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Commodities Report: January 13, 2012

By  |  Commodities  |  Jan 13, 2012 03:49PM GMT  |   Add a Comment
www.investing.com/analysis/commodities-report:-january-13,-2012-111196
Commodities Report: January 13, 2012
By   |  Jan 13, 2012 03:49PM GMT
 

Crude oil plunges on global economic concerns

Nymex crude oil prices declined by 1.8 percent on Thursday, as European Union ban of Iranian oil imports is expected to be delayed by six months.

However, further fall in prices were cushioned because of supply concerns from Nigeria coupled with a weaker dollar. Oil prices touched an intra-day low of $98.50/bbl and closed at $99.1/bbl yesterday.

On the MCX, crude oil prices declined around 0.5 percent and closed at Rs.5260/bbl after touching an intra-day low of Rs.5241/bbl on Thursday.

Natural Gas

Nymex natural gas declined by more than 1.7 percent yesterday, touching an intra-day low of $2.663/mmBtu and closed at $2.72/mmBtu.

However, further fall in prices was restricted on account of a weaker dollar.

On the MCX, prices declined sharply by 3.6 percent on account of Rupee appreciation and closed at Rs.138.7/mmBtu after touching an intra-day low of Rs.138.2/mmBtu on Thursday.

EIA Natural Gas Inventories Data

US Energy Information Administration (EIA) released its weekly report of natural gas inventory yesterday and it showed that the inventories declined by 95 billion cubic feet (bcf) to 3.377 trillion cubic feet for the week ending on 6th January 2012.

Courtesy:Angel Commodities

Base metals settle higher on weak US dollar

Revival in the global markets after a successful Spain and Italy’s bond auction and a weaker dollar acted as supportive factor for the base metals complex to trade higher on the LME on Thursday.

However, appreciation in the Indian currency capped further gains on the domestic bourses yesterday.

Copper

Copper was the top gainer on Thursday, as the metal surged almost 3 percent on the LME and around 2.3 percent on the MCX.

The red metal inventories declined sharply by 1.6 percent to 358,250 tonnes on the LME warehouses yesterday.

This factor helped copper prices to move in the upward direction. Additionally, dollar weakness also acted as a positive factor for the red metal prices on Thursday.

Copper touched an intra-day high of $8074/tonne and closed above the crucial level of $8000/tonne yesterday.

On the MCX, Copper February contract touched an intra-day high of Rs418.80/kg and closed at Rs416.80/oz on Thursday.

Courtesy:Angel Commodities

NCDEX soy complex settles lower on global cues

Soybean prices opened lower following international prices while weak trend hardly sustained. Market factored in weaker supply projections which were due to reported in WASDE report.

Spot prices remained stable along with arrivals of 3 lakh bags in M.P today. CBOT soybean prices tumbled more than 3.5% as USDA report recorded higher stockpiles of soybean at 2366 tons.

Soy oil prices movement was reported to be very sluggish when compared to soybean and mustard. Spot prices slightly dampened by '2-3/10kg affected by the sentiments of rupee appreciation.

CBOT soy oil prices tumbled in unison with crude oil and soy complex which kept the prices steeply lower.

Mustard seed prices extended gains on Thursday following soy complex. Good demand for meal and oil supported prices further to end the day in green. Spot prices of oil and meal gained marginally which supported mustard prices.

Courtesy:Karvy Comtrade Ltd.

NCDEX jeera rises on weak arrivals

Jeera prices continued to trade firm on account of lower arrivals in the domestic market amidst demand from the local buyers. Prices at the Spot and Futures settled 1.40% and 4% higher respectively yesterday.

According to Gujarat farm ministry, area sown under jeera till January 2, 2012 stood at 2.82 lakh hectares (lh) up 18.5% as compared to last year while area covered in Rajasthan till date is expected to be 3.03 lakh hectares as compared to 3.30 lakh hectares in the same period last year.

Carryover stocks of jeera is expected to be around 9-10 lakh bags as compared to 4-5 lakh bags in the last year.

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

Production, Arrivals and Exports

Unjha markets witnessed arrivals of 3,000 bags while offtakes stood at 5,000 bags on Thursday.

Production of jeera in 2011-12 is expected to be around 35 lakh bags as compared to 29 lakh bags in 2010-11. (Each bag weighs 55 kgs). (Source: spot market traders).

