Commodities Report: December 19, 2011

Positive economic data from the US last week helped base metal prices recover from their lows, but on a weekly basis performance was very weak. Copper, the leader of the base metals pack slipped more than 6 percent on the LME last week as ongoing economic worries led to weak global market sentiments.

Concerns over the European front have heightened and the last month of year is witness to risk aversion as investors remain cautious.

In Friday’s trade, copper prices bounced back on account of dollar weakness and upbeat US economic data. During the week, the red metal touched a low of $7131/tonne, but revival in prices was seen by the end of the week as the metal managed to close above $7300/tonne.

On the MCX, the copper February contract slipped more than 5 percent but losses were less than that compared on the LME on account of a weaker Rupee. The MCX February copper contract touched a low of Rs 386.10/kg, marking the lowest level since the end of November.

Inventories of copper on the LME declined more than 1 percent to 381,250 tonnes last week from 386,075 tonnes in the previous week. However, inventories on the Shanghai increased 9.4 percent from a week earlier.

Courtesy: Angel Commodities


Crude Oil slumps on economic concerns

n the last week, crude oil prices on the Nymex slipped around 6 percent as economic concerns, dollar strength in the first-half of the week coupled with lower concerns over supply led to pressure on prices.

During the week, Nymex crude oil prices slipped to a low of $92.52/bbl, marking the lowest since early November.

The Organization of Petroleum Exporting Countries (OPEC) has agreed for the first new production limit in three years, thereby settling a 6-month old argument over production levels in Saudi Arabia’s favor.

The oil cartel has agreed on a new supply target of 30 million barrels daily. But for the first-half of the next year, the agreement caps output for all 12 OPEC members, keeping supply near 3-year highs that could lead to rebuilding of inventories.

Natural Gas

Natural gas prices witnessed major downside pressure and prices on the Nymex are trading at their lowest level in more than two years as forecasts for warmer weather in the coming days has dented optimism over demand.

In the last week, prices on the Nymex fell around 6.2 percent to $3.128/mmBtu, while on the MCX the decline was 5.4 percent to Rs 165.80/mmBtu on account of a weaker Rupee.

Courtesy: Angel Commodities


India guar seed declines on subdued demand

Guar seed and gum futures hit lower circuit levels on Saturday owing to weak demand which was prevailing across major spot markets.

Major importers like china and European Union are current not placing major export orders fro gum which has kept prices lower.

Intervention of guar gum manufactures association to curb prices also had nega-tive impact on prices.

Courtesy: Karvy Commtrade Ltd.


India soy complex edges higher on global cues

Soybean prices extended gains on Saturday as domestic market arrivals are coming to end. Concerns about Latin American weather conditions remerged in international markets which might keep prices on upswing. Concerns about the demand to re shift to U.S are supportive for prices.

Soy oil prices remained on gaining side on Saturday due to demand for soy oil which is gradually increasing and in turn supporting the prices. Major edible oil companies raised prices of oil by '2/10 kg for second time in fortnight amidst of bleak imports and weak supply situation which supported the prices.

Mustard seed prices gained nominally in deviation from large gains in soy complex prices on Saturday. Slight drop in spot prices continued to surge by '20-30/quintal across major markets led to limited gains. Lower acreage and carry forward stocks are weighing on prices.

Courtesy: Karvy Commtrade Ltd.


NCDEX turmeric weakens on higher arrivals

Spot prices of Turmeric and Futures posted sharp fall and settled 3.26% and 14.25% lower respectively w-w on account of increased arrivals in the domestic market. Offtakes on the other hand remained steady.

Production, Arrivals and Exports

Arrivals in Nizamabad and Erode mandi stood at 1,500 bags and 10,000 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 settles higher on rising demand

Demand from the local stockists amidst reports of surge in the exports of jeera led Spot prices and Futures to settle 0.89% to 2.73% higher respectively w-w. Reports of unfavorable weather conditions in Gujarat the major producing area of the spice led prices to strengthen.

According to Gujarat farm ministry, area sown under jeera till December 13, 2011 stood at 2.32 lakh hectares (lh) up 26.68% 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 3,000 bags amidst off takes of 4,200 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 trades up on weak arrivals

Lower arrivals at the domestic amidst demand from t he local stockists led pepper Spot prices and Futures to settle 3.98% and 6.21% higher respectively w-w.

Lower arrivals were noticed on account of ongoing agitations in Kerala with regard to Mullaperiyar dam.

