Prices Touch Historical Highs

Robust export demand amidst reports of lower output this season continued to add to the gains of the previous week and settled 3.66% and 3.24% higher respectively on Monday. Prices touched new historical highs of Rs.5,622/qtl and Rs.17,885/qtl.

Arrivals of late sown Guar crop has started across Churu, Bikaner and other growing areas of Rajasthan and thus arrivals have increased in the last 2-3 days 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. If, Government considers the removal of export incentive and imposes export duty exporters 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% 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.

Outlook
Guar prices are likely to trade firm owing to reports of robust export demand and expectation of lower output of Guar in 2011-12 amidst lower carryover stocks.

It is advisable to maintain strict stop losses as prices are trading at record high levels and thus technical correction cannot be ruled out.

If global uncertainty continues and rupee continues to remain weak, then the overseas demand might get hampered in the coming months thereby putting downside pressure on the prices.

Courtesy: Angel Commodities


Chana prices to remain firm on local demand

Chana Futures after falling by 14% in the last few trading session bounced back from the lows owing to improved demand from the market participants and settled at the upper freeze of 4% on Monday.

Lower stocks at the domestic till fresh arrivals supported Spot prices to strengthen. Prices settled 4.11% higher yesterday.

According to the latest report by Ministry of Agriculture, pulses have been sown in 114.1 lakh hectares as on 2nd December 2011, up 2.4% as compared to 111.5 lakh hectares in the same period last year.

Area sown under Chana in India till 2nd December 2011 was 75.9 lakh hectares (lh) as compared to 73.9 lh in the same period previous year.

In UP, sowing of Masoor is lagging behind (down by 18% to 4.57 lakh ha.) while Chana and peas is up by 8 and 18% to 8.1 and 3.84 lakh ha respectively.

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 15.08 lakh ha against 13.46 lakh ha sown in the same period last year.

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.

Outlook
Chana prices are expected to remain firm due to demand from the local stockists amidst lower availability in the major mandi (Indore).

In the short term prices may trade in the range of Rs 2900 per qtl and Rs 3250 per qtl in the short term (2 -3 weeks).

However, increased area under Chana and thereby better output in 2011-12 might cap sharp gains in the medium term. Also, government might step up if Chana prices rise sharply.

Courtesy: Angel Commodities


Sugar weakens on availability, to trade sideways

Sugar spot prices settled 0.71% down owing to sufficient availability in domestic caused by increased quota for the month of December 2011. Also reports of October to November 2011 India Sugar output to rise by 17% to 2.16 million tonnes as compared to 1.84 mln tonnes in last year added to the bearish tone.

Further, extension of zero duty on Sugar till March 2012 and ongoing crushing across India pressurized sugar prices in week ended 3rd December 2011.

The government has notified the export of one million tonnes of sugar in the 2011-12 season. 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 raws.

Government has extended Zero duty on sugar imports till March 2012 to tame inflation.

ICE Raw Sugar LIFFE white Sugar futures settled 2.69% and 1.76% higher owing to reports that European leaders might draw some concrete plan to lead the region out of the debt crisis.

The Brazilian white Sugar prices are ruling around $ 659/tonne (FOB) as on December 01, 2011 compared to $630/tonne (FOB), in the previous week. Current offer price stands at Rs 34,260/tonne in Rupee terms compared to current domestic price of Rs 31,050 /tonne (FOB).

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. Output in Maharashtra during Oct- Nov 2011 period is lower at 9.11 lakh tn as compared to 9.73 lakh tn in the 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.

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.

Outlook
Sugar prices are expected to trade sideways to down due to ample stocks in the domestic. However, formal notification of the sugar exports might control prices from falling sharply.

From long term perspective, prices are expected to take cues from the Sugar output estimates in the domestic market, change in government policies with respect to exports and International Sugar prices, which would be influenced by the supplies from Brazil, Thailand and India and demand from China.

Courtesy: Angel Commodities


NCDEX soybean gains on global cues, set to gain further

NCDEX December soybean futures traded higher on account of firm overseas market (soybean futures at e-CBOT) and improved demand from solvent extractors and stockists due to higher prices of edible oil.

