India’s growth rate is expected to clock 6.4 to 7% in 2009-10 as most Asian economies are expected to rebound from the financial crisis which is positive for both equity and commodity markets. Commodity exchanges in the country have already witnessed their combined turnover rise by 32.92 per cent till September 15 this fiscal over the same period last year, even as bullion trade dipped marginally, the commodity market regulator Forward Markets Commission (FMC) said.
BSE Sensex has climbed above !7000 levels for the first time since May 2008 on hopes of better quarterly earnings, banking, infrastructure stocks.
Poor demand in consuming countries have led to 20% fall in India’s coffee exports while global sugar prices are rising on Nagging worries over the impact on sugar supplies from top producer Brazil due to persistent and excessive rain, combined with expectations of further demand by Mexico, the US and India, have fuelled bullish sentiments in sugar.
According to data released by the Coffee Board, for the crop year ending September 30, 2009, India’s coffee exports stood at 1,81,069 tonnes as against 2,27,779 tonnes in the previous year, a decline of 20.5 per cent.
Export earnings were Rs 1,978 crore for the year, down over 17 per cent compared with the previous year. Unit value remained flat at around Rs 1 lakh per tonne.
Precious Metals
After initial weakness followed by marginal gains gold bounced backed to regain $1000 on Wednesday and managed to stay close to the $1000 mark as dollar retreated over news of deeper than expected US job losses in September. In the global market, gold rose above $1000 on Friday while in India prices dropped by Rs 50 per 10 gms at Rs 15,590. Earlier in the week, crude oil rally and geopolitical tensions supported dollar’s upward moves.
Gold prices are in for weakness as lower oil prices curbs demand for safe haven investments. Easing inflationary pressures does not augur well for gold. December Gold futures rose $3.60 at $1004 an ounce in the comex division of New York Mercantile Exchange. In the near to medium term, inflationary pressures and trends in dollar are major factors affecting bullion prices. The gold-to-oil ratio hs risen to 14.40 towards weekend from 14.17 previously. Spot Gold had risen to $ 1006 per ounce on intra-day trading on Tuesday.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its holdings stood at 1,095.327 tonnes as of Oct. 1. As of Sept. 30, it was up 1.22 tonnes from the previous business day. MCX December gold had strong support at 15452 and ended with a profit of RS 63 at Rs 15598. However, the trend looks downward while global prices are likely to hover close above $1000 mark next week.
Base Metals
Base metals face downside pressure on the back of bad economic news coupled with Chinese holiday. Copper prices ended the week on a negative note, losing almost 2% the last week. Poor US unemployment figures coupled with a long holiday in China kept the world’s largest copper consumer away. US non-farm payrolls revealed a loss of 263,000 jobs in September, while the market had braced itself for a lesser decline of 179,000 jobs.
The unemployment rate, however, met expectations at 9.8 percent. US carmakers watched sales drop 23.3 percent year-on-year to 721,378 vehicles in September, leaving the market reeling after the cash for clunkers incentives program ended in August. Though we have witnessed a downside in copper prices due to absence of China we feel that prices could rise by the end of next week as investment funds could buy ahead of return of the Chinese players in the market. Trading in the Shanghai markets will commence on 9th October, which is a Friday. Factor that could prevent a sharp upside by the end of next week in base metals could be a stronger dollar which has now found some strength on the back of poor US economic data.
Economic data from the US has raised concern that the situation still remains bleak. Overall, the employment scenario is still disturbing and the rally in base metal prices ahead of actual economic improvement may be threatening from the short-term perspective. We hold the view that, the slight improvement that is being witnessed in the economic data across the globe is mainly linked to the stimulus and other financial measures. If economies were left aside without stimulus measures, we could not have witnessed this change in economic figures. Hence, the rally in base metals remains under threat of a correction as demand needs to show strong improvement. Prices have raced ahead of their fundamentals; hence profit-booking at higher levels cannot be ignored. In the coming week, copper prices are expected to find support at 281.35/276.85 and face resistance at 294.50/303.15.
Energy
Crude oil prices gained a whopping 6% in the last week despite inventory data showing a rise. Crude oil supplies gained 2.8 million barrels to 338.4 million. Distillate stockpiles, which include heating oil and diesel, rose 323,000 barrels to 171.1 million. That’s a sixth weekly increase even as refinery output and imports dropped. Gasoline inventories fell 1.7 million barrels to 211.5 million in the week to Sept. 25. Oil prices received support on the back of weakness in the US Dollar Index in the early part of the week. However, the dollar index strengthened by the end of the week as bad economic data from the US lowered demand for higher-yielding and riskier investment assets and raised demand for the low-yielding dollar.
Oil prices touched a high of $71.39/bbl last week but closed below the $70/bbl mark as the dollar showed strength on Thursday and Friday. The decline in oil prices on Friday was after an economic report that showed that the US jobless rate increased to a 26-year high in September, boosting concern that fuel demand will take time to rebound. Economic concerns still persist and prices could face resistance around $70/bbl levels as demand scenario is not expected to improve significantly. In the coming week too, we could witness a rise in oil inventories and that could add pressure on oil prices. If the dollar strengthens on the back of rise in demand for low-yielding currencies then that will also add pressure on the downside. In the coming week, we expect oil prices to find support at 3212/3080 and face resistance at 3445/3540 levels.
Soybean
Soybean (NCDEX November contract) futures moved in a range of 2005-2051.50 levels during the last week. Soybean prices fell slightly lower on account of harvesting pressure of new crop in Maharashtra and Madhya Pradesh during the last week. Lower export demand of domestic soy meal and globally soybean production is estimated higher as compared to last year provided support to bears in the market. However, it recovered slightly on lower sowing acreage this year as compared to last year by Ministry of Agriculture and lower production estimates to 97 lakh tonnes this year from 108 lakh tonnes last year as per the Soybean Processors Association of India (SOPA). Domestic kharif oilseeds area so far been covered on 172.21 lakh hectares against 181.34 lakh hectares during corresponding period a year ago, as on September 24, 2009.The area under soybean is reported down at 95.90 lakh hectares against 96.24 lakh hectares a year ago, groundnut at 44.22 lakh hectares vs 51.95 lakh hectares in the corresponding period last year. In the coming week, prices are expected to trade lower on account of harvesting pressure in major producing states like Maharashtra and Madhya Pradesh. Prices have strong support at 1945/1910 and resistance is seen at 2060/2115 levels.
Chana
Chana prices witnessed a bearish trend in the last one month due to tremendous pressure from the government to curb the rising prices. Also, huge stocks of Chana supported the bearish market sentiments. Futures prices of Chana which surged 2.5% during the initial days of the last week on improved demand ahead of festival season erased the early gains and settled lower during the weekend due to adequate supplies in the markets. During the last week, October Chana contract traded in the range of Rs.2281-2353 per qtl.
Chana production stood at around 7.05 MMT up from the 2007-08 final estimates of 5.75 MMT. Also, it is expected that the acreage under Chana in the coming Rabi season will be more due to higher moisture level. Thus, overall sentiments in Chana remain bearish in the medium to long term. However in the short term, Chana prices will remain firm due to good demand ahead of festival season. Also, higher prices of other Pulses would support the sentiments in the short term. NCDEX Chana November contract is having strong support at 2335/2300 per qtl and resistance is seen at Rs. 2415/2455 per qt.
