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Soaring crude oil prices and a weakening dollar have sent the price of gold soaring to a 28-year high, both in India and abroad. With Diwali knocking on the doors, 10 gram of the dazzling yellow metal costs Rs 10,000 in Mumbai.
Domestic dealers are apprehensive that the rise in international prices to $700 per ounce would have a rub-off effect here.
Suresh Zaveri, a Vile Parle jeweller, said, "Customers are reluctant to buy gold because of the high price. While their number has not dropped, they are buying in lesser quantity." Jewellers believe that the festive season will see 500-600 kg of gold being sold instead of the usual one-tonne Diwali sale.
Samrat Zaveri of Tribhuvandas Bhimji Zaveri, one of the biggest jewellers in India, said the current resistance among buyers was a temporary phenomenon. "I do not think it will have a major impact on the sales. The high prices have instead, revived the consumers confidence of getting good returns on their investment," said Zaveri.
He added that the gold prices would rise to Rs 13,000/10 gm in the next six months.
Gitanjali Group chairman Mehul Choksi said, "Crude oil and dollar risks are being hedged in with gold. This is sending gold demand and prices northwards."
Ashok Minawala, director of Danabhai and Sons, said, "Gold has always been considered to be a safe haven. Therefore, even if the prices are high, consumers will always buy gold. However, the quantity could be less."
Kochi: Pepper futures market, which has been on the upward run, declined sharply on Oct 30, despite reports that the world availability next year would be lower by 55,000 tonnes. Indonesia was offering L Asta at $3,800-3,850 a tonne (fob) and Brazil at $3,700 a tonne (f.o.b.). November contract on NCDEX on Oct 30, declined by Rs 543 a quintal to close at Rs 14,956 from Rs 15,499 on Oct 29. The decline in other contracts was from Rs 481 to Rs 605 a quintal. Spot prices on purchasing support ruled steady at previous levels of Rs 14,600 (un-garbled) and Rs 15,200 a quintal on Oct 30.
New Delhi: The Food Corporation of India (FCI) and State agencies have managed to procure 72.48 lakh tonnes (lt) of rice during the current 2007-08 marketing season (October-September) as on Oct 30. According to the Food Ministry, progressive procurement in Punjab so far, at 60.95 lt, is lower than the corresponding 2006-07 figure of 63.69 lt. The current procurement gap is mainly on account of late transplanting of paddy in Punjab and Haryana, which has led to delayed mandi arrivals. The late announcement of a bonus by the Centre has also been a factor in the lower progressive procurement. Meanwhile, the Union Agriculture Minister, Mr Sharad Pawar, and the Finance Minister, Mr P. Chidambaram, are scheduled to meet on Oct 31, to talk about the feasibility of announcing a further bonus over and above the current Rs 50 per quintal. The latter is, in turn, on top of a minimum support price (MSP) of Rs 645 per quintal on common paddy and Rs 675 on grade A varieties for the current season.
Mumbai: Even 15 days after publication of the official notification banning export of non-basmati rice, exporters are running from pillar to post trying to ensure that their pre-ban commitments are fulfilled.
As many as 11 ships are still waiting for clearance for loading. Each day of delay results in demurrage and detention charges of over $10,000. Close to four lakh tonnes of export cargo are lying in and around Kakinada port in Andhra Pradesh. Exporters are losing hope; and indeed, many are losing faith in the Government’s desire and ability to extend assistance.
Instead of addressing the genuine concerns of rice exporters, the bureaucracy is attempting to frustrate the trade on basis of technicalities, an aggrieved party complained to Business Line.
Proof of contract
A most irksome condition is the insistence on Letter of Credit (L/C) as evidence of pre-ban commitment. To be sure, in the export policy, opening of an L/C was never a pre-condition to ascertain the genuineness of an export contract. There are instances where L/Cs have been opened; there are instances where advance has been received against export order; and in some cases, exporters have applied to banks for pre-shipment packing credit. Any of these, should be sufficient proof of an export contract.
In an extreme case, one exporter loaded most of the cargo on to the ship, and only a small lot remained, before which the ban was announced. Now, the Customs authorities are insisting that the exporter produce a L/C or simply unload the cargo already on board the ship. The exporter is shocked by the Customs officials’ response.
Another exporter said that the very fact that export documents have been processed and bulk of cargoes have been loaded on to the vessel should be conclusive evidence of the existence of an export contract.
Exporters are fast losing hope that the Government would soon sort out some of the technical issues. Trade circles are furious that the three ministries concerned with rice exports - Ministry of Commerce, Finance and Agriculture - are working at cross purposes and demonstrate utter lack of co-ordination.
Restricted evidence
Firstly, it is essential to establish the extent of pre-ban export commitment. The evidence should not be restricted to L/C; but should be more liberal to include other forms of sufficient evidence. Unless, the ministries adopt a more open and practical approach, the fate of exporters would continue to hang in balance.
There is apprehension that in the next two to three days most of the ships awaiting cargo will set sail from the port, if there is no definite and clear-cut support to exporters. This is sure to subject defaulting Indian exporters to numerous arbitration proceedings at the international level and possibly, huge amounts of damages to be paid by them.
Meanwhile, rice procurement has been going on in a somewhat tardy fashion. Even after imposition of the ban and sullying the image of Indian exporters, there is doubt if the procurement target would be achieved.
Mumbai: Demand for gold coins ahead of Diwali is sluggish as wild swings in prices are prompting buyers to put off their purchase decisions, say bankers.
“This year we have seen one of the worst demand swings due to price volatility that is not common,” said Anshuman Sharma, Head - Precious Metals at Axis Bank. “One day the price is Rs 9,800 per 10 gm, the next day it is Rs 10,100 per 10 gm. A purchaser cannot make a decision amidst such volatility,” he added.
Retail demand is picking up, however, the wholesale demand is sluggish, said Moses Harding, Head of precious metals at IndusInd Bank.
Corporate gifting
Emergence of gold coin demand for corporate gifting purpose is picking up, said Sudip Bandyopadhyay, Director & CEO of Reliance Money that has just supplied gold coins to Sansui for corporate gifting.
Going forward, gold prices will be determined by the dollar movement and forthcoming US Federal Reserve meet on October 31, said Harding.
In the last one and half month, gold prices have seen huge increases. In the last week, they gained over Rs 100 per 10 gm day-on-day.
Gold prices surged to Rs 10,135 per 10 gm in the local market in Mumbai on Monday.
Palm oil futures in Malaysia, the global benchmark, touched a record after crude oil went up past $93 a barrel, lifting the demand for biofuels made from vegetable oils. Oil zoomed to a high in New York as Mexico, the third largest supplier to the US, shut about a fifth of its daily output because of a storm heading for the Gulf of Mexico. Palm oil for January delivery, the most active contract, rose as much as 75 ringgit, or 2.7 per cent, to 2,875 ringgit ($860) a tonne on the Malaysia Derivatives Exchange, surpassing the October 16 peak of 2,814 ringgit. Futures ended the morning session at 2,870 ringgit at 12:30 pm local time. Palm oil has gained 69 per cent in the past year, spurred by higher demand in food and soaps. The tropical oil is also being used for bio-diesel, an alternative fuel which is renewable and contains no petroleum. China's Dalian Commodity Exchange has started trading futures based on the Malaysian contract. Palm oil for January traded at the day's ceiling of 8,424 yuan a tonne. Soybean oil, the next most consumed oil after palm oil, rose as high as 41.78 cents a pound in after-hour trading in Chicago. This the highest since at least December 26, 1978, according to Bloomberg data. China and India, the world's most populous nations, import palm oil to fill shortages in supplies of soybean, groundnut and canola oils. Indonesia and Malaysia make up 90 per cent of palm oil's global output.
Mumbai: Buoyed by rising crude, weakening dollar and mounting geopolitical concerns, gold marched ahead last week to test the highs seen last as far back as in January 1980. Investors are flocking to put their money on the yellow metal, yet again proving its status as a safe haven investment.
