Global oilseed ending stocks are projected at 74.8 mln tons, down 0.7 mln tons.
Rape/mustard Seed: NCDEX April RM Seed futures traded sharply lower as huge losses in other oilseeds and vegetable oil. According to NCDEX data, over 62,000 tonnes of mustard seed will expire its validity on Feb 5 for the purpose of delivery on exchange platform, which means buyers in January contract are likely to be marked for delivery of these stocks also provided support to the bears.
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. Rabi sowing acreage of mustard seed in Gujarat declined to 13.8% to 186,800 hectares as of Monday (January 16, 2012), showed data released by the state's agriculture department, Gujarat.
As per PIB, Total area under oilseeds cultivation is reported to be 80.96 lakh ha against 85.5 lakh ha last year as January 13, 2012. The country's RM seed sowing has totaled 64.83 lakh ha as on January 13, down 4.96% from 68.21 lakh ha in the year-ago period. RM seed accounts for about 70% of India's winter-season oilseed output.
Refined Soy Oil: NCDEX Feb refined soy oil futures ended lower on account of lower global demand of edible oil at prevailing prices. INR against US dollar also provided support to the bears. As per SGS (cargo surveyor), Malaysian Palm Oil exports in the first 15 days of Jan 2012 fell by 11% to 575,833 tons as compared to last month of during the same period.
As per SEA of India, India imported 654,714 tons edible oil in December, down 21% from the month of Nov 2011. In the first two months of the current oil year (Nov- Dec), edible oil imports were at 14.82 lakh tons against 13.82 lakh tons a year ago.
Current stock of edible oils as on 1st Jan, 2012 at various ports is estimated at 620,000 tons(CPO 420,000 tons, RBD Palmolein 100,000 tons, Degummed Soybean Oil 35,000 tons and Crude Sunflower Oil 65,000 tons) and about 720,000 tons in pipelines.
Courtesy: Angel Commodities
NCDEX sugar settles higher on short covering
Sugar prices settled 0.8% higher on Wednesday on the reports that Food Minister would soon take up the matter of sugar sector decontrol with Finance Minister Pranab Mukherjee. Further, expectations that govt may soon decontrol sugar industry also supported prices.
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 mln tn. Thus there is a wide scope for exports from India.
Global Sugar Updates
Thailand has crushed 9.4 mn tn cane this season against 3.3 mn tn a year ago. Thailand sugar output could reach to 9.9 million tonnes in 2011-12 compared to 9.64 million tonnes in 2010-11.
According to UNICA, Sugar output in Brazil's center-south from the start of the season to January 01,2012 stood at 31.2 million tonnes down 7% for this time a year ago. Total 2011-12 crush of sugar stood at 492.23 million tonnes down 11% from a year earlier.
Swiss sugar consultancy Kingsman lowered its global 2011-12 sugar surplus estimate by 940,000 tn to 8.22 mln tn.
Courtesy: Angel Commodities
NCDEX chana tumbles on arrival pressure
Chana futures declined sharply by 3.85% on Wednesday 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. However the downside was limited in the spot markets as fresh demand was seen emerging at lower levels.
According to the Rajasthan farm department’s first advance estimates for Rabi crops, Chana output is estimated 7.8% lower at 14.75 lakh tonnes in 2011-12 season against 16 lakh tonnes in 2010-11.
Rajasthan is the third largest Chana producing state in India contributing around 10-12% share in total Indian Chana output after MP and Maharashtra. Although sowing of Chana is higher in Rajasthan, unfavorable climate is expected to lower the yield of the Chana crop in the coming season harvesting of which would begin in February in Rajasthan.
Chana sowing across India as on January 13th 2012 is 5.23% down at 8.722 million hectares as compared to 9.22 million hectares in the same period previous year. Highest decline in area is witnessed in Maharashtra where sowing is down 23%, while in Karnataka it is down by 19%.
Crop progress and Production
Chana is the main Rabi Pulse crop grown in India, sowing of which is done during October-December, and harvesting begins in January. Sowing of Chana began on a brisk note; however, the progress was not satisfactory in Maharashtra, Karnataka, UP, Bihar and AP and thus acreage has declined drastically.
Further, unfavorable weather in Central and Southern India may lower Chana yield in the coming season. Except in Rajasthan, all other major producing states i.e MP, Maharashtra, Karnataka and AP are likely to witness a fall in output in the coming season harvesting of which would begin after mid January.
Indian government is targeting total pulses output of 17 mln tn in the current crop year that started July 2011, down marginally from last year's record production of 18.09 mln tn on account of 10% decline in Kharif Pulses output.
Although government has targeted higher Rabi Pulses output, it is difficult to achieve the same taking into consideration the sowing progress and prevailing weather conditions.
Courtesy: Angel Commodities
NCDEX guar seed surges on thin supply
After hitting lower circuit in the opening session, Guar seed and Guar gum were unable to sustain at lower levels and rebounded sharply to hit an upper circuit of 4% despite FMC taking stricter measures to curb the spiraling Guar prices. Expectations of tight supplies in the long run pushed spot prices higher by 5.5%.
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