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 $7,325-7,450(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 13750 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 17 MT as compared to 18 tonnes on Friday while offtakes on the other hand stood at 45 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 soy complex settles higher on global cues

NCDEX January soybean futures ended in green on account of firm overseas market and better demand in the domestic market from solvent extractors and stockists.

Total arrivals of soybean in Madhya Pradesh were 1.20 lakh bags, Maharashtra was 50,000 bags and Rajasthan was 40,000 bags(Bag=90-100 Kg). Soybean prices in Indore were at Rs2,230-2,280/qtl (auctions in Mandi) and plant delivery was quoted Rs2,330-2,380/quintal.

A private forecaster pegged soybean planted area for 2012 at 74.6 million acres as compared with 75 million this year and 77.4 million last years.

USDA’s weekly export figures released on December 15, 2011, which shows that the net weekly export sales for soybeans came in at 468,600 metric tonnes which was slightly below trade expectations.

China was the largest buyer of 354,200 tonnes. Cumulative soybean sales stand at 63.7% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 68.5%. Meal sales came in at 103,700 metric tonnes for the current marketing year and 3,600 for the next marketing year for a total of 107,300. Net oil sales came in at 5,500 metric tonnes which was near the low end of expectations.

As per local statistics bureau of China, soybean output in China's Heilongjiang province, the top-producing area, fell 7.5% to 5.42 million metric tons this year.

Rape/mustard Seed

NCDEX January RM Seed futures ended slightly higher on lower sowing acreage of Rabi oilseeds. Sowing acreage of Rabi oilseeds in India was 7.56 million hectare as compared to 8.15 million hectare a year ago. Oilseeds area in the Maharashtra declined 23% to 207,000 ha, with safflower acreage falling 17.4% to 121,600 ha. Mustard seed accounts for about 70% of India's winter-season oilseed output.

As per WASDE (USDA) monthly supply & demand report which is released on December 09, 2011 shows that the Canada rapeseed production raised 1.3 million tons to 14.2 mln based on the latest survey results from Statistics Canada.

Refine Soy Oil

NCDEX December refined soy oil futures traded higher as improved demand from domestic market as winter season demand.

As per SGS ( a cargo surveyor ), Malaysia's palm oil exports in the first 15 days of December fell 19% from a month earlier, to 649,138 metric tons.. 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.

However, soybean oil’s share was less than 1% and rest was sunflower oil. India imports palm oil from Indonesia and Malaysia and a small quantity of soy oil from Argentina and Brazil.

Courtesy: Angel Commodities


India sugar declines on higher cane crushing

Sugar futures declined sharply by 2.4% and settled the week 7.24% lower on reports that Maharashtra Sugarcane crushing and Sugar output improved and is up from the year ago period. Further, sufficient supplies and lower demand from the bulk manufactures amidst winter season kept prices under pressure.

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 and ICE Raw settled 0.57% and 1.45% up respectively on Friday.

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 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 today lowered its global 2011-12 sugar surplus estimate by 940,000 tn to 8.22 mln tn, due to higher projection for consumption than earlier estimated. It has revised upward the world 2011-12 sugar output estimate to 174.12 mln tn and world '11-12 sugar use estimate to 165.90 mln tn

Courtesy: Angel Commodities


NCDEX chana edges higher on lower acreage

Chana futures extended the gains of the previous week and settled more than 4% higher wow on the reports of lower acreage for the second straight week.

Concerns over unfavorable weather in AP, Maharashtra coupled with lower area under cultivation in these states have raised concerns over Chana output in the coming season.

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.

The area under pulses has been marginally lower by 0.8% on account of lack of rains. Area under Chana, a dominant pulse crop has been lower at 83.55 lakh ha against 86.36 lakh ha in corresponding last year.

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 tumbles on imposition of additional margin

Guar seed and Guar gum futures hit an lower limit of 4% for the second consecutive day after imposition of further special margin of 10% over and above the existing 10% special margin imposed earlier last week.

Market also witnessed panic selling after the reports of discrepancies in the latest export figures released by the APEDA (Agricultural & Processed Food Products Export Development Authority).

As per the NCDEX circular dt 16/12/2011, further Special Margin of 10% in cash on the Long side of Guar seed and Guar gum will be imposed w.e.f. from today, December 19, 2011 on all running and yet to be launched contracts.

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)

Harvesting of Guar in Haryana and Punjab is almost complete and Arrivals of late sown Guar crop is ongoing in Rajasthan. Daily average arrivals stood around 1.1 lakh bags on Saturday compared to 90 lakh bags on Thursday.

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.

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.

Courtesy: Angel Commodities.