Positive factors
Speculative interest in gold has hit an all-time high. Non-commercial positions on the COMEX gold market stand at over 40 per cent of the total futures positions. Recent gold positive factors jittery stock market, weakening dollar and growing inflation concerns - look likely to persist for some time, according to experts.
All that means gold will likely continue to trade with an upside bias. However, as non-commercial positions are nearing the all-time high of 49 per cent of total futures positions, the market will be vulnerable to changes in investor sentiment. It is yet unclear what can drive a change in investor sentiment. So, the precious metals vulnerability at the current high levels cannot be ruled out.
It is also most likely that from here on, there would be profit-taking at every rise. But given the upside bias, every dip should provide a buying opportunity. There is near unanimity of opinion that the yellow metals next target of $800 an ounce should be reached in a matter of weeks.
In addition to flow of speculative funds, on the physical side, emergence of demand at every price dip is providing solid support to the market. This is further aided by sustained build up in ETF positions.
Taking a cue from global trends, Indian gold market too has spurted. After briefly breaching the psychological Rs 10,000 per 10 grams, the market dropped back to four-digits. At these high levels, there is sure to be some demand compression as Indian consumers are known to be price-conscious. High prices would also encourage scrap sales.
Changing perceptions of global economic health and geopolitics continue take their toll on the base metals market. There has also been a slight rise in inventory levels. But it maybe instructive to note that metals market fundamentals continue to look strong. Even a slight slowdown in the US may be largely neutralised by robust demand in other regions of the world (Asia, in particular).
Inventory levels will stay low and in a number of markets, including copper, nickel and tin, inventory levels by early 2008 are forecast to fall to fresh lows in the current cycle, experts asserted, adding that copper was at the risk of considerable fundamental tightening with raw materials in short supply and the prospect of a big pick up in Chinese buying before long. Tin fundamentals still look undergoing further tightening ($16,400/t). Nickel prices at the front end of the curve are strengthening ($32,000/t) and there are signs that the de-stocking process at European and Asian stainless steel stockists is coming to an end.
Crude
Oil market is truly on the boil. Evidence of a further tightening of the crude oil market continues to mount with fall in the US crude inventories and deteriorating stock position in Europe. The market is clearly facing a deficit. Moving further into the last quarter, the deficit threatens to expand. Experts assert the current high prices are justified by fundamentals and the door to further increases remains open.
Last week, Front month WTI settled above $90 a barrel for the first time in trading history; and later pushed above $ 92/barrel. Front month Brent also closed at an al time high. The combination of worsening fundamentals and mounting geopolitical tensions has created a platform for a sharp push up in prices.
Winter demand is nearing. OPECs decision to raise output by 500,000 barrels a day from November 1 is seen inadequate; and in any case insufficient to cool the current market sentiment.
Mumbai: Volatile maize futures are set to trade on the higher side despite forecast of a bumper 2007 kharif production of 13 million tonnes, against last year’s production (kharif and rabi) of 11.5 mt.
In 2006-07, maize prices touched a peak of Rs 835-840 levels per quintal in March and since crashed to a low of the current level of Rs 697.
Maize prices had fallen as the poultry industry, which consumes nearly 70 per cent of the production, shifted to soyameal.
“Traders turned bearish on information that the acreage under maize had increased by 10-15 per cent,” said Harish Galipalli, head of research, Karvy Comtrade.
However, analysts feel that the prices have bottomed out and are expected to recover in the short-term.
Warehouses have no inventories due to rise in exports to Sri Lanka and Bangladesh.
Demand from domestic starch and poultry feed manufacturers are expected to increase in the coming days. Kharif arrivals of 15,000-20,000 bags (100 kg) per day to the Nizamabad markets have started, while in Maharashtra and Karnataka it is picking up pace.
Increase in demand
Less moisture content in the Nizamabad stock has attracted buyers at this lower price level.
“Increasing ethanol demand is an additional factor for a bullish sentiment in the long-term,” said Galipalli.
The near-month November contract on NCDEX, after touching a low of Rs 663 rose to Rs 745 levels and is currently trading at Rs 685.
“Market is expected to move up with support at Rs 680 per quintal and if breached may test Rs 665 levels. Once it tops Rs 745 levels, the trend may reverse,” he said.
Mumbai: With gold prices nearing Rs 1,000 a gm, it is beginning to put off buyers as well as investors. While physical gold purchases are being made only for occasions such as marriage or functions, investors find the stock markets yielding more than the yellow metal.
On Friday, standard gold closed at Rs 9,950 a gm against Rs 8,905 on September 1.
“According to market estimates, the average gold demand per day is one tonne. It has fallen to 700-750 kg in September. The primary reason has been the price volatility and lower realisation in rural markets,” said Sahil Kapoor, research analyst of Kotak Commodity Services Ltd (KCSL).
Optimistic
“Wholesale demand for gold has gone down this Dasara due to high prices. We expect demand to pick up during Diwali but it will depend on the prices,” said Suresh Hundia, President, Bombay Bullion Association.
“People seem to buying only because they have to for the occasion. Otherwise, there is lukewarm interest. There is practically no investment demand,” said Ashok Kumar Mundra, Secretary of the Madras Jewellers and Diamond association.
According to analysts, booming stocks have also made gold investments less attractive. “While Sensex has gained about 3,800 points since September 1, gold prices have increased by around Rs 1,000 per 10 gm only. This is a clear indicator of how attractive the stock market has become vis-À-vis the bullion market,” an analyst said.
The Sensex closed at 19,105 points against 15,318 during the period.
During the last 12 months, the yellow metal has gained Rs 1,215 per 10 gm.
According to Kotak Commodity Services Ltd (KSCL), demand for gold in the country has fallen 25-30 per cent in the last few weeks.
A consolation for the domestic gold has been that the rupee’s gain has kept the prices on a leash at a time when global prices are at 28-year high of $780.50 a troy ounce, up 31 per cent year on year.
Jewellery demand
Rise in gold prices have also impacted jewellery demand. “Apart from high gold prices, jewellery demand was low in September at in the Hindu calendar it was the inauspicious Shravan month,” said Kiran Dikshit, Manager, Tribhovandas Bhimji Zaveri.
Sensing an opportunity many enterprising customers have preferred to exchange their old jewellery for new ones, he added.
Mumbai: Though gold prices have hit a 27-year high, analysts expect a correction in the prices in November before they gather further momentum.
“Nervous investors are rushing to lock-in profits as macroeconomic concerns once again rose to the fore,” said an analyst.
The gold price movement can see a lot of strength coming in from jewellery consumers in India and consumption in Turkey and West Asia.
“The festive season is taking a break in India and West Asia demand is expected to slowdown. This would result in some softening in the physical markets and result in lower price levels,” said Sahil Kapoor, analysts with Kotak Commodity Services Ltd.
Investment buying
The underlying market conditions remain favourable as inflationary pressure and investment buying lend support. Crude oil prices would also keep the precious metal markets supported.
Investment demand for gold is expected to be strong, as risk aversion would result in strong rise in investment in precious metals. Oil prices are likely to rise due to political tension and stagnant oil refining capacity worldwide, Kapoor said in the report.
The US Fed is expected to cut rates by 25 basis points on October 31, which is likely to boost gold prices across the globe.
“We feel the interest rate cuts and higher inflationary pressure in the months to come can be taken as a probable event which can increase investment demand in gold,” Kapoor said.
Gold ETFs have shown remarkable rise in holdings. With rising prices there has been steep rise in the holding of major Gold ETFs.
On MCX, December contract would see strong support levels at Rs 9,650-9,600 and Rs 9,530, as also resistance at Rs 9,860, Kapoor said.
On the face of it, it is an industry that accounts for a turnover of Rs 6,500 crore annually. More importantly, it provides direct employment to two-and-a-half lakh workers in the organised sector, and to another one lakh in the unorganised sector. In addition, it provides gainful engagement to over four million farmers. That, for you, is the jute industry that, in the decades gone by, was among India’s highest export earners.