According to Spices Board of India, exports of Jeera during April 2011-November 2011 stood at 26500 tonnes as compared to 20,750 tonnes in 2010-11, an increase of 27.7%.

Courtesy:Angel Commodities

NCDEX turmeric slumps on fresh arrivals

Fresh arrivals in the domestic market coupled with dull demand led Spot prices to settle 0.99% lower on Thursday.

Futures however, traded rangebound throughout the day and settled 0.22% higher yesterday.

Production, Arrivals and Exports

Arrivals in Nizamabad mandi stood around 1,700 bags while Erode mandi witnessed arrivals of 12000 bags.
Turmeric production for the year 2011-12 is projected at historical high of 82 lakh bags (1 bag= 70 kgs) compared to 69 lakh bags in 2010- 11.

Erode is expected to produce45 lakh bags of turmeric a rise of 29% as compared to previous year.

According to Spices Board of India, exports of Turmeric during April 2011- November 2011 stood at 58,000 tonnes as compared to 35500 tonnes in 2010-11, rise of 56%.

Targets set by the Spices Board have already been met till October 2011. Exports are expected to touch new historical levels in 2011-12.

Courtesy:Angel Commodities

NCDEX pepper gains on weak arrivals

Better exports figures during Apr- Nov 2011 coupled with reports of lower arrivals led Spot Pepper prices and Futures to settle 0.26% and 4% higher on Thursday.

Demand from the overseas and domestic buyers remains dull currently as buyers remain absent from the market.

Fresh arrivals from the domestic will gain momentum at the end of the month (January 2012).

Indian parity in the international market is being offered at $6,300/tonne while Vietnam is offering its ASTA pepper at $6,775/qtl.

Exports

According to Spices Board of India, exports of pepper during April 2011- November 2011 stood at 17,000 tonnes as compared to 11,850 tonnes in 2010-11, rise of 43.6%.

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

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

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

Production and Arrivals

Arrivals of pepper in Kochi market stood at 10 tonnes while offtakes stood at 6 tonnes on Thursday.

Global Pepper production in 2012 is expected to increase 7.2% to 3.20 lakh tonnes as compared to 2.98 lakh tonnes in 2011 with sharp rise of 24% in Indonesian pepper output and in Vietnam by 10%.

Pepper production in Vietnam and Indonesia is projected at 1.10 lakh tonnes while that in Indonesia is projected to be 41 thousand tonnes.

(Source: Financial Express). Domestic consumption of Pepper in the world is expected to grow by 3.03% to 1.25 lakh tonnes while exports are likely to grow by 1.48% to 2.46 lakh tonnes in 2012.

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

Courtesy:Angel Commodities

NCDEX soy oil finishes up on seasonal demand

NCDEX February refined soy oil futures traded higher on account of improved demand of edible oil as winter season demand.

As per Malaysian Palm Oil Board, Malaysia’ s crude palm oil output fell 8.2% from a month ago 1.49 million tonnes also added bullish market sentiments.

The country's palm oil output in 2011 stood at 18.91 million tonnes as against 16.99 million tonnes in the previous year.

December-end palm oil inventories fell to 2.04 million tonnes from 2.07 million tonnes in the earlier month.

Courtesy:Angel Commodities

NCDEX mustard seed trades up tracking soy complex

NCDEX April RM Seed futures traded higher on 4th trading sessions and breached contract high and made a high of Rs 3525/qtl on account of strong gains in other oilseeds and vegetable oil.

Lower production estimates of RM Seed as lower sowing acreage coupled with crop damage report also provided support to the bulls.

According to Rajasthan farm department first advance estimates for Rabi crop, mustard output is estimated at 35.3 lakh tonnes in 2011- 12 compared to 38.8 lakh tonnes in 2010-11 season.

The country's mustard Rabi sowing has totaled 6.46 million ha as on January 05, 2012, down 5.4% from 6.82 million ha in the year-ago period.

Mustard seed accounts for about 70% of India's winter-season oilseed output.

Mustard Seed stock at NCDEX warehouses was 44,336 tonnes Monday as compared to 39,072 tonnes on Saturday.

Courtesy:Angel Commodities

NCDEX soybean edges higher on rising spot demand

NCDEX February soybean futures traded higher on 4th consecutive trading session on account of improved demand from crushers and firm overseas market as weather concern in South America (Brazil and Argentina).

