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Commodities Report: December 29, 2011

By  |  Commodities  |  Dec 29, 2011 05:26PM GMT  |   Add a Comment
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Commodities Report: December 29, 2011
By   |  Dec 29, 2011 05:26PM GMT
 
Gold, silver and base metals decline, crude oil up

European markets erased their earlier gains today ahead of Italian debt sale. The country’s has scheduled to sell as much as 8.5 billion Euros ($11 billion) of government debt today.

Italy sold 9 billion Euros of 179-day bills at the rate of 3.25 percent and zero-coupon notes due in September 2013 at a yield of 4.85 percent on Wednesday.

India’s food inflation eased to 0.42 percent, lowest in nearly six years, for the week ending 17th December, as costs of vegetables, onion, potato and tomatoes, wheat and other essential commodities decreased, according to data by the Ministry of Commerce and Industry. Food inflation stood at 1.81 percent in the previous week.

The fuel price index eased to 14.37 percent in the same week from the previous 15.24 percent a week earlier.

Spot gold prices declined around 1.2 percent today on the back of a stronger dollar coupled with rising concerns over Euro Zone debt crisis ahead of an Italian debt auction.

The yellow metal touched an intraday low of $1533/oz till 4.30 pm IST. On the MCX, Gold February contract declined sharply by 1.6 percent and touched an intra-day low of Rs26,851/10 gms till 4.30 pm IST today.

Taking cues from fall in gold prices and downside in base metals, spot silver declined sharply upto 1.4 percent till 4.30 pm IST today.

Additionally, strength in the US dollar also acted as a negative factor for the white metal prices. MCX Silver March contract dropped by more than 2 percent and touched an intra-day low of Rs49,360/kg till 4.30 pm IST today.

The base metals pack traded on a mixed note today with copper, nickel and aluminium trading in the red while zinc and lead trading in the green. Mounting worries over global economic growth coupled with a stronger dollar exerted downside pressure on metals.

Additionally, mixed sentiments in the global markets also acted as a negative factor.

Nymex crude oil prices traded higher by 0.2 percent today, on the back of expected fall in US crude oil inventories. But sharp gains were capped due to a stronger dollar.

Oil touched an intra-day high of $99.86/bbl and was hovering around $99.54/bbl till 4.30 pm IST today.

The US Energy Department (EIA) is scheduled to release it weekly inventories report today and crude oil inventories is expected to decline by 1.7 million barrels for the week ending on 23rd December 2011.

Outlook

Gold and silver prices are expected to trade with a negative bias today on the back of a stronger dollar. Silver will also take cues from fall in gold prices and downside in base metals.

We expect base metals to come under pressure on account of dollar strength coupled with mixed sentiments in the global markets due to escalating concerns over Europe’s debt crisis.

Crude oil is expected to trade with a sideways bias as on one hand mixed sentiments in the markets and a stronger dollar will pull prices in the downward direction, while on the other hand, expected fall in US crude oil inventories will provide support.

Courtesy: Angel Commodities


Base metals edge lower on Euro debt concerns

The base metals complex traded lower on the LME on Wednesday, mainly on the back of weak sentiments in the global markets due to rising tensions with respect to Euro Zone debt crisis coupled with strength in the US dollar. Nickel was the worst performer in yesterday’s trading session, as the metal declined almost 4 percent on the LME and around 2.8 percent on the MCX.

Copper

Copper, the lead of the base metals, slipped around 2.8 percent on the LME and by almost 1 percent on the MCX on Wednesday.

Deepening worries over Euro Zone debt crisis and rising tensions over an economic slowdown in China, the world’s largest consumer of metal, created demand concerns for the metal. On the MCX the red metal touched an intra-day low of Rs398.80/kg and closed at Rs399.6/kg yesterday.

Courtesy: Angel Commodities


Crude oil declines on rising inventories

Nymex crude oil prices declined around 2 percent in yesterday’s trading session, on the back of unexpected rise in US crude oil inventories along with a stronger dollar. Oil prices closed at $99.4/bbl after touching an intra-day low of $99.11/bbl yesterday.

On the MCX, prices declined by around 1 percent and closed at Rs.5325/bbl after touching an intra-day low of Rs.5305/bbl on Wednesday.

API Inventories Data

As per the American Petroleum Institute (API) report last night, crude oil inventories increased unexpectedly by 9.6 million barrels to 339.60 million barrels for the week ending on 23rd December 2011.