Black Pepper
Black pepper market was very volatile in the beginning of the week as bear operators were at centre-stage aided by higher crop arrivals from Brazil and Indonesia. On Tuesday October contract declined by Rs 48 on NCDEX to close at Rs 13,995 a quintal. November and December dropped by Rs 50 and Rs 14 respectively to close at Rs 14,160 and Rs 14,301 a quintal.
Pepper futures market on Thursday went up in the forenoon on bullish reports based on the earthquake in Indonesia and buy calls from expert analysts.
It dropped in the afternoon on sell calls to close below Wednesday’s closing. Profit booking at the end of the day also led to fall in prices although firm trend was visible due to robust spot demand, low stocks and reviving exports. India’s pepper is quite competitive as its ASTA Grade at $3000-3050 is cheaper than Vietnamese offering. Spot pepper rose by nearly 5 rupees and ended at 14,193.75 rupees per 100 kg in Kochi, a major trading hub in Kerala.
Fundamentals remain bullish on reviving exports, low stocks and robust spot demand. Decreasing price gap with leading global producers of the spice has led to export interest trickling back to India. Demand for spices usually goes up during August to October, the country's peak festival season.
Rubber
Weak to steady trend was visible in rubber spot markets in the country and this was also reflected in domestic futures at NMCE as the traders look for definite direction before making trades. RSS 4 grade was quoted at Rs 107.50 on extremely dull volumes. Tyre sector demand also looks dull, traders said. The October futures for RSS 4 closed at Rs 108.15 (108.21), November at Rs 109.09 (109.02), December at Rs 110.70 (110.96) and January at Rs 112.50 (112.19) a kg on National Multi Commodity Exchange (NMCE).
Rubber declined as global equity markets dropped and U.S. auto sales slumped in September, eroding optimism that demand may grow for the commodity used in tires and gloves.
At TOCOM, rubber futures turned weak tracking Japanese equity market on unexpected drop in US manufacturing data, increasing jobless claims and declining September auto sales. Martch delivery rubber lost 3.8 yen at 198.6 yen a kg before closing at 200.8 yen although initially the contract had gain as much 2.7% in the week. Fundamentals for rubber continued to be steady to weak as data on automobile sales and economic recovery is not yet positive.
Wheat
Weakness was visible in India wheat futures on hopes of higher output. Agriculture Minister Sharad Pawar recently said that the extended monsoon season augors well for winter-sown crops such as wheat as soil moisture is set to improve.The winter sowing season starts next month. The October futures contract NWTV9 on National Commodity and Derivatives Exchange fell to 1,222.6 rupees per 100 kg on Thursday.On Sept. 1, India had 30.1 million tonnes of wheat stocks, up from 23.2 million tonnes a year earlier. At the beginning of the new marketing year in April 2010, stocks are estimated at 10 million tonnes.
This week, CBOT wheat has rebounded an reports that US farmers are likely to go slow on sowing due to falling prices. CBOT Wheat has dropped 25% this year due to abundant supplies and falling export demand from USA. However, towards weekend, the bounce could not be retained and fell to $4.39 a bushel on large world supplies and spillover pressure form other markets. Canada has also raised it s wheat production dampening market sentiments.
Showing posts with label rubber. Show all posts
Showing posts with label rubber. Show all posts
Tuesday, 6 October 2009
Sunday, 9 August 2009
Commodity Trends:Are we in for shortages in 2010
Commodity shortages are likely next year as output of metals and agricultural products potentially rises too slowly to match revival of demand, according to a Goldman Sachs Group study. The Reuters/Jefferies CRB Index of 19 commodities has added 17 percent this year, driven by energy and metals prices. Limits on production growth and swelling demand in developing nations will keep driving prices higher and probably curb usage in industrialized countries like the U.S., Goldman Sachs said.
Meanwhile, in India scanty rains are a cause for concern in some major crop growing regions and Finance Minister Pranab Mukherjee hinted that it would be damaging for economic growth which had begun to look up due to stimulus measures.
India's exports fell for ninth month in a row. Commerce Ministry said, exports in June dipped 27.7%. Imports also dropped by 29.3%, reflecting slowdown in domestic consumption and mainly because a 51% decrease in oil import.
As fall in imports is steeper than that in exports, the trade deficit in June 2009 has contracted to $6.2 billion from $9.1 billion in the same month of the last financial year. Exports dipped to $12.8 billion in June from $17.7 billion in the same month last year
A few major developments related to commodity exchanges last week. It was announced that commodity bourses such as MCX, NCDEX and NMCE can now hold equity stake in one another as the government has allowed cross-holding in national level commodity exchanges that have completed five years. The new guidelines on equity structure issued recently by the consumer affairs ministry, the stock and commodity exchanges can hold a maximum equity of up to 15% in commodity bourses that have completed five years.
Forward Markets Commission (FMC), India's commodity market regulator, has asked national-level commodity exchanges to ensure at least 10 percent of their stake is owned by government companies. Total stake by state firms, banks and warehouses together should be at least 26 percent, while only the original promoter of the exchange can hold upto 26 percent, it added.
The guidelines were aimed at better governance, transparency and investor confidence in the markets. Volumes in India's commodity futures, one of the fastest growing in the world, rose 29 percent in 2008/09 financial year ending March to 52.49 trillion rupees.
Precious Metals
The Bullion pack traded higher for the past week with Spot Gold trading above $935 levels. Silver prices also moved in tandem with gold prices trading higher. The sharp fall in the Dollar Index (the USD pegged against 6 major currencies) supported the rally in the bullion pack as assets traded in USD dollar terms appreciate in value terms when the Dollar weakens. A further sustained fall in the USD would lead to a sharp rally in the bullion pack. Investment/Fabrication demand shall continue to play a crucial role in coming weeks. Also, broad-based buying was also witnessed across the commodities pack is currently being witnessed as risk appetite of global investors is on the rise, which has been pressurizing the USD. Higher crude prices and overall improvement in sentiments have been supportive for the bullion pack. Spot Gold shall meet with resistance around $975 - $980 zone, and further trading above this level would lead prices towards the $1000 mark. Domestic gold prices breached the Rs.15,000 mark last week. For this week, we expect prices to trade higher with resistance seen at 15070/15220 whereas support is seen at 14750/14590.
Base Metals
The Base metals pack last week rallied sharply on the back of improving global economic sentiments & weakness in the US Dollar. In the last few days, the base metals market has been running on a very optimistic note due to a steady stock market recovery but, with only moderate seeds of consumer demand. The market also seems almost immune to any negative data. Despite slower summer physical conditions evidenced on the back of rising inventories and falling cancelled warrants, prices are witnessing an uptrend. However, we feel that base metals could come under pressure as prices are racing ahead of their fundamentals. Hence, prices may be due for a correction this week on account of profit-booking. Copper, the leader of the base metals pack, shall have crucial support around 281/273 levels whereas resistance is seen around 297/305 levels for this week.
Soybean
Soybean (NCDEX Sep contract) futures opened the week at Rs 2334 a quintal, and surged more than 5% during the last week as compared to previous week on account of short covering and strong movement of soybean futures at Chicago Board of trade (CBOT). Better demand from solvent extractors amid tight supply led to spurt in prices. Traders are resorting to hoarding, as there is a growing concern in respect with the paucity of rainfall.
