Commodities Report: December 5, 2011

European stocks are trading on a positive note today as Italian Prime Minister Mario Monti declared austerity and growth measures in order to tackle with the region’s debt crisis. This led to rise in risk appetite in the markets today.

Spot gold prices declined around 0.2 percent today mainly on account of rise in risk appetite in the markets. However, a weaker dollar cushioned sharp decline in the international markets. Prices touched a low of $1740/oz and were trading around the same levels till 4.45 pm IST today. On the MCX, Gold February contract rose 0.2 percent and was hovering around Rs 28,931 /10 gms till 4.45 pm IST.

Silver prices witnessed gains of around 0.4 percent today, mainly taking cues from weakness in the US dollar index. The white metal hit an intra-day high of $32.98/oz and was trading at the level of $32.66/oz till 4.45 pm IST. MCX Silver March contract increased almost 0.7 percent and was hovering around Rs 55,449/kg till 4.45 pm IST today.

The base metals pack traded lower on the LME today, with nickel being an exception. However, weakness in the US dollar resisted further decline on the international bourses. Aluminium is the top loser of the day, as the metal declined more than 1 percent on the LME and around 0.6 percent on the MCX till 4.45 pm IST today.

Nymex crude oil gained around 0.7 percent today taking cues from supply concerns from the Middle East. Rising expectations that Euro Zone will take steps in order to fight debt crisis led to rise in risk appetite in the global markets, which also supported prices. Additionally, a weaker dollar also acted as a positive factor.

Oil prices are trading around $101.69/bbl after touching an intraday high of $101.90/bbl till 4.45pm. On the MCX, prices increased by 1.4 percent due to Rupee depreciation and were hovering around Rs.5220/bbl till 4:45pm today.

Outlook

Gold and silver are expected to trade with a positive bias today as weakness in the US dollar will help support prices in the international markets.

Rising expectations that Euro Zone will take measures in order to deal with the ongoing crisis is expected to lead to risk appetite in the global markets. This coupled with dollar weakness will support upside in base metals today.

We expect crude oil prices to trade higher on account of supply concerns from the Middle East coupled a weaker dollar today.

Courtesy: Angel Commodities


Base metals settle higher on positive US economic data

The base metals complex delivered excellent performance on the LME in the last week mainly taking cues from favorable economic data from the US coupled with upbeat sentiments in the global markets.

Additionally, a weaker dollar also acted as a positive factor for metals. However, appreciation in the Indian Rupee resisted further gains on the domestic bourses.

Copper

On a weekly basis, copper prices increased almost 9 percent on the LME and around 8.2 percent on the MCX.

Factors that supported the red metal prices were - sharp decline in global inventories of copper, dollar weakness and optimistic sentiments in the global markets.

Copper LME inventories declined around 1.7 percent in the last week to reach the level of 388,150 tonnes on 2nd December 2011. Weekly copper inventories in warehouses monitored by the Shanghai Futures Exchange dropped sharply by almost 12 percent to 65,205 tonnes last week.

Courtesy: Angel Commodities


Crude oil surges on global supply concerns

On a weekly basis, Nymex crude oil prices gained more than 4 percent, taking cues from expected supply concerns from the Middle East after European government tightened its sanction on Iran.

Additionally, a weaker dollar and rise in risk appetite in the markets also supported oil prices.

Crude oil hit a two-week high of $101.75/bbl and closed above the crucial level of $100/bbl last week. On the MCX, prices increased around 2 percent as further gains were capped due to Rupee appreciation and closed at Rs.5148/bbl last week.

Natural Gas

Nymex natural gas declined more than 2 percent last week on the back of mild weather which affected demand for the commodity. However, a weaker dollar cushioned further decline in gas prices.

Prices touched a low of $3.556/mmBtu during the week and closed at $3.581/mmBtu on Friday. On the MCX, prices increased around 1 percent and closed at Rs.184.8/mmBtu on Friday.

Courtesy: Angel Commodities


Precious metals edge higher on appreciated Rupee

Gold prices in the last week witnessed a phenomenal performance as dollar weakness supported upside in the international markets.

Prices on the MCX gained less than that in the international markets as appreciation in the Rupee capped sharp gains.

Spot Gold prices increased around 4 percent and closed the last week at $1744/oz and on the MCX the yellow metal rose around 1.8 percent to end the week at Rs28,891/10gm.

Holdings in the SPDR Gold Trust, world's largest gold-backed exchange traded- fund (ETF), rose marginally by 0.1 percent to 1298 tonnes on 2nd December 2011 from the previous 1297.32 tonnes on 25th November 2011.