Further, declining arrivals of soybean in major producing states like Madhya Pradesh and Maharashtra as famer’s holding their stocks in anticipation of higher prices in coming month also provided support to the bulls. Total arrivals of soy bean in Madhya Pradesh was 2.25 lakh bags and Maharashtra about 1.40 lakh bags on Monday (Bag=100 Kg).

Soybean spot price at Indore was quoted at Rs 2140-2150/qtl (Auctions) and plant Delivery was Rs 2230-2260/qtl (excluding VAT) on Monday.

USDA’s weekly export sales released on Friday (December 01, 2011) which shows that the weekly export sales for soybeans came in at 489,600 tonnes which was below trade expectations. Meal sales were 135,500 metric tonnes, in line with expectations.

Sales of 99,000 metric tonnes are needed each week to reach the USDA forecast. Oil sales were 8,900 tonnes, in line with expectations

Mustard Seed
NCDEX December RM Seed futures surged higher and hit 3% upper limit on lower yield concern as unfavorable weather condition (high temperature). Higher prices of other oilseeds and vegetable oils also added bullish market sentiments.

There is talk about the low yield of RM Seed this year as compared to last year due to warm weather at flowering stage also provided support to the bulls. Rape/mustard seed accounts for about 70% of India's winter-season oilseed output.

As of December 02, 2011, sowing acreage of Mustard Seed increased to 56.60 lakh hectare (down by 2.5%) as compared to 58.1 lakh hectare last year till date. Sowing acreage of RM seed declined in India mainly due to lower sowing acreage in Rajasthan. 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 surged sharply higher on account of firm overseas market (gains BMD CPO futures and soybean oil at e-CBOT) as supply concern of palm oil due to heavy rains like a flood situation in major producing regions in Malaysia and Indonesia.

Improved demand of edible oil as winter/wedding season also provided support to the bulls. Depreciation of INR against US dollar also provided support to the bulls. As per Interteck ( a cargo surveyor), Malaysia's palm oil exports in the month of November, declined to 1.53 million tons, down 9% as compared with previous month.

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.

Outlook
Oilseed seed complex are expected to trade higher on account of firm overseas market as supply concern coupled with improved domestic demand as winter/wedding season.

Declining arrivals of Soybean coupled with improved demand from stockists and solvent extractors are also in favour of the bulls.

Depreciation of INR against US dollar is also in favour of the bulls as imports would be costly. India’s import is more than 50% of its requirements of edible oils.

Courtesy: Angel Commodities

Pepper gains on lower arrivals, prices to remain firm

Demand from the local buyers amidst lower arrivals led Spot pepper and Futures to settle 0.27% and 1.25% higher respectively on Monday. 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 $7,625-650(c&f) a tone and remained competitive and was attracting overseas orders while Vietnam 550 gl was quoting its pepper at $7,450 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 stood at 17 tonnes as compared to 15 tonnes on Saturday. Offtakes on the other hand stood at 21 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.

Outlook
Pepper prices in the intraday are expected to remain firm owing to lower arrivals in the domestic market amidst demand from the local buyers. In the short term (till mid of December 2011) price trend is expected to remain firm due to lower carryoverstocks of pepper with major producers.

In the medium term (December end onwards till February 2012) prices are likely to witness correction as the global pepper production estimates are projected to be higher as compared to last year.

Prices in the international market of major origins will also determine price trend in the domestic market.

Courtesy: Angel Commodities

Jeera to rise further on unfavorable weather in Gujarat

Jeera Spot prices and Futures after trading weak in the last few days bounced back from the support levels owing to short coverings and reports that weather in the chief growing area is not favourable for the sown jeera crop. Temperature in the Gujarat is too hot which is drying the soil moisture thereby stopping proper germination of the seed. Prices at the Spot and Futures settled 0.57% and 3.72% higher respectively on Monday.

According to Gujarat farm ministry, area sown under jeera till November 30, 2011 stood at 1.55 lakh hectares (lh) up 67.5% 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 steady arrivals of 2,750 bags amidst offtakes of 5500 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%.

Outlook
Prices are expected to trade sideways to up in the intraday owing to reports of unfavorable weather in the Gujarat. Also, overseas demand is expected in the coming days which might support prices in the coming weeks.

In the long term (January till February 2012) prices are likely to take cues from the crop growth status and weather in the growing regions. Better crop output estimates are expected to pressurize jeera prices in the above mentioned period.

