Base Metals Settle Higher on Firm US Economic Data

Favorable economic data from the US coupled with weakness in the US dollar acted as a positive factor for the base metals complex in the last week. Additionally, upbeat sentiments in the global markets also provided further support for metals.

Copper

Copper, the leader of the base metals pack, rose sharply by 3.5 percent on the LME and more than 4 percent on the MCX to be the top performer in the last week. The red metal received support from upbeat economic data from the US, rise in copper imports from China, the world’s largest metal consumer and sharp fall in the metal inventories on the LME warehouses.

Inventories of copper on the LME declined almost 2.5 percent to 372,300 tonnes last week from 381,250 tonnes in the previous week. However, inventories on the Shanghai increased 3.4 percent from a week earlier.

Zinc

Zinc was the only metal to witness decline on the LME last week. On a weekly basis, prices traded lower by 0.6 percent on the LME and around 0.8 percent on the MCX. Sharp rise in the metal inventories on the LME warehouses acted as a negative factor for prices.

Zinc inventories rose sharply by 9 percent to 826,300 tonnes last week from 758,900 tonnes in the previous week. On the MCX, the metal touched a low of Rs97.50/kg and closed at Rs 98.10/kg last week.

Courtesy: Angel Commodities


Crude oil surges on weak US inventories

On a weekly basis, Nymex crude oil surged around 6.5 percent which is the biggest weekly gain in last two months. Oil prices increased taking cues from the sharp decline in US crude oil inventories which declined the most since 16th February 2011.

Additionally, upbeat economic data from the US coupled with supply concerns due to US and European Union sanctions on Iran also acted as a positive factor for the commodity.

Prices touched a high of $100.23/bbl during the week and closed at $99.68/bbl on Friday. On the MCX, prices rallied more than 8 percent on the back of depreciation in the Indian Rupee and closed at Rs.5300/bbl on Friday after touching a high of Rs.5308/bbl during the week.

Libya’s oil output has recovered and currently the country is pumping more than 1 million barrels per day and exceeds the fellow Organization of Arab Petroleum Exporting Countries (OPEC) countries Ecuador and Qatar.

Natural Gas

Nymex natural gas declined by 0.8 percent last week on the back of less than expected decline in gas inventories. However, sharp downside in prices was cushioned because of demand for the gas increases as weather is expected to be cooler in upcoming future.

Gas prices closed at $3.104/mmBtu on Friday. On the MCX, prices increased by more than 0.5 percent last week on account of depreciation in the Indian Rupee and closed at Rs.166.3/mmBtu on Friday.

Courtesy: Angel Commodities


Precious metals edge higher on firm safe haven demand

On a weekly basis, spot gold prices rose around 0.5 percent as rise in crude oil prices fueled inflation-led demand for gold. In addition to this, weakness in the US dollar also acted as a positive factor for the yellow metal.

The US dollar index slipped below the crucial 80-mark as global sentiments turned positive. On the MCX, Gold February contract rose more than 1 percent due to depreciation in the Indian Rupee which led further rise on the domestic bourses and hit a high of Rs28,106 last week.

Silver

Spot silver prices declined almost 2 percent in the last week. In the initial part of the week, silver dropped sharply by 3 percent after Fitch's warning on downgrading France and six other Euro Zone nations which led the white metal to touch a low of $28.65/oz.

But, in the later part of the week, silver recovered some of its losses due to positive economic data from US which resulted rise in risk appetite in the global markets and rise in gold prices too. On the MCX, Silver March contract dropped by 0.6 percent as further decline was cushioned on account of Rupee depreciation and touched a low of Rs52,544/kg last week.

Holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, declined almost 1.5 percent to 9605.79 tonnes on 23rd December 2011 from the previous level of 9743.41 tonnes on 16th December 2011.

Courtesy: Angel Commodities


India soy complex settles lower on profit booking

Soybean prices dropped at the futures platform owing to profit booking on previous rally. Buyers were inactive at higher spot prices which resulted in bleak demand across major markets.

Gradual drop in demand for soy oil and soy meal has also led to lower crushing margin which kept the prices under pressure.

Soy oil prices dropped on Saturday as the palm oil exports sales data came with drop in exports of palm oil by 12% from Malaysia. Slow demand for edible oils across the globe affected the soy oil prices. Spot prices gained marginally which limited the down fall in prices.

Mustard seed prices declined gradually in line soy complex. Drop in the prices of mustard oil as stockists are inactive at higher price levels which had negative impact on prices.

Seed prices also dropped as the meal prices dropped marginally across major spot markets.

Courtesy: Karvy Commtrade Ltd.


NCDEX turmeric gains on rising spot demand

Turmeric Futures after trading weak in the beginning of the week surged on account of revival in demand from the domestic buyers and settled 0.89% and 4.43% higher respectively w-w.

Production, Arrivals and Exports

Arrivals in Nizamabad and Erode mandi are steady around 1,000 bags and 12,000 bags respectively on Friday.

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 surges on firm exports

Demand from the local stockists amidst reports of fresh export enquiries led prices to witness sharp rise of 3.07% and 9.16% higher respectively w-w.

According to Gujarat farm ministry, area sown under jeera till December 19, 2011 stood at 2.64 lakh hectares (lh) up 26% 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 3,000 bags 500 bags more as compared to Friday amidst off takes of 6,000 bags on Saturday.

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 weakens on fresh arrivals

Pepper Futures continued to trade bearish for the second consecutive day on Saturday anticipating fresh arrivals at the domestic to gain momentum in the coming days. Spot prices and Futures settled 5.6% and 6.17% down repectively w-w.

Indian parity in the international market is being offered at $7,050- 7,100(c&f) a tonne and remained competitive while Vietnam 550 gl was quoting its pepper at $7,250 per tonne (fob).

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 Saturday stood at 3MT as compared to 6 MT on Friday 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 drops on profit booking

NCDEX January soybean futures ended lower on account of profit taking after yesterday’s strong gains. Southern Brazil is expected to see a decent rain event this weekend and Argentina may also see rains in 1 or two days also added bearish market sentiments. Total arrivals of soybean in Madhya Pradesh were 1.50 lakh bags, Maharashtra was 1 lakh bags and Rajasthan was 50,000 bags (Bag=90-100 Kg).

Soybean prices in Indore were at Rs 2300-2330/qtl (auctions in Mandi) and plant delivery was quoted Rs 2370-2400/quintal. 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. As of December 15th, cumulative sales stand at 65.5% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 70.7%.

Sales of 327,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 142,000 metric tonnes as compared with 97,000 metric tonnes needed each week to reach the USDA forecast. Net oil sales came in at 14,800 metric tonnes which was higher than expected and compares with 11,000 tonnes needed each week to reach the USDA forecast.

Rape/mustard Seed

NCDEX January RM Seed futures traded with mixed sentiments on lack of fresh fundamentals. Lower sowing acreage of rabi oilseeds and rape/mustard seed also provided support to the bulls. 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 winterseason oilseed output.

Refined Soy Oil

NCDEX December refined soy oil futures ended mildly higher on account of improved demand in domestic market as winter season demand. Delayed harvesting of Malaysian palm oil due to heavy rains in Malaysia.

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 1-20 December fell by 10.1% to 9.34 lakh tonnes as compared10.37 lakh tonnes in the same period previous year.

A firm rupee weighs on edible oil prices as it makes imports cheaper for domestic buyers. India is the world's leading edible oil importer.

As per Solvent Extractors Association of India, India imported 827,684 tonnes of vegetable oils in the first month of oil marketing year (November to October), up 27 percent from 652,262 tonnes a year ago.

Marker share of palm oil imports was about 90% of total vegetable oil imports.

Courtesy: Angel Commodities


NCDEX sugar tumbles on rising cane crushing

Sufficient supplies in the domestic market owing to ongoing crushing season led Spot prices to settle 1.56% lower w-w. Further, lower demand from the bulk manufactures amidst winter season kept prices under pressure. However, Futures settled 1.20% higher w-w 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 0.39% and 0.64% higher on Friday owing to short coverings ahead 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 ends higher on lower acreage

Lower offtakes by the domestic buyers led prices to settle 2.81% lower w-w. Despite decline in the acreage under Rabi pulses as well as Chana prices remained weak throughout the week. However, Futures bounced back from the support levels to settled 1.21% higher on Saturday.

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.

Pulses production during the current fiscal is expected to decline by 5-7% over 2010-11 due to lack of adequate rain, According to India Pulses and Grain Association (IPGA). (Source: Financial Express)

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 settles higher on firm exports

Guar seed and Guar gum futures witnessed high volatile session throughout the week and settled 10.5% and 12.3% higher respectively ww. Various efforts by the Forward Market Commission to curb excessive volatility such as imposition of long margins, special cash margins were overlooked by the market participants and prices touched new historical highs of 7,420/qtl on Saturday.

Further, 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%.

FMC is mulling to put Guar Futures in trade to trade segment. (Source: Newswire 18).If this is imposed market participants may not be allowed to square off their intraday positions.

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