Silver, gold prices gain, mixed sentiments in metals
Global market sentiments are expected to remain mixed on account of uncertainty surrounding the European economic scenario. Moody’s has indicated that it could cut ratings of banks in 15 European nations. The ratings agency has indicated that a rapid escalation of Europe’s sovereign debt crisis threatens the entire region.
Fitch ratings agency revised the outlook on the US credit rating from stable to negative after a special congressional committee failed last week to agree on at least $1.2 trillion in deficit-reduction measures. The agency gave US the time upto 2013 in order to come up with a plan to deal with its budget deficit. Fitch warned of US downgrade if no budget deal is presented in 2013.
Spot gold prices witnessed gains of around 0.2 percent till 4.45 pm IST today mainly taking cues from dollar weakness that made dollar denominated commodities cheaper for the holders of other currencies.
The yellow metal touched an intra-day high of 1717$/oz and was trading at the level of $1715/oz till 4.45 pm IST. MCX gold traded on a flat note and touched a low of Rs28,621/10 gms till 4.45 pm IST today.
Taking cues from rise in gold prices coupled with a weaker dollar, silver prices rose slightly by 0.1 percent today. Prices hit an intra-day high of $32.17/oz and were hovering around $32.07/oz till 4.45 pm IST.
The base metals complex delivered a mixed performance on the LME today with aluminium and nickel trading in the red while copper, lead and zinc are trading higher. However, further decline was cushioned on account of a weaker dollar. Nickel was the top loser of the day, as the metal declined around 0.6 percent on the LME and more than 0.2 percent on the MCX. The metal inventories rose almost 1 percent to 89,778 tonnes on the LME warehouse today which acted as a negative factor for metal prices.
Supply concerns in the Middle-East along with weakness in the US dollar helped crude oil prices trade higher by almost 1 percent today. Prices touched an intra-day high of $99.30/bbl and was trading at $98.89/bbl till 4.45 pm IST. MCX crude oil December contract gained sharply by 1.2 percent and was hovering around Rs5148/bbl till 4.45 pm IST today.
The American Petroleum Institute (API) is scheduled to release its weekly inventories today and crude oil inventories are expected to increase by 1 million barrels for the week ending on 25th November 2011.
Outlook
Gold and silver are expected to trade with a negative bias today, as Fitch revised US credit rating outlook to negative and Moody’s also indicated that it could cut ratings of banks in 15 European nations which may lead downside in the global markets. Silver will also take cues from fall in gold prices and downside in base metals.
Base metals and crude oil prices are expected to trade lower today as Fitch’s negative outlook on US credit rating and rising worries over Europe’s debt tensions will lead to weak sentiments in the global markets.
Additionally, expected rise in US crude oil inventories will also act as a negative factor for oil prices. However, supply worries in the Middle East may cushion sharp fall.
Courtesy: Angel Commodities
Base metals settle higher tracking positive global shares
Base Metals closed on a positive note due to recovery of the global equity markets. The Metal complex traded up with two percent in the morning hours but later on during the day the gains were limited.
The economic data releases had a mixed impact but still the metals gained. Apart from Zinc, all other metals experienced a draw down in inventory at the LME indicating the uptrend due to the marginal spot demand.
Today in the morning the metals are trading slightly up to mix at LME. The US markets closed positive and the Asian equities are also trading slightly up. Therefore the metals are expected to post some gain in the morning hours.
However the economic data releases from Europe are expected to have a negative impact and the Moody’s Investors service is considering lowering debt ratings for banks of fifteen European Nations, increasing the uncertainty of the Euro zone debt crisis.
This may reduce the gains in the metals sector. Hence; the base metals are expected to have a mixed impact.
Aluminium
Aluminium prices ended up by 1.71 per cent on LME while in India closed up by 1.57 per cent.
Aluminum cancelled warrants were increased, the prices also increased as some buying was witnessed and the open interests have also increased suggesting short term scenario may be slightly bullish.
Copper
Copper prices ended up by 3.67 per cent while in Indian market was up by only 2.27 per cent.
The Cancelled warrants ratio were increased with an increase in the prices, there has been an increase in the open interest too, indicating a bullish trend.