As per WASDE, US dept. of Agriculture which is released on January 12, 201, U.S. oilseed production for 2011/12 is estimated at 91.2 million tons, up 0.2 million tonnes from last month.

Soybean production is estimated at 3.056 billion bushels, up 10 million based on increased yields. The soybean yield is estimated at 41.5 bushels per acre, up 0.2 bushels from the previous estimate.

Soybean exports are projected at 1.275 billion bushels, down 25 million from last month and down 226 million from 2010/11.

Soybean ending stocks are projected at 275 million bushels, up 45 million.

Global oilseed production for 2011/12 is projected at 457.4 million tons, down 0.3 million tonnes.

Global soybean production is projected at 257 million tons, down 2.2 million mostly due to lower production forecasts for South America.

The Argentina soybean crop is projected at 50.5 million tons, down 1.5 million due to lower projected area and yields.

Excessive heat and dry conditions since December throughout much of the principal growing area is expected to limit soybean plantings and reduce yields from earlier expectations.

The Brazil soybean crop is reduced 1 million tons to 74 million reflecting hot, dry conditions in recent weeks, especially in the second largest producing state of Parana where planting was more than half completed by late October.

Global oilseed ending stocks are projected at 74.8 million tons, down 0.7 million tonnes.

Courtesy:Angel Commodities

NCDEX sugar remains firm on short covering

Sugar Futures remained firm and settled 0.25% higher on expectations that government might consider second tranche of exports shortly.

Also, reports that government might discuss on decontrol of sugar and levy sugar supported prices yesterday. Discussion on the same is scheduled on January 16, 2012.

Sugar recovery in Maharashtra during October 2011-December 2011 stood at 10.35% as compared to 9.80% in the same period previous year.

However, Sugar recovery in U.P. is lesser at 8.47% till 3rd January 2012 as compared to 8.73% in the same period previous year.

The government has released lower monthly quota for the month of January at 17.16 lakh tonnes which includes 2.16 lakh tonnes of levy quota and 15 lakh tonnes of non levy quota.

The quota for January is much lower compared to January 2011 monthly quota of 19.18 lakh tonnes and last month’s quota of 19.07 lakh tonnes.

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.

Mixed sentiments prevailed across global Sugar markets with Liffe ending higher by 0.39% while ICE down by 1.77%. Cancellation of sugar imports by EU led prices to remain weak on Thursday.

Domestic Sugar updates

Sugar output in Maharashtra rose 18.8% between Oct 01 and Dec 31, 2011 to 27.5 lakh tonnes.

The output was earlier down by 6%. According to ISMA, India is likely to have crushed 14.4 mln tn cane during Oct 1-Nov 23 and produced 7.58 mln tn sugar vs 6.46 mil tn during the current crushing season.

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

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

Global Sugar Updates

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

According to UNICA, Sugar output in Brazil's center-south from the start of the season to January 01,2012 stood at 31.2 million tonnes down 7% for this time a year ago. Total 2011-12 crush of sugar stood at 492.23 million tonnes down 11% from a year earlier.

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

Courtesy:Angel Commodities

NCDEX chana settles higher on lower acreage

Chana spot as well as futures settled 1.44% and 1.45% higher respectively on account of lower area covered under Chana and thereby fears of lower output in the coming season.

As the Rabi sowing season is almost nearing its end, area covered under the Pulses and Chana are probably to miss the target.

According to the Rajasthan farm department’s first advance estimates for Rabi crops, Chana output is estimated 7.8% lower at 14.75 lakh tonnes in 2011-12 season against 16 lakh tonnes in 2010-11.

Rajasthan is the third largest Chana producing state in India contributing around 10-12% share in total Indian Chana output after MP and Maharashtra.

Although sowing of Chana is higher in Rajasthan, unfavorable climate is expected to lower the yield of the Chana crop in the coming season harvesting of which would begin in February in Rajasthan.

Chana sowing across India as on January 5th 2012 is 5.23% down at 8.72 million hectares as compared to 9.22 million hectares in the same period previous year.

Highest decline in area is witnessed in Maharashtra where sowing is down 23%, while in Karnataka it is down by 19%.

Crop progress and Production

Chana is the main Rabi Pulse crop grown in India, sowing of which is done during October-December, and harvesting begins in January.

Sowing of Chana began on a brisk note; however, the progress was not satisfactory in Maharashtra, Karnataka, UP, Bihar and AP and thus acreage has declined drastically.