Of the 77 jute mills, comprising the industry in the mills sector, 60 are located in West Bengal while the others are scattered across Andhra Pradesh, Uttar Pradesh, Bihar, Assam, Orissa, Tripura and Chhattisgarh.
Today, the golden fibre industry is faced with problems one too many. It has to face competition from the synthetics lobby, the machinery installed in the jute mills are old and outdated, production processes are inefficient and demand policies that are announced by the Government are announced year-on-year.
Says Sanjay Kajaria, Chairman of the Indian Jute Mills Association: “The core issue is that the jute industry is dependent on government policies for demand for its products. If the policy is not constant, there is bound to be a demand-supply mismatch. There has been a lot of capacity addition in the industry in the last 3-4 years. While the installed production capacity is 20 lakh tonnes per annum, the annual production is barely 16-16 ½ lakh tonnes. The Mandatory Packaging Order is reviewed every year by the executive, the political establishment and the judiciary. We at IJMA feel that, if we can have a demand policy for 10 years instead of it being reviewed every year, the industry can look at the long term and invest in upgradation and modernisation schemes.”
According to Kajaria, authorities must ensure that the Jute Packaging Material (Compulsory use in Packaging Commodities) Act, 1987 is implemented in letter and spirit. State agencies should also not be permitted to procure and use second-hand jute bags. Also cases of violations of the Act that have been pending must be wrapped up and the defaulters penalised.
Says Binod Kispotta, Jute Commissioner: “The jute industry must invest in technology upgradation with a view to improving production and efficiency. A case in point is the cotton industry, which has invested in technology upgradation programmes. With increased awareness, consumer preference will shift in favour of environment-friendly and biodegradable products. The jute industry has to invest in modernisation programmes, improve technologies and efficiencies and be ready for what lies ahead in terms of competition”.
Geo textiles
While the industry continues to grapple with problems faced by it, the Jute Manufactures Development Council (JMDC), which is generally regarded as the export promotion council of the jute industry, has taken proactive steps to promote the use of jute geo textiles across the country.
JMDC has initiated discussions with 10 States to promote the use of jute geo textiles. These States include Gujarat, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Sikkim, Himachal Pradesh and Uttarakhand. Presentations have been by JMDC in these States showcasing the potential and application of jute geo textiles in road construction, embankment protection, etc.
The initial response of the State Governments to jute geo textiles has been “very encouraging”, according to informed sources. JMDC is hopeful that some of these States will initiate pilot projects within the current fiscal. “To begin with, this is bound to increase awareness of the varied applications of jute geo textiles. Once it is incorporated in the States’ PWD schedules, the demand that is generated is bound to be huge,” the sources said.
For example, in road embankments, one would require 4,000 running metres of jute geo textiles for a seven feet wide, one-km-long road. “It is quite possible that pilot projects that are undertaken by these States will require more than a million running metres of jute geo textiles. They are cheaper, durable and environment-friendly,” the sources said.
According to them, if the project takes off successfully, it will have a cascading effect on the industry. The mills sector would have to augment production and the acreage under jute cultivation would have to go up. For now, however, the focus was on getting these States to kick-start pilot projects in jute geo textile applications as soon as possible.
Efforts are also on to increase the industry’s exports, which, in absolute terms, has been pegged at Rs 1,100-1,200 crore annually. The industry has been demanding a restoration of the External Market Assistance Scheme, which was last in vogue till March 31, 2007. Official sources said extension of the same is “under consideration”.
New Delhi: Is a further Central bonus for paddy growers on the anvil? Well, it would appear so. On October 31, the Finance Minister, P. Chidambaram, the Agriculture Minister, Sharad Pawar and the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia are scheduled to meet and discuss the feasibility of an additional bonus for paddy, over and above the already announced Rs 50 per quintal.
The Cabinet Committee on Economic Affairs had, on October 9, cleared an Rs 50 per quintal bonus on top of the minimum support price (MSP) of Rs 645 per quintal on common paddy and Rs 675 on grade ‘A’ varieties for the 2007-08 marketing season (October-September). The effective procurement price payable, thus, came to Rs 695 for common paddy and Rs 725 for grade ‘A’ varieties - an Rs 75 per quintal jump over the previous year.
However, even this unprecedented increase has apparently not passed political muster, with the opposition Bharatiya Janata Party (BJP) as well as the Left and the Telugu Desam Party taking up cudgels of behalf of paddy growers. The issue has found particular resonance in Andhra Pradesh, where non-Congress parties have been holding demonstrations and disrupting rail and road traffic demanding support price parity between paddy and wheat.
Till 2004-05, the MSP for wheat was only Rs 50 per quintal higher than that for grade ‘A’ paddy. But with the acute shortage of public wheat stocks forcing the Centre to liberally raise procurement prices for the former, the effective gap vis-À-vis paddy has now widened to Rs 275. “In a potential election scenario, it would be difficult to justify this difference, particularly in paddy-growing States likes AP and Tamil Nadu, where the Congress and its allies are in power. An additional bonus is, therefore, inevitable”, the sources pointed out.
Meanwhile, the Food Corporation of India (FCI) and State agencies have procured 61.68 lakh tonnes (lt) of rice in the current marketing season till October 25, against the 67.71 lt bought during the corresponding period of the 2006-07 season. If present trends hold, there is a possibility of total purchases for the 2007-08 season falling short of the 250.75 lt of 2006-07 and the record 276.56 lt of 2005-06.
New Delhi: The Centre has eased the blanket ban on export of all non-basmati rice, with the Union Cabinet on Thursday, permitting shipments of premium varieties that are priced above $425 a tonne free-on-board (f.o.b.).
The imposition of a minimum export price (MEP), in place of the earlier October 9 decision to ban all non-basmati shipments, will pave the way for export of varieties such as Pusa-1121, Sharbati, Swarna Masuri, Ponni and Red Matta.
These varieties command prices from $550-600 (Ponni, Swarna Masuri and Matta) to $650-700 (Sharbati) and $1,350-1,400 (1121). Despite not being procured by the Government agencies, their categorisation as ‘non-basmati’ had resulted in a ban on shipments following the October 9 Cabinet decision.
The Government has withdrawn the ban on superior non-basmati rice exports of over $425 a tonne following complaints from farmer organisations and the State Government of a sharp drop in open market prices of paddy, the Union Information and Broadcasting Minister, Priyaranjan Dasmunshi, told presspersons here. The ban was also giving competing nations such as Pakistan an upper hand in the rice export market, he added.
Kochi: Considering the plight of coir workers in the unorganised sector, the Coir Board has requested the Union Labour Minister to bring them under the ambit of ESI scheme.
In a letter to the Union Labour Minister, Oscar Fernandez, the Coir Board Chairman, A.C. Jose, pointed out that there are around 3.8 lakh workers, mostly women in the unorganised sector of coir working in the spinning and weaving category. They are finding it difficult to make both ends meet on account of paltry wages.
The Coir Board, Jose said, had introduced Coir Board Workers Group Insurance Scheme, which provide for death insurance and permanent disability. The unorganised workers need to be covered under welfare schemes such as ESI so that they can get the benefit of hospitalisation and medicines, he said.
The Coir Board Chairman also suggested that all those who are registered with the Kerala Workers Welfare Fund Act be given the protection of coverage under ESI on production of registration documents with the Welfare Board.
At present, some concessions provided by the Welfare Board include various assistances such as educational assistance, marriage assistance, medical assistance, funeral assistance and the like. But it did not compensate their medical assistance.
Mumbai: Despite repeated representations at various levels and reports of government decision to ease export controls on non-basmati rice, there is little headway made on the ground, say rice exporters with pending export commitments.
The Assistant Commissioner of Customs at Kakinada port (from where manyshipments are due to take place) has already announced that no loading of non-Basmati rice will take place from the port without further orders. As uncertainty marks the rice export scene, (it is now 10 days since the ban was officially notified), Indian exporters are unable to fulfil their export obligation following imposition of ban on non-basmati rice export.