The open interest for the three month forwards contract at LME is also increasing suggesting the future demand for the metal.
Lead
Lead prices ended up by 1.05percent in LME while in MCX closed up by 1 per cent.
The cancelled warrant ratios are continuously maintaining above six per cent mark.
The open interest at futures markets are declining providing a very dicey trend for the short term.
Nickel
Nickel prices at LME ended up by 1.36 per cent while in MCX it ended up by 0.74 per cent.
The cancelled warrants though have been improving but now are in the down side trend and reduced from 6 per cent to 3.38 per cent.
The backwardation effect is slowly turning positive indicating increase in future demand for the metal.
Zinc
Zinc prices to witnessed up trend and ended the session at $1915 up by 2.46 per cent, while in MCX the gains were limited with a slight increase of 1.50%.
The cancelled warrant ratios are increasing for the past few sessions although not suggesting any clear direction.
The future trend is building positively showing some gains in the near term.
Courtesy: Karvy Commtrade Ltd.
Base metals settle higher on positive US economic data
The base metals complex traded higher on the LME on Monday on the back of upbeat sentiments in the global markets due to positive US economic data from the US.
Additionally, weakness in the US dollar also acted as a supportive factor for the metal prices yesterday.
However, appreciation in the Indian Rupee capped further gains on the domestic platform on Monday.
Copper
Copper, the leader of the base metals pack, was the top performer on Monday, as the metal rose around 2.7 percent on the LME and by 2.3 percent on the MCX.
The red metal touched an intra-day high of $7535/tonne and closed its trading session at the level of $7434/tonne yesterday. On the MCX, Copper November contract hit an intra-day high of Rs390/kg on Monday.
Courtesy: Angel Commodities
Crude oil rises on global supply concerns
Nymex crude oil prices rose sharply by 1.5 percent on Monday on account of expected supply concerns in the Middle East region coupled with a weaker dollar. Sanctions on Syria led to concerns that supplies from the Middle East could get affected which supported oil prices.
Additionally, Mexico shut its three largest oil-export terminals on account of bad weather which also acted as a positive factor for oil prices.
On the MCX, Crude oil December contract gained around 1 percent and touched an intra-day high of Rs5223/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 increase by 1 million barrels for the week ending on 25th November 2011.
Gasoline stocks are expected to increase by 1 million barrels and distillate inventories are expected to decline by 1.2 million barrels.
Courtesy: Angel Commodities
Precious metals edge higher on weak dollar index
Spot Gold rose almost 2 percent on Monday mainly on the back of dollar weakness. The yellow metal touched an intra-day high of $1719/oz and ended its session at the level of 1711/oz yesterday.
MCX Gold December contract increased by 1.3 percent and hit an intraday high of Rs.28,849/10 gms yesterday. However, appreciation in the Indian Rupee resisted further gains on the domestic bourses in yesterday’s trading session.
Silver
Taking cues from rise in gold prices coupled with a weaker dollar, spot silver gained sharply by 3.5 percent in yesterday’s trading session.
Additionally, silver being an industrial metal also took cues from upside in base metals too. Prices touched an intra-day high of $32.30/oz and closed its trading session at $32/oz on Monday.
On the MCX, Silver December contract gained by more than 2 percent and touched an intra-day high of Rs.55,777/kg yesterday.
Courtesy: Angel Commodities
India soy complex settles higher on global cues
Soybean prices marginally gained at futures platform today. Millers buying and the china importing more beans in November and December had positive impact on CBOT prices and same impact can be seen on Indian markets.
CBOT prices have increased on Monday due to weaker dollar index and broad recovery in grains complex.
Soy oil prices have gained on Monday as edible oil imports for month of November could be much lower the last month which could add to the weakness in prices.
Domestic availability of edible oil prices remained firm as the supply side is much limited during current year.
Courtesy: Karvy Commtrade Ltd.
NCDEX turmeric declines on subdued demand
Turmeric Futures declined sharply initially on account of lackluster trades at the domestic mandis, however, it recover towards the end and settled 1.1% higher on short coverings. Spot prices continued to trade lower on Monday owing to lacklustre trades.
