Commodities Report: November 24, 2011

Base Metal prices ended lower with losses of one to two percent on the back of economical concerns looming around the globe.

The German PMI manufacturing and the Initial Jobless Claims in US enhanced panic among the Investors and due to all these the Base Metals were largely seen trading on the downtrend. The Equities market also joined the bearish trend and the US as well as Indian Markets closed negative yesterday. The Dollar Index ended at 79.03 up by 0.98 per cent.

Surprisingly, since morning we have already noticed huge volatility on metal prices. Initially prices had corrected but now all of them have recovered as Asian equities have turned positive, US dollar index has turned negative, euro is improving, so lot of activities are seen.

We believe today metals may have huge volatility as other commodities are to stay sluggish ahead of US thanks giving holiday; so money/investment could flow into metals sector. Going ahead economic data from Euro zone/Germany are expected and likely to have positive impact and that may support euro to trade firm and subsequently a positive impact on metals can be felt.

Thereafter, we may not see much activities today as US would remain shut. So, most of the activities are likely in the Asia and Europe nation. However, overall trend has not reversed completely, the euro concerns are still holding tight hence we could only see a minor recovery and thereafter selling trend should resume again.

Aluminium
Aluminium prices ended substantially lower by 2.25 per cent and settled at $2024 levels.

The LME inventory rose on yesterday supported the metals to trade lower.

However, cancelled warrant ratios have improved on yesterday’s trading session.

Copper
Copper prices traded lower by 1.23 per cent to settle at $7240 levels.

The cancelled warrants have increased in the recent time however prices took a little dip, nonetheless market respect the cancelled warrant ratios in the short term.

Lead
Although lead prices declined along with other metals but quantum of fall was less for this metals and ended at $2005 levels down -0.72 per cent.

The cancelled warrant ratios are improving for the past three sessions and suggesting market may slowly recover in the short term.

Nickel
Surprisingly, nickel prices fell the most by 2.99 per cent to settle the day at $17025 levels The cancelled warrant ratios have started to declined from its recent high making lower spot demand.

There is no major activities in the future markets as well as the volumes have declined by around 50 per cent on yesterday’s session.

Zinc
Zinc prices traded lower and ended the session at $1914 down by 1.34 per cent.

The cancelled warrant ratios are trading stable for the past three sessions although not suggesting any clear direction.

There has been very sideways trend on this commodity and cancelled warrants are seen marginally improving.

Courtesy: Karvy Commtrade Ltd.

The base metals complex delivered poor performance on the LME on Wednesday.

Deepening concerns with respect to Euro Zone debt crisis coupled with weak sentiments in the global markets exerted downside pressure on metal prices yesterday.

Additionally, strength in the US dollar also acted as a negative factor for base metals on Wednesday.

Nickel
Nickel was the worst performer on Wednesday, as the metal declined sharply by 2.6 percent on the LME and around 2.2 percent on the MCX.

Prices declined mainly taking cues from a stronger dollar and weak market sentiments yesterday.

Nickel touched an intra-day low of $17,005/tonne and ended its trading session at $17,205/tonne on Wednesday.

Courtesy: Angel Commodities

Crude oil prices closed in the negative territory on Wednesday as European economic worries dominated market sentiments.

Also, economic data from the US and other nations came on the negative side and reiterated concerns over the grim scenario on the global economic front.

Most important being the slowdown in manufacturing activity in China which showed a contraction in the month of November.

EIA Inventory Data
But the weekly inventory report came in on the positive as the US Energy Information Administration (EIA) said that crude oil stockpiles declined 6.2 million barrels last week.

The EIA also indicated that gasoline inventories rose 4.5 million barrels, but supplies of distillates, that include heating oil fell 800,000 barrels.

Natural Gas Inventory Data
The natural gas weekly inventory report was released a day earlier on Wednesday itself, on account of US Thanksgiving holiday which falls today.

The EIA said that natural gas inventories increased by 9 billion cubic feet in the last week.

Courtesy: Angel Commodities

Gold prices ended yesterday’s trade in the negative territory but was off the intra-day lows. Gold for December delivery closed at $1691/oz, losing 0.4 percent on an intra-day basis.

Lately, the yellow metal has not received support from safe-haven demand and has largely tracked movement in equities and commodities.

Safe-haven buying interest is muted as investors prefer sitting on cash in this uncertain economic scenario.

The yellow metal touched an intra-day low of $1677/oz on Wednesday.

On the MCX, Gold December contract dropped around 0.1 percent and touched an intra-day low of Rs28, 490/10 gms yesterday.

Silver
Silver prices declined sharply by more than 3 percent on Wednesday, taking cues from decline in gold and base metals prices. Dollar strength added further downside pressure on the white metal.

Silver touched an intra-day low of $31.27/oz and closed at $31.7/oz yesterday.

MCX Silver December contract declined around 2.1 percent and touched an intra-day low of Rs54,703/kg on Wednesday.

Courtesy: Angel Commodities

Soybean prices declines yesterday towards closing as pressure of the arrivals had negative impact on prices.

Spot prices remain unchanged while the millers who were producing remained inactive as the prices had reasoned higher in the last fort night despite only 305 of the arrivals seen in markets.

CBOT prices ended steeply down due strengthened dollar index and broad based sell off in commodities. Estimations of weekly export sales to china to decline had bearish impact on prices.

Courtesy: Karvy Commtrade Ltd.

CHICAGO (Commodity Online): US soybean futures fall to a 13-month low as uncertainty surrounding the global economy encouraged traders to reduce risk exposure.

Broad-based asset selling and a rising dollar was at the center of risk-off moves.

Otherwise traders took a cautious approach ahead Thanksgiving. CBOT January soy ended down 30 1/2c at $11.22 1/2 a bushel.

Courtesy:CME Group

CHICAGO (Commodity Online): Soy product futures slump in unison with soybeans, joining a broad-based sell-off across asset classes.

Worries about the global economy enticed traders into shedding risk, with analysts also worried about potential demand destruction in an economic slowdown, particularly in China, analysts say.

CBOT Dec soymeal ended down $9.50 at $282.50/short ton; Dec soyoil dropped 1.46c to 49.32c/lb.

Courtesy:CME Group

CHICAGO (Commodity Online): US wheat futures stumble further thanks to poor demand and ongoing outside-market pressure.

Prices hit 5-month lows, with the greatest losses in nearby futures, particularly in Chicago.

Poor export demand looms, as does worry about the global economy, with concerns about Europe and China in the spotlight.

CBOT December wheat ends down 2.4% at $5.79 1/4 a bushel while KCBT December drops 12c to $6.49 and MGEX December slides 2.8% to $8.35 3/4.

Courtesy:CME Group

CHICAGO (Commodity Online): US corn futures end lower on worries about the world economy and poor export demand.

Fears about Europe's debt crisis and a potential downturn in China weighed on markets broadly.

Corn's downward trend has prompted speculative selling, traders note, and weak exports are also weighing. However, US supplies are still seen as tight.

CBOT December corn ends down 10 1/4c at $5.88 3/4 per bushel.

Courtesy:CME Group

Spot prices f Turmeric continued to add to the gains of the previous day and settled 0.47% higher on Wednesday on account of slight recovery in demand from the domestic buyers. Futures also settled 0.25% higher yesterday owing to improved buying at support levels.

Sharp gains may however be capped on account of sufficient availability of Turmeric in the major mandis.

Production, Arrivals and Exports
Arrivals in Nizamabad stood at 1,000 bags while Erode market witnessed arrivals of 10,000 bags on Wednesday.

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

Jeera prices continued to trade lower owing to selling by the market participants and tracking dullness in the spot mandis. Prices at the Spot and Futures settled 0.17% and 0.89% lower respectively on Wednesday.

Sowing of jeera in Rajasthan has gained momentum due to favorable weather condition. Sowing of Jeera has also commenced in some parts of Gujarat but it is on slow pace. 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 3,500 bags on Wednesday.

Production of jeera in Gujarat and Rajasthan in 2011 was around 22 lakh bags and 7-8 lakh bags respectively. (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

Fragile demand from the domestic and overseas buyers led Spot prices of Black Pepper to remain weak and settled 0.12% down on Wednesday.

Pepper Futures continued to trade lower initially but short coverings by the market participants led prices to recover and settled 0.38% higher yesterday. However, reports of lower pepper crop in India in 2011-12 are expected to support pepper prices.

Lower stocks with Vietnam and Indonesia, the major suppliers of pepper till fresh arrivals commence next year (April and July respectively) will also support prices.

Indian parity in the international market was at $7,450 a tonne and remained competitive and was attracting overseas orders while Vietnam 550 gl was quoting its pepper at $7,500 per tonne.

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.

39thsession and meeting of IPC scheduled on 22nd-26th November 2011 in Lombok Island, Indonesia.

39th session of the IPC meet is scheduled on 22nd – 26th November 2011 in Indonesia and theme of the session is “Global Strategy and Innovation for Sustainable Pepper production, price and Quality”.

Production and Arrivals
Arrivals of pepper in the domestic mandi on Wednesday stood at 20 tonnes as compared to 17 tonnes on Tuesday. Offtakes on the other hand stood at 15 tonnes.

Global Pepper production in 2012 is expected to increase 4% to 2.70 lakh tonnes with Vietnam the largest producer producing around 1.40-1.50 tonnes. Carryover stocks are projected at 50,000 tonnes as compared to 60,000 tonnes in 2011. (Source: Peppertradeboard). While, production of pepper in India in 2011-12 is expected to be 43 thousand tonnes according to the market sources a decline of 5% as compared to 48 thousand tonnes in the last year.

Courtesy: Angel Commodities

NCDEX December soybean futures traded higher in the morning hours on account of improved demand from stockiest coupled with declining arrivals in the domestic market. Arrivals of soybean declined to 5.50- 6.00 lakh bags per day as compared to 9-10 lakh bags in the beginning of the month. However, prices could not sustain higher levels and came under pressure an hour before closing the market and finally managed to close in red due to profit taking after continuous rise in the last two trading sessions and weak global market sentiments also added bearish market sentiments.

USDA’s weekly export sales released on Thursday (November 17, 2011) which shows that the Weekly export sales for soybeans came in at 746,100 metric tonnes for the current marketing year and 5,100 for the next marketing year for a total of 751,200. This was higher than expected and included sales to China of 517,100 tonnes. Meal sales came in at 201,500 tonnes which was also higher than expected. Oil sales were just 2,100 tonnes which was well below expectations.

USDA’s monthly S& D report released on Wednesday (November 09, 2011) which shows slightly higher global oilseeds production estimates and higher ending stocks. Global oilseed production for 2011/12 is projected at 454.8 million tons, up 1.3 million tons from last month.

Brazil soybean production is increased 1.5 million tons to 75 million.

Mustard Seed
NCDEX December RM Seed futures traded higher in the morning hours due to improved demand of RM seed from millers as higher prices of vegetable oil and other oilseeds. However, prices could not sustain higher levels and came under pressure an hour before closing the market and finally managed to close in red due higher sowing acreage amid favorable weather conditions. Rajasthan government has targeted mustard acreage for 2011-12 season at 30 lakh hectares compared to 24.9 lakh ha in 2010-11 season. As on November 22,2011 sowing has been completed on 81 percent of the area with total area covered so far standing around 24.29 lakh ha.

Refine Soy Oil
NCDEX December Refined Soy oil futures traded higher as improved demand of edible oil due to wedding/winter season demand coupled with supply concern of palm oil due to continuous and heavy rains in Indonesia and Malaysia (la Nina weather). Better export figures of palm oil during the first 15 days of this month also provided support to the prices. As per SGS ( a cargo surveyor), Malaysia's palm oil exports during the November 1-20, unchanged from a month earlier to 1.03 million tons. As per another cargo surveyor (Intertek Agri Services), Malaysia's palm oil exports during the November 1-20, rose 0.6% from a month earlier.

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

Sugar Futures initially opened at the upper freeze of 3% taking cues from the positive decision taken regarding exports of sugar on Tuesday. Prices however towards the end of the session witnessed profit booking and settled 2.10% higher on Wednesday. Late evening on Tuesday (November 22, 2011) government allowed exports of 1 million tonnes of sugar under Open General Licence (OGL) and removed the stock limit on sugar from December 1, 2011.

Currently (till November 30, 2011) sugar traders were not allowed to hold more than 500 tonnes of sugar.

Crushing in U.P the largest grower of the sweetener have started to gain momentum with about 60% of the 125 mills functioning. So far the mills had crushed nearly 2.9 million tonnes of cane producing 2.30 lakh tonnes of sugar. (Source: Business standard)

ICE Raw Sugar futures and LIFFE extended losses of the previous day and declined to 5 ½ month low on Wednesday and settled 1.38% and 1.49% down. Approval of exports of sugar from India of 1 million tonnes and global economic worries led price to slide.

The Brazil white Sugar prices have declined to $ 657 /tn last week ended 19th Nov, 2011 compared to $680-685 per tonne (FOB), in the previous week. Current offer prices stands at Rs 32900 per ton in rupee terms compared to current domestic price of Rs 31000 / tn FOB.

Domestic Sugar updates
Cane output in Maharashtra is expected to rise to 82.5 mn tn during 2011-12 from 80.3 mn tn last year, while sugar output is likely to increase about 2.5% to 9.3 mn tn.

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
According to UNICA, Sugar production in Brazil's center-south in the second half of Oct dipped 23.5 percent from a year ago, as more mills ended crushing the 2011/12 cane crop. Sugar output totaled 1.47 million tonnes, down from 1.92 million tonnes a year earlier. Eighty-nine out of the 310 existing mills in the region had concluded crushing by Nov. 1.

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

Chana futures witnessed mixed trades in early part of the trading session but declined towards the closing hour on account of selling by the market participants and settled 2.82% down on Wednesday. Spot prices however ended 0.86 % higher yesterday.

There are reports that supplies in the global markets are tight. This will make imports costlier. Further, reports of lower sowing under pulses in A.P. and Karnataka due to dry spell are likely to provide support to the prices.

According to the Ministry of Agriculture, pulses have been sown in 49.75 lakh hectares as on November 18th 2011 as compared to 46.33 lakh hectares in the last year same period.

Sowing to Chana in Maharashtra was up by 64.6% to 3.4 lakh hectares as compared to 2.06 lakh hectares in the same period previous year.

Area sown under Chana in Rajasthan till 18th November 2011 was 13.96 lakh hectares (lh) as compared to 10.06 lh in the same period previous 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)

Pulses Imports
Imports have declined dramatically in the current FY 2011-12 with India's state-owned trading agencies having contracted imports of only 121,660 tn pulses since the beginning of the current financial year till September 12, 2011 compared with 596,700 tn during the same period last year. Imports have been weak because domestic pulses output in 2010-11 (Jul- Jun) was at an all time high of 18.09 mln tn, up 23percent from a year ago. Also, the Centre has abolished one of the reimbursement schemes for the state-owned importing agencies.

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

Weak demand from the domestic buyers continued to keep Guar prices down for the second consecutive session and settled 0.55% down on Wednesday. Prices had surged by around 6% in the beginning of the week.

Arrivals which had touched 95 thousand to 1 lakh bags in the first fortnight of November 2011, have currently declined to 65-70 thousand bags as farmers held back their fresh produce in anticipation of higher prices.

Weaker rupee is seen gearing up exporter’s profit margin. However, export demand may hit to some extent amidst higher prices and weaker rupee, which touched an intraday low of Rs 52.70 per $ on Tuesday, November 22, 2011.

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 June of the current fiscal year 2011-12 stood at 1.45 lakh tn compared to 0.71 lakh tn during the same period last year.

Exporters believe that exports which had crossed over 4 lakh tn last year, may hit this year due on financial crisis in U.S & Europe along with shift in demand. Further weaker rupee may also affect export volumes.

However the export figures clearly indicates that global crisis has not hit Guar exports as of now in the current season too.

Courtesy: Angel Commodities