Commodities Report: Metals and Softs

Unexpected increase in the US unemployment claims and weak manufacturing data from China exerted downside pressure on the base metals complex on Thursday, except aluminium.

Additionally, rising worries over Euro Zone debt issues and weak sentiments in the global markets also acted as a negative factor for the metals yesterday. However, weakness in the US dollar resisted further decline in prices.

Nickel
Nickel was the worst performer on Thursday, as the metal prices slipped sharply by 3.5 percent on the LME. Continuously rise in the nickel inventories acted as a negative factor for prices.

On a week-on-week basis, nickel inventories rose almost 3 percent to 91,074 tonnes on 1st December 2011. Stocks increased more than 5 percent in the month of November from the previous level of 87,042 tonnes on 31st October2011.

Chile’s copper output increased by 1 pct (y-o-y) in October Copper production from the Chile rose around 1 percent (y-o-y) to 466,822 in October. On a monthly basis, output has increased by 6.9 percent in October as compared to 436743 tonnes in the month of September. Chile produces around onethird of the world’s copper.

Courtesy: Angel Commodities


Precious metals decline on Euro debt concerns

Spot gold prices declined slightly by 0.1 percent on Thursday and touched an intra-day low of $1733/oz.

Fall in crude oil prices reduced inflation-hedge demand for gold which also affected prices.

However, further downside was cushioned on account of a weaker dollar. On the MCX, Gold February contract declined around 0.6 percent on account of appreciation in the Indian Rupee and touched an intra-day low of Rs29,125/10 gms yesterday.

Silver
Silver prices declined around 0.2 percent in yesterday’s trading session taking cues from fall in gold prices coupled with downside in base metals.

The white metal touched an intra-day low of $32.45/oz and ended its trading session at the level of 32.70/oz on Thursday.

MCX Silver March contract dropped almost 1 percent due to Rupee appreciation and touched an intra-day low of Rs57,167/kg yesterday.

Courtesy: Angel Commodities


Gold gains on weak dollar, copper recovers

Economic recovery in the US is progressing and hopes that the world’s largest economy added workers in the last month led to rise in risk appetite in the global financial markets.

Asian and European equities were supported by the bulls today and US stock futures are also trading in the green. Although uncertainty over the European economic front continues, stable economic indicators from the US have provided some relief to the ailing global markets.

Weakness in the US Dollar Index (DX) helped support gold prices in the international markets which rose around 0.3 percent till 4.45pm IST.

Spot Gold prices are trading around $1749/oz and prices on the MCX are hovering around Rs28,954/10gms. Spot Silver prices witnessed gains more than that of gold by rising almost 2 percent till 4.45pm IST, taking cues from upside in gold and base metal prices.

Copper prices gained by 1.6 percent today for the first time in last six weeks on the back of signals that demand is increasing as global inventories decline to an 11-month low. Additionally central banks cut funding costs to shore up growth also acted as a positive factor.

Shanghai copper inventories declined by more than 11 percent today.

Prices are hovering around $7925/tonne after touching an intra-day high of $7955/tonne till 4:45pm today. On the MCX, prices increased by more than 1 percent and were trading around Rs.409.20/kg till 4:45pm.

Nymex crude oil gained by around 0.4 percent today on the back of expectations of supply-risk of crude oil supplies from the Middle East region after European government tightened its sanction on Iran.

Additionally, a weaker dollar also acted as a positive factor for the commodity.

Prices are trading around $100.6/bbl after touching an intra-day high of $101.09/bbl till 4:45pm. On the MCX, prices increased by around 1 percent and hovering around Rs.5161/bbl after touching an intra-day high of Rs.5188/bbl till 4:45pm today.

Outlook
On account of dollar weakness, gold prices are expected to trade higher today. Silver on the other hand is expected to rise on the back of upside in gold and base metals.

Copper is expected to witness upside due to sharp fall in global inventories of the red metal. A weaker dollar will add additional upside.

Taking cues from rise in copper prices, other base metals are also expected to trade higher today.

Potential of supply concerns from Iran coupled with upbeat global market sentiments are expected to lead to rise in crude oil prices today.

Courtesy: Angel Commodities


Base metals settle lower on weak manufacturing data

Base metals witnessed a bearish trend and apart from Aluminum all other base metals lost on the ground of weak manufacturing data releases.

China’s HSBC manufacturing, UK and Germany’s manufacturing data were mostly negative for the metals pack.

Later, during the evening the US data releases like ISM manufacturing and construction spending has shown some improvement but the jobless claims have increased and the prices of metals were under pressure.

Today morning the Asian equities are mostly flat and presently the markets are moving in a very dicey trend.

The Euro has gained slightly on the mark of easing the lending of Dollar swaps by the Central Banks. From the Inventory perspective, Aluminum and Lead has witnessed draw down whereas that of copper has increased slightly yesterday.