Production, Arrivals and Exports
Arrivals in Erode declined to 7000 bags as compared to 10,000 bags on Friday.
Turmeric production for the year 2011-12 is projected at 82 lakh bags (1 bag= 70 kgs) compared to 69 lakh bags in 2010-11. However, area covered under turmeric till 21st September 2011 stood at 0.67 lakh ha 2.9% lower as compared to 0.69 lakh ha in the 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 settles higher on extended buying
eera prices continued to trade firm and settled 0.53% higher on Monday on account of improved buying by the market participants. Spot prices also ended 0.41% higher due to slight recovery in demand from the local buyers.
Sowing of jeera in Rajasthan has gained momentum due to favorable weather condition. Sowing of Jeera has also commenced in some parts of Gujarat but it is on slow pace. 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 3,000 bags while offtakes improved to 6,500 bags on Friday.
Production of jeera in Gujarat and Rajasthan in 2011 was around 22 lakh bags and 7-8 lakh bags respectively. (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 short covering
Black pepper prices witnessed mixed trades throughout day and settled 0.43% higher on Monday. Spot prices however ended 0.06% marginally down owing to fragile demand from the domestic buyers.
Lower stocks with Vietnam and Indonesia, the major suppliers of pepper till fresh arrivals commence next year (April and July respectively) will also support prices.
Indian parity in the international market was at $7,150 a tonne and remained competitive and was attracting overseas orders while Vietnam 550 gl was quoting its pepper at $7,500 per tonne.
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 September 2011 exports of pepper from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was around 188,000 mt, 4% lower from the corresponding period of 195,000 mt. Vietnam has reportedly sold 1.12 lakh tonnes of pepper from January to September 2011 a rise of 14% as compared to previous year.
Sharp fall of 38% in pepper exports was witnessed in Indonesia during above period. Exports stood at 26,300 tonnes as compared to 42,082 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.
39thsession and meeting of IPC scheduled on 22nd-26th November 2011 in Lombok Island, Indonesia
39th session of the IPC meet is scheduled on 22nd – 26th November 2011 in Indonesia and theme of the session is “Global Strategy and Innovation for Sustainable Pepper production, price and Quality”.
Production and Arrivals
Arrivals of pepper in the domestic mandi on Monday stood at 7 tonnes as compared to 10 tonnes on Saturday. Offtakes on the other hand stood at 8 tonnes.
Global Pepper production in 2012 is expected to increase 4% to 2.70 lakh tonnes with Vietnam the largest producer producing around 1.40-1.50 tonnes. Carryover stocks are projected at 50,000 tonnes as compared to 60,000 tonnes in 2011. (Source: Peppertradeboard). While, production of pepper in India in 2011-12 is expected to be 43 thousand tonnes according to the market sources a decline of 5% as compared to 48 thousand tonnes in the last year.
Courtesy: Angel Commodities
NCDEX soybean rises on global cues
NCDEX December soybean futures traded higher on account of firm overseas market (e-CBOT) as improved global equity market on Monday. Arrivals of soybean in Madhya Pradesh were around 3 lakh bags, Maharashtra 1.5 Lakh bags and Rajasthan 1 lakh bags (bag=100 kg). Arrivals of soybean declined slightly because farmers are holding their stocks in anticipation of higher prices in coming days.
USDA’s weekly export sales released on Friday (November 25, 2011) which shows that the Weekly export sales for soybeans came in at 921,600 metric tonnes which was well above trade expectations. China was a net buyer of 936,000 tonnes for the week.
Mustard Seed
NCDEX December RM Seed futures ended higher on account of firm overseas market. Higher prices of other oilseeds and vegetable oil also provided support to the bulls.
As of November 25, 2011, sowing acreage of Mustard Seed increased to 56.54 lakh hectare (up by 1%) as compared to 55.51 lakh hectare last year till date. Sowing acreage of RM seed increased mainly higher sowing acreage in West Bengal, Haryana and Rajasthan due to 35% hike in RM Seed MSP (Current Rs 2500/qtl). However, Area under groundnut (1.89 vs 2.18 lakh ha), sunflower (2.31 vs 2.99 lakh ha) and safflower (1.57 vs 1.99 lakh ha) is declined slightly. Overall Rabi oilseed declined marginally to 65.68 lakh ha as compared to 65.94 lakh hectares.