The ban was actually notified by the Director General of Foreign Trade on October 15, but was made effective from October 9. A question over the legal validity of banning export retrospectively has arisen. The Customs authorities at ports have stopped processing export documents (based merely on the announcement purported to have been made by the Finance Minister on October 9) even without a formal notification in place. These developments have caused considerable anguish among exporters.
Awaiting shipment
An estimated seven lakh tonnes of rice collectively valued at about Rs 850 crore, which are committed for export are awaiting shipment. About four lakh tonnes of rice are lying in various ports across the country to be loaded into vessels, it is pointed out.
Some ships are already waiting to commence loading; but there is no clearance from Customs authorities for want of clear-cut directives from New Delhi.
Risks
Exporters feel that objections are being raised at the export document processing stage and they are exposed to many risks for no fault of theirs. Demurrage and detention charges for vessels add up to a tidy sum. There is apprehension among exporters here that they would be dragged into international arbitration proceedings for shipment default. Non-basmati rice export is usually done on free-on-board (f.o.b) terms and payment is usually against submission of export documents (CAD/DP terms),although in some cases letters of credit have been established too.
Exporters, this correspondent spoke to, asserted that they have sufficient documentary evidence to prove the existence of a pre-ban commitment. For a country that produces nearly 880-900 lakh tonnes of rice, allowing pre-ban commitment of about seven lakh tonnes should not pose difficulty under normal circumstances. But reports circulating in the market suggest poor coordination among the concerned ministries - Commerce, Finance and Agriculture; and the absence of clear-cut directive for honouring pre-ban commitments.
Minimum export price
The government’s consideration of imposing a minimum export price (MEP) for non-basmati rice would also harm rice business.
By imposing a high MEP, the Government would willy-nilly drive exporters to indulge in invoice manipulation, argued an established exporter. “In the past, we have seen such efforts fail”, he added.
“As export markets are cultivated assiduously over time, the least the policy makers should do is to instruct quick clearance of ready-to-ship export cargoes at various ports so that India is not perceived as an unreliable supplier in the global market” is the unanimous refrain of exporters.
Pune: Pune is hosting a cashew and raisin festival along similar lines as that of the mango festival. The fair will end on Friday. Participants from the different cash growing regions in the State, mostly from Kolhapur, Sindhudurg, Ratnagiri, Jalgaonand and Ahmednagar districts, will showcase their products in about 30 stalls.
Production
Maharashtra during 2005-06 had recorded a total production of about 1.74 lakh tonnes of cashew and 55,000 tonnes of raisin. Around two lakh tonnes of grapes is required to manufacture 55,000 tonnes of raisin. The acreage under cashew is 1.60 lakh hectares and 45,000 hectares under raisin.
Maharashtra also exports about 1.25 lakh tonnes of cashew to the US, European countries and Japan and around 43 tonnes of raisin, mainly to the Gulf countries.
According to the Maharashtra State Agricultural Marketing Board (MSAMB) officials, this low quantity of raisin exports is because the technology that is required to cater to the European markets is not available in the State.
This is part of MSAMB’s ‘producer to consumer’ initiative that it started in 2002 for mango, they added.
This is the first cashew and raisin festival. It has been decided to hold this as an annual event in Pune during the festival season, as Diwali is an occasion for dry-fruits. “This is when the demand peaks, from individuals as well as corporate houses (for gifting to clients),” the officials said.
They expect the fair to generate sales of around eight tonnes of cashew and 2 tonnes of raisin.
The response that is estimated to be generated, due to this festival is sales of around eight tonnes of cashew and two tonnes ofraisin.
They noted that one of the corporate houses in Pune hasalready made a transaction for around 250 kg of cashew nuts.
Flavoured cashews
To draw more consumers to the fair, value-added products of cashews with varied flavours such as mango, strawberry, pineapple and chocolate are being showcased at the stalls.
The mango flavour seems to have got a head start as it has made good sales, stall owners noted.
The other attractions include the black pepper flavoured cashews, salted cashew, red chilli and green chilli flavoured cashews. One of the stall owners noted that there were around 2.5 lakh farmer families involved in cashew cultivation in the State whilepointing out that it is labour intensive.
Madurai: The Confederation of Indian Industry (CII), Madurai Zone is organising the third edition of the conference on rubber technology ‘Madurai Rubber 2007’ in the city on October 25.
The objective of the one-day conference is to create an opportunity to discuss emerging technological trends, opportunity and challenges in the rubber industry and showcase Madurai as a manufacturing hub.
The industry employs already 25,000 persons both directly and directly in Madurai and in the surrounding districts in rubber-based industries.
To be inaugurated by Shakthikanta Das, Secretary, TN Department of Industries, the conference will have sessions on opportunities and challenges in rubber industry, developments in materials used in the industry, latest design and technology in rubber industry and a session on best manufacturing practices.
Speakers at the conference include Joerg Guntrum, Rhein Chemie Corporation, Germany; Daya Kulatunge, Managing Director, Ceymac Rubber Co. Ltd, Sri Lanka; Virendra Rathod, Head - Synthetic Rubber business, Reliance Industries; Mt. Supti K. Ghosh, CEO, Philips Carbon Black Ltd; Nitin Tambe, Senior Business Development Manager, Export Mobil Chemical Ltd; S. Selvamani, Head-R&D, Sundaram Clayton Ltd; Kothandaraman, HoD, Department of Plastic and Rubber Technology, Madras Institute of Technology; S. Nedumaran, Sundaram Industries Ltd; C.M. Naresh Kumar, Regional Manager, Lanxess India Ltd; K. Prakash, General Manager-Manufacturing, TVS Srichakra Ltd; and B.T. Bangera, MD, HiTech Arai Ltd.
Kottayam: The domestic rubber prices continued sluggish though the fundamentals were unchanged and the global indices bullish. In spot, sheet rubber RSS 4 closed firm at Rs 99 a kg at Kottayam, while it fell to Rs 98.50 from Rs 99.50 a kg at Kochi. The November contract fell to Rs 98.33 (99.18) a kg on MCX. On NMCE, the November contract declined further to Rs 98.05 (99.45), December to Rs 98.55 (100.43), January to Rs 99.25 (101.14) and February to Rs 100.70 (102.54) per kg for RSS 4. The outstanding positions were recorded as 1,511 (1,615) lots in November, 1,382 (1,370) lots in December, 823 (852) lots in January and 440 (406) lots in February on NMCE. The November futures for RSS 3 bounced back to 271.3 (Rs 94.07) yen from 267.3 yen a kg at TOCOM.
Kochi: If the current trend in chilli exports is any indication during the current fiscal, in all probability it will repeat or surpass its record performance in the last fiscal and the target set for 2007-08. The country's shipments during April - August 2007-08 stood at 88,000 tonnes valued at Rs 487 crore against 47,294 tonnes valued at Rs 225.81 crore. Chilli exports last fiscal stood at 1,48,500 tonnes valued at Rs 807.75 crore, against 1,13,174 tonnes valued at Rs 403.01 crore in the previous fiscal. The unit value realisation has increased from Rs 36 in 2005-06 to Rs 54 per kg last fiscal and to Rs 55 a kg during April - August 2007-08. Shipments of Indian chilli to the European markets are said to have shown a tangible increase during the current fiscal paving the way for the commodity to establish a monopoly in these markets because of a reported fungus attack on Pakistan's chilli crops and a consequent ban on imports of the commodity by the European Union.
In the past three years, the European Union had prohibited import of red chilli from Pakistan for the presence of aflatoxin. Japan has also stopped import of chilli powder from Pakistan. India is at an advantageous position as the mandatory sampling, introduced by the Spices Board for chilli and chilli products consignments, for the presence of Sudan I - IV and aflatoxin before shipments has boosted the confidence of the overseas purchasers.