On the economic data front, change in non-farm payrolls, manufacturing payrolls and unemployment data from the US are expected to be positive impacting the metals pack to recover and post some gains later during the day. Overall we expect the metals to be mostly flat today, till the opening of the European session.

Aluminium
Aluminum prices ended up by 1.66 per cent on LME while in India closed slightly up by 0.64 per cent. It was the only gainer among all base metals yesterday.

Aluminum cancelled warrants have reduced to 3.78% the prices have increased for the spot but the major concern is the contango indicating the dicey trend in the future.

Copper
Copper edged 1.20 per cent at LME while in Indian market was down by 1.23 per cent

The Cancelled warrants ratio reduced from 6.24 percent to 6.07 percent, whereas there has been a slight increase in Inventory at the LME.

The open interest for the three month forwards contract at LME is indicating a dicey trend.

Lead
Lead prices ended down by 0.24 percent in LME while in MCX closed down by 1.06 per cent.

The cancelled warrant has drastically increased from 6.31 percent to 9.31 percent indicating the increase in spot demand.

The open interest at futures markets had decreased indicating some correction in prices.

Nickel
Nickel was the major looser yesterday and the prices came down from $17500 to $16750, reducing by 4.29 percent. While at MCX the prices came down by 3.75 percent.

The cancelled warrants though have been improving but now are in the down side trend and reduced from 2.92 per cent to 2.86 per cent indicating a fall in the spot demand.

Zinc
Zinc prices ended down by 1.26 percent at LME while in MCX it came down by 1.78 percent.

The cancelled warrant ratios decreased slightly from 5.57 percent to 5.40 percent.

The future trend may turn bearish as we can see the metal prices going towards Backwardation.

Courtesy: Karvy Commtrade Ltd.


Crude oil edge lower on US job data

Nymex crude oil prices declined by 0.4 percent yesterday taking cues from unexpectedly rise in the US unemployment claims. However further declined in prices was cushioned due to a weaker dollar.

Prices touched an intra-day low of a $98.87/bbl and closed at $100/bbl on Thursday. On the MCX, prices declined by 2 percent on account of Rupee appreciation and closed at Rs.5115/bbl after touching an intra-day low of Rs.5103/bbl yesterday.

Natural Gas
Nymex natural gas prices increased by more than 2 percent yesterday on the back of unexpectedly decline in US natural gas inventories.

Prices touched an intra-day high of $3.689/mmBtu and closed at $3.65/mmBtu in yesterday’s trading session. On the MCX, prices increased by 0.4 percent and closed at Rs.188.4/mmBtu on Thursday.

EIA Inventories
US Energy Information Administration (EIA) released its weekly inventories yesterday and it indicated that natural gas inventory decreased by 1 billion cubic feet (bcf) to 3.851 trillion cubic feet for the week ending on 25th November.

Courtesy: Angel Commodities



NCDEX turmeric remains lower on production concerns

Turmeric Spot and Futures remained bearish and settled 0.77% and 1.42% lower respectively on Thursday 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 Thursday.

Turmeric production for the year 2011-12 is projected at 82 lakh bags (1 bag= 70 kgs) compared to 69 lakh bags in 2010-11. However, area covered under turmeric till 21st September 2011 stood at 0.67 lakh ha 2.9% lower as compared to 0.69 lakh ha in the 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 drops on sluggish spot demand

Jeera Futures traded weak and settled 0.35% lower owing to lackluster trades at the domestic on Thursday. Spot prices however remained closed due to All India band called on by the retailers protesting approval of FDI in retail.

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 3,000 bags amidst offtakes of 2,500 bags on Wednesday.

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 gains on fresh buying

Black pepper continued to trade firm to improved buying by the market participants on Thursday. Spot prices also ended firm on account of demand from local buyers yesterday. Reports of lower pepper crop in India in 2011-12 are expected to support pepper prices.

Pepper stocks with Vietnam are expected to be around 10 thousand tonnes while that in India is expected to be 12-15 thousand tonnes. Indian parity in the international market was at $7,450-7475(c&f) a tone and remained competitive and was attracting overseas orders while Vietnam 550 gl was quoting its pepper at $7,350 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 September 2011 exports of pepper from six major exporting countries (Brazil, India, Indonesia, Malaysia, Vietnam and Sri Lanka) was around 188,000 mt, 4% lower from the corresponding period of 195,000 mt. Vietnam has reportedly sold 1.12 lakh tonnes of pepper from January to September 2011 a rise of 14% as compared to previous year.

Sharp fall of 38% in pepper exports was witnessed in Indonesia during above period. Exports stood at 26,300 tonnes as compared to 42,082 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 Thursday stood at 12 tonnes as compared to 10 tonnes on Wednesday. Offtakes on the other hand stood at 17 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 trades lower on subdued demand

NCDEX December soybean futures traded lower on account of lower demand from solvent extractors and stockists. China’s negative manufacturing data also added bearish market sentiments.

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.

China was the largest buyer at 534,600 tonnes which was offset by net reductions of 370,500 tonnes for unknown destinations.

Marketing year sales are running near 35% under last year's pace. 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 fell sharply lower and breached two weeks low on account of better existing carryover stocks and higher sowing acreage of RM Seed throughout India amid favorable weather this year as compared to last year.

Rape/mustard seed accounts for about 70% of India's winter-season oilseed output. Sharp decline in vegetable oil also added bearish market sentiments.

As of November 25, 2011, sowing acreage of Mustard Seed increased to 56.54 lakh hectare (up by 1%) as compared to 55.51 lakh hectare last year till date.

Sowing acreage of RM seed increased mainly higher sowing acreage in West Bengal, Haryana and Rajasthan due to 35% hike in RM Seed MSP (Current Rs 2500/qtl). 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 ended fell sharply lower on account of appreciation of Indian Rupee against US dollar. 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 rises on lower cane crushing

Despite release of higher monthly sale quota, sugar Futures settled 0.33% higher on Thursday owing to reports of lower cane crushing in Maharatsra during October and November at 9.8 million tonnes.

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.

December Non levy sugar quota has been set higher compared to last year's 15 lakh tn to avoid surge in prices after the stock limit lapse and export permission.

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

U.P sugar mills have produced 4.79 lakh tonnes of sugar till 29th November 2011, 3.39 lakh tonnes higher as compared to last year.

However recovery is lower this year.

ICE Raw Sugar futures settled 0.59% % higher owing to demand from the buyers while LIFFE settled 0.42% down on reports that crushing has picked up in Thailand.

The Brazil white Sugar prices have declined to $ 630 /tn last week ended 23rd Nov, 2011 compared to $657 per tonne (FOB), in the week ended 19th November, 2011. Current offer prices stands at Rs 32770 per ton in rupee terms compared to current domestic price of Rs 30500 / tn.

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 settles higher on short covering

Chana futures after trading weak in the last few trading session witnessed short coverings and settled 0.90% higher on Thursday.

Reports of lower availability also supported prices.

According to the Ministry of Agriculture, pulses have been sown in 61.30 lakh hectares as on November 24th 2011 as compared to 57.29 lakh hectares in the same period last year.

Area sown under Chana in Rajasthan till 29th November 2011 was 15.09 lakh hectares (lh) as compared to 11.81 lh in the same period previous year. Area under Chana is up by 27% in Rajasthan, by 9% in MP and by 6% in UP as on 22nd November. However, the pace is slow in Maharashtra and AP. A.P. area sown is down by 48% to 1.69 lakh hectares as compared to 3.25 lakh hectares in last year.

There are reports of decline in the output of dry peas and Chickpeas in Canada for 2011. Chickpeas output is expected to fall by 58% to 54 MT while that of peas will fall by 33% to 2 MT (Source: Agriwatch)

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.

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 weakens on profit booking

Guar seed and Guar gum futures which had gained by around 21% and 22% respectively since past few sessions witnessed profit booking and settled 1.94% and 0.94% lower on Thursday. Prices touched new historical highs of Rs.5375 in Guar and Rs. 16880 in Guargum.

However, robust export demand for the Guargum and expectations that Guar output in the season might be lower than earlier projected estimates may control prices from falling sharply.

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 lakh bags. However, arrivals are not expected to cross 1.2 lakh tonnes as harvesting of early sown Guar crop (Guari) is almost completed.

Weaker rupee is seen gearing up exporter’s profit margin. However, export demand may hit to some extent amidst higher prices and weaker rupee.

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


CBOT Updates:Soybean weakens on output concerns

CHICAGO(Commodity Online):US soybean futures end lower, ending a three day recovery from prior declines.

Concerns about soybean export demand in the face of favorable South American crop prospects and ongoing competition from Brazil in export markets, analysts say.

Soybeans attempted to rally, but once support from equities and crude oil faded, traders focused on demand fundamentals, an area that is clouded by prospects from South American output and exports, analysts add. CBOT Jan soy ended down 3 1/4c at $11.28/bushel.

Courtesy:CME Group


CBOT Updates:Corn tumbles on weak exports

CHICAGO(Commodity Online): US corn futures end lower, fueled by sluggish export demand and the absence of an outside catalyst to attract buyers.

The market faces pressure from traders trying figure out if USDA export forecast is low enough, says Dan Cekander, analyst with Newedge in Chicago.

Poor sales in recent weeks stoke fears that government forecasts will lower demand forecasts next week and show corn carryout is less threatening, he adds. Light profit taking on recent gains aided the declines.

CBOT March corn ended down 6 1/2c at $6.01 1/2/bushel.

Courtesy:CME Group