Gasoline inventories increased by 1.9 million barrels to 215.71 million barrels and distillate inventories shoot up by 554,000 barrels to 140.16 million barrels.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release it weekly inventories report today and crude oil inventories are expected to decline by 1.7 million barrels for the week ending on 23rd December 2011. Gasoline stocks are expected to decline by 0.1 million barrels whereas distillate inventories are expected to shrink by 0.5 million barrels.

Courtesy: Angel Commodities


Precious metals under pressure on firm US dollar

Spot gold prices declined sharply by 2.5 percent in yesterday’s trading session on account of strength in the US dollar. A stronger dollar makes dollar-denominated commodities expensive for the holders of the other currencies. The yellow metal touched an intra-day low of $1549/oz and closed its trading session at the level of $1553/oz on Wednesday.

On the MCX Gold February contract dropped around 1.3 percent on Wednesday and touched an intra-day low of Rs27,150/10 gms. The yellow metal ended its trading session at Rs27,281/10 gms yesterday.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, declined by 1.1 percent to 1,254.57 tonnes on 28th December 2011 as compared to 1267.88 tonnes on 21st December.

Silver

Spot silver prices came under pressure on Wednesday and declined sharply by almost 6 percent, taking cues from fall in gold prices and dollar strength. Silver being an industrial metal also took cues from downside in base metals yesterday.

The white metal touched an intra-day low of $26.82/oz and closed its trading session at $27.05/oz yesterday. On the MCX, Silver March contract declined around 4 percent and touched an intra-day low of Rs50,281/kg on Wednesday.

Courtesy: Angel Commodities


India soybean complex remains firm on strong spot demand

Soybean prices remained on gaining note on Wednesday as the spot prices were around `2450-2500/quintal across major markets.

Marginal increase in the soy meal prices on Wednesday also supported the bean prices along with soy oil.

CBOT soybean prices closed down yesterday on year end profit booking which had no relation with the fundamental factors.

Soy oil prices gained on Wednesday owing to the rise in spot prices. Supply constraints in the edible oil complex is triggered the price rally at the Indian commodity bourses.

CBOT soy oil prices has closed lower due to year end profit booking despite the fundamentals remaining stronger with palm oil supplies disrupted in Malaysia.

Mustard seed prices extended the gains in active contract in line with soy complex. Surge in spot prices by `50-75/quintal across major spot markets supported rise in futures prices.

Good demand for edible oil and increase in the ex-factory prices of the meal is supported price gain.

Courtesy: Karvy Comtrade Ltd.


NCDEX turmeric weakens on higher stocks

Turmeric Futures traded rangebound throughout the day and settled 0.95% down on Wednesday. However, spot prices settled 0.24% up on account of better offtakes yesterday.

Production, Arrivals and Exports

Arrivals in Nizamabad and Erode mandi stood around 1,000 bags and 12,000 bags respectively 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- October 2011 stood at 50,000 tonnes as compared to 32,000 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 rises on weak arrivals

Demand from the local stockists amidst declining arrivals led Spot prices and Futures to settle 0.66% higher respectively on Wednesday. Prices gained despite increase in the area under jeera in Gujarat.

According to Gujarat farm ministry, area sown under jeera till December 26, 2011 stood at 2.78 lakh hectares (lh) up 21.5% 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 arrivals of 4,500 bags 1,000 bags lower as compared to Tuesday amidst off takes of 6,500 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-Ocotber 2011 stood at 20500 tonnes as compared to 19,800 tonnes in 2010-11, an increase of 3.5%.

Courtesy: Angel Commodities


NCDEX pepper settles lower on weak export demand

Lacklustre trades at the domestic and overseas market led prices to remain weak and settled 0.49% and 0.53% lower on Wednesday. Further, buyers are following a wait and watch stance anticipating fresh arrivals to improve in the coming weeks thereby softening prices.

Indian parity in the international market is being offered at $6,950/tonne.

Exports

According to Spices Board of India, exports of pepper during April 2011- October 2011 stood at 13,750 tonnes as compared to 10350 tonnes in 2010-11, rise of 32.8%.

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 Wednesday stood at 4 MT as compared to 11 MT on Tuesday while offtakes on the other hand stood at 7 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 trades up on firm domestic demand

NCDEX January soybean futures traded higher on third consecutive trading sessions on account improved demand from crushers/stockists coupled with thin arrivals as farmers are holding back their stocks.

