India Soy Settles Higher; Sugar Trades Down; Precious Metals Edge Higher

Soybean prices continued the range bound movement with marginal recovery. Chinese ban along with subdued international market activity weighed on sentiments. Spot prices remained around `2400-2425/quintal.

CBOT Soybean prices also traded down on Jan. 25th on reports of improved weather conditions but reports of lower production forecast in Brazil pushed the prices on higher note on Jan. 26th.

Soy oil prices increased marginally on Wednesday on expectations of rise in export sales data. Prices across major spot markets remained at `675-677/10kg.

Reports of showers in South American regions also kept CBOT soy oil prices under pressure on Jan. 25th but good recovery on declining production estimates supported the prices to trade up on Jan. 26th.

Mustard seed prices extended the down trend on Wednesday owing to weakness in demand for the meal.

Ex-Kandla meal prices have decline drastically which kept the prices under pressure. Temperatures are returning to normal which is supportive for the crop which kept the prices under pressure.

Courtesy: Karvy Comtrade Ltd.

NCDEX sugar trades down on ample supply

Ample supplies in the domestic market amidst lacklustre demand led Sugar prices to settle 0.17% down on Saturday.

The Sugar Directorate will seek the Election Commission's approval to allow 1 mln tn sugar exports, before the Empowered Group of Ministers meet Feb 7, in view of upcoming polls in Uttar Pradesh next month.

India produced 10.45 mln tn sugar in the first three-and-a-half months of the season that began Oct 1, 19% higher than 8.77 mln tn a year ago. 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.
 
Liffe and ICE Raw Sugar prices extended gains of the previous day and settled 0.45% and 0.90% higher on Wednesday owing to bullish market sentiments led by reports that FED would not increase the interest rates for the next 2 years.

Liffe cuts margins for Sugar from $ 2900 to $ 2600 per tn wef from 25th Jan, 2012.

Domestic Sugar updates

Maharashtra, the country's largest sugar producer, crushed 34.6 mln tn cane during Oct 1-Jan 15 against 31.5 mln tn a year ago, ISMA said. Sugar recovery in the state was also higher during the period at 10.71% versus 10.25% a year ago.

Uttar Pradesh, India's largest cane producer, crushed 34.7 mln tn cane during the period under review, compared with 27.1 mln tn a year ago, it said. Though the quantum of cane crushing was higher, recovery was lower at 8.49% compared with 8.85% a year ago as crushing began early 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 mln tn. Thus there is a wide scope for exports from India.

Global Sugar Updates

The global sugar surplus is forecast to more than halve into next season from forecast of 7.9 mn tn in 2011-12 to 3.2 mn tn in 2012-13 season, according to Reuters Poll.

According to UNICA, Sugar output in Brazil's center-south from the start of the season to January 01, 2012 stood at 31.2 mn tn down 7% for this time a year ago. No dramatic turnaround in the Brazilian crop is expected in 2012-12 as the fall in production last year was due mainly to an ageing cane crop which would continue this year.

The impact of the weather phenomenon La Nina was a key variable, potentially affecting sugar supply. La Nina would exacerbate the dryness in the centre-south of Brazil, delaying crop maturation and crushing.

Courtesy: Angel Commodities

NCDEX soybean weakens on subdued spot demand

Soybean futures traded lower on account of lower demand of soybean as lower export demand of oil meals and sharp gains in INR against US dollar in the last 2-3 trading sessions also provided support to the bears. December, China imported 41,729 tonnes of oil meal from India, down from 65,428 tonnes during the same month a year ago. Most of the Mandis were remain closed on account of Vasant Panchami. Slight rains in South America which is favorable for soybean crop also added bearish market sentiments.

Argentina's Agriculture Ministry in its monthly report reduced its soybean forecast to 48.9 million tonne from 52 million tonnes. Brazil’s production estimates are reduced to 71.50 million tonnes this year from 75.3 million tonnes last year.

As per USDA weekly sales report which is released on Thursday, soybeans exports figures came in at 466,300 metric tonnes for the current marketing year and 126,000 for the next marketing year for a total of 592,300 which was below trade expectations. Cumulative soybean sales stand at 75.0% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 79.8%.

Meal sales came in at 124,200 metric tonnes for the current marketing year and 2,400 for the next marketing year for a total of 126,600. Sales of 96,000 metric tonnes are needed each week to reach the USDA forecast. Oil sales were just 2,500 metric tonnes as compared with a weekly average of 9,000 needed each week to reach the USDA forecast.

NCDEX April RM Seed traded lower on 4th consecutive trading sessions on account of weak demand of rape/mustard seed and meal coupled with fresh arrivals of RM seed in some parts of Uttar Pradesh and Rajasthan. China restricted their imports of soy meal from India also added bearish market sentiments. Weakness in other oilseeds and edible oils also added bearish market sentiments.

However, for long term perspectives, RM seed are expected to trade higher on account of lower sowing acreage of RM Seed this year as compared to last year. According to PIB, as on January 27, 2012, total area under oilseeds cultivation is reported to be 84.35 lakh hectares against 93.15 lakh hectare last year.

Higher area has been reported under oilseed crops in Tamil Nadu (1.04 lakh hectare), Jharkhand (0.63 lakh hectare), Uttar Pradesh (0.51 lakh hectare), Gujarat (0.37 lakh hectare), and Assam (0.21 lakh hectare).

NCDEX February refined soy oil futures ended lower on weak overseas market as lower export figures of Malaysian Palm Oil during the period of January 1-25 as compared to previous month. Appreciation of Indian rupee again US dollar in the last 2-3 trading sessions also provided support to the bears as imports of edible oil would be cheaper and India imports about 50% of its total requirement.

As per SGS (cargo surveyor), Malaysian Palm Oil exports in the first 25 days of Jan 2012 fell about 20% as compared to last month of during the same period. As per SEA of India, India imported 654,714 tons edible oil in December, down 21% from the month of Nov 2011. In the first two months of the current oil year (Nov- Dec), edible oil imports were at 14.82 lakh tons against 13.82 lakh tons a year ago.

Courtesy: Angel Commodities

Precious metals edge higher on global economic concerns

Spot Gold prices increased a whopping 4.3 percent in the last week and touched a high of $1738/oz. In the Indian markets prices rose only 1.9 percent as Rupee appreciation capped gains in the yellow metal.

On a weekly basis, prices on the MCX February contract touched a high of Rs28,084/10gm and closed the week below the Rs28,000/10gm mark.

Latest announcement by the Federal Reserve to maintain record low interest rates till late 2014 came as a negative factor for the dollar, which supported upside in gold prices in the international markets.

Another factor that aided further upside in prices was the indication given by the Fed over a third round of quantitative easing program.

Silver

Spot silver prices surged 5.5 percent last week taking cues from rise in gold prices coupled with weakness in the US dollar. Silver being an industrial metal also took cues from upside in base metals.

The white metal hit a high of $33.93/oz and ended its trading session at the level of 33.86/oz in the last week. On the MCX, Silver March contract rose 4.3 percent as further gains were capped due to appreciation in the Indian Rupee last week.

Courtesy: Angel Commodities

Crude oil trades higher on weak US dollar index

On a weekly basis, Nymex crude oil prices increased by more than 1 percent, taking cues from Federal Reserve’s decision not to changed the interest rates until 2014 which led weakness in the US Dollar Index (DX).

Also supply concerns from Iran which is expected to block Strait of Hormuz if further sanctions are imposed also acted as a further supportive factor for oil prices. Crude oil touched a high of $101.39/bbl during the week and closed at 99.56/bbl on Friday.

On the MCX, prices declined by 1.2 percent on account of Rupee appreciation and closed at Rs.4945/bbl on Friday after touching a low of Rs.4922/bbl last week.

Natural Gas

Nymex natural gas prices increased tremendously by more than 14 percent last week, on the back of sharp decline in US inventories.

Additionally, a weaker dollar also supported upside in natural gas prices. Gas prices touched a high of $2.803/mmBtu during the week and closed at $2.678/mmBtu on Friday.

On the MCX, prices increased around 15 percent and closed at Rs.134.9/mmBtu on Friday after touching a high of Rs.137.3/mmBtu during the week.

Courtesy: Angel Commodities

Base metals weigh down on Eu debt concerns

Base metals retreated slightly on Friday closing after trading in gains as Fitch downgraded Spain and Italy on fears of default as the Greek negotiations coupled with German chancellor Merkel’s deficit control mechanism acceptance by the EU resulting in weaker Equities followed by down trend in base metals.

On the same note, today morning base metals are trading negative by 1 to 1.5 percent at the LME electronic platform. The Asian markets are also trading mostly in the down side as the markets are eyeing the key meeting of EU members where the leaders will sign-off a permanent rescue fund by agreeing on a balanced budget rule in national legislation today.

This may strengthened the Euro in the latter half of the day and may continue to support metals pack. Further the Greece negotiation may continue as the International Institute of Finance are talking on behalf of private creditors where every 0.5 percent cut in bond yield reduces 2.5 percent of deficit on total GDP. The Dollar index has also lost as Fed announced easing resulting cheaper money.

However the easing has added investor confidence and also continued the gaining rallies in financial market from the beginning of the year. From the economic releases front, we may see better confidence figures from the Euro-zone coupled with increased income and spending from US after increased GDP.

The Dallas Fed manufacturing activity is also expected to be positive and may support the gain in metal prices. The Chinese markets are reopening after week long holiday and some profit-booking from the Chinese bourses may also be witnessed.

Therefore we may see early morning contraction due to weak Asian equities, however expecting pullback in prices in the evening session due to better economic releases coupled with Euro-zone rescue fund and Greek negotiation.

Aluminium

Aluminum prices came down by 0.48 percent at LME, however the prices gained slightly at MCX.

The inventory has witnessed drawdown and the cancelled warrants are also maintaining at 19.39 percent indicating strong spot demand.

Due to better aerospace and automobile growth forecasts for the year, prices have rallied, however as the market continues to remain in surplus, gains were limited.

Copper

Copper prices came down by 0.76 percent at LME after a few consecutive sessions of gain after Fitch downgraded Spain and Italy.

Though prices retreated yet the inventories continued to drawdown and the cancelled warrants are maintaining at record levels of 26.96 percent indicating the increase in spot demand.

Lead

Lead prices came down by 1.29 percent at LME and a similar trend was witnessed at MCX too.

The inventory has witnessed slight drawdown and the cancelled warrants have also increased to 13.98 percent indicating improving spot demand.

The basis difference is maintaining near $25 indicating future demand for the metal.

Nickel

Nickel was the top gainer and prices came up by 0.46 percent and similar gains were witnessed at MCX.

Nickel inventory has witnessed slight stockpiling but the cancelled warrants have increased to 3.96 percent indicating improved spot demand.

The basis difference is slowly building into contango indicating increased future demand for the metal.

Zinc

Zinc prices retreated the most and prices came down by 2.49 percent at LME and similar trend was witnessed at MCX.

Inventory has witnessed stockpiling at LME warehouses and cancelled warrants have also come down to 2.58 percent indicating weak demand.

Fundamentally due to better manufacturing activity reported at NAFTA region prices have gained, however in the long term demand from China may continue to play a vital role for prices

Courtesy: Karvy Commtrade Ltd.