Courtesy: Angel Commodities


Turmeric recovers on short covering, revival in demand

Turmeric Futures after trading bearish in the last few trading session bounced back owing to short coverings and settled at upper freeze of 4.03% on Monday. Slight recovery in demand from the local buyers also supported prices yesterday.

Production, Arrivals and Exports
Arrivals in Nizamabad and Erode mandi stood at 1000 bags and 7500 bags respectively on Saturday.

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%.

Outlook
Turmeric prices in the intraday are expected to trade firm owing to demand from the domestic buyers. However, bumper crop of turmeric amidst sufficient carryover stocks are expected to control prices from trading higher in the short term (till December 2011).

In the medium to long term (January – February ) bumper crop in 2012 season may keep turmeric prices bearish.

Courtesy: Angel Commodities


Soybean to trade positive on good buying by crushers

Soybean gained substantially on Monday taking cues from domestic spot market activity.

At spot markets firm buying from the millers and crushers supported prices of spot and same reflection was seen at the futures.

Outlook:
Soybean prices might open positive for the day on continued recovery. Good buying interest of crushers,
stockists and millers in Indian markets might also have positive impact on prices.

However, Latin American crop prospects might weigh on prices later in the day. Argentina production might be higher at 52-53 million tons of soybeans. Crop sowing is 81% complete in Argentina and 92.5% of sowing is complete in Brazil which might have bearish impact on prices.

Argentina soybean acreage is projected at 18.9 million tons compared to 18.6 million tons last year.

South American soybean production is expected to be around 142.65 million tons which is higher by 6% during last season.

Courtesy: Karvy Commtrade Ltd.


Soy oil trades positive on fresh buying at lower levels

Soy oil prices continued the positive trend owing to the fresh buying at lower levels.

Expectations of the revival in edible oil demand from china kept the prices positive.

CBOT prices ended higher on Monday amid reports of supply disruptions in palm might shift the buyers towards soy oil which supported positive market sentiments.

Outlook:
Edible oil prices might resumed down trend for today amid reports of decline palm oil exports. According to Intertek surveyor, exports have dropped 12.5 percent to 1.61 million tons.

Shipments fell 8.8 percent to 1.53 million tons in November compared with 1.68 million tons in October.

However, Chinese import news might limit huge losses. PEC has invited tenders to import 3 lakh tons of soy oil from Brazil and Argentina which might limit any steep fall in soy oil prices.

Courtesy: Karvy Commtrade Ltd.


RM Seed gets support on weak acreage, production outlook

Mustard seed prices increased on Monday owing to the lower production estimates prevailing in mustard in the current crop.

Production could be lower as the current cold weather conditions is reported to be insufficient for crop growth which might keep prices lower.

Outlook:
Mustard prices might open on positive note continuing the earlier gains today. Around 81% of sowing is complete major mustard growing regions in rajasthan.

Overall weak acreage numbers and dull production estimates in mustard might support the prices. Projected output is much lower than last year around 65-70 lakh bags.

However, negative impact of oilseed complex might weigh on prices during the day.

China National Grain & Oils Information Center projects increase of the mustard imports by 41% compared to last year during current marketing year.

Courtesy: Karvy Commtrade Ltd.


Pepper to trade positive on follow through buying

Pepper prices resumed uptrend on fresh buying at lower level. Futures started the day on lower note on continued corrections.

However, bullish reports from global pepper market supported the prices and futures ended on higher note.

Outlook
Pepper prices are expected to continue the positive trend on follow through buying. Lower production projections given by IPC are supportive for Indian prices.

Fresh crop is expected to hit the market by end of this month. Therefore, till then supply crunch is likely to support the prices.

The estimates given by IPC for Indian production in 2012 are down by 10% Y/Y to 43000 tons. Indian prices in international market are quoted around $7350 & $7650 per MT for Europe and US FOB, which is much lower than other countries quotes.

Thus, competitive Indian prices in international market are supporting export demand in small amount for Indian pepper.

According to derivative analysis, prices, open interest have increased while volumes have declined. It is a good indication that market is attracting late buyers & early shorts; market is vulnerable to a sharp correction but likely that that correction will be bought creating a buy point for uptrend.

Courtesy: Karvy Commtrade Ltd.


Turmeric to be under pressure if arrivals increase

Turmeric prices witnessed huge recovery on short covering n previous losses.