Moreover, market participants are anticipating that the government may declare a drought. As per IMD report, the rainfall for the week to August 5 was 66% below normal. As per Agriculture Ministry of India, area covered under domestic kharif oilseeds is 141.79 lakh hectares till July 31, 2009, as compared with 144.66 lakh hectare during corresponding period a year ago. In this respect, area under Soybean is reported up at 90.74 lakh hectare against 87.75 lakh hectare a year ago. As per Brazil’s crop supply agency, soybean crop estimates for 2008/09 was about unchanged at 57.13 million tonnes compared to record 60.02 million tonnes in 2007/08. In the coming week, prices are expected to move higher on account of lower soybean stocks and better demand from solvent extractors. NCDEX September Soybean prices has a support at 2350/2300 and resistance is seen at 2510/2550 levels.
Chana
Chana futures gained over 5% during the last week due to weak rainfall in key pulses growing areas, which have led to the speculation that the Kharif output would be lower in the coming season. September contract recovered from its low of Rs. 2475 per qtl levels and settled at around 2600 levels on Friday. Chana output in Rabi 2008-09 stands at around 70 lakh tonnes. Thus, there are huge stocks of Chana or gram in the domestic markets. Despite this, Chana prices are not able to sustain at the lower levels due to the soaring prices of other Pulses.
Delayed monsoon and thereby delay in the sowing of Kharif Pulses like Tur, moong and Urad has led to the speculation that there might be supply shortage in the coming months. Chana is the only pulses crop which is such available at such lower prices. Thus, sellers are not ready to sell Chana at the current prices, thereby restricting the supplies. On the other hand, demand is vibrant from the processors and millers ahead of the festive season. The government measures to control the rising pulses prices might pressurize Chana prices to some extent. However, any significant decline should be treated as a good buying opportunity. We expect September Chana contract to trade in the range of Rs. 2530-2700 per qtl in the coming week.
Pepper
Spot pepper prices at Kochi surged due to buying by the stockists and increase in the pepper parity of various origin. There are reports that the pepper crop in Brazil is expected to be lower due to heavy rains in Para state, which is major producing area of pepper in Brazil. Fresh arrivals of pepper in the Brazil will commence in the month of September. Vietnam has lower stocks of pepper to sell, as it has already exported around 65000 tonnes of pepper from its fresh crop of 110000 tonnes during this year. Thus it would not aggressively sell pepper. Indian pepper in the international market is quoting at $3075/tonne (C&F). Strong demand from the overseas and domestic market is expected in the coming days. Pepper futures have touched a high of Rs.14,750/qtl, breaking an important resistance level of Rs. 14,400/qtl. Prices may trade in sideways to upward trend in the coming days. Technically prices may have a strong support at 14,400/3,800 levels. Resistance may be seen at 15080/15,600 levels.
Rubber
Rubber spot market witnessed weak to mixed trends throughout the weak despite bull rally in TOCOM futures. Absence of quantity buyers in main marketing centres was responsible for sudued sentiments. Spot prices which had improed to Rs 101 in the beginning of the week later weakened to Rs 100.
The physical rubber prices were weak on Thursday. According to observers there were no quantity buyers in the main marketing centres to keep the market firm though the domestic and international futures were in a bullish mood. Sheet rubber declined to Rs 100 from Rs 100.50 a kg on buyer resistance.
The August futures for RSS 4 firmed up to Rs 102.10 (101.28), September to Rs 99.73 (98.66), October to Rs 97.05 (96.63) and November to Rs 97 (96.52) a kg on National Multi Commodity Exchange (NMCE) on Thursday.
Despite rising imports, prices of natural rubber have remained buoyant throughout the past few months on the back of a shortfall in the global production.
The import of rubber by tyre companies has touched about 79,573 tonnes during April to August 4, 2009 as compared to 24,264 tonnes during the same period of the year-ago period, growing at a rate of 228%. Stocks of natural rubber now stands at 1.8 lakh tonnes, against 1.2 lakh tonnes during the same period of last year. Lower exports also added to the stocks.
Despite such a major increase in import and stocks, the rubber price has not seen a downturn. After hovering around Rs 98 to Rs 99 per kg in the past one month, the price touched Rs 100 per kg-mark on August 1. On Thursday, the price stood at Rs 100 per kg.
AT TOCOM, prices slipped 2.5 percent on Friday after reaching a nine month high on Tuesday, booking its first weekly decline in five weeks, on speculation a U.S. jobs report may revive concern that worsening unemployment will curb consumer spending and cap demand for the commodity. Investors are cutting long positions on doubts about fall in spending.
January-delivery rubber fell as much as 4.8 yen to 191 yen a kilogram ($2,003 a metric ton) on the Tokyo Commodity Exchange before settling at 191.9 yen. The decline was fast as investor resistance was stiff above 200 yen.
Rubber gained 21 percent in July, the most since December 2006, and have jumped 44 percent this year as global equities rallied and exporters, including Thailand, curbed shipments. Rubber is expected to exhibit weakness and range-bound trading close to Rs 100 levels is likely next week.
Crude Oil
Crude oil began the week on a rosy note and hit a one-month high of $71 on Monday as positive Chinese data and firm equities signaled economic recovery and higher energy demand. US Crude hit a intra-day high of $71.95 before settling at $71.50.
Brent crude was getting close to resistance levels and continued support from equities were required to stabilize prices.
On Friday, Crude oil fell below to$71 per barrel on the New York Mercantile Exchange after attaining a 5-week high although equities fared well in Wall Street. Light, sweet crude traded lower, losing $1.01 to reach $70.86 per barrel. Heating oil prices lost 0.0163 cents to $1.9145 per gallon. Reformulated gasoline prices fell 0.0524 cents to $2.003 per gallon. Natural gas prices lost 0.0866 cents to $3.70 per million British thermal units.
The dollar gaining against euro reduced the appeal of commodities, a forecast showing a weaker Atlantic hurricane season offset an upbeat US job report. The U.S. National Oceanic and Atmospheric Administration (NOAA) said that it now expects a near- to below-normal hurricane season, as the effect of the El Niño weather pattern continues to develop. Meanwhile US weekly employment data was supportive and prevented sharp fall in oil prices. The four-week average of new claims dropped to 555,250, the lowest level since January.
Oil Futures have so far gained 59% this year. The speed of the oil price surge in recent times also made it susceptible to correction. In the near term, weakness is likely in the oil segment with possibility of prices declining to $60 and then rebounding.
Meanwhile, in India scanty rains are a cause for concern in some major crop growing regions and Finance Minister Pranab Mukherjee hinted that it would be damaging for economic growth which had begun to look up due to stimulus measures.
India's exports fell for ninth month in a row. Commerce Ministry said, exports in June dipped 27.7%. Imports also dropped by 29.3%, reflecting slowdown in domestic consumption and mainly because a 51% decrease in oil import.
As fall in imports is steeper than that in exports, the trade deficit in June 2009 has contracted to $6.2 billion from $9.1 billion in the same month of the last financial year. Exports dipped to $12.8 billion in June from $17.7 billion in the same month last year
A few major developments related to commodity exchanges last week. It was announced that commodity bourses such as MCX, NCDEX and NMCE can now hold equity stake in one another as the government has allowed cross-holding in national level commodity exchanges that have completed five years. The new guidelines on equity structure issued recently by the consumer affairs ministry, the stock and commodity exchanges can hold a maximum equity of up to 15% in commodity bourses that have completed five years.
