Commodities Report: December 13, 2011

Weak sentiments in the global markets due to rising concerns with respect to Euro Zone debt worries exerted downside pressure on the base metals complex on Monday.

Mounting tensions over global economy created demand fears for metals which too acted as a negative factor for prices yesterday. However, Rupee depreciation cushioned further losses on the domestic bourses on Monday.

Copper

Copper declined almost 3 percent on the LME and around 1.1 percent on the MCX on Monday. Indonesian workers at the Freeport McMoRan’s Copper and Gold Inc. are expected to sign a pay deal with the firm today, in order to end the three-month old strike.

This strike has disturbed the production at the world’s second largest copper mine. The firm has agreed to pay a rise of 40 percent over two years. This will ease the supply concerns for copper which will act as a negative factor for the red metal prices.

Courtesy: Angel Commodities


Crude oil edges lower on Euro debt worries

Nymex crude oil declined by more than 1.5 percent yesterday, taking cues from escalating concerns over Euro Zone debt worries.

Additionally, a stronger dollar also led to downside pressure on the commodity. Oil prices closed at $97.8/bbl after touching an intra-day low of $97.54/bbl.

On the MCX, prices increased by 1.2 percent on the back of Rupee depreciation and closed at Rs.5203/bbl after touching an intra-day high of Rs.5222/bbl on Monday.

API Inventories Forecast

The American Petroleum Institute (API) is scheduled to release its weekly inventories today and crude oil inventories are expected to decline by 1.6 million barrels for the week ending on 9th December 2011.

Gasoline stocks are expected to increase by 1.5 million barrels and distillate inventories are also expected to increase by 0.9 million barrels.

OPEC News

Most members of Organization of Petroleum Exporting Countries (OPEC) agreed that there is no need to change in production quotas before the meeting in Vienna tomorrow.

Saudi Arabia and Kuwait nations are pleased with current level of production whereas Iran wants a cut in production quota.

Courtesy: Angel Commodities


Precious metals decline on strong US dollar

Despite rising concerns with respect to the European economies, gold prices came under yesterday, as strength in the dollar exerted downside pressure on the yellow metal prices.

Spot Gold prices touched an intra-day low of $1657/oz and closed at the level of $1665/oz, losing more than 2.5 percent on Monday.

But a weaker Rupee prevented sharp fall in gold prices in the domestic markets. As compared to the previous trade, the MCX Gold February contract closed around 1 percent lower at Rs28,847/10gm yesterday.

Silver

Silver prices dropped sharply by 2.7 percent on Monday, taking cues from decline in gold prices along with a stronger dollar.

Additionally, silver being an industrial metal also took cues from downside in base metals. On the MCX, Silver March contract declined by 1.4 percent yesterday, as Rupee depreciation resisted further fall in silver on the domestic bourses and touched an intra-day low of Rs56,817/kg.

Courtesy: Angel Commodities


India soy complex to remains lower on global cues

Soybean prices extended losses on Saturday in line with the CBOT price movement. Decline in crushing margins in India below '1000/tons are also weighing on market sentiments.

Spot prices also dropped by '10-15/quintal across major spot markets on back of weakened buying as export demand for meal was not reported good. CBOT prices closed slightly positive yesterday on recovery on the previous fall.

Soy oil prices declined on Monday as demand is reported very weak fro edible oils across globe with china- major buyers remaining very inactive currently.

Peak crushing season of soybean is resulting in production of ample soy oil while buyers are absent in the market. On reasons of absence of buyers CBOT soy oil closed lower yesterday.

Courtesy: Karvy Commtrade Ltd.


NCDEX turmeric plunges on long liquidation

Spot prices of Turmeric traded firm and settled 1.08% higher on account of better offtakes by the local stockists. However Futures witnessed long liquidation and settled 3.03% lower on Monday.

Production, Arrivals and Exports

Arrivals in Nizamabad and Erode mandi stood at 10000 bags and 800 bags respectively on Monday.

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- September 2011 stood at 41,500 tonnes as compared to 28,500 tonnes in 2010-11, rise of 46%.

Courtesy: Angel Commodities


NCDEX jeera tumbles on profit booking

Jeera Futures witnessed profit booking by market participants and settled 1.36% down on Monday. Lower offtakes at the domestic also led prices to decline yesterday. Unfavourable weather conditions led prices to recover in the week ended 12th December 2011.