Further, unfavorable weather in Central and Southern India may lower Chana yield in the coming season.

Except in Rajasthan, all other major producing states i.e MP, Maharashtra, Karnataka and AP are likely to witness a fall in output in the coming season harvesting of which would begin after mid January.

Indian government is targeting total pulses output of 17 mln tn in the current crop year that started July 2011, down marginally from last year's record production of 18.09 mln tn on account of 10% decline in Kharif Pulses output.

Although government has targeted higher Rabi Pulses output, it is difficult to achieve the same taking into consideration the sowing progress and prevailing weather conditions.

Courtesy:Angel Commodities

NCDEX guar seed extends uptrend on firm exports

Guar futures continued to extend gains of the previous day on account of concerns relating to the availability of Guar in the coming months after monitoring the robust exports of the same.

Expectations of tight supplies in the long run owing to lower output have led to whopping 120% rise in Guar prices since last 2 months.

FMC on Wednesday took another measure to curb the rising price of Guar seed and gum viz- Cut in position limits w.e.f. FMC on 11th January, 2012, directed the exchanges to cut position limit in Guar seed by 20% for brokers and clients and in Guar gum by 40% for brokers. Position limit in Guar gum for clients remain unchanged.

The revision aggregate position limit in Guar seed for member would be 1200 lots and for client 240 lots and for the near month contract member limit would be 400 lots and client limit would be 80 lots.

The revision aggregate position limit in Guar gum for member would be 300 lots and for client 100 lots and for the near month contract member limit would be 60 lots and client limit would be 20 lots.

According to the second advance estimates from Rajasthan farm department, Guar seed output has been revised upward from 11.36 lakh tonnes to 12.09 lakh tonnes and area covered has been revised upward at 30.9 lakh ha against 29 lakh hectares in the first advance estimates.

Production

After harvesting a record 15 lakh tonnes of Guar crop in Rajasthan in 2010-11season (Oct 10- Sep 11), output in the current season has declined to around 12.09 lakh tonnes (Second advance Estimates).

Despite higher production prices had touched record levels of Rs 4770 per qtl in2010-11 on the back of robust exports which doubled from 2.1 lakh tonnes to 4.03 lakh tonnes in 2010-11.

In the current season 2011-12, which started in October 2011, output is estimated 25% lower than previous year, while exports continue to remain firm registering 68% growth during the first 6 months of FY 2011- 12 (Apr 11-Mar -12). Further.

Carryover stocks of Guar in the current season is at lowest levels around 1.5-2 lakh tonnes against normal 4-4.5 lakh tonnes.

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

Exports

Exports of Guar gum from April to September 2011 stood at 2.86 lakh tn a rise of 68 % compared to 1.70 lakh tn during the same period last year.

In 2010-11 fiscal, Guar gum exports were almost doubled to 4.03 lakh tonnes.

Courtesy:Angel Commodities

CBOT Updates:Wheat settles lower

CHICAGO (Commodity Online):US wheat futures stumbled on spillover pressure from corn as the grains complex succumbed to larger-than-expected USDA supply estimates.

The market was driven lower by corn, which tumbled on the new forecasts. Estimates weren't as bearish for wheat, although the government did estimate winter-wheat plantings well above analysts' expectations.

That's why it, traded in Chicago and Kansas City, fell more sharply than Minneapolis spring wheat. Some traders question the USDA's soft red-winter-wheat estimate and say that the hard red-winter-wheat acreage doesn't reflect what will actually be harvested.

CBOT March wheat ends down 36c at $6.05 a bushel while KCBT March slides 28 3/4c to $6.73. MGEX March falls just 9c to $8.07 1/2.

Courtesy: CME Group

CBOT Updates:Corn edges lower on supply concerns

CHICAGO (Commodity Online): US corn futures tumble Thursday after the USDA issues much larger-than-expected supply estimates.

Although the USDA's changes from last month were not huge, traders had widely been expecting supply cuts.

Instead, the USDA raised its 2011 crop estimate and 2012 world stockpile projection, while leaving its US inventory projection unchanged.

Traders were leaning the wrong way headed into the report, and the market plunged limit down shortly after the open and stayed there most of the day.

The market is expected to fall again Friday, although worries about South America's crop and a looming three-day holiday weekend could add some uncertainty. CBOT March corn ends down 40c, or 6.1%, to $6.11 1/2. Friday's trading limit will be expanded to 60c.

Courtesy: CME Group

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