Forward Markets Commission (FMC), India's commodity market regulator, has asked national-level commodity exchanges to ensure at least 10 percent of their stake is owned by government companies. Total stake by state firms, banks and warehouses together should be at least 26 percent, while only the original promoter of the exchange can hold upto 26 percent, it added.
The guidelines were aimed at better governance, transparency and investor confidence in the markets. Volumes in India's commodity futures, one of the fastest growing in the world, rose 29 percent in 2008/09 financial year ending March to 52.49 trillion rupees.
Precious Metals
The Bullion pack traded higher for the past week with Spot Gold trading above $935 levels. Silver prices also moved in tandem with gold prices trading higher. The sharp fall in the Dollar Index (the USD pegged against 6 major currencies) supported the rally in the bullion pack as assets traded in USD dollar terms appreciate in value terms when the Dollar weakens. A further sustained fall in the USD would lead to a sharp rally in the bullion pack. Investment/Fabrication demand shall continue to play a crucial role in coming weeks. Also, broad-based buying was also witnessed across the commodities pack is currently being witnessed as risk appetite of global investors is on the rise, which has been pressurizing the USD. Higher crude prices and overall improvement in sentiments have been supportive for the bullion pack. Spot Gold shall meet with resistance around $975 - $980 zone, and further trading above this level would lead prices towards the $1000 mark. Domestic gold prices breached the Rs.15,000 mark last week. For this week, we expect prices to trade higher with resistance seen at 15070/15220 whereas support is seen at 14750/14590.
Base Metals
The Base metals pack last week rallied sharply on the back of improving global economic sentiments & weakness in the US Dollar. In the last few days, the base metals market has been running on a very optimistic note due to a steady stock market recovery but, with only moderate seeds of consumer demand. The market also seems almost immune to any negative data. Despite slower summer physical conditions evidenced on the back of rising inventories and falling cancelled warrants, prices are witnessing an uptrend. However, we feel that base metals could come under pressure as prices are racing ahead of their fundamentals. Hence, prices may be due for a correction this week on account of profit-booking. Copper, the leader of the base metals pack, shall have crucial support around 281/273 levels whereas resistance is seen around 297/305 levels for this week.
Soybean
Soybean (NCDEX Sep contract) futures opened the week at Rs 2334 a quintal, and surged more than 5% during the last week as compared to previous week on account of short covering and strong movement of soybean futures at Chicago Board of trade (CBOT). Better demand from solvent extractors amid tight supply led to spurt in prices. Traders are resorting to hoarding, as there is a growing concern in respect with the paucity of rainfall.
Moreover, market participants are anticipating that the government may declare a drought. As per IMD report, the rainfall for the week to August 5 was 66% below normal. As per Agriculture Ministry of India, area covered under domestic kharif oilseeds is 141.79 lakh hectares till July 31, 2009, as compared with 144.66 lakh hectare during corresponding period a year ago. In this respect, area under Soybean is reported up at 90.74 lakh hectare against 87.75 lakh hectare a year ago. As per Brazil’s crop supply agency, soybean crop estimates for 2008/09 was about unchanged at 57.13 million tonnes compared to record 60.02 million tonnes in 2007/08. In the coming week, prices are expected to move higher on account of lower soybean stocks and better demand from solvent extractors. NCDEX September Soybean prices has a support at 2350/2300 and resistance is seen at 2510/2550 levels.
Chana
Chana futures gained over 5% during the last week due to weak rainfall in key pulses growing areas, which have led to the speculation that the Kharif output would be lower in the coming season. September contract recovered from its low of Rs. 2475 per qtl levels and settled at around 2600 levels on Friday. Chana output in Rabi 2008-09 stands at around 70 lakh tonnes. Thus, there are huge stocks of Chana or gram in the domestic markets. Despite this, Chana prices are not able to sustain at the lower levels due to the soaring prices of other Pulses.
Delayed monsoon and thereby delay in the sowing of Kharif Pulses like Tur, moong and Urad has led to the speculation that there might be supply shortage in the coming months. Chana is the only pulses crop which is such available at such lower prices. Thus, sellers are not ready to sell Chana at the current prices, thereby restricting the supplies. On the other hand, demand is vibrant from the processors and millers ahead of the festive season. The government measures to control the rising pulses prices might pressurize Chana prices to some extent. However, any significant decline should be treated as a good buying opportunity. We expect September Chana contract to trade in the range of Rs. 2530-2700 per qtl in the coming week.
Pepper
Spot pepper prices at Kochi surged due to buying by the stockists and increase in the pepper parity of various origin. There are reports that the pepper crop in Brazil is expected to be lower due to heavy rains in Para state, which is major producing area of pepper in Brazil. Fresh arrivals of pepper in the Brazil will commence in the month of September. Vietnam has lower stocks of pepper to sell, as it has already exported around 65000 tonnes of pepper from its fresh crop of 110000 tonnes during this year. Thus it would not aggressively sell pepper. Indian pepper in the international market is quoting at $3075/tonne (C&F). Strong demand from the overseas and domestic market is expected in the coming days. Pepper futures have touched a high of Rs.14,750/qtl, breaking an important resistance level of Rs. 14,400/qtl. Prices may trade in sideways to upward trend in the coming days. Technically prices may have a strong support at 14,400/3,800 levels. Resistance may be seen at 15080/15,600 levels.
Rubber
Rubber spot market witnessed weak to mixed trends throughout the weak despite bull rally in TOCOM futures. Absence of quantity buyers in main marketing centres was responsible for sudued sentiments. Spot prices which had improed to Rs 101 in the beginning of the week later weakened to Rs 100.
The physical rubber prices were weak on Thursday. According to observers there were no quantity buyers in the main marketing centres to keep the market firm though the domestic and international futures were in a bullish mood. Sheet rubber declined to Rs 100 from Rs 100.50 a kg on buyer resistance.
The August futures for RSS 4 firmed up to Rs 102.10 (101.28), September to Rs 99.73 (98.66), October to Rs 97.05 (96.63) and November to Rs 97 (96.52) a kg on National Multi Commodity Exchange (NMCE) on Thursday.
Despite rising imports, prices of natural rubber have remained buoyant throughout the past few months on the back of a shortfall in the global production.
The import of rubber by tyre companies has touched about 79,573 tonnes during April to August 4, 2009 as compared to 24,264 tonnes during the same period of the year-ago period, growing at a rate of 228%. Stocks of natural rubber now stands at 1.8 lakh tonnes, against 1.2 lakh tonnes during the same period of last year. Lower exports also added to the stocks.
Despite such a major increase in import and stocks, the rubber price has not seen a downturn. After hovering around Rs 98 to Rs 99 per kg in the past one month, the price touched Rs 100 per kg-mark on August 1. On Thursday, the price stood at Rs 100 per kg.
AT TOCOM, prices slipped 2.5 percent on Friday after reaching a nine month high on Tuesday, booking its first weekly decline in five weeks, on speculation a U.S. jobs report may revive concern that worsening unemployment will curb consumer spending and cap demand for the commodity. Investors are cutting long positions on doubts about fall in spending.
January-delivery rubber fell as much as 4.8 yen to 191 yen a kilogram ($2,003 a metric ton) on the Tokyo Commodity Exchange before settling at 191.9 yen. The decline was fast as investor resistance was stiff above 200 yen.
Rubber gained 21 percent in July, the most since December 2006, and have jumped 44 percent this year as global equities rallied and exporters, including Thailand, curbed shipments. Rubber is expected to exhibit weakness and range-bound trading close to Rs 100 levels is likely next week.