Mumbai: Turmeric futures are on a downtrend in the short term on the backdrop of increase in output of 8.90 lakh tonnes in 2006-07 against 8.5 lt last year. On Oct 18, turmeric for October delivery hit the lower circuit at Rs 1,805 per quintal, while the November delivery was down 1.5 per cent at Rs 1,999. In the last three months, turmeric prices have fallen to the current level from a peak of Rs 2,300 per quintal due to high speculative selling. The high carry forward stocks of about six lakh bags (70 kg) are also pulling down the price. Lack of domestic demand supports bearish trend in near term. Inventories for 2007-08, are hoped to double to over one lakh tonnes. As of now, spot market prices are at Rs 1,980-2,000 levels a quintal.
Chennai: Chana (gram) prices are likely to gain momentum ahead of Diwali with demand seen for besan (gram flour) during the festival.
“Demand (for chana) is gathering pace in the physical market ahead of the festivals.
Outlook
“The commodity for December delivery on NCDEX could test Rs 2,520 a quintal levels on the upside,” Kotak Commodity Services (KSCL) said in an outlook note.
Fresh buying was witnessed towards last weekend amid low volumes and the spot markets witnessed a steady to firm trade in Delhi.
Strategy for investors would be to start building long positions at every dip, it said.
Jeera
Jeera prices are likely to come under pressure in view of short covering for the near month contracts. The long accumulation witnessed in December contract was witnessing a decline, KSCL said.
“We expect Rs 10,100 a quintal as a good support for November contract. Market is expected to test the support of Rs 10,400 on a closing basis for December contract. We see resistance around Rs 11,000. We expect selling pressure on every rise,” it said.
Chilli
A fall in the stocks in exchange warehouses is likely to keep chilli prices firm in the short-term. The November contract could test a resistance of Rs 4,500 a quintal and if it gets past that, then it could test Rs 4,700 levels.
Comex gold futures fell from the highest in 27 years after crude oil futures declined from a record and the dollar rebounded, reducing the appeal of the precious metal as a hedge against inflation.
However, expectations that the Federal Reserve will cut interest rates again this year and weaken the dollar helped limit gold’s losses. Tremendous investment interest in gold is seen presently, with ETFs backed by bullion showing a record 594 tonnes. Gold is still expected to rise higher, as investors seek a haven from credit-market turmoil related to the collapse of sub-prime mortgages.
Comex December gold futures continues to rise in line with our expectations. The correction we expected at $773 levels did not materialise. As mentioned in the previous update, if the momentum remains strong, there is a good possibility of this current move even to test $785. In the coming week, corrective retracements, if any, would be supported near $759, $756.00 or $755. It needs to fall below $749 to change this view.
Favoured view is bullish and expects $759/755 region to cushion corrective dips. As mentioned earlier, the current rally looks set to test $780-800 levels. We believe that the third wave could have ended at $732 and the fourth wave consolidation to have ended at $665, and the fifth wave has begun with potential targets at $780 or even higher. RSI is in the highly overbought zone cautioning against aggressive longs.
The averages in MACD are still above the zero line of the indicator suggesting bullishness to be intact. Only a cross-over below the zero line will be a clear bearish sign. Therefore, expect gold futures to test the resistance levels and correct lower subsequently. Supports are at $763, 755 & 748. Resistances are at $778, 790 and 825.
Chennai: The Centre’s move to release additional quota of sugar for sale in the open market this month is likely to put further pressure on sugar prices, sagging already under a production glut, especially in November. “The Centre during the weekend released an additional 1.45 lakh tonnes under the free sale quota and this takes the quantity of sugar available for sale in the open market to 18.80 lakh tonnes. Of the additional quota release, 1.25 lakh tonnes have been allocated only for Maharashtra,” industry sources said.
Earlier, the Centre had released 16 lakh tonnes before allotting another 1.35 lakh tonnes. As per the Government norms, the Centre decides on the quantity of sugar that can be sold in the open market and through ration shops. The allocation is made month-wise in an effort to ensure that the market does not crash due to over supply. At the same time, any shortage, especially during festival periods, is also overcome through additional allocation.
Failiure to lift quota
However, this additional release is in view of one of the Centre’s nominee failing to lift the quota allocated for distribution through ration shops in time. Such failure forces mills to urge the Centre to take some measures as it creates problem of liquidity and space. This unutilised quota is converted into free sale quota and diverted to the open market.
“Prices have already crashed by Rs 7-8 a quintal in the futures and by Rs 10 in the open market,” sources said.
Spot prices for medium sugar have declined to Rs 1,410-1,505 a quintal and that for small sugar to Rs 1,355-1,406. On NCDEX, sugar for November delivery were down to Rs 1,282.
“The first allocation has to be expedited by November 4 and the second by November 18. Now, as the validity period draws near, mills, which wait for an opportune moment, will be under pressure to lift the stocks and send it to the open market.
As a result, prices during November could fall,” they said. Though there may not be a sharp fall in the prices due to festival demand, trade sources said prices could fall by Rs 20-25 a quintal.
Lack of direction
Meanwhile, Kotak Commodity Services Ltd, in a note on the sugar situation, said there was clear lack of direction in the sugar market.
“There is hardly any change in the fundamental factors. There is some demand for sugar mainly due to festive season. But this is quite normal as the demand was expected this time of the year.Any major upside in the market is unlikely,” it said.
Mumbai: Commodity markets witnessed a fantastic period with robust gains in energy and precious metals over the past week. While crude oil set fresh all-time highs, platinum was not far behind in the feat. Gold, investors' forever favourite, retested 28-year peaks.
Commodity markets witnessed a fantastic period with robust gains in energy and precious metals over the past week. While crude oil set fresh all-time highs, platinum was not far behind in the feat. Gold, investors' forever favourite, retested 28-year peaks. In some way, it was a truly momentous week for the commodities market. The golden week for the global bullion market witnessed all favourable factors in simultaneous operation.
The yellow metal prices registered multi-decade highs amid soaring crude market, geopolitical concerns and falling US dollar. As the US dollar reached fresh lows in the latter part of the week, gold was boosted to $766.20/oz and then on to a fresh multi-decade high of $770/oz.In London cash market, on Friday the PM Fix was $763/oz, marginally down from the previous day's PM Fix of $764.15/oz. On Friday, AM Fix for silver was $13.83/oz, up from previous day's $13.68/oz.
Platinum too surged to record highs ($1,451/oz) last week on report of mine closure and supply tightness. Little is expected to change in the near future as gold is widely seen to be on a relentless march towards the magical $800 an ounce mark.
Bullish Trend
Foreign exchange strategists believe the prospects for USD remain bleak. Further weakness over the next weeks can be expected.
This will prove positive for gold. Although dollar weakness, high oil prices and geopolitics continue to provide solid momentum, the buildup of speculative positions to all-time highs could expose prices to a short-term correction, warn experts.
Following widely anticipated production loss due to partial closure of some mines, platinum is set to move higher. According to technical analysts, another strong bullish weekly candle points to a resumption of the gold uptrend.
There seems to be little bearish evidence. The focus is higher towards $800 later in the year. As for platinum, the medium term target is 1600.
Base Metals
Contrasting with energy and precious metals, price movements in the base metals market were less positive.
The markets have been volatile on the back of rising stocks and concerns over the health of the US economy as also current weakness in physical market.
Lead ended the week lower by 3.9 per cent following a 10,900-tonnes rise in LME stocks to 33,450 tonnes.
Copper too fell during the week by 2.5 per cent due to general fund long liquidation, which coincided with a 10,800-tonnes rise in stocks.
Zinc dropped by 5.7 per cent for the week. Interestingly, cash aluminium prices rose by 2.3 per cent to $2,501/t over the week, while longer-dated aluminium forward prices (26-63 months delivery) fell.
The 63-month forward contract prices fell by 2.7 per cent to $2,413/t. Although the lead market continues to look tight, if recent stock rises were to continue at a fast clip, prices would come under pressure.