Improved prices at spot market amid demand for hybrid finger variety pushed the prices on higher side which also reflected in futures prices.

Outlook
Turmeric futures expected to continue the positive trend on follow through buying during early trade of the day. However, if arrivals increases at spot market that might weigh on prices during the day.

Carry forwards stocks at physical market is around 12-13 lakh bags and production is estimated more than 80 lakh bags.

Therefore, higher carry forward stocks along with increased production estimates might weigh on sentiments.

Acreage in major growing regions in AP is also reported higher than the normal sowing acreage.

According to derivative analysis, open interest has declined while prices and volumes have increased. It is a good indication that market has a lot of traders initiating from both sides but larger traders may be liquidating into the higher prices.

The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of day.

Courtesy: Karvy Commtrade Ltd.


Jeera to trade positive on extended short covering

Jeera futures prices also moved up on short covering on lower levels.

Declined arrivals at spot market of Unjha also supported the prices to trade up and futures ended on higher note.

Outlook
Jeera prices are expected to open on slight positive note on extended short covering. Declining arrivals at spot market might also support the prices.

However, long term trend is still weak amid rising sowing prospects. According to latest update, Gujarat rabi jeera acreage is 1,55,600 ha so far, higher by 67.5% Y/Y.

According to trade sources, production for year 2012 is expected to around 30-40 lakh bags against 28-30 lakh bags last year (1bag=60Kg.).

According to derivative analysis, open interest has declined while prices and volumes have increased. It is a good indication that market has a lot of traders initiating from both sides but larger traders may be liquidating into the higher prices.

The market may be vulnerable to large price swings as shorter time frame traders attempt to trade from both sides of the market but liquidating before end of day.

Courtesy: Karvy Commtrade Ltd.


Chilli may trade lower on increased arrivals

Chilli prices extended down trend amid poor domestic and export demand.

Increased arrivals at spot market of Guntur also added to the down side.

Overall weak trend pulled down the prices and futures ended in red.

Outlook
Chilli prices are projected to extend the losses on extended corrections during the day. Increase in arrivals across the spot markets might pressurize the prices today.

However, lag in AP Rabi sowing acreage W/W might limit huge losses. Andhra Rabi chilli area is reported 0.32 lakh ha as on 30th Nov. v/s 0.33 lakh ha yr ago.

However, traders are still expecting higher production in neat season. Nonetheless, According to Spices Board data, chilli exports during April- Sep, 2010-11 were down by 35% as compared to the same period last year.

According to derivative analysis, prices have declined while volumes and open interest have increased. It is a good indication that new money is coming into the market, showing aggressive new short selling.

This scenario will prove out a continuation of a downtrend or bearish.

Courtesy: Karvy Commtrade Ltd.


Cardamom to gain on good export demand

Cardamom prices continued the recovery on lower level buying. Improved prices at spot auction also supported the recovery at futures.

However, towards the closing futures took decent corrections and ended in red

Outlook
Cardamom futures are expected to open on slightly lower note. However, later on prices might take smart recovery amid good export demand.

According to data released by Spices board, cardamom exports during Apr-Sep, 2011 were up by 445% to 1825 tons against same period in last year.

According to Spices board of India, total arrivals during the current season till Nov. 27th were up by 110% to 7,670 tons against 3,655 tons in the same period last year.

According to derivative analysis, prices have declined while volumes and open interest have increased. It is a good indication that new money is coming into the market, showing aggressive new short selling.
This scenario will prove out a continuation of a downtrend or bearish.

Courtesy: Karvy Commtrade Ltd.


Base metals gain slightly, nickel the top gainer

Base metals gained slightly in yesterday’s trading session, Nickel turned to be the top gainer and the prices went up by 4.31 percent. Zinc was the only metal that closed down by 0.58 percent due to decrease in future demand. The economic data from Euro zone were mostly favorable and supported the prices.

Today, the metals are looking much weak and are trading low by 0.5 to 1.5 percent at the LME. The Inventory for all the metals has witnessed drawdown apart from Copper. The cancelled warrants have also reduced slightly indicating a downtrend. The Standard and Poor’s is possibly looking at rate cut for 15 Euro nations including France and Germany.