Firm overseas market as dry weather concern of South America (Brazil and Argentina) also provided support to the prices. South America contributes about 50% of total global production of soybean. Total arrivals of soybean in Madhya Pradesh were 1.50 lakh bags on Wednesday, Maharashtra was 1.25 lakh bags and Rajasthan was 60,000 bags (Bag=90-100 Kg) on Wednesday.

Soybean prices in Indore were at Rs 2340-2415/qtl (auctions in Mandi) and plant delivery was quoted Rs 2450-2490/quintal. Soymeal price were quoted $ 332-333/tonnes at FAS Kandla. USDA’s weekly export figures released on December 22, 2011, which shows that the net weekly export sales for soybeans came in above trade expectations at 653,400 metric tonnes for the current marketing year and 75,000 for the next marketing year for a total of 728,400.

Meal sales came in at 142,000 metric tonnes as compared with 97,000 metric tonnes. Net oil sales came in at 14,800 metric tonnes which was higher than expected and compares with 11,000 tonnes.

Rape/mustard Seed

NCDEX January RM Seed futures traded higher on account of strong gains in edible oils on improved demand in domestic market and lower sowing acreage of Rape/mustard seed this year as compared to last year. Sowing acreage of Rabi oilseeds in India was 7.8 million hectare as compared to 8.31 million hectare a year ago on 23/12/2011. Sowing acreage of rape/mustard seed in India was 6.38 million hectare as compared to 6.77 million hectare a year ago.

Sowing acreage of Rabi oilseeds in Rajasthan was 2.63 million hectare as compared to 3 million hectare a year ago on 23/12/2011. Sowing acreage of rape/mustard seed in Rajasthan was 2.52 million hectare as compared to 2.49 million hectare a year ago. Mustard seed accounts for about 70% of India's winter- season oilseed output.

Refined Soy Oil

NCDEX January refined soy oil futures posted sharp gains on account of improved demand in domestic market as winter season demand. Delayed harvesting of Malaysian palm oil due to heavy rains in Malaysia are also in favour of the bulls.

La Nina-driven dry weather in Argentina and Brazil could cause heat stress and sap soybean crop yields. Production (of palm oil) in key producing areas (Malaysia) is expected to decline due to continuous heavy rains.

 As per SGS (cargo surveyor), Malaysian Palm Oil exports from 1-25 December fell by 12% to 1.18 million tonnes as compared to the same period last month. Imported crude palm oil quoted $1035/tonnes on Wednesday C&F Mumbai as compare to $ 1030/tonnes on Tuesday.

Imported crude palm oil quoted Rs 54500/tonnes on Wednesday as compare to Rs 5400/tonnes on Tuesday. Imported crude soy-oil price quoted Rs 65,000 /tonnes on Wednesday as compared to Rs 64,500/tonnes on Tuesday.

Courtesy: Angel Commodities


NCDEX sugar falls on profit booking

Spot prices remained steady on account of fragile demand from the local stockists. However, Futures settled lower owing to profit booking and settled 0.69% lower. Prices are likely to bounce back on expectation of lower quota to be released for the month of January 2012.

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.

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.

The Food Ministry has issued permits for the export of nearly 37,000 tonnes of sugar so far out of the one million tonnes that the government has allowed for overseas shipment in the ongoing 2011-12 marketing year.

Liffe white sugar & ICE Raw settled 1.98% and 1.95% lower on Wednesday owing to thin trades as buyers are away from the market on Christmas and New Year holidays.

Domestic Sugar updates

Sugar output in Maharashtra rose 9% between Oct 01 and Dec 15 to 18.6 lakh tonnes compared with the 17 lakh tonnes same period last year. The output was earlier down by 6%. Recovery rate also increased to 10.07% from 9.70% a year ago.

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 has crushed 9.4 mn tn cane this season against 3.3 mn tn a year ago. Thailand sugar output could reach to 9.9 million tonnes in 2011-12 compared to 9.64 million tonnes in 2010-11.

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

Swiss sugar consultancy Kingsman lowered its global 2011-12 sugar surplus estimate by 940,000 tn to 8.22 mln tn.

Courtesy: Angel Commodities


NCDEX chana declines on subdued demand

Lacklustre trades at the domestic led Chana Spot and Futures to settle 0.77% and 0.76% lower respectively on Wednesday. Despite lower area covered under Chana prices are witnessing a fall.