According to Gujarat farm ministry, area sown under jeera till December 05, 2011 stood at 1.92 lakh hectares (lh) up 20% as compared to last year. Carryover stocks of jeera is expected to be around 9-10 lakh bags as compared to 4-5 lakh bags in the last year.

Prices in the global markets of Indian origin are quoting around $2,800-2,950/tn while Syrian origin is quoting at $3,100-$3,150/tn.

Production, Arrivals and Exports

Unjha markets witnessed steady arrivals of 2,000 bags amidst offtakes of 800 bags on Monday.

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-September 2011 stood at 16,000 tonnes as compared to 18,800 tonnes in 2010-11, decline of 15%.

Courtesy: Angel Commodities


NCDEX pepper ends higher on extended buying

Spot prices and Futures settled 0.20% and 0.86% higher respectively on account of improved buying by the local stockists. However, demand from the overseas buyers has reduced owing to Christmas and New Year vacation.

Pepper stocks with Vietnam are expected to be around 10 thousand tonnes while that in India is expected to be 12 thousand tonnes.

Indian parity in the international market was at $7,325-7,450(c&f) a tonne and remained competitive while Vietnam 550 gl was quoting its pepper at $7,250 per tonne (fob).

Exports from the major countries

According to Spices Board of India, exports of pepper during April 2011- September 2011 stood at 11,250 tonnes as compared to 9,250 tonnes in 2010-11, rise of 22%.

According to International Pepper Community (IPC) exports of black pepper during January to October 2011 from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was around 2.04 lakh tonnes a decline of 4.6% as compared to 2.14 lakh tonne in the same period last year.

Exports from Indonesia posted significant decrease of 40% as compared to previous year. Exports stood at 29,000 tonnes as compared to 48,500 tonnes in the last year.

During Jan to Oct 2011, Brazil exported 25,331 tonnes of pepper a rise of 4.74% as compared to previous year. U.S. remained the major destination of the pepper imports.

Production and Arrivals

Arrivals of pepper in the domestic mandi on Monday remained steady around 8 tonnes while Offtakes on the other hand stood at 38 tonnes.

Global Pepper production in 2012 is expected to increase 7.2% to 3.20 lakh tonnes as compared to 2.98 lakh tonnes in 2011 with sharp rise of 24% in Indonesian pepper output and in Vietnam by 10%. Pepper production in Vietnam and Indonesia is projected at 1.10 lakh tonnes while that in Indonesia is projected to be 41 thousand tonnes. (Source: Financial Express).

On the other hand production of pepper in India in 2011-12 is expected to be scale down further by 5% to 43 thousand tonnes as compared to 48 thousand tonnes in the last year.

Courtesy: Angel Commodities


NCDEX soybean declines on poor global cues

NCDEX January soybean futures ended lower on second consecutive trading session on account of weak overseas market as bearish figure of USDA’s monthly supply and demand report which is released on Friday.

Global demand of oilseeds was revised which is down by about 1 million tonnes also added bearish market sentiments. However, from medium to long term prices are expected to firm as improved demand from solvent extractors and stockists coupled with declining arrivals as farmers are holding their stocks in anticipation of higher prices.

Total arrivals of soy bean in Madhya Pradesh was 1.75 lakh bags and in Maharashtra was 1.40 lakh bags on Friday (Bag=100 Kg). As per WASDE (USDA) monthly supply and demand report which is released on December 09, 2011 shows that the total U.S. oilseed production for 2011/12 is projected at 91.0 million tons, down slightly due to a small reduction in cottonseed.

Soybean ending stocks for 2011/12 are projected at 230 million bushels, up 35 million from last month. Global oilseed production for 2011/12 is projected at 457.6 million tons, up 2.8 million tons from last month. Global soybean production is projected at 259.2 million tons, up 0.3 million.

Global rapeseed production is projected higher this month mainly due to gains for Canada. Global oilseed ending stocks are projected at 75.5 million tons, up 1.6 million from last month mainly reflecting increased soybean stocks in the United States and increased rapeseed stocks in Canada.

Mustard Seed

NCDEX January RM Seed futures traded lower on account of higher sowing acreage of RM seed this year as compared to last year.

Weakness in other oilseeds and vegetable oil also added bearish market sentiments. According to data from the Directorate of Oilseeds Development, mustard has been planted over 6.16 mln ha this rabi season as on December 08, 2011, up marginally from around 6.08 mln ha in the year ago period.