Yesterday’s key meeting between the French and German authorities prior to the Euro Summit scheduled this week, was focused towards this possible downgrade. The Asian equities and Euro has lost on the same note as the downgrade can hamper the performance of the Economies. From the economic data front, the Euro zone GDP, Household construction and Government spending are expected to remain at a blend.

The German Factory orders are expected to improve but still due to the downgrade and Euro concern the metals are expected to remain at stress. Overall, we suggest being on the selling side till the European data release which can release some pressure from the metals pack.

ALUMINIUM
Aluminum prices ended slightly up by 0.18 per cent at MCX, however the metal traded flat at LME

The open interest for the futures are declining indicating no carry forward of positions

Aluminum cancelled warrants have reduced, the prices have increased for the spot but the major concern is the contango indicating the dicey trend in the future

COPPER
Copper prices ended up by 0.63 per cent while in Indian market it gained slightly and was up by 0.92 per cent

The Cancelled warrants ratio decreased from 6.14 percent to 6.11 percent, whereas the Inventory at the LME has also increased consecutively for the third day

The open interest for the three month forwards contract at LME has increased slightly suggesting some future demand for the metal

LEAD
Lead prices ended up by 0.47 percent in LME while in MCX closed up only by 0.19 per cent

The cancelled warrant ratios have been increasing and is presently at 12.80 percent indicating spot demand for the metal

The open interest at futures markets had increased providing a bullish trend in the near term

NICKEL
Nickel was the top gainer yesterday and the prices at LME ended up by 4.31 per cent while in MCX it ended up by 4.49 per cent

The cancelled warrants have been improving but it came down to 3.26 percent

The backwardation effect is slowly reviving indicating increase in future demand for the metal

ZINC
Zinc was the only metal that lost in yesterday’s trading session and prices witnessed down trend and ended at $2040 down by 0.58 per cent, while in MCX the metal closed slightly down by only 0.29 percent

The cancelled warrant ratios decreased slightly from 4.87 percent to 4.60 percent

The future demand is improving as we can see the metal coming out of Backwardation

Courtesy: Karvy Commtrade Ltd.


Gold futures retreat on S&P warning to EU leaders

Gold future retreated yesterday after Standard & Poor's on Monday warned it may carry out an unprecedented mass downgrade of euro zone countries if EU leaders fail to reach an agreement on how to solve the region's debt crisis in a summit later this week. The immediate delivery bullion fell 0.96% while at MCX it settled 0.52% below prior closing.

The US stocks gained yesterday but the day’s rally was dampened by the news Germany and other top-rated European nations could see their credit ratings cut

The dollar index settled slightly lower after their retail sales and non manufacturing fell below expectation

Holdings in the SPDR Gold Trust, the world's largest goldbacked exchange-traded remained unchanged at 1297.32 tons as on 5th Dec

OUTLOOK
While writing this report at 8.20 IST, gold futures at the Globex are little down by $10.80, at $1723.80. The Asian equities are heading down at present after S&P put 15 European nations on watch for potential downgrade. Depending on the result of EU summit on December 9, even Germany can also lose their “AAA” rating. Euro therefore stayed on the back foot since early morning.

The leaders of France and Germany agreed a master plan involving treaty change on Monday to impose budget discipline across the euro zone as S&P piled on pressure for a rapid solution to the EU debt crisis.

Gold holdings in the exchange traded products also fell from the record 2356.02 metric tons to 2354.365 metric tons yesterday, raised the concern for gold’s outlook.

From the economic data front, the Euro zone GDP might not improve as Government expenditure is likely to fall with house hold consumption to increase slightly. However, there is no data release from the US.

Market might be waiting for the upcoming EU summit on December 9 and the recent threat of down gradation might wreck havoc in the market. Gold, sharing a positive correlation with equities now a day, might also feel the pressure. Crafting tougher rules for the Euro nations to avoid a repeat for the crisis might weigh on to the Euro.

Therefore, we expect gold to remain under stress for the day. Hence, we also recommend remaining short for the metal.

Courtesy: Karvy Commtrade Ltd.


Silver futures fall along with gold and equities

Silver future also drifted lower along with gold and equities after reports flashed the possible threat of down gradation of 15 Euro nations by the S&P.

The immediate delivery future fell near a percent; while rupee depreciation helped MCX prices to settle 0.62% below prior level.

