Commodities Report: January 04, 2012

Despite reports that Forward Market commission might take concrete steps to curb volatility in the Guar Complex Futures, prices settled 3.08% and 2.33% higher respectively on Tuesday on account of buying by the market participants. In continuation to the efforts taken by the FMC, the regulator is planning to issue showcause notices to leading traders in Rajasthan on Friday.(Source: Business Standard)

According to the FMC Chairman the team was expected to submit the report on Tuesday January 3, 2012 and action on the same was to be taken on Wednesday. (Source: Newswire 18 Dated: January 02, 2012 ).

Despite imposition of 30% special margin bulls continued to build fresh long positions on expectations of robust exports and lower output. Total margin on long positions on the Complex has risen to 40%.

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 also led to high volatility in the Guar prices.

In addition to this FMC is mulling a last resort to cool Guargum and Guar seed prices through introduction of “trade to trade” for the first time in commodities derivatives market (Source: Business standard).

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. (Source: Newswire 18).

Arrivals of late sown Guar crop is ongoing in Rajasthan. Arrivals currently in Rajasthan and Haryana stand around 1.1 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.

Carryover stocks of Guar in the current season is at lowest levels around 1.5-2 lakh tonnes against normal 4-4.5 lakh tonnes.

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 September 2011 stood at 2.86 lakh tn a rise of 68 % compared to 1.70 lakh tn during the same period last year.

Courtesy: Angel Commodities


NCDEX chana settles higher on lower acreage

Chana Spot and Futures gained on account of lower acreage covered under the crop this season and settled 0.31% and 0.54% higher respectively on Tuesday. As the rabi sowing season is coming to an end, area covered under the Pulses and Chana are probably to miss the target.

According to the Farm Ministry area sown under Rabi pulses is down by 1.28% to 13.85 million hectares as compared to 14.02 lakh hectares in the same period previous year. Chana sowing till December 23rd 2011 is 5.9% down at 8.64 million hectares as compared to 9.18 million hectares in the same period previous year.

According to Gujarat farm Ministry, Chana acreage in the state is down 4.9% to 1.84 lakh hectares as con December 26th 2011.

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)

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 sugar drops on higher stocks

Sugar Spot prices and Futures settled 1.90% and 1.21% lower on Tuesday owing to reports of better sugar recovery in Maharashtra. Sufficient stocks at the domestic led prices to remain weak. Sugar recovery in Maharashtra during October 2011-December 2011 stood at 10.35% as compared to 9.80% in the same period previous year.

The government has released lower monthly quota for the month of January at 17.16 lakh tonnes which includes 2.16 lakh tonnes of levy quota and 15 lakh tonnes of non levy quota. The quota for January is much lower compared to January 2011 monthly quota of 19.18 lakh tonnes and last month’s quota of 19.07 lakh tonnes.

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.

Liffe white sugar & ICE Raw settled 4.60% and 5.19% higher on Tuesday on account of buying by the market participants.

Domestic Sugar updates
Sugar output in Maharashtra rose 18.8% between Oct 01 and Dec 31, 2011 to 27.5 lakh tonnes. The output was earlier down by 6%. Recovery rate increased on account of higher recovery rate and number of mills that are operational this year.

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 soybean trades up on weather concerns

NCDEX January soybean futures traded higher on third consecutive trading sessions on dry weather concern of South America (Brazil and Argentina) coupled with improved demand from crushers and stockists in domestic markets due to higher prices of soy oil and meals.

Total arrivals of soybean in Madhya Pradesh were 1.35 lakh bags on Tuesday, Maharashtra was 75,000 bags and Rajasthan was 50,000 bags (Bag=100 Kg). Soybean prices in Indore were at Rs 2440-2500/qtl (auctions in Mandi) and plant delivery was quoted Rs 2540-2580/quintal. Bullish USDA’s weekly export figures also provided support to the prices.

USDA’s weekly export figures released on December 30, 2011, which shows that the net weekly export sales for soybeans came in at 662,700 metric tonnes for the current marketing year and 500 for the next marketing year for a total of 663,200 which was higher than expected.

Meal sales came in at 51,100 metric tonnes which was well below expectations. Oil sales were also slow at 2,300 metric tonnes.

Rape/mustard Seed
NCDEX April RM Seed futures traded higher on account of strong gains in edible oil coupled with lower production estimates for this year as compared to last year due to lower sowing acreage coupled with crop damage talk of RM Seed due to frost in Rajasthan and Haryana.

According to Ministry of Agriculture, GOI, Sowing acreage of Rabi oilseeds in India was 79.22 lakh hectares (down 6.32%) as compared to 84.57 lakh hectares a year ago on 30/12/2011. Sowing acreage of rape/mustard seed in India was 64.55 lakh hectares (down 5.37%) as compared to 68.21 lakh hectares a year ago. Mustard seed accounts for about 70% of India's winter-season oilseed output.

Refined Soy Oil
NCDEX January refined soy oil futures soared record high and touched high of Rs 764.75/10 Kg on Tuesday due to strong gains in overseas market as weather concern and supply concern coupled with improved demand of vegetable oil globally and domestic market.

As per Traders, India’s imports figures for the month of December may be lower as importers restricted their imports due to weak rupee against dollar. Depreciation of Indian rupee against US dollar also provided support to the prices as import of edible oil would be more expensive.

India imports about 50% edible oil of its total requirements. As per Intertek (cargo surveyor), Malaysian Palm Oil exports in the month of December 2011 fell by 2.6% to 1.49 million tonnes as compared to last month.