As for copper, the focus of analysts is lower. There could be slow drift lower, rather than a sharp descent, they said. Another interesting aspect of the commodities market is the booming prices of raw material for steel. Indian sport iron ore prices are reportedly trading at $175-180/t CIF China, up from $75/t at the start of the year.
Spot coking coal was as high as $200/t f.o.b. (Australia to India), $40/t higher than recent transactions and more than double this year's annual contract level ($98/t f.o.b. and below). Freight costs are moving up.
Crude
To a market already characterised by tightening fundamentals, when you add geopolitical concerns, there is only one direction for prices. Crude prices moved sharply up last week, breaching the psychological $90 a barrel. Gains have extended to the entire length of the forward curve. With little fundamental news coming out, there is palpable market desire to explore the upside, experts assert. The possibility of further gains remains intact. What can bring prices down? A recession the US could have surely led to a price decline; but that seems to be have been averted, at least for the time being. A relaxation of the extremely tight fundamentals can potentially lead to a pullback.
While the demand side is unlikely to relent (crude is integral to fuelling economic growth), some strong action on part of OPEC producers may help. The promised additional output of five lakh barrels a day beginning November 1 is far from adequate to meet demand. More needs to be done.
Thiruvananthapuram: India’s cashew export industry is upset over the Centre’s recent move to cut the Duty Entitlement Pass Book (DEPB) rate for cashew from 3 per cent to 1.5 per cent.
Addressing a press conference in the city, Walter D’Souza, Chairman of the Cashew Export Promotion Council of India, said that in July this year, the Commerce Ministry had announced that the DEPB rate for cashew would be 3 per cent with effect from April 1 this year to March 31 next year.
However, on October 9, the Government of India cut the DEPB rate for cashew from 3 per cent to 1.5 per cent with immediate effect, he explained. This move has come as a “rude shock” to the cashew industry, more so at a time when it is facing difficulties caused by the appreciation of the rupee against the US dollar and also stiff competition from Vietnam, he added.
According to D’Souza, the cashew industry is requesting the Centre to restore the DEPB rate for cashew to 3 per cent.
Brand creation
In an effort to create a brand for Indian cashew, the Promotion Council is testing a ‘made in India’ brand promotion strategy in the United Arab Emirates. In the first six months of this fiscal, export of cashew kernels was 57,157 tonnes as against 58,210 tonnes in the same period last year.
Kochi: Prices of most varieties of tea eased at the Kochi auction that had 11,21,000 kg on offer. Best CTC varieties were barely steady, while medium and lower grades eased by Re 1-Rs 2 as the trade progressed. Orthodox high grown and medium dust grades were steady. Blenders were active on good liquoring varieties while loose tea trade and exporters were selective.
Best CTC varieties quoted Rs 63-72, medium CTC was at Rs 48-55, while below medium ranged at Rs 30-35. High grown BOPD varieties fetched Rs 90-110, medium BOPD was at Rs 40-45, while secondaries quoted Rs 32-36.
Leaf Sale
High grown orthodox whole leaf grades were lower by Rs 3-5, while brokens eased by Re 1-Rs 2. High grown CTC were lower, while medium and plainer CTCs were barely steady to easier by Re 1. Exporters were the mainstay for orthodox leaf grades and they were selective on CTC varieties. There was 3,41,000 kg of leaf on offer.
Best Nilgiri leaf fetched Rs 83-94, medium orthodox quoted Rs 44-70, while plain orthodox was at Rs 40-42. Best CTC leaf fetched Rs 48-60 and medium CTC realised Rs 40-45.
Top Prices
Among the dust varieties, Kodanad BOPD fetched the top price at Rs 110, followed by Parkside BOPD at Rs 90, Pasuparai SFD at Rs 77, Pasuparai FD and Chinnar SFD at Rs 75.
Kochi: Cardamom prices ruled steady at the auctions held in Kerala and Tamil Nadu during the week on good buying support.
North Indian buyers were actively buying to meet their Diwali requirements. The capsules were fresh and of good quality and hence everybody, except exporters, were buying. But, since the prices were ruling high the upcountry dealers were said to be not buying to create any inventory. On the other hand, the arrivals continued to remain 30 to 35 per cent less than during the same period last year, though picking has reached its full swing. Exporters were absent as there were no orders at the current prices, trading sources told Business Line.
However, at the e-auction held at Bodinayakannur on Thursday the prices witnessed a decline. Out of the total arrivals of 30 tonnes, 27 tonnes were sold. Maximum price was Rs 480 a kg and the minimum Rs 154.50 a kg. Individual average stood at Rs 394.57. At the Kumily auction on Wednesday, conducted by the Cardamom Processing and Marketing Company (CPMC), arrivals stood at 56 tonnes and the entire quantity was sold out, P.C. Punnoose, General Manager, CPMC, said. He said that the maximum price fetched was Rs 552 a kg and the minimum Rs 280 a kg.
The individual average price was Rs 420.90.
Good colour green 8 mm capsules were fetching Rs 490 - Rs 525 a kg, while 7 mm - 8 mm Rs 450 - Rs 475 a kg. Currently bulk was being sold at Rs 425 - Rs 450 a kg.
Significantly, even the rejection variety which was being sold at Rs 130 - Rs 150 a kg was fetching Rs 350 - Rs 370 a kg.
Prices of graded varieties as on October 17, were AGEB Rs 505 - Rs 510, AGB Rs 400 - Rs 405, AGS Rs 380 - Rs 385 and AGS 1 Rs 360 - Rs 370 a kg.
Kochi: Pepper futures market on Friday declined on liquidation by October and November by position holders.
Add to this there was a feeling in the players that no fresh buying is likely to come in the coming days as the Indian pepper has become out priced. Indian parity is at $3,750-3,800 a tonne (c&f). October contract on NCDEX declined on Friday by Rs 19 a quintal to close at Rs 13,820 from Rs 13,839 on Thursday. The other contracts fell by Rs 142 to Rs 217 a quintal.
On NMCE, November contract dropped by Rs 204 a quintal to close at Rs 13,900 from Rs 14,104. The fall in other contracts was from Rs 185 to Rs 226 a quintal.
Turnover
Total turnover on NCDEX increased by 1,217 tonnes to 12,785 tonnes, while that for October and December increased by 6 per cent and 35 per cent respectively. November turn over dropped by 57 per cent. On NMCE total open interest declined by 118 tonnes to 1,523 tonnes. November position declined by 57 tonnes to 542 tonnes.
Spot prices also dropped by Rs 100 a quintal on Friday to close at Rs 13,300 (un-garbled) and Rs 13,900 (MG 1).
Visakhapatnam: The demand for fixing the minimum support price for paddy at Rs 1,000 a quintal, being voiced by different political parties in the State and several farmers’ organisations, is quite justified and the Union Government should concede it, according to Dr Y. Sivaji, a former member of the Rajya Sabha and president of the AP Tobacco Growers’ Association.
Dr Sivaji said in Guntur on Thursday that the country’s food security would be in jeopardy if the Union Government did not wake up to certain realities. The per-capita availability of food grains per day had gone down from 510.10 grams in 1991 to 463.40 grams now.
The availability of paddy has gone down from 221.7 grams to 194.5 grams. If the situation continues the government will have to import rice like wheat imports, he said.
“Similar is the situation with pulses. Therefore, keeping in view the ever increasing costs of agricultural inputs and the food security of the country, both the paddy farmers and wheat farmers should be paid Rs 1,000 a quintal. The price fixed for paddy - Rs 725 per quintal for fine variety and Rs 695 for the common variety - is grossly inadequate,” he added.
Commenting on the situation in Andhra Pradesh, Dr Sivaji said the millers in the State were exploiting farmers, who are denied a remunerative price, as there was no direct procurement.
“In several other States such as Punjab, the Government agencies procure the paddy from farmers at MSP, mill it and supply it to the FCI. In Andhra Pradesh, on the other hand, it has been private monopoly for ages and it has to be broken. The State Government agencies should procure at least 15-20 lakhs tonnes and supply it to the FCI to inject competition into the market. Otherwise, the farmer will be at the mercy of the miller,” he opined. He alleged that the millers in the State were pocketing Rs 1,000-2,000 crore every crop year.