The US stocks gained yesterday but the day’s rally was dampened by the news Germany and other top-rated European nations could see their credit ratings cut

The dollar index settled slightly lower after their retail sales and non manufacturing fell below expectation

The I-share silver holdings fell to 9702.56 tons from 9706.54 tons as on 2nd Dec

OUTLOOK
At the Globex, silver is seen trading down by $0.252 at 32.12. As we have discussed in Gold’s outlook, the Asian equities rattled after the S&P threaten 15 Euro nations for a probable down gradation. Euro declines on fear of Germany, the top rated Euro nation, faced the risk of down grade.

France and Germany agreed a master plan involving treaty change on Monday to impose budget discipline across the euro zone as S&P piled on pressure for a rapid solution to the EU debt crisis.

A tougher rule for the Euro nation is certainly better for the economy but, at present it might hurt the currency. From the economic data front, the Euro zone GDP might not accelerate at a faster pace as the government expenditure is likely to fell.

So, Euro may remain under stress for the day. Silver therefore is also expected to remain weak on the back of weak equities and Euro. Hence, we recommend remaining short for the metal for the day.

Courtesy: Karvy Commtrade Ltd.


Gold falls on rise in global risk appetite

Spot gold prices declined around 1.4 percent on Monday, mainly on the back of rise in appetite in the global markets which affected demand for gold.

Prices touched an intra-day low of $1717/oz and closed its trading session at the level of $1720/oz yesterday.

On the MCX, Gold February contract declined slightly 0.1 percent as sharp decline was cushioned on account of Rupee depreciation. Prices touched an intra-day low Rs28,800/10gms and ended at Rs28,859/10 gms on Monday.

Silver
Taking cues from fall in gold, silver also declined by 1.8 percent on Monday. Additionally, mixed performance in the base metals space also affected the white metal yesterday.

Prices touched an intra-day low $31.83/oz and closed at $32/oz on Monday. MCX Silver March contract touched an intra-day low of Rs54,850/kg and closed at Rs55,002/kg.

Outlook
On account of concerns over the Euro Zone, we expect the US Dollar Index to strengthen in today’s trade.

Gold and silver prices are expected to come under pressure on the back of dollar strength and as risk aversion could grip the financial markets.

Fall in silver is expected to be more than that in gold as the white metal will also take cues from downside pressure in the base metals space.

Courtesy: Angel Commodities


Crude oil trades flat, to get support on supply concerns

Crude oil prices on the Nymex closed on a flat note yesterday while prices on the MCX increased almost 2 percent.

During yesterday’s trade, prices on the Nymex touched a high above $102/bbl but later succumbed to pressure on account of reemergence of European economic concerns.

But prices on the domestic bourses witnessed gains as weaker Rupee acted as a supportive factor.

Nymex crude oil prices touched an intra-day low of $100.24/bbl and closed at the level of $101/bbl. On the MCX, oil prices closed at Rs.5237/bbl after touching an intra-day high of Rs.5260/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 1.1 million barrels for the week ending on 2nd December 2011.

Gasoline stocks are expected to rise by 1.1 million barrels and distillate inventories are also expected to increase by 1.3 million barrels.

Outlook
Although supply-side concerns and expected fall in API crude oil inventories should support prices today, the commodity is expected to come under pressure on account of rising economic risks associated to the European economies. Dollar strength will additionally act as a negative factor.

Courtesy: Angel Commodities


Base metals to trade with negative bias on Eurozone worries

The base metals complex delivered a mixed performance on the LME on Monday. Unfavorable economic data from the US affected upside in base metals yesterday. But dollar weakness came in as a respite to sharp decline in prices.

Nickel
Nickel prices gained sharply by around 4 percent on the LME and by 4.5 percent on the MCX on Monday. A weaker dollar coupled with upbeat market sentiments acted as a supportive factor for the metal prices yesterday.

It touched an intra-day high of $18,480/tonne and closed at the level of $18,368/tonne. On the MCX, Nickel December contract hit an intra-day high of Rs948.80/kg and ended its trading session at Rs946.7/kg on Monday.

Outlook
Base metals are expected to trade with a negative bias today, as escalating worries over Euro Zone debt crisis will lead to rise in risk aversion in the markets. Additionally, a stronger dollar will also exert downside pressure on metals.

Courtesy: Angel Commodities