In Rajasthan, the largest producer of mustard in the country, acreage was slightly lower about 5.4% on year at 2.60 million ha. In Uttar Pradesh, the second largest producer, the crop has been sown across 1.03 mln ha, up almost 7% from a year ago.

The crop, the most crucial of winter oilseeds, has been sown across 97% of the usual area of 6.36 million ha. The government is aiming total mustard acreage of 7.55 mln ha this year and output at a record 8.19 million tonnes this rabi season.

Last year, farmers had harvested 7.67 mln tn of the oilseed. Mustard seed accounts for about 70% of India's winterseason oilseed output. As per WASDE (USDA) monthly supply & demand report which is released on December 09, 2011 shows that the Canada rapeseed production raised 1.3 million tons to 14.2 mln based on the latest survey results from Statistics Canada.

Refine Soy Oil

NCDEX December refined soy oil futures traded lower due to weak overseas market as bearish figures of USDA’s monthly supply and demand report pressurized prices. Lower export figure of Malaysian palm oil also added bearish market sentiments. A Cargo surveyor Intertek estimated Malaysia's palm oil exports during December 1-10 at 443,699 tonnes, down 5.1% from a month ago.

Courtesy: Angel Commodities


NCDEX sugar drops on ample supply

Sugar futures settled 0.26% lower on Monday on huge supplies amidst higher monthly quota, while spot sugar remained firm on lower level demand.

The government has notified the export of one million tonnes of sugar in 2011-12 seasons. The ministry has given 45 days to sugar mills to apply for export release orders, which will be valid for 60 days. (Source: Economic Times)

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

Liffe white sugar settled 0.18% up while Raw Sugar settled 0.47% down.

Pessimistic comments from EU paymaster Germany and new figures exposing growing stress among Europe's banks took the shine off financial market hopes of a turning point in the euro zone debt crisis at a summit this week.(source: Reuters)

Domestic Sugar updates

According to ISMA, India is likely to have crushed 14.4 mln tn cane during Oct 1-Nov 23 and produced 1.3 mln tn sugar during the current crushing season. Maharashtra Oct 1-Dec 8 sugar output is up at 1.45 mln tn vs 1.31 mln yr ago due to higher recovery at 9.8% from 9.344% last year.

Indian Sugarcane production is estimated higher by 0.9% at 342 mn tn for 2011-12 season starting October 1, 2011. ISMA has projected sugar production at 26 million tonnes for 2011-12.

With the opening stocks of 6 mn tn, domestic Sugar supplies are estimated at 32 mn tn against the domestic consumption of around 23 mn tn. Thus there is a wide scope for exports from India.

Global Sugar Updates

Thailand sugar output could reach to 9.9 million tonnes in 2011-12 compared to 9.64 million tonnes in 2010-11.

According to UNICA, Sugar output in Brazil's center-south in the first half of November fell 13.8 percent from a year ago, as more mills ended crushing the 2011/12 cane crop. Sugar production in the period totaled 1.26 million tonnes, compared with 1.46 million tonnes a year earlier.

Swiss sugar consultancy Kingsman today lowered its global 2011-12 sugar surplus estimate by 940,000 tn to 8.22 mln tn, due to higher projection for consumption than earlier estimated.

Courtesy: Angel Commodities


NCDEX chana declines on output concerns

Chana spot as well as futures declined on Monday and settled 1.37% and 0.65% lower on expectations of higher output in the coming season.

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

According to the latest report by Ministry of Agriculture, pulses have been sown in 12.06 million hectares as on 8th December 2011, up 1.17% as compared to 11.92million hectares in the same period last year.

However, area sown under Chana in India till 8th December 2011 was 7.94 million hectares down 0.37% as compared to 7.97 million hectares in the same period previous year.

Area under Chana in Maharashtra till date is 8.21 lakh hectares down 16% as compared to 9.82 lakh hectares in the same period previous year.

In Rajasthan, as per the current pace of sowing and favourable weather it looks that sowing of Chana may cross the set target of state agriculture department of 17 lakh ha. So far Chana is sown in 15.21 lakh ha against 14.47 lakh ha sown in the same period last year (December 07, 2011).