Refine Soy Oil
NCDEX December Refined Soy oil futures ended higher on account of firm soybean oil futures at e-CBOT as ease euro debt concern. Edible oil demand increased in the domestic market on account wedding/winter seasons.
India won't hike the base price of imported refined edible oils immediately to prevent any price rise in the local market. India levies a 7.5% import tax on refined oil, but the duty is calculated on the basis of base prices fixed by the government and not the market price. Imports of crude edible oil are tax-free. As per SGS ( a cargo surveyor), Malaysia's palm oil exports during the November 1-25, declined to 1.34 million tons, down 1.7% as compared with 1.37 million tonnes during the October 1-25.
India’s Vegetable Oil Imports:
According to Solvent Extractors Association of India, India’s import of vegetable oil in the month of October 2011 was 8.78 lakh tonnes, up 12% as compared to 7.81 lakh tonnes in October 2010. However, from November 2010 to October 2011 (Oil Marketing year), India’s import of vegetable oil was 83.71 lakh tonnes, fell more than 5% as compared to last edible oil marketing year of 88.23 lakh tonne.
Courtesy: Angel Commodities
NCDEX sugar edges higher on rising spot demand
Sugar Futures extended the gains of the previous week and settled 1.23% higher on the Monday on the reports that the notification for the recently allowed 1 mln tn sugar exports is likely to be issued soon and the entire quantity will be in a single tranche.
However, crushing has gained momentum across India and is thus expected to cap sharp upside in the prices.
India has extended the deadline for mills to seek export permits for around 30,000 metric tons of unsold sugar from the marketing year ended Sept. 30 until Dec. 6, 2011.
ICE Raw Sugar futures and LIFFE white settled 0.96% and 0.48% higher due to a weaker US dollar and easing worries over the euro-zone sovereign debt situation.
The Brazil white Sugar prices have declined to $ 630 /tn as on 23rd Nov, 2011 compared to $657 per tonne (FOB), in the 19th Nov. Current offer prices stands at Rs 32770 per ton in rupee terms compared to current domestic price of Rs 30500 / tn.
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.
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 10.2 to 10.3 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.
China, the world's largest sugar consumer, has imported 1.6 million tons of sugar in the first 11 months of 2011, with preliminary data for the full year likely to be issued around October 10.
Courtesy: Angel Commodities
NCDEX chana regains on fresh spot demand
After declining by more than 5% during the last week, Chana futures rebounded on Monday as fresh demand emerged at lower levels. Further, lower stocks from the last year’s harvest was seen supporting Chana prices as harvesting would commence only In January.
According to the Ministry of Agriculture, pulses have been sown in 61.30 lakh hectares as on November 24th 2011 as compared to 57.29 lakh hectares in the same period last year.
Area sown under Chana in Rajasthan till 22nd November 2011 was 14.59 lakh hectares (lh) as compared to 11.81 lh in the same period previous year. Area under Chana is up by 23% in Rajasthan, by 9% in MP and by 6% in UP as on 22nd November. However, the pace is slow in Maharashtra and AP.
There are reports of decline in the output of dry peas and Chickpeas in Canada for 2011. Chickpeas output is expected to fall by 58% to 54 MT while that of peas will fall by 33% to 2 MT (Source: Agriwatch)
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.
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 gains on firm exports
Guar complex extended the gains of the previous week on account of robust export demand and expectations that production might fall below 11 lakh tonnes.
Guar seed as well as Gum futures settled 0.56% and 0.97% higher on Monday.
Arrivals of late sown Guar crop has started across Churu, Bikaner and other growing areas of Rajasthan and currently stands around 1 lakh bags. However, arrivals are not expected to cross 1.2 lakh tonnes as harvesting of early sown Guar crop (Guari) is almost completed.
Weaker rupee is seen gearing up exporter’s profit margin. However, export demand may hit to some extent amidst higher prices and weaker rupee.
