Metals Outlook for the dayGold
Fundamental View: Gold traded steady above the key psychological levels of US$1,600/ounce, recuperating from the breach of the 200 day moving average. On European debt front, France successfully held its debt auction of sovereign bonds with yields rising only slightly despite fears for its AAA rating. On US macroeconomic front, ADP Employer Services reported a 325,000 increase in private payrolls last month, an increase much better than anticipated. In this regard, market participants anticipate US non-farm payroll numbers to reveal an addition of 150,000 jobs during December.
Silver
Fundamental View: Silver prices settled with gain of 0.7% at US$29.3/ounce. Silver prices managed a high of US$29.6/ounce and a low of US$28.7/ounce. On domestic front, MCX March Silver ended literally flat at Rs52,740/kg. Prices made a high of Rs52,988/kg and a low of Rs51,861/kg. Today, MCX March Silver is trading lower by 0.38% at Rs52,540/kg.
Copper
Fundamental View: Copper prices traded subdued, suppressed by a stronger US dollar index and effectively a weaker Euro. On European front, German retail sales declined by 0.9% in December, as compared with a 0.2% decline during the prior month. On US front, Institute for Supply Management’s index of non manufacturing sectors came at 52.6 for December, as compared with 52.0 during the previous month.
Crude Oil
Fundamental View: US crude oil retraced back from the significant levels of US$103/bbl, weighed down by stronger US dollar and surging crude oil inventories in the world largest economy. Energy Information Administration in its weekly report stated that crude-oil supplies rose 2.2mn barrels in the week ended Dec. 30. Gasoline inventories rose 2.5mn and distillate stocks went up 3.2mn barrels.
Courtesy : India Infoline
Base metals settle lower on global economic concerns
The base metals complex traded lower on the LME in yesterday’s trading session on the back of deepening worries over Euro Zone debt concerns coupled with mixed sentiments in the global markets.
Additionally, a stronger dollar also acted as a negative factor for the metals on Thursday.
Lead
Lead was the worst performer on Thursday, as the metal dropped sharply by 2.6 percent on the LME as well as on the MCX.
Worries with respect to Euro Zone debt crisis and a stronger dollar exerted pressure on metal prices. Lead touched an intra-day low of $1988/tonne and closed its trading session at $2005/tonne yesterday.
On the MCX, Lead January contract touched an intra-day low of Rs105.20/kg and closed at Rs106.10/kg on Thursday.
Courtesy:Angel Commodities
Crude oil tumbles on rising US inventories
Nymex crude oil prices declined sharply by 1.4 percent on Thursday, on the back of unexpected rise in US crude oil inventories and escalating concerns over European debt crisis.
Additionally, a stronger dollar also acted as a negative factor for the commodity. Oil prices touched an intra-day low of $101.30/bbl and closed at $101.8/bbl yesterday.
On the MCX, crude oil prices declined by 0.3 percent and closed at Rs.5443/bbl after touching an intraday low of Rs.5402/bbl on Thursday.
EIA Inventories Data
As per the US Energy Department (EIA) report released yesterday, crude oil inventories increased by 2.2 million barrels to 329.7 million barrels for the week ending on 30th December,
2011.
Gasoline stocks rose by 2.5 million barrels to 220.2 million barrels and whereas distillate stockpiles also shoot up by 3.2 million barrels to 143.6 million barrels for the last week.
Courtesy:Angel Commodities
Precious metals edge higher on Euro debt concerns
Spot gold prices gained around 0.6 percent on Thursday and touched an intraday high of $1625/oz. However, sharp gains were capped on account of dollar strength yesterday. The yellow metal ended its trading session at the level of $1621/oz on Thursday.
On the MCX, Gold February contract witnessed a fall of around 0.3 percent and touched an intra-day low of Rs27,540/10 gms yesterday. The metal ended at the level of Rs27,775/10 gms on Thursday.
Silver
Spot silver prices recovered its earlier losses and ended higher by 0.4 percent on Thursday. The white metal touched an intra-day high of $29.63/oz and closed at the level of $29.3/oz.
However, sharp gains were capped due to a stronger dollar in yesterday’s trade. MCX Silver March contract slipped around 0.4 percent and touched an intra-day low of Rs51,861/kg on Thursday.
Courtesy:Angel Commodities
Base metals settle lower on Euro debt concerns
Base metals retreated yesterday and the prices came down by 0 to 2.6 percent due to growing concerns of Euro-zone outlook as the bond auction of France resulted in increased yield and reducing the Euro by 1.2 percent against the greenback.
Though the economic data releases were mostly favorable for base metals still the metals pack plummeted with Lead and Zinc losing the most.
Today morning base metals are trading slightly positive by 0.2 to 0.6 percent at the LME. However the Asian equities have retreated by 1 to 1.5 percent though data were mostly favorable indicating signs of recovery of US economy. The Asian’s might be taking cues from the weak European sentiments.
Fundamentally, the inventory of the metals has witnessed drawdown from LME warehouses but the cancelled warrants have also reduced indicating the weak spot demand. Concern related to the Euro has taken a center stage and due to weak confidence and growing uncertainty investors prefer to rather wait and watch.
From the economic data front, the confidence index from the Euro-zone is mostly expected to deteriorate including industrial confidence and this may put pressure on metal prices.
The business climate and retail sales are also expected to contract raising the growing uncertainty prevailing in the region. Much of the future prospects of metal prices may depend on the “Euro” as the currency has touched a fifteen month low yesterday.
From the US, the payrolls data are expected to be favorable with an increase in Non-farm and manufacturing and this may support the prices from plummeting. The unemployment may remain same as we saw an increase in ADP employment coupled with lower jobless claims yesterday.
Overall we expect the metal prices may witness pressure during the day, however some pullback can be witnessed once the US markets open.
Aluminium
Aluminum prices came down by 1.40 percent at the LME and it came down by 1.29 percent at the MCX.
The inventory has witnessed drawdown but the cancelled warrants ratio have reduced to 13.14 indicating the decline in demand.
The contango is slowly heading downwards supported by the fall in open interest indicates the dicey trend.
Copper
Copper prices came down slightly by 0.28 percent at MCX, however there was no change in closing price at LME.
The inventory has came down and cancelled warrants have increased slightly indicating demand for the red metal.
First Quantum Mineral’s Kansanshi Copper mine workers have gone for a strike disrupting production of 700 MT of copper ore a day.
Lead
Lead was the top loser and prices came down by 2.67 percent at the London Metal Exchange and the prices retreated by 2.62 percent at MCX.
The cancelled warrants have been reducing day by day and has came down to 7.55 percent indicating the fall in spot demand for dull metal.
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However, open interest for the future has been increasing indicating that the investors are holding their position expecting bullish trend in near term.
Nickel
Nickel prices came down by 0.64 percent at the LME and at MCX the prices came down by 0.70 percent.
The cancelled warrants have decreased and came down to 2.62 percent indicating the weak spot demand.
The open interest for the futures are decreasing supported by the basis in backwardation indicates the dicey trend in near future.
Zinc
Zinc was also no exception and the prices came down by 1.93 percent at LME and the prices retreated by 1.62 percent at MCX.
The cancelled warrants have been reducing day by day and presently is the lowest among all metals at 1.66 percent indicating the poor spot demand.
The future positions have increased but due to economic concerns the demand is sluggish.
Courtesy:Karvy Comtrade Ltd.
Oilseeds sector to trade sideways
NCDEX January soybean futures traded lower on second consecutive trading session on account of profit taking after continuous rise in the last 8-10 trading sessions coupled with weak overseas market also added bearish market sentiments. Total arrivals of soybean in Madhya Pradesh were 1.8 lakh bags on Thursday, Maharashtra was 1 lakh bags as compared to 75,000 bags on Tuesday and Rajasthan was 90,000 bags as compared to 60,000 bags (Bag=100 Kg).
Soybean prices in Indore were at Rs 2400-2430/qtl (auctions in Mandi) and plant delivery was quoted Rs 2500-2540/quintal. Soybean stock at NCDEX warehouses increased to 29,956 tonnes on Tuesday as compared to 28,940 tonnes on Monday. 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 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 ended lower on account of profit taking after continuous rise in the last 10-12 trading sessions. Weakness in other oilseeds and edible oil also added bearish market sentiments. Uttar Pradesh mustard acreage increased to 663,141 hectares till date as compared to 657,228 hectare. The country's mustard rabi sowing has totaled 6.46 million hectares as of Thursday, down 5.4% from 6.82 million hectares in the year-ago period. Mustard seed accounts for about 70% of India's winterseason oilseed output.
Refined Soy Oil
NCDEX January refined soy oil futures ended on second consecutive trading sessions on account of lower demand from euro zone on debt concern. Indonesia’s higher production estimates of palm oil (25 million tonnes) this year (due to increased plantation acreage), up by 6.32% as compared to 23.5 million tonnes last year. 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 Thursday, unchanged as compared to Rs 66,500/tonnes on Wednesday. Imported crude palm oil price quoted Rs 54,700 /tonnes on Thursday as compared to Rs 55,800/tonnes on Wednesday (source: SEA).
Outlook
Oilseed seed complex are expected to trade sideways with negative bias on account of long liquidations, there is possibility of further corrections at prevailing prices. However, for long term perspectives, oilseed complex are expected to trade higher on account of tight supply due to lower production estimates and ending stocks of Malaysian palm oil for 2012 coupled with dry weather concern in South America (Brazil and Argentina) are in favour of the bulls. Lower production estimates of RM Seed 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 are also in favour of the bulls.
Courtesy : Angel Commodities
India soy complex settles lower on weak fundamentals
Soybean prices have extended losses as the buyers were absent at higher prices levels. Steep surge in prices in the near past kept the buyers away from the market.
Meal prices have dropped by Rs. 100/ton which had bearish impact on soybean prices. CBOT soybean prices closed steeply lower on Thursday as the stronger dollar index kept the prices under pressure.
Soy oil prices remained in loosing spree due to absence of buyers at higher prices. Spot prices in a month’s time have increased more than Rs. 60-80/10kg which kept the buyers inactive.
GAPKI reported increase in palm oil production estimates during 2012 which affected the prices. Spot prices gained marginally by Rs.3/10kg. Soy oil from Brazil and Argentina remained stable.
Mustard seed price movement was in different to the soy complex as the meal exports data supported the prices. Despite the drop in spot prices of oil and meal increase in the soybean and meal exports in current financial year increased by 53 percent which supported the prices.
Courtesy:Karvy Comtrade Ltd.
Chana acreage a concern for Indian pulse production
Improved buying by the market participants led Spot prices and Futures to extend gains of the previous day and settled 0.91% and 1.30% higher respectively on Thursday. Lower acreage under Chana is also lending support to the prices. 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 30th 2011 is 5.9% down at 8.64 million hectares as compared to 9.18 million hectares in the same period previous year. Highest decline in area is witnessed in Maharashtra where sowing is down 23%, while in Karnataka it is down by 19%.
Crop 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 and thus acreage has declined drastically.
Further, unfavorable weather in Central and Southern India may lower Chana yield in the coming season. Except in Rajasthan, all other major producing states i.e MP, Maharashtra, Karnataka and AP are likely to witness a fall in output in the coming season harvesting of which would
begin after mid January.
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.
Outlook
Chana prices are expected to remain firm on account of lower acreage under Chana cultivation and thereby fears of lower output. In the short term prices may trade in the range of Rs 3250 per qtl and Rs 3600 per qtl in the short term (2 -3 weeks).We expect the upside rally to continue till the end of January as arrival pressure will built up February onwards when arrivals from MP and Rajasthan starts in full swing. However, technical corrections cannot be ruled out and thus buying at dips is suggested.
Courtesy : Angel Commodities
Commodities market commentary
Gold prices traded steady above the key psychological levels of US$1,600/ounce, recuperating from the breach of the 200 day moving average. On European debt front, France successfully held its debt auction of sovereign bonds with yields rising only slightly despite fears for its AAA rating. However, European debt markets still weakened as investors were still concerned regarding the enormity of the fiscal debt in euro zone.
On US macroeconomic front, ADP Employer Services reported a 325,000 increase in private payrolls last month, an increase much better than anticipated. In this regard, market participants anticipate US non-farm payroll numbers to reveal an addition of 150,000 jobs during December. Figures from the Labor Department showed initial applications for jobless benefits falling 15,000 to 372,000 last week.
LME base metals traded subdued, suppressed by a stronger US dollar index and effectively a weaker Euro. On European front, German retail sales declined by 0.9% in December, as compared with a 0.2% decline during the prior month. On US front, Institute for Supply Management’s index of non manufacturing sectors came at 52.6 for December, as compared with 52.0 during the previous month.
US Crude oil futures retraced back from the significant levels of US$103/bbl, weighed down by stronger US dollar and surging crude oil inventories in the world largest economy. Energy Information Administration in its weekly report stated that crude-oil supplies rose 2.2mn barrels in the week ended Dec. 30.Gasoline inventories rose 2.5mn and distillate stocks went up 3.2mn barrels. However, geopolitical tensions still persist, as European Union has reached a preliminary agreement to ban crude oil imports from Iran, reinforcing concerns about potential supply disruptions. EU has yet to finalize the details in respect with when the embargo will be imposed. Moreover, Royal Dutch Shell has declared force majeure on its Nigerian Bonny Light crude oil exports, as the Nigerian government has decided to remove gasoline subsidies at the start of 2012 which has triggered protests and calls for
strikes by trade unions.
Courtesy: IIFL