Imported crude soy-oil price quoted Rs 67,000 /tonnes on Tuesday as compared to Rs 66,500/tonnes on Monday. Imported crude palm oil price quoted Rs 55,500 /tonnes on Tuesday as compared to Rs 55,000/tonnes on Monday (source: SEA).

Courtesy: Angel Commodities

NCDEX pepper weakens on subdued spot demand

Lacklustre trades at the domestic and overseas market led Spot Pepper prices to settle 0.26% higher on Tuesday. However, Futures witnessed mixed sentiment and settled 0.92% lower on Tuesday.

Demand from the overseas and domestic buyers continues to remain dull as buyers are remain absent from the market due to New Year holidays. Fresh arrivals from the domestic will gain momentum at the end of the month (January 2012).

Indian parity in the international market is being offered at $6,950/tonne.

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 domestic market were nil on Tuesday as compared to 10 MT on Monday.

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 jeera gains on weak arrivals

Jeera Futures advanced further to new contract highs of Rs.16,875/qtl and settled 0.72% higher on Tuesday. Spot prices also settled 2.82% higher on account of lower arrivals amidst better offtakes. Also, reports of fresh export enquiries supported prices in the last few trading sessions.

According to Gujarat farm ministry, area sown under jeera till December 26, 2011 stood at 2.78 lakh hectares (lh) up 21.5% 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 arrivals of 4,000 bags on Tuesday as compared to 3500 bags on Monday. Off takes stood at 6,000 bags yesterday.

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 turmeric finishes up on firm spot demand

Lower arrivals at the domestic mandi led Spot prices to settle 1.46% higher on Tuesday. Futures traced the Spot prices and settled 0.29% higher yesterday.

Production, Arrivals and Exports
Arrivals in Nizamabad and Erode mandi stood around 1,000 bags and 6000 bags respectively on Tuesday.

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


India soy complex settles higher on firm physical demand

Soybean prices remained in gaining spree as the spot prices surged by `20-30/quintal while the arrivals are gradually decreasing across major markets. Meal prices have further increased by `150/tons which might be supportive for the prices.

CBOT bean prices ended at two month highs as crop conditions in Latin American countries are further worsening leading to lower crop.

Soy oil prices extended gains on Tuesday following the rise in spot prices by `10-13/10kg. Soy oil from Brazil and Argentina surged by `500/ton as next crop concerns are intensifying across major markets.

Bad weather conditions in Malaysia are affecting imports of palm oil in India along with which tax structure in Indonesia is adding to supply bottle.

Mustard seed prices shed gains yesterday as the spot prices remained stable and buying was masked by steep rise in spot prices.

Some showers were reported across rajasthan regions which prompted the fall affecting moisture conditions. However, strong demand for edible oil limited steep fall along with robust meal demand.

Courtesy: Karvy Comtrade Ltd.


Precious metals surge on weak US dollar

Spot gold prices surged almost 2.5 percent on Tuesday, on the back of weakness in the US dollar coupled with upbeat sentiments in the global markets.

The yellow metal touched an intra-day high of $1607/oz and closed its trading session above the crucial $1600-mark yesterday.

On the MCX, Gold February contract gained around 1 percent and touched an intra-day high of Rs27,779/10 gms on Tuesday. The yellow metal ended its trading session at the level of Rs27,656/10 gms yesterday.

Silver
Taking cues from rise in gold prices coupled with upside in base metals pack, spot silver prices rallied almost 6.5 percent on Tuesday.

Additionally, a weaker dollar also provided further support. The white metal touched an intra-day high of $29.72/oz and closed at $29.6/oz yesterday. MCX Silver March contract rose sharply by 3.5 percent an touched an intra-day high of Rs53,500/kg on Tuesday.

Courtesy: Angel Commodities


Crude oil edges higher on global supply disruptions

Nymex crude oil prices increased by more than 4 percent on Tuesday taking cues from expectations that further sanctions may be implemented on Iran which may affect the oil supply from the country. Additionally, a weaker dollar coupled with favorable manufacturing data from US also acted as a positive factor for the commodity.

Oil prices closed at $103/bbl after touching an intra-day high of $103.18/bbl yesterday. On the MCX, crude oil prices rose by 2.2 percent but further gains were capped on account of Rupee appreciation. Prices closed at the level of Rs.5442/bbl after touching an intra-day high of Rs.5464/bbl on Tuesday.

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 1.8 million barrels for the week ending on 30th December 2011. Gasoline stocks are expected to increase by 1.4 million barrels and distillate inventories are expected to increase by 0.7 million barrels.

Courtesy: Angel Commodities


Base metals settle higher on positive US economic data

Favorable economic data from the US and Euro Zone helped base metals complex to trade higher on the LME on Tuesday.

Additionally, rise in risk appetite in the global markets coupled with dollar weakness also acted as a positive factor for the metals. Appreciation in the Indian Rupee capped further gains on the domestic platform in yesterday’s trading session.

Copper
Copper was the top performer amongst the base metals complex on Tuesday, as the metal rose around 2.8 percent on the LME and around 1.5 percent on the MCX. The red metal received support from a weaker dollar coupled with positive economic data from the US.

Copper touched an intra-day high of $7787/tonne and closed at the level of $7769/tonne yesterday. On the MCX, copper February contract touched an intra-day high of Rs415/kg and closed its trading session at the level of Rs413/kg on Tuesday.

Courtesy: Angel Commodities