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. If government considers the removal of export incentive and imposes export duty, exporter’s profit margin will be reduced. Traders believe that if India considers imposition of export duty countries like China would be forced to roll back import duty on guar gum powder and splits and this may benefit India in the long run.
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.
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% as compared to 1.02 lakh tn during the same period last year.
The export figures clearly indicate that global crisis has not hit Guar exports as of now in the current season too. In fact weaker rupee has increased the profit margin of the exporters in the current season.
Courtesy: Angel Commodities
Crude Oil prices driven by Europe, Middle East developments
January Crude Oil closed lower for the second consecutive week but losses could have been worse if not for a strong comeback on Friday. The primary reason for the weakness throughout the week was concern that the European debt crisis would trigger the start of a global recession. As bearish conditions spread throughout the Euro Region, traders pressured the Euro, driving up the U.S. Dollar and lowering demand for the dollar-based crude oil market.
The soft crude oil market firmed up on Friday on the news that violence had erupted in Saudi Arabia. With unrest already taking place in Egypt and Yemen, the news that it had spread to Saudi Arabia led to speculation that an escalation of events may destabilize the country. Egypt and Yemen are small players in the oil game while Saudi Arabia is the world's biggest crude oil exporter. Increased violence in this country would drive oil prices sharply higher on the fear that supply would be reduced.
Movement in the crude oil market is coming down to simple supply and demand analysis. If the Euro Zone problems continue to expand beyond the peripheral nations such as Greece, Italy and Spain then demand is likely to fall for crude oil, sending prices lower. "Risk-off" sentiment continues to drive investors into the U.S. Dollar, making crude oil more expensive to foreigners.
Since the markets are being driven primarily by the headlines from Europe and the Middle East, the impact of positive economic news from the U.S. has been diminished. This condition is likely to continue until Europe comes to a concrete agreement on how to manage its sovereign debt crisis. Up until now it's been "all talk and no action". Until this mind set changes, positive U.S. economic news is likely to have effect on the price of crude oil in my opinion. From now until the end of the year, Europe and other outside events are likely to set the tone in the market.
From a supply perspective this means that inventories are likely to remain high if Euro remains the key issue. If the emphasis shifts to the potentially explosive situations developing in the Middle East then the only thing that can be guaranteed is extreme volatility. What this market has come down to is this. If traders focus on Europe, the market is likely to weaken due to the stronger Dollar. If traders lean toward the possibility of supply disruptions in the Middle East then look for the market to rise.
In addition to the eruptions of violence in Egypt, Yemen and Saudi Arabia, traders shouldn't forget about Iran. Last week the U.S. announced a plan to sanction Iran because it is producing military grade uranium in its nuclear plants. Late in the week, France called for a European embargo on crude supplies. With Iran controlling the Strait of Hormuz, oil prices could soar if there is a military confrontation.
Factors Affecting Crude Oil This Week:
Supply and demand: The U.S. supply and demand situation comes down to which set of fundamentals speculators decide to follow. If they follow the headlines out of Europe and decide to trade on a weaker Euro/stronger Dollar scenario, then look for oil prices to weaken. If the events in the Middle East escalate into full-blown confrontation then look for higher prices because of supply disruption concerns.
European sovereign debt: Last week Portuguese and Hungarian debt was downgraded to junk status. In addition, the European Central Bank's Italian bond buying campaign seems to have failed. With European leaders unable to come up with a plan to manage the spiraling debt situation, the problems are likely to worsen. Europe seems to be facing either a sovereign debt default or a major bank collapse. It is likely to be both. This would plunge the region into a recession and perhaps the world greatly lowering demand for crude oil.
U.S. economy: If Europe falls, the U.S. is likely to face another recession. The Fed has done just about all it can to keep the economy afloat but there are some things it has no control over. U.S. economic news is not as important at this time and is not likely to move the market. Traders are focusing on Europe and the Middle East.
Middle East conflicts: Egypt, Yemen, Saudi Arabia and Iran. What is it going to take to draw the U.S. into any one of these conflicts? While unlikely to move on the events in Egypt and Yemen, the U.S. has direct interests in Saudi Arabia and Iran. These scenarios have to power to drive oil prices sharply higher.
Courtesy:. Oilprice.com