According to the Farm Ministry area sown under Rabi pulses is down by 1% to 134.18 lakh hectares as compared to 135.21 lakh hectares in the same period previous year. Chana sowing till December 23rd 2011 is 4.35% down at 85.7 lakh hectares as compared to 89.6 lakh hectares in the same period previous year.

According to Gujarat farm Ministry, Chana acreage in the state is down 4.9% to 1.84 lakh hectares as con December 26th 2011.

Rajasthan, rabi pulses area is 1.60 mln hectares as compared to 1.56 mln hectares as on 16th December 2011. Area covered under Chana stands around 1.56 mln hectares as compared to 1.54 mln hectares in the same period previous year(State Farm Ministry)

However concerns over unfavorable weather in Ap and Karnataka still persist and lower area under Chana in these states may restrict sharp downside in the prices.

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.

Sowing 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.

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.

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 surges on firm exports

Despite imposition of special margin on the Guar complex prices continued to trade firm and settled at the upper circuit of 4% on Wednesday. Total special margin on long positions on the Complex has risen to 30% from 20% currently.

Forward Market Commission (FMC) is mulling a last resort to cool Guargum and Guar seed prices through introduction of “trade to trade” for the first time in commodities derivatives market (Source: Business standard).

Special margin of 10% is being imposed on long side of all running contracts with effect from December 27th 2011. Thus, from tomorrow total margin on long side of Guarseed and Guargum would be around 40% which includes special margin of 30%.

Reports of discrepancies in the latest export figures released by the APEDA (Agricultural & Processed Food Products Export Development Authority) coupled with talks of high manipulation has led to high volatility in the Guar prices.

Indian Guar gum Association has sought the FMC’s intervention so as to curb rising Guar seed and Gum prices. They clarified that the price surge is not only defeating the futures trade, but also hurting the export prospects. (Newswire 18).

Although long term fundamentals remain supportive for the prices, such rise was not expected at the time when arrivals are at its peak. Arrivals of late sown Guar crop is ongoing in Rajasthan. Arrivals currently in Rajasthan and Haryana stand around 1.35 lakh bags (Newswire 18).

Production

Guar seed output in Rajasthan is estimated at 11.36 lakh tonnes for 2011-12 season, down by 25% 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.

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

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. However, the latest figures from April to August are 5% lower than the April – July number published last month. This has created panic in the markets.

Courtesy: Angel Commodities


CBOT Updates: Soybean tumbles on profit taking

CHICAGO (Commodity Online): US soy futures end lower Wednesday, retreating from sharp recent gains amid profit-taking and farmer selling.

The market rallied at mid-day on spillover support from corn but later pulled back. While hot, dry weather is a concern for South American crops generally, it is not yet as much an issue for soybeans, traders say.

Traders also question whether demand can stay strong above $12. CBOT Jan. soybeans end down 1 1/2c to $11.98 1/4 a bushel.

March CBOT soyoil ends down $0.07 to $52.16. March soymeal joins corn and wheat, ending up $2.40 to $314.10 per short ton.

Courtesy: CME Group


CBOT Updates: Wheat edges higher on supply concerns

CHICAGO (Commodity Online): US wheat futures end higher Wednesday as the market continues to get pulled higher by corn. Hot, dry South America weather is threatening the corn crop and is the dominant factor in grains.

Wheat dragged higher since smaller corn supplies could mean more demand for wheat as feed. Export demand remains weak, however, and traders say gains fueled largely by short-covering.

Like corn, CBOT wheat up 8 days in a row. March CBOT wheat ends up 6 1/2c to $6.51 1/4 a bushel, KCBT March wheat up 3 1/2c to $6.99 1/4 and MGEX March wheat up 1/2c to $8.63.

Courtesy: CME Group


CBOT Updates: Corn rises on weather concerns

CHICAGO (Commodity Online): US corn futures end up for the eighth day in a row as South America's hot, dry weather fuels continued gains.

Market posted modest early gains and then jumped at mid-day, as weather forecasts failed to show any relief for Argentina's crop.

Traders note technical buying, and say possibility of a smaller South America crop could boost export demand in the US.

Funds bought an estimated 8,000 contracts today, but some traders say the recent rally is fueled by short-covering and year-end positioning.

Market sets a fresh six-week high. CBOT March corn ends up 9 1/4c to $6.42 1/2.

Courtesy: CME Group

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