Currently, imports from Australia are viable. Cost and Freight (C & F) quote declined marginally by $20 per MT to $630/MT. Thus, fresh import contract may execute in the coming weeks due to import parity. Landed cost currently stands at Rs 32130 / tn against domestic price of Rs 34100 / tn in Mumbai.

Sowing progress and Production

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.

However, Rabi Pulses output Is estimated higher on higher area and conducive weather Chana is the main Rabi Pulse crop grown in India, sowing of which is done during October-December, and harvesting begins in January. If the sowing trend is maintained India may witness another bumper crop of Chana in the coming season.

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

Courtesy: Angel Commodities



NCDEX guar seed settles higher on firm export demand

Guar futures extended the gains of the previous week and settled at 4% upper limit on Monday on expectations of record high exports in the current season too.

According to the exchange circular issued on Friday, the National Commodity and Derivatives Exchange has imposed 10% special margin on all long positions in guar seed and guar gum contracts, the half of which must be paid in cash with effect from 13th December, 2011.

Currently, total margin on Guar seed and Guar gum stands around 8.5% and 9.5%, i.e. around Rs 48700 and Rs 88800 per contract. After the imposition the total margin for trading in Guar seed and Guar gum would be 18.5% and 19.5% i.e. around Rs 103000 and Rs 177000 respectively.

Although long term fundamentals remain supportive for the prices, current market conditions do not support the upside rally as arrival season is ongoing in the domestic markets.

Arrivals of late sown Guar crop has started across Churu, Bikaner and other growing areas of Rajasthan and thus arrivals have increased in this week (since 5th December 2011) and stands around 1.50 lakh bags.

On the back of record high exports, the exports federation has urged the Government to withdraw export promotion incentives and impose export duty on guar seeds. However, no decision on same has been taken yet.

Production

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

However, there are unconfirmed reports that Guar seed output may be lower around 10 lakh tonnes compared to the government target of 11.3 lakh tonne due to excess moisture in the soil during the sowing period.

Thus, with lower carryover stocks and lower output the supplies would not be sufficient in the long run if Guar gum export trend continue to remain the same as last year, thus supporting the upside rally in the longer term.

Exports

According to Agriculture and Processed Food Products Export Development Authority, Indian Guar gum exports for the period April- March 2010-11 surged by 84% and stood at 4,03,007 tonnes as compared to 2,18,473 tonnes during the last year.

Exports of Guar gum from April to July of the current fiscal year 2011-12 stood at 1.93 lakh tn a rise of 82% compared to 1.02 lakh tn during the same period last year.

Export figures clearly indicate that global crisis has not hit Guar exports as of now in the current season too. In fact rupee has increased profit margin of the exporters in the current season.

Courtesy: Angel Commodities


CBOT Updates:Soybean settles higher on bargain buying

CHICAGO (Commodity Online):US soybean futures end higher, shunning the bearish influence of external financial markets, as bargain hunting emerges after prices dipped to new 14-month lows.

The ability of the market to find price support is an indication of some export pricing occurring beneath the market, says John Kleist, analyst withebottrading.com.

After prices slumped to a new low, the market may have drummed up new business, and with lingering concerns about South American weather, traders were unwilling to aggressively pressure prices, Kleist adds.

CBOT Jan soy ended up 5c at $11.12/bushel, well off the session low of $10.95.

Courtesy: CME Group



CBOT Updates:Wheat weakens on subdued demand


CHICAGO (Commodity Online):U.S. wheat futures end mostly lower as a stronger dollar and poor demand weighs. Prices slipped on the dollar, and worries about Europe, in early trade.

While grains re-gained their footing later in the session, an abundance of world wheat is hurting U.S. exports and limiting the upside, analysts say.

CBOT March wheat ends down 1 3/4c to $5.94 1/4 a bushel, while March KCBT wheat ends down 9 1/4c to $6.52 1/4. MGEX March wheat ends down 3 3/4c to $8.23 1/2.

Courtesy:CME Group


CBOT Updates:Corn tumbles on weak export demand

CHICAGO (Commodity Online): U.S. corn futures end mostly lower, but the market shook off early losses amid commercial buying, traders say.

Bargain hunters emerged after early losses, as the market's inability to push to new lows prompts some to question whether a market low is in.

Still, weak export demand amid growing world supplies looms over the market and will continue to limit the upside, analysts say. A stronger dollar adds to pressure. CBOT March corn ends down 1/4c $5.94 1/2 a bushel.

Courtesy:CME Group