He said the State Government was getting Rs 600 crore or so in the form of taxes and rural development cess and that should be ploughed back for the benefit of the farmers.
Dr Sivaji said that the MSP of paddy in 1994-95 was Rs 360 a quintal on a par with that of wheat. By 1997-98, the gap widened, with the MSP for paddy being fixed at Rs 415 per quintal and for wheat at Rs 510 per quintal. During 1998-99, the MSP for paddy was pegged at Rs 440 and for wheat at Rs 550 and during 2003-04 the respective prices were Rs 550 and Rs 630.
“Now the gap has widened to Rs 300 per quintal, with wheat getting Rs 1,000 a quintal and paddy only Rs 700. Considering the comparative costs of cultivation and other factors, there is no justification for such a disparity. Paddy should get the same MSP. The political parties may have their motives for voicing the demand, but the Union Government should concede keeping in view the welfare of farmers,” he pleaded.
Kochi: Pepper futures market declined marginally on Thursday under the influence of the drop in the stock market.
The market would have gone up but for the decline in the stock market, trading sources told Business Line. Brokers were saying that exporters were full and quoting Nov and Dec only. Spot is not available, they said.
Indian parity on Thursday was at $3,800-3,850 a tonne (c&f).
International market continued to remain without much activity. In Brazil growers were reportedly reluctant to sell. Limited quantity of B 1 was being offered at $3,250-3,300 a tonne (f.o.b.) Belem. B Asta was offered at $3,400-3,425 a tonne (f.o.b.) Belem.
Vietnam was steady offering 500 GL at $3,200, 550 at $3,250 and 570 GL at about $3,650 a tonne (f.o.b.). It was offering white pepper at $4,800 a tonne (f.o.b.) while Ecuador was quoting at $4,925-4,950 a tonne (c&f) New York.
Meanwhile, exporters were quoted as saying that the Brazil crop this year was likely to be below 30,000 tonne as against the earlier projections of 40,000 tonne.
Contract position
October contract on Thursday declined by Rs 8 a quintal to at Rs 13,830 a quintal. All other contracts except February dropped by Rs 6 to Rs 95 a quintal. On NMCE, November contract fell by Rs 33 a quintal to Rs 14,055.
Spot prices on Thursday remained steady at previous levels at Rs 13,400 (un-garbled) and Rs 14,000 (MG 1) a quintal.
Hyderabad: With the 10 per cent blending of ethanol with petrol norm appearing on the horizon, SISMA (South Indian Sugar Mills Association) has decided to counsel its members on tapping this opportunity.
N Nageswara Rao, the newly elected President of the association, told Business Line that the Southern states had an additional advantage of close proximity to big refineries on the East coast. Estimates put the requirement of ethanol for 10 per cent blending at 1,100 million litres and for five per cent at 550 million litres. While making five per cent blending mandatory with immediate effect, the Government last week said the bar would be raised to 10 per cent from October next.
Though SISMA has about 180 member mills, only 18-20 have the required equipment to produce ethanol from sugar cane. “The cooperative sector is beset with financial crunch to upgrade their facilities in order to produce ethanol,” he said.
The situation, however, is not bleak. “About 80 ethanol making units would come up in the next six months. Orders have been placed for the equipment. They will be on steam for the next season. Of the 80 plants, 15 would be coming up in the South,” Nageswara Rao said.
The package would also help the industry to seek carbon credits for additional income. Stating that the move came at the right time when the sugar sector was saddled with the problem of glut, he said the ethanol blending programme offered an assured and higher income.
As against an income of Rs 1,600 from a tonne of cane, sugar gives about Rs 1,200. There is a huge potential for exports too. A tonne of ethanol would give $350. The association, however, was apprehensive on the implementation of the mandate by the oil companies.
AP gets Rs 270 crore
Incidentally, the Union Government last week announced Rs 270-crore package for Andhra Pradesh for modernising five cooperative sugar factories in Visakhapatnam, Vizianagaram, Nellore and Chittoor. The funds are to be utilised for upgrading the facilities with co-generation and ethanol making features.
Chennai: The Centre on Wednesday banned import of palm group of oils through Kochi port in what is seen as an effort to help slumping coconut oil prices to recover.
Pressure on centre
The Directorate General of Foreign Trade in a notification said palm oil and its fraction, whether or not chemically modified, crude palm oil, other palm oil, RBD palm oil, RBD palmolein, other such oil, palm kernel oil besides its fraction were not permitted to be imported through Kochi port.
According to official sources, the move follows pressure on Centre to come up with measures to prop up coconut oil prices, which have dropped alarmingly in the last few months and are quoting even below RBD palmolein that is considered as the cheapest edible oil.
Replacement
For example, in January 2005 coconut oil was quoted at Rs 73 a kg, while RBD palmolein ruled at Rs 38. Currently, coconut oil is ruling at Rs 44 and palmolein at Rs 54. Due to this, vanaspati units, especially in the North, have replaced coconut oil for palm oil in the production process. Industry sources alleged that ghee was being adulterated with semi-hydrogenated coconut oil in the northern parts of the country.
Board proposal
The sources said the Coconut Development Board had last month sent a note to the Agriculture Ministry seeking ban on import of palm group oils through all southern ports. But its proposal was rejected.
Then, it sought a ban on import through Kochi port at least to which the ministry agreed.
Not keen
According to industry sources, the Centre was not keen on banning import through all southern ports in view of edible oil prices ruling firm and also due to the current festival period. “Now with arrivals of kharif oilseeds, the Centre has agreed to ban the import through Kochi port, though it has on its own nominated agencies to import edible oil,” they said.
Globally, edible oil prices have gained sharply in the last one year or so as these are now used in the production of bio-diesel. Palm oil, in particular, is popular for such use what with Malaysia itself setting up bio-diesel units that use the oil. Interest to set up bio-fuel units has increased in view of rising crude oil prices, which topped a record $88 a barrel on Tuesday before easing on Wednesday.
Production rise
According to industry sources, one of the reasons for the crash in coconut oil prices is increase in production, especially in Tamil Nadu. The ban, however, is expected to have minimal effect as the trade expects palm oil to flow into Kerala either through Mangalore or Tuticorin port.
Kochi: Pepper futures market moved up marginally at close after declining during early trading in tandem with the trend in the stock market on Wednesday.
Kerala’s Idukki district based investors were liquidating their stocks and the exporters, processors, domestic dealers and processors were buying. Nearly 80 to 90 tonnes of pepper were sold at Rs 133 to Rs 137 a kg depending upon quality, market sources told Business Line. However, unconfirmed reports said that 150 tonnes of the commodity was sold.
As expected domestic demand has picked up and it is mainly met by supplies from the primary markets.
In the international market Brazil prices are reportedly firmer and due to upward trend in local prices exporters were not offering.
B Asta was quoted at $3,500 a tonne (f.o.b.).
Sri Lanka was offering 550 GL at $3,400 a tonne (f.o.b.). Vietnam prices remained unchanged. Indian parity on Wednesday stood at $3,775 -$3,800 a tonne (f.o.b.).
Contract position
October contract on NCDEX improved by Rs 16 a quintal on Wednesday to close at Rs 13,842 from Rs 13,826 on Tuesday.
The other contracts except November and February moved up by Rs 5 to Rs 308 a quintal. November and February declined by Rs 6 and Rs 19 respectively.
Spot prices ruled steady at previous levels on Wednesday at Rs 13,400 (un-garbled) and Rs 14,000 (MG 1) a quintal.
Kochi: The cashew industry, disappointed by the Union Government’s decision to reduce the duty drawback rate, at a time when the rupee has been appreciating against the dollar, has urged the State government to take up the issue with the Union Commerce ministry.
The duty drawback rate, which has been raised to three per cent from one per cent following the steep appreciation of rupee against the dollar, has now been reduced to 1.5 per cent and at a time when the rate for textiles, coffee, tea, etc has been raised to five-eight per cent, Baby Oommen, Vice-Chairman, Cashew Export Promotion Council told Business Line. The Union Government has reduced the rates with immediate effect through a notification on October 9, he said.
He said industry was entitled to three per cent of the value of goods exported as grant from the government under this scheme.
Import cost rise
Considering this facility the industry has been importing raw nuts, cost of which has also gone up. “We keep an inventory of raw nuts for five months to keep the factories running during lean seasons”, he said.
The high cost of production of late is due to 50 per cent increase in wages of workers; appreciation of rupee resulting in a drop in value realisation; and the reduction in duty draw back rate, which has steered the industry into making losses on the export front. This phenomenon has compelled the processor exporters to market their produce in the domestic market where the prices have been ruling above the international price, so as to avoid the losses, Babu Oommen said.
Employment provider
Given the importance of this sector as a major employment provider to a large number of women belonging to the weaker section of the society both in Kerala and Tamil Nadu, the government should enhance the rate to at least five per cent, he said.
He said five lakh workers were employed in Kerala and an equal number in Tamil Nadu. Kerala’s Kollam district had the largest number with 3.5 lakh workers.
The factories in Kerala are using 90 per cent of imported raw nuts because of short supply from indigenous sources. At the national level, 50 per cent of the raw nuts requirements were met by imports, he said. The raw material price had also gone up as some of the exporting countries had resorted to market intervention exercise. Recently in Mozambique and Tanzania, the respective governments had fixed floor price for the raw nuts. Similarly, the prices in Indonesia had also gone up due to increased demand from Vietnam.
A major processor exporter in Kollam alleged that Kerala, where the cashew industry was concentrated, was being discriminated by not supporting this industry. Cut in duty draw back facility coupled with high rupee appreciation would result in the companies making losses and that in turn would force them pull down the shutters or cut down production. This would lead to loss of employment to thousands of workers, he warned.
Babu Oommen said the Cashew Export Promotion Council had taken up the issue with the State Chief Minister and the Labour Minister for initiating urgent steps to rectify the situation.
Kottayam: Though there has been a shortage of 62,000 tonnes in production during the first half of the current fiscal compared with the same period last year, there would not be any problems relating to the availability of rubber as there is excess stock, said Sajen Peter, Chairman Rubber Board.
The contagious diseases and continuing rains in the plantation areas were the major reasons for the low production.
Domestic price
Though there was fall in production, the stock at the end of September 2007 was 93,000 tonnes, which is 39,000 tonnes more than the same period last year. The Chairman was addressing a meeting of the stakeholders of the industry at Kottayam.
During April-September last year, the consumption was 4,03,980 tonnes. This year, it has increased by 3.18 per cent to 4,16,810 tonnes. During the last one or two years, the average domestic price had been ruling below the international price.
The representatives of growers and rubber dealers presented various problems created by the speculators in futures trading and such matters have been brought to the notice of the Government and the Forward Marketing Commission, the Chairman clarified.
Mumbai: Domestic gold futures were subdued till late on Tuesday evening with the yellow metal rising by Rs 37 per 10 gm from the previous day’s close, a gain of less than four basis points.
On MCX, gold futures for December delivery closed at Rs 9,663 per 10 gm on Monday and quoted at Rs 9,700 late on Tuesday evening.
In contrast, on COMEX, gold for December delivery opened on a strong note on Tuesday morning at $763.7 per troy ounce against $754. It touched a peak of $772 per troy ounce intra-day trade on October 15.
Divergent movement
Domestic spot gold closed at Rs 9,715 up Rs 65 from Monday.
Silver was quoted at $13.68 per troy ounce in the international spot market in London in early afternoon down from $13.74 per troy ounce.
The divergent price movement in the two precious metals evident for some time now continued on Tuesday’s trade as well.
The “gold-silver” ratio, a reference a phenomenon of fund houses taking positions in gold and silver in a particular format, is no longer in evidence feel analysts.
Silver ETF
In the after immediate aftermath of the launch of the Barclays Silver ETF, there was greater momentum in silver as other fund houses began to stock up on silver positions.
But with their unwinding of positions in silver it is the other way around, he added.
Kochi: Pepper futures market after witnessing wild and wide fluctuations during the day closed below Monday’s levels. The bulls and bears were seen competing to push up and pull down the prices.
There was no selling pressure on spot. Stocks at the exchanges were coming down. Nobody was ready to sell as the availability was only at the exchange. None was interested in taking short positions also.
Compared to last week, there was a lull in the domestic market demand but it is expected to pick up in the coming days as buying for Diwali would commence.
The international market witnessed no activity. Indonesia remains closed on account of Ramzan. Brazil was quoting B Asta at $3,400 a tonne (f.o.b) Belem and B-1 $3,300 a tonne (f.o.b) Belem.
Vietnam continued to remain firm with marginal fluctuations. It was offering 500 GL at $3,170 a tonne (f.o.b) and 550 GL at $3,350 (f.o.b). Indian parity was at $3,800- $3,850 a tonne (c&f).
Contract position
October contract on NCDEX on Tuesday remained unchanged at Rs 13,833 a quintal. All the contracts except December and January dropped by Rs 46 to Rs 133 a quintal. December and January moved up by Rs 104 and Rs 99 a quintal respectively.
On NMCE, October contract matured and 369 tonnes of pepper were delivered. All the other contracts fell by Rs 81 to Rs 225 a quintal.
Total turnover on NCDEX increased by 6,850 tonnes to 24,585 tonnes, while that on October, November and December moved up by 3 per cent, 76 per cent and 18 per cent respectively.
On NMCE, total turnover went up by 302 tonnes to 2,109 tonnes.
Total open interest on NCDEX moved up by 58 tonnes. October and November positions dropped by 12 per cent and 44 per cent respectively, while December went up by 32 per cent.
On NMCE, total open interest declined by 137 tonnes to 1,561 tonnes. (October matured and 369 tonne delivered.)
Spot prices ruled steady at previous levels on Tuesday at Rs 13,400 (un-garbled) and Rs 14,000 (MG 1) a quintal.
New Delhi: The Department of Fertilisers (DoF) and the Union Agriculture Ministry are looking at expanding the scope of subsidy to all fertilisers which are present in the Fertiliser Control Order (FCO).
“At the moment, the subsidy exists for only 11 complexes and three fertilisers. But both the DoF and the Agriculture Ministry want the subsidy regime to be extended to the 200 fertilisers and complexes which are a part of the FCO. This is being done to shift to the nutrient-based subsidy regime which is under the consideration of the Group of Ministers (GoM),” an official in the Department of Fertilisers told Business Line.
GoM meet
The GoM was supposed to have met on Wednesday, but it has now been postponed and is likely to meet next week.
The GoM is headed by the Agriculture Minister, Sharad Pawar, and the other members include the Finance Minister, P. Chidambaram, the Minister for Chemicals, Fertilisers and Steel, Ram Vilas Paswan, and the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia.
Currently, the subsidised fertilisers contain only the primary soil nutrients - nitrogen (N), phosphorus (P) and potassium (K). Experts say that the current subsidy regime has not only led to an overuse of the primary nutrients but has resulted in the secondary and micronutrients being neglected.
“The move will also help farmers to have the flexibility to choose the fertiliser as per the need of the crop. It will also enable them to change the fertiliser depending on the soil pattern,” the official said.
Meanwhile, the DoF will be asking the Finance Ministry for Rs 11,400 crore in the second supplement. The increase in the cost of gas and urea has pushed up the fertiliser subsidy for the current financial year to Rs 48,000 crore, of which the Government has allocated Rs 22,450 crore in the Budget and the DoF has got Rs 15,000 crore in the first supplement.
“We have sent the proposal to the Finance Ministry and we are awaiting their response,” Paswan said here on Tuesday.
The Minister also said that they expect the Rs 7,500-crore bonds that were part of the first supplement to be released in the next couple of days.