Crude Oil
Crude oil began the week on a rosy note and hit a one-month high of $71 on Monday as positive Chinese data and firm equities signaled economic recovery and higher energy demand. US Crude hit a intra-day high of $71.95 before settling at $71.50.
Brent crude was getting close to resistance levels and continued support from equities were required to stabilize prices.
On Friday, Crude oil fell below to$71 per barrel on the New York Mercantile Exchange after attaining a 5-week high although equities fared well in Wall Street. Light, sweet crude traded lower, losing $1.01 to reach $70.86 per barrel. Heating oil prices lost 0.0163 cents to $1.9145 per gallon. Reformulated gasoline prices fell 0.0524 cents to $2.003 per gallon. Natural gas prices lost 0.0866 cents to $3.70 per million British thermal units.
The dollar gaining against euro reduced the appeal of commodities, a forecast showing a weaker Atlantic hurricane season offset an upbeat US job report. The U.S. National Oceanic and Atmospheric Administration (NOAA) said that it now expects a near- to below-normal hurricane season, as the effect of the El Niño weather pattern continues to develop. Meanwhile US weekly employment data was supportive and prevented sharp fall in oil prices. The four-week average of new claims dropped to 555,250, the lowest level since January.
Oil Futures have so far gained 59% this year. The speed of the oil price surge in recent times also made it susceptible to correction. In the near term, weakness is likely in the oil segment with possibility of prices declining to $60 and then rebounding.
Sunday, 5 July 2009
Commodity Trends:Hopes high on CTT removal
The Railway Budget and Economic Survey 2008-09 have raised hopes of a reformist budget from Finance Minister Pranab Mukherjee on Monday. The Survey has favoured regulation of the commodity futures market by the Securities and Exchange Board of India (Sebi), lifting of ban on futures trading of rice, tur and urad, extension of spot commodity trading in electronic form to agricultural markets by involving APMCs and complete removal of the commodity transaction tax (CTT).
Since Commodity Futures also are part of the financial market, it should be regulated by SEBI, according to the Survey. The Survey hints at removal of commodity transaction tax (CTT) which was vehemently opposed by the industry when the concept was introduced in 2008 budget but not yet notified.
Last week, among the major exchange-related news include MCX launching futures in gasoline. There were also reports that Universal Commodity Exchange has approached the Forward Markets Commission (FMC) to set up India's sixth national level commodity exchange which is promoted by IT entrepreneurs.
Meanwhile, state-run MMTC Ltd, the country’s biggest importer of gold, said it will import 150 tonnes of the yellow metal during the 2009-10 fiscal, the same quantity it imported last fiscal.
Precious Metals
The overall Bullion pack was under pressure last week with Gold continuing to trade sideways whereas Silver witnessed a sharper fall. Weak US economic data and sharp fall in US stock markets made investors rush towards the safe refuge of the US Dollar. Earlier in the week, reports that China has asked to debate proposals for a new global reserve currency at next week’s Group of Eight summit in Italy had supported the Bullion pack. Further, holdings in the world's largest gold-backed exchange-traded fund (SDPR) have been falling in the past few weeks as growing optimism about the global economy saps investors' appetite for the safe-haven asset. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,120.55 metric tons.
Spot Gold continues to trade in the range of $912 - $948 zone. Overall, gold has benefitted from persisting worries that heavy government borrowing could boost inflation. Physical demand from India has been weak with imports down 50% year-on-year in the first half of this year compared with the first six months of 2008, as per the Bombay Bullion Association. For the week, we expect Spot Gold prices to have immediate support at $920/$908 whereas resistance is seen at $944/$958. Spot Silver prices shall find support at $13.00/$12.70 whereas resistance is seen at $13.65/$13.95. MCX August Gold has support at 14350/14260 whereas resistance is seen at 14580/14710. MCX Sep Silver shall find support at 21220/20750 whereas resistance is seen at 21950/22410 levels.
Crude Oil
Crude Oil prices pared early gains and tumbled in the last week, reaching to their lowest level in one month and marking its third successive weekly loss, as bearish weekly inventory data and relatively strong dollar against major currencies exerted pressure on oil prices. Oil prices are also taking cues from equity markets and weak global equity markets dented risk sentiments in the market and weighed on oil prices. NYMEX May Crude Oil futures ended the week 5.10% lower than the previous week to close at $65.63 per barrel, the lowest closing level since 3rd June.
Crude Oil prices are facing downward pressure once prices reach above $70 mark, as recent economic data is still mixed and raising concerns in the mind of investors with regard to early economic recovery. With unemployment rates are at multi year high, consumers are unlikely to expedite consumption in the near term, which can certainly curb the energy demand. Global risk sentiment is on the edge and if equity markets peak off, then we can see fall in risk appetite, which can potentially reduce demand for higher yielding assets like commodities.
Weekly inventory data in US is showing that energy demand in world’s largest oil consuming nation is still more than 5% less than last year. Despite US summer driving season is underway, gasoline demand is not picking up, which is certainly not a positive sign. Traders will also have to look out for trend in dollar, as rising dollar can also weigh on oil prices. Rising geopolitical tension in the Nigeria is the only possible factor which can lend support to oil prices. Due to above mentioned factors; we expect that oil prices can face resistance near $70 levels and it can eventually head downwards towards $60-61 levels.
Soybean
Soybean (NCDEX Aug contract) prices opened the week at Rs 2550/quintal, initially fell sharply on account of lower export demand of soy meal from global livestock industry. However, it could not sustain at lower levels and prices moved slightly higher after making a low of 2462 levels and finally managed to close at 2490 levels on account of short covering, value buying, lower stock of soybean and delayed monsoon in major growing areas also provided support to bulls in the market.
Oil meal exports declined to 1,97,593 metric tonnes in June 2009, down 33% as compared to 2,95,204 metric tonnes in June 2008. While, during the first three months of financial year (April-June, 2009) total oil meal export was 6,14,528 metric tonnes, down 57% on corresponding period last year. India exported 1,09,923 metric tonnes of soy meal, 58, 805 tonnes of rape/mustard seed meal, 12580 tonnes of rice bran meal and 16046 tonnes of castor meal in June 2009.
Plantation of soybean has started during the first week of July in major producing state (Madhya Pradesh). Area covered under kharif oilseeds is 6.63 lakh hectares, down by 65% as compared to 19.23 lakh hectares in corresponding period a year ago, due to delayed monsoon this year. Domestic area under soybean is reported lower at 1.63 lakh hectare compared to 8.11 lakh hectare in the corresponding period a year ago.
USDA’s planted Acreage Report released on Tuesday, which shows soybean acreage number was only 77.43 million acres, about 500,000 acres below trade expectations. However, this was still up from 76.024 million acres on the USDA’s March 31st report, it is largest soybean acreage number on record. In the coming week (NCDEX Aug Soybean), prices are expected to move range bound with a support at 2450/2350 and resistance is seen at 2550/2620 levels.
Black Pepper
Black Pepper prices in the spot markets quoted in the range of Rs.12,500 – Rs.12,900/qtl in the past 15 days. Prices witnessed strength in the beginning due to poor monsoon rains and supportive sentiments that production could reduce in the year 2010 but declined at the end of the previous week. Indonesia fresh crop arrivals have started and they are offering it at lower levels at $2,325 a tonne (f.o.b).
Pepper prices in the international market of Indian origin are being quoted at higher levels of $2,750/tonne. Pepper imports in May showed a substantial increase into the nation. Imports of black pepper were 2,265 tonnes (May) through the Kochi port alone against export of 1,750 tonnes. Demand from the overseas and domestic continues to be lackluster. Prices at the futures after making a high of Rs.13,150/qtl dipped to lows of Rs.12,188/qtl. Prices may dip further if the support level of Rs.12,130 is breached and may touch Rs.12,050/qtl and thereafter Rs.11,600/qtl. Prices may find resistance initially at Rs.12,540/qtl and thereafter at 12,890/qtl.
Rubber
Rubber is witnessing steady to mixed trend in domestic and overseas markets. Buyer resistance is visible which is not allowing prices to go beyond Rs 98-102 range. July Futures in NMCE concluded the weekend session at Rs 96.69 while the August contract traded at Rs 93.47.
In the early part of the week, Rubber exhibited weakness and quantity buyers stayed away from spot markets. Major consumers seemed comfortable with imports rather than buying from domestic markets. The Automotive Tyre Manufacturer’s Association has urged the government bring down the customs duty on natural rubber from 20 to 10% on par with finished rubber products which is levied at 10 %.
Weakness was visible in Asian rubber futures despite the fact that International Tripartite Rubber Council members Thailand, Indonesia and Malaysia announced a decision to remove 9,15,000 tons from the market in 2009 to bolster prices. At TOCOM a steady to high trend was visible in rubber futures while Shanghai technical selling led to decline in prices.
Rubber is likely to witness steady or range-bound trading as there is no bullish factors alive with China buying the only saving grace while US and European markets appear quiet.
Base Metals
It was a rather dull weak for base metals although some recovery was visible during weekend on Chinese data.Copper exhibited weakness on concerns of a weakening US labour market. Payrolls in the U.S., the second-biggest consumer of copper after China, declined by 467,000 in June. The jobless rate climbed to 9.5 percent, the highest since August 1983. This has raised concerns about demand for industrial metals falling.
Copper for three-month delivery slid $65, or 1.3 percent, to $4,970 a metric ton. Analysts expect weaker demand and rising inventories to pull down prices to $4000 in July-September period.
Towards weekend there was a gain from economic data from China which indicated that official purchasing manager’s index for June rose to 53.2 from 53.1 in May, the fourth straight month in which the manufacturing sector has showed signs fo expansion. Nickel prices gained more than 8% to $16,600. The week ahead, expect choppy trade with some profit booking as most of the commodities are trading higher compared to fundamentals.
Last week, MCX August copper prices opened the week at 246.50 initially moved higher and as expected found good resistance at 250.45 levels. Later prices fell sharply lower breaking the initial support marginally made a low of 239.25 and finally ended the week with a loss of Rs.3.8 to close at 241.85. This week market is expected to find good resistance in the range of 243.50-245.50 levels and then strongresistance is seen at 249.50-250.50.
(With analytical inputs from Angel Commodities, Mumbai)
Since Commodity Futures also are part of the financial market, it should be regulated by SEBI, according to the Survey. The Survey hints at removal of commodity transaction tax (CTT) which was vehemently opposed by the industry when the concept was introduced in 2008 budget but not yet notified.
Last week, among the major exchange-related news include MCX launching futures in gasoline. There were also reports that Universal Commodity Exchange has approached the Forward Markets Commission (FMC) to set up India's sixth national level commodity exchange which is promoted by IT entrepreneurs.
Meanwhile, state-run MMTC Ltd, the country’s biggest importer of gold, said it will import 150 tonnes of the yellow metal during the 2009-10 fiscal, the same quantity it imported last fiscal.
Precious Metals
The overall Bullion pack was under pressure last week with Gold continuing to trade sideways whereas Silver witnessed a sharper fall. Weak US economic data and sharp fall in US stock markets made investors rush towards the safe refuge of the US Dollar. Earlier in the week, reports that China has asked to debate proposals for a new global reserve currency at next week’s Group of Eight summit in Italy had supported the Bullion pack. Further, holdings in the world's largest gold-backed exchange-traded fund (SDPR) have been falling in the past few weeks as growing optimism about the global economy saps investors' appetite for the safe-haven asset. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,120.55 metric tons.
Spot Gold continues to trade in the range of $912 - $948 zone. Overall, gold has benefitted from persisting worries that heavy government borrowing could boost inflation. Physical demand from India has been weak with imports down 50% year-on-year in the first half of this year compared with the first six months of 2008, as per the Bombay Bullion Association. For the week, we expect Spot Gold prices to have immediate support at $920/$908 whereas resistance is seen at $944/$958. Spot Silver prices shall find support at $13.00/$12.70 whereas resistance is seen at $13.65/$13.95. MCX August Gold has support at 14350/14260 whereas resistance is seen at 14580/14710. MCX Sep Silver shall find support at 21220/20750 whereas resistance is seen at 21950/22410 levels.
Crude Oil
Crude Oil prices pared early gains and tumbled in the last week, reaching to their lowest level in one month and marking its third successive weekly loss, as bearish weekly inventory data and relatively strong dollar against major currencies exerted pressure on oil prices. Oil prices are also taking cues from equity markets and weak global equity markets dented risk sentiments in the market and weighed on oil prices. NYMEX May Crude Oil futures ended the week 5.10% lower than the previous week to close at $65.63 per barrel, the lowest closing level since 3rd June.
Crude Oil prices are facing downward pressure once prices reach above $70 mark, as recent economic data is still mixed and raising concerns in the mind of investors with regard to early economic recovery. With unemployment rates are at multi year high, consumers are unlikely to expedite consumption in the near term, which can certainly curb the energy demand. Global risk sentiment is on the edge and if equity markets peak off, then we can see fall in risk appetite, which can potentially reduce demand for higher yielding assets like commodities.
Weekly inventory data in US is showing that energy demand in world’s largest oil consuming nation is still more than 5% less than last year. Despite US summer driving season is underway, gasoline demand is not picking up, which is certainly not a positive sign. Traders will also have to look out for trend in dollar, as rising dollar can also weigh on oil prices. Rising geopolitical tension in the Nigeria is the only possible factor which can lend support to oil prices. Due to above mentioned factors; we expect that oil prices can face resistance near $70 levels and it can eventually head downwards towards $60-61 levels.
Soybean
Soybean (NCDEX Aug contract) prices opened the week at Rs 2550/quintal, initially fell sharply on account of lower export demand of soy meal from global livestock industry. However, it could not sustain at lower levels and prices moved slightly higher after making a low of 2462 levels and finally managed to close at 2490 levels on account of short covering, value buying, lower stock of soybean and delayed monsoon in major growing areas also provided support to bulls in the market.
Oil meal exports declined to 1,97,593 metric tonnes in June 2009, down 33% as compared to 2,95,204 metric tonnes in June 2008. While, during the first three months of financial year (April-June, 2009) total oil meal export was 6,14,528 metric tonnes, down 57% on corresponding period last year. India exported 1,09,923 metric tonnes of soy meal, 58, 805 tonnes of rape/mustard seed meal, 12580 tonnes of rice bran meal and 16046 tonnes of castor meal in June 2009.
Plantation of soybean has started during the first week of July in major producing state (Madhya Pradesh). Area covered under kharif oilseeds is 6.63 lakh hectares, down by 65% as compared to 19.23 lakh hectares in corresponding period a year ago, due to delayed monsoon this year. Domestic area under soybean is reported lower at 1.63 lakh hectare compared to 8.11 lakh hectare in the corresponding period a year ago.
USDA’s planted Acreage Report released on Tuesday, which shows soybean acreage number was only 77.43 million acres, about 500,000 acres below trade expectations. However, this was still up from 76.024 million acres on the USDA’s March 31st report, it is largest soybean acreage number on record. In the coming week (NCDEX Aug Soybean), prices are expected to move range bound with a support at 2450/2350 and resistance is seen at 2550/2620 levels.
Black Pepper
Black Pepper prices in the spot markets quoted in the range of Rs.12,500 – Rs.12,900/qtl in the past 15 days. Prices witnessed strength in the beginning due to poor monsoon rains and supportive sentiments that production could reduce in the year 2010 but declined at the end of the previous week. Indonesia fresh crop arrivals have started and they are offering it at lower levels at $2,325 a tonne (f.o.b).
Pepper prices in the international market of Indian origin are being quoted at higher levels of $2,750/tonne. Pepper imports in May showed a substantial increase into the nation. Imports of black pepper were 2,265 tonnes (May) through the Kochi port alone against export of 1,750 tonnes. Demand from the overseas and domestic continues to be lackluster. Prices at the futures after making a high of Rs.13,150/qtl dipped to lows of Rs.12,188/qtl. Prices may dip further if the support level of Rs.12,130 is breached and may touch Rs.12,050/qtl and thereafter Rs.11,600/qtl. Prices may find resistance initially at Rs.12,540/qtl and thereafter at 12,890/qtl.
Rubber
Rubber is witnessing steady to mixed trend in domestic and overseas markets. Buyer resistance is visible which is not allowing prices to go beyond Rs 98-102 range. July Futures in NMCE concluded the weekend session at Rs 96.69 while the August contract traded at Rs 93.47.
In the early part of the week, Rubber exhibited weakness and quantity buyers stayed away from spot markets. Major consumers seemed comfortable with imports rather than buying from domestic markets. The Automotive Tyre Manufacturer’s Association has urged the government bring down the customs duty on natural rubber from 20 to 10% on par with finished rubber products which is levied at 10 %.
Weakness was visible in Asian rubber futures despite the fact that International Tripartite Rubber Council members Thailand, Indonesia and Malaysia announced a decision to remove 9,15,000 tons from the market in 2009 to bolster prices. At TOCOM a steady to high trend was visible in rubber futures while Shanghai technical selling led to decline in prices.
Rubber is likely to witness steady or range-bound trading as there is no bullish factors alive with China buying the only saving grace while US and European markets appear quiet.
Base Metals
It was a rather dull weak for base metals although some recovery was visible during weekend on Chinese data.Copper exhibited weakness on concerns of a weakening US labour market. Payrolls in the U.S., the second-biggest consumer of copper after China, declined by 467,000 in June. The jobless rate climbed to 9.5 percent, the highest since August 1983. This has raised concerns about demand for industrial metals falling.
Copper for three-month delivery slid $65, or 1.3 percent, to $4,970 a metric ton. Analysts expect weaker demand and rising inventories to pull down prices to $4000 in July-September period.
Towards weekend there was a gain from economic data from China which indicated that official purchasing manager’s index for June rose to 53.2 from 53.1 in May, the fourth straight month in which the manufacturing sector has showed signs fo expansion. Nickel prices gained more than 8% to $16,600. The week ahead, expect choppy trade with some profit booking as most of the commodities are trading higher compared to fundamentals.
Last week, MCX August copper prices opened the week at 246.50 initially moved higher and as expected found good resistance at 250.45 levels. Later prices fell sharply lower breaking the initial support marginally made a low of 239.25 and finally ended the week with a loss of Rs.3.8 to close at 241.85. This week market is expected to find good resistance in the range of 243.50-245.50 levels and then strongresistance is seen at 249.50-250.50.
(With analytical inputs from Angel Commodities, Mumbai)
Sunday, 12 April 2009
Commodity Trends: India's Futures go rural
India’s inflation fell to near zero levels although it may take some time for it to get reflected in the prices of essential commodities. Even as the BSE Sensex is moving in a narrow range unable to break the 9000 mark, India’s largest commodity bourse created a record by as its turnover touched Rs 32016 crore on a single day the previous highest being Rs 29,887 crore in September 18, 2008. Angel Commodities, one of the leading commodity brokerages also announced the crossing of a major milestone of Rs 1000 crore turnover. What ever gains in BSE in recent days has been attributed to growth in commodity stocks.
Commodity market regulator, Forward Markets Commission (FMC) will install at least 180 display boards at locations such as rural post offices, Krishi Vigyan Kendras and APMCs across the country in the next 10 days to provide prices of farm com modity futures to farmers. Meanwhile gold and crude oil continue to generate more volumes in India’s commodity bourses.
Precious Metals
Gold prices recovered strongly from its lows during last week and almost touched a high of $970/oz., as the Federal Reserve's plans to purchase as much as $1.15 trillion in U.S. bonds and mortgage-backed securities sparked worries of inflation ahead, raising gold's appeal as a hedge against rising prices. This is the most aggressive plan taken by Fed since the early 1960. Demand from gold ETF also increased during this week. Holdings in SPDR Gold Trust, world’s largest gold ETF, touched an all time high of 1103.29 tons.
The volatility in prices in the Bullion pack has increased greatly over the past few months with 19 March being a highly volatile trading day. Spot Gold is finding excellent support in the zone of $880-$890 levels which is viewed as value buying zone by investors. Whereas major resistance zone is seen between $960-$970. The demand for the safe-haven asset is still prevalent with the USD weakening consistently over the past few trading sessions. Also, the increased volatility in the Rupee is playing its role in determining domestic bullion prices. In coming weeks & months, the state of the overall global economic scenario will play a key role in determining bullion prices as investors evaluate various asset classes to channel their funds. Still gold remains the best bet under current market scenario. MCX April Gold can face resistance around Rs.15600 levels, whereas support is seen at Rs. 14850 per 10 gram.
Crude Oil
crude Oil prices traded higher amidst high amount of volatility in the last week. Oil prices surged to a three month high on account of weak dollar and rally in global equity markets. Despite bearish inventory data, prices rebounded from its lows, after US Federal Reserve decided to buy Treasury bonds worth $300bn to ease credit market. Steps taken by Fed rekindled hopes for economic recovery and rise in energy demand. Crude Oil prices have increased by more than 20% this year, on account of strict implementation of production cuts by OPEC to reduce excess supply and weak dollar against major currencies. Volatility in oil prices has increased sharply in past few trading sessions. We expect that oil prices can witness fierce tussle between bulls and bears in coming weeks. Factors like falling demand and weak economic data are favoring bears, but weak dollar, rise in risk appetite amidst strong equity markets are giving bulls a reason to come back in to market. After last week’s rally, oil prices can witness profit booking. During this week, NYMEX May Crude Oil prices are expected to trade in the range of $42.50 and $53.50. MCX April Crude Oil futures have support at Rs. 2390/2175 and resistance is seen at Rs. 2740/2870 per barrel.
