Govt Allows FDI In Commodity Exchanges

New Delhi: The Government on Wednesday liberalised the foreign direct investment (FDI) cap across various sectors including public sector oil refineries, while allowing foreign investment in areas such as commodity exchanges and credit information companies (CICs).

In the case of petroleum refining by PSUs, the Union Cabinet has approved hiking the equity cap to 49 per cent (from the existing 26 per cent) with prior approval of the FIPB.

However, it does not envisage dilution in the existing PSUs.

Also in the case of trading and marketing of petroleum products, the Cabinet has waived-off a condition of compulsory divestment of up to 26 per cent in favour of Indian partner/public within five years.

FDI In refining

While FDI up to 100 per cent through automatic route is allowed for private companies, in the case of PSUs, there was a cap of 26 per cent. Today’s decision would ease the entry of foreign players in the refining sector in partnership with PSUs.

The move assumes significance in the backdrop of the interest envisaged by foreign companies such as Kuwait Petroleum for forging alliances with new refining projects of state owned refiners.

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FDI up to 26 per cent and the FII up to 23 per cent has been allowed in commodity exchanges subject to the condition that no single investor would hold more than five per cent.

The move is in sync with the stance of the Department of Economic Affairs that there should be separate caps within the overall cap of 49 per cent for the FDI and the FII investment at 26 per cent and 23 per cent, respectively.

Industrial parks

However, DIPP had said there was no justification for imposing separate caps on the FDI and the FII within the overall foreign investment cap.

The Cabinet also decided to exempt foreign investment in industrial parks from the provisions of Press Note 2 (2005) that stipulates conditions such as minimum capitalