Commodities Report: January 2, 2011

On a weekly basis, spot gold prices declined sharply by 3 percent on the back of strength in the US dollar. In addition to this, fall in crude oil prices also affected the inflation-led demand for the yellow metal.

On the MCX, Gold February contract dropped more than 1 percent as depreciation in the Indian Rupee resisted further losses on the domestic bourses and touched a low of Rs26, 517 last week. The yellow metal ended its trading session at the level of Rs27, 453/10 gms on Friday.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 1,254.57 tonnes on 30th December 2011, the lowest since early November.

Silver
Spot silver prices slipped sharply by almost 5 percent in the last week, taking cues from fall in gold prices coupled with downside in base metals. Additionally, a stronger dollar also acted as a negative factor for the white metal prices.

On the MCX, Silver March contract declined around 3.2 percent last week, as a weaker Rupee cushioned further fall in silver on the Indian platform and touched a low of Rs48, 562/kg last week.

Holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, remained unchanged at 9605.79 tonnes on 30th December 2011.

Courtesy: Angel Commodities  


India soy complex settles higher on firm domestic demand

Soybean prices gained through out the day due to good demand across spot markets. Arrival season has come to an end across domestic markets which are triggering prices amidst of the good demand.

CBOT market remained closed on the Friday due to new year holidays. Soy oil prices sustained the uptrend on Saturday owing to the supply side bottle neck in the edible oils.

Export tax structures in Indonesia and bad weather conditions in Malaysia are affecting the imports of palm oil in India. Soy oil from Brazil and Argentina are becoming costlier with rupee depreciation which is supporting price rally.

Mustard seed prices remained on gaining spree on Saturday owing to weather affecting the crop sin major growing regions of Rajasthan. Frost conditions are affecting flowering and crop growth activities in Mustard which supported prices to gain amidst of the good demand for seed and oil.

Courtesy:Karvy Comtrade Ltd.


NCDEX turmeric under pressure on subdued spot demand

Continued better arrivals amidst lacklutre demand led Spot prices to settle 4.52% lower w-w. Futures however, witnessed improved buying at lower levels and ended 2.82% higher w-w.

Production, Arrivals and Exports
Arrivals in Nizamabad and Erode mandi stood around 1,000 bags and 10,000 bags respectively on Friday.

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


NCDEX jeera ends higher on weak production concerns

Jeera Spot prices and Futures ended on firm note in the last week on expectation of ground frost in the chief growing areas which might damage the sown crop. Spot prices and Futures settled 6.36% and 6.54% higher respectively w-w.

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 as compared to 5500 bags on Friday. Off takes stood at 5,000 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 pepper weakens on sluggish export demand

Lacklustre demand from the overseas and domestic buyers kept prices bearish in the last week. Spot prices and Futures settled 5.61% and 5.31% lower w-w.

Demand from the overseas and domestic buyers is dull as buyers are following a wait and watch stance anticipating fall in the prices as fresh arrivals will gain momentum shortly.

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 the domestic mandi on Saturday stood at 8 MT as compared to 5 MT on Friday while offtakes on the other hand stood at 19 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 rises on global cues

NCDEX January soybean futures traded high on account of firm overseas market as bullish USDA’s weekly export figures coupled with improved demand from crushers and stockists in domestic markets. Total arrivals of soybean in Madhya Pradesh were 2 lakh bags on Saturday, Maharashtra was 85,000 bags, as compared to 1 lakh on Saturday and Rajasthan was 50,000 bags (Bag=100 Kg).

Soybean prices in Indore were at Rs 2370-2420/qtl (auctions in Mandi) and plant delivery was quoted Rs 2470-2510/quintal.

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.

As of December 22nd, cumulative soybean sales stand at 67.4% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 71.9%. Sales of 318,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 51,100 metric tonnes which was well below expectations. Sales of 98,000 metric tonnes are needed each week to reach the USDA forecast.

Oil sales wee also slow at 2,300 metric tonnes. Cumulative soybean oil sales stand at 25.9% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 40.0%. Sales of 12,000 metric tonnes are needed each week to reach the USDA forecast.

Rape/mustard Seed
NCDEX January RM Seed futures traded sharply higher on account of 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 Mistry of Agriculture, GOI, Sowing acreage of Rabi oilseeds in India was 79.22 lakh hectares (down 6.32%) as compared to 84.57 lakh hectare 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 traded higher on account of firm overseas market and improved demand of edible oil in winter season. 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 palm oil quoted Rs 54500/tonnes on Friday, unchanged as compare to Rs 54500/tonnes on Thursday. Imported crude soy-oil price quoted Rs 66,000 /tonnes on Friday, unchanged as compared to Rs 66,000/tonnes on Thursday.

Courtesy: Angel Commodities


NCDEX sugar weakens on subdued spot demand

Sugar Spot prices and futures settled 2.41% and 0.03% lower w-w respectively owing to lacklustre trades at the domestic and sufficient availability of the sweetener due to ongoing crushing season. However, reports that Food Minister’s might consider 1 million tonnes more Sugar exports for 2011-12 season are likely to provide support to the prices.

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 0.43% and 0.89% lower on Friday amidst long liquidation ahead of year end book closing by the hedge funds.

Domestic Sugar updates
Sugar output in Maharashtra rose 9% between Oct 01 and Dec 15 to 18.6 lakh tonnes compared with the 17 lakh tonnes same period last year. The output was earlier down by 6%. Recovery rate also increased to 10.07% from 9.70% a year ago.

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


India chana edges higher on lower acreage

Lower acreage covered under Rabi pulses and Chana led Chana spot prices and Futures to settle 2.78% and 6.33% higher respectively w-w. 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 guar seed tumbles on weak fundamentals

Guarseed and Guargum Futures witnessed volatile session throughout the week and settled 1.27% and 0.39% lower w-w. Fears that Forward Market Commission (FMC) might impose stricter norms to curb high volatility in the prices led prices to remain undertone.

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. (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