Rubber
Rubber prices in domestic and global markets were on a recovery mode this week. In the weekend covering groups lifted the prices to further highs driven by possibly a speculative interest. However, 2009 as predicted by many analysts is not going to be a good year for rubber with consumption to fall 5.5 percent across the globe mainly due to falling automobile sales. Rubber prices have slumped 50 percent in a year as the global recession slashed tire demand. Europe’s car market shrank 7.8 percent in 2008, while U.S. sales contracted 18 percent to a 16-year low
In TOCOM and Shanghai, benchmark natural rubber futures climbed to the highest in more than two weeks as producers restated proposed output cuts and on speculation China, the world’s largest consumer, is adding the commodity to state stockpiles.
Spot rubber flared up on Friday. Sheet rubber RSS 4 moved up to Rs 76.50 from Rs.75.50 a kg, while the market made all-round improvement even in the absence of enquires from the major manufacturers. The volumes were comparatively better.
The April futures for RSS 4 firmed up to Rs 77.99 (Rs 77.50), May to Rs 79 (Rs 78.56), June to Rs 79.99 (Rs 79.67) and July to Rs 79.95 (Rs 79.80) a kg on National Multi Commodity Exchange (NMCE).
Towards weekend in global markets, RSS 3 slipped further to Rs 73.37 (Rs 73.81) a kg on Singapore Commodity Exchange. The grade’s spot weakened to Rs 73.68 (Rs 74.43) a kg at Bangkok. The physical rubber rates were: RSS-4: 76.50 (75.50), RSS-5: 75 (74), Ungraded: 73.50 (73), ISNR 20: 74 (73.50), and Latex 60%: 57.50 (57).
Meanwhile, India’s Rubber Board has raised alarm against the rapid growth in tyre imports mainly from China. A steady trend with an slight upward bias could be expected for rubber next week.
Base metals
Base metal prices are moving higher on the back of a weaker dollar and stable equities as both these factors have improved market sentiments. A weaker dollar makes base metals look attractive for holders of other currencies. This is providing a strong support to base metal prices but the upside could be capped as LME inventories have touched a 15-year high. The base metals market is in an oversupply situation and fundamentals look bearish. However, the current rise in base metal prices is mainly due to technical buying and short-covering. In the coming week, base metal prices are expected to remain volatile as the US is expected to announce economic data like existing home sales, new home sales, 4Q GDP, personal income and spending.
Soybean
Refined soy oil futures fell sharply during the last week as government of India scrapped import duty on soy oil to reduce premium over palm oil. Government of India extended ban on exports of edible oil. Last year, Govt. of India had banned export soy oil in March to control rise in price. According to the Solvent Extractor’s Association of India, India‘s import of edible oil increased to 7,30,094 metric tonnes in February, 2009, up 69.40% as compared to last year during the same period. Edible oil imports in the first four months of oil marketing year (November to February) was 28,24,941 metric tonnes, up 87% as compared to 15,12,695 metric tonnes during the same period last year. PEC Ltd. has floated two separate tenders for the local sales of 3161 metric tonnes of crude soy oil. PEC is authorized by the government of India to import edible oils and sales the local market. Global vegetable oil prices may still fall due to ample global supply. In the coming week, prices are expected to move lower on account of higher import of edible oil and scrapped import duty on soybean oil. NCDEX April Refined Soy Oil has support at 430/422 and resistance is seen at 452/460 levels in this week.
Other Edible Oil
India’s edible oil and oilseeds Futures recovered from their lower level tracking the global markets. The Bursa Malaysia Derivative making decent gains in the past few days and CBOT’s projection aided market sentiments. It was a firm trend in crude palm oil that lend support to the oil seeds complex. The June Contract closed at 1985 a gain of 74. Nymex Crude Oil has support at US $51 per barrel.
Mustard Seed and castor seed tracked the gains in soybean and ended on a mixed to higher note in physical, Futures markets
Turmeric
Spot prices at Erode and Nizamabad over the past couple of days are being quoted at higher rates due to better offtakes at the domestic market. Prices in the previous week were quoted in the range of Rs. 4,200-4,350/qtl. Even though the arrivals are more offtakes are equally better due to domestic buying. Arrivals on an average in the previous week were around 25,000 bags daily in both the major mandis of Nizamabad and Erode. Fear of lower availability of Turmeric in 2009 is supporting the prices to strengthen. Demand from the domestic market especially from local stockists is present but the overseas demand has reduced as the prices are at higher levels. Farmers are hoarding the stocks and not bringing in fresh turmeric to the market in good quantity in order to reap maximum profits. Turmeric Futures April 09 contract touched a high of Rs.5,090/qtl tracking spot prices. Prices are ruling at higher levels thus cautious trading is advisable at futures. Prices have initial support at Rs.4,840/qtl and thereafter at Rs.4,700/qtl. Resistance could be seen at Rs.5,205/qtl and thereafter at Rs. 5,395/qtl.
Sugar
Sugar market declined sharply by 15% in the last 3-4 weeks as the Indian government has adopted various measures to curb spiraling Sugar prices. Besides imposition of stock limits and duty free impost of Raw Sugar, Government is now considering a proposal to let state-run trading companies import refined sugar at zero duty to bridge the widening gap between demand and supply. Final decision by the cabinet regarding the duty free imports of refined Sugar is expected in the coming week. India will have to import 3 million tonnes of Sugar to meet its domestic consumption of 22.5-23 million tonne. But imported sugar is much more expensive than local sweeteners at present, making the imports unviable. Thus, despite government’s effort to ease import norms, we don’t expect imports to take place in the coming months. Any significant decline in the prices should be treated as a good buying opportunity as Overall, fundamentals remain supportive for the prices with lower output forecast in India and a global deficit of more than 4.3 million tonnes. April Sugar futures are currently trading at around Rs. 2035 levels. Prices are having initial support at Rs. 1995 and then 1953. Resistance could be seen at Rs. 2080/qtl and thereafter Rs. 2120/qtl.
Black Pepper
The undertone in the Black Pepper spot and futures counter this week was steady due to increased buying interest and aided by a tight supply position. Indian parity in the international market was at $2,225-2,325 a tonne (c&f) as the rupee has strengthened against the dollar on Wednesday. Overseas reports on Wednesday said that Brazil was firmer and exporters appeared to reluctant to offer. B Asta was said to have been offered at $2,000 a tonne while B1 at $1,900 a tonne (fob).
Vietnam was reportedly steady at $1,800 a tonne for faq 500 GL. More buying interest was seen for black and white pepper from industry albeit for nearby deliveries. Lasta was being offered on replacement basis at $2,200-2,250 a tonne (fob). New Indonesian crop is said to be lower at 15,000 tonne against an estimated 30,000 tonnes last season. However, some substantial quantity of carry over stock is reportedly available therein the hands of middlemen and exporters.
In the weekend the physical counter traded steady amidst good underlying buying interest. The domestic as well as the overseas buyers from Europe were active. The stock availability remained low inducing the Indian traders to purchase from other cheaper origin like Indonesia at $2100/tonne fob. At the benchmark Kochi markets berries were offered at Rs.10300/qtl for the ungarbled variety and 10800/qtl for the garbled variety, steady as that of prior trading session. Around 33.5 tonnes were sold for the arrivals of 25 tonnes. Strengthening rupee against dollar pushed up Indian parity to $2300/tonne f.o.b while VASTA was offered at $2150/tonne and BASTA at $1950/tonne f.o.b. Pepper is likely to trade weak during early hours with the possibility of late recovery.
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