Silver

On a week-on-week basis, Spot silver prices surged by more than 5 percent and on the MCX the white metal rose around 1.4 percent.

Rise in gold prices coupled with a weaker dollar acted as a supportive factor. Silver being an industrial metal also took cues from upside in base metals. However, appreciation in the Indian Rupee capped further gains on the domestic platform.

Holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, increased around 0.8 percent to 9702.56 tonnes by 2nd December from the previous 9,627.88 tonnes on 25th November 2011.

Courtesy: Angel Commodities


India soy complex settles higher on global cues

India Soybean gained marginally on Saturday following the positive closing of the CBOT. At spot markets firm buying from the millers and crushers supported prices of spot and same reflection was seen at the futures.

Soy oil prices gained substantially on Saturday owing to the short covering on previous fall. Expectations of the revival in edible oil demand from china kept the prices positive. CBOT prices ended higher on Friday due to spill over support from soybeans. Supply disruptions in palm might shift the buyers towards soy oil which also supported positive market sentiments.

Mustard seed prices increased on Saturday 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.

Courtesy: Karvy Commtrade Ltd.


NCDEX turmeric finishes down on weak spot demand

Turmeric Spot and Futures continued its downward trend and settled 5.62% and 6.2% lower respectively w-w on account of weak demand from the domestic and overseas buyers. Better crop output for the second consecutive year coupled with better carryover stocks of spice this season is pressurizing prices.

Production, Arrivals and Exports

Arrivals in Nizamabad stood at 1000 bags 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- September 2011 stood at 41,500 tonnes as compared to 28,500 tonnes in 2010-11, rise of 46%.

Courtesy: Angel Commodities


NCDEX jeera tumbles on higher sowing

Jeera Spot prices and Futures continued to trade bearish owing to reports of better output this season amidst lacklustre demand from the domestic buyers. Prices at the Spot and Futures settled 1.68% and 3.7% lower respectively w-w.

Sowing of jeera in Rajasthan has gained momentum due to favorable weather condition. 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 3,200 bags amidst offtakes of 2,500 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- September 2011 stood at 16,000 tonnes as compared to 18,800 tonnes in 2010-11, decline of 15%.

Courtesy: Angel Commodities


NCDEX pepper jumps on weak arrivals

Lower arrivals amidst demand from the local buyers led Spot prices and Futures to settle 0.36% and 0.70% higher w-w. Reports of lower pepper crop in India in 2011-12 are expected to support pepper prices.

However, prices on Saturday witnessed profit booking and settled 0.69% lower.

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 exports of pepper 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 7 tonnes as compared to 10 tonnes on Friday. Offtakes on the other hand stood at 5 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 edges higher on short covering

NCDEX December soybean futures traded higher on account of short covering and improved demand from solvent extractors and stockists at prevailing prices. Further, declining arrivals of soybean in major producing states also provided support to the bulls. Total arrivals of soy bean in Madhya Pradesh was 2.50 lakh bags and Maharashtra about 1.5 lakh bags on Saturday (Bag=100 Kg). Soybean spot price at Indore was quoted at Rs 2100-2130/qtl (Auctions) and plant Delivery was Rs 2210-2240/qtl (excluding VAT) on Saturday.

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 ended higher in tandem with higher prices of other oilseeds and vegetable oils.

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 improved demand as winter/wedding season. Crude palm oil price were quoted $1,000/tonne C&F Mumbai on Thursday as compared to $985/tonnes Wednesday.

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. Crude palm oil price were $990/tonne C&F Mumbai on Monday vs $995/tonne on Friday.

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 settles higher on domestic demand

Sugar spot prices settled 0.90% higher w-w on expectation that government may notify the sugar exports soon. Futures however ended 1.1% lower w-w owing to increased quota for the month of December 2011. 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 0.59% % and 0.58% lower on supply pressure amidst commencement of crushing in Thailand and India.

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.

Courtesy: Angel Commodities


NCDEX chana plunges on higher acreage

Chana Spot prices and Futures posted sharp fall and settled 8.87% and 7.7% down w-w on reports of higher acreage under Chana and Pulses cultivation.

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.

Courtesy: Angel Commodities


NCDEX guar seed surges on firm export demand

Robust export demand amidst reports of lower output this season led Spot prices and Futures to remain firm for the third consecutive week and settled 7% and 6.7% higher w-w. Prices on Saturday however witnessed profit booking and settled 1.14% lower.

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.

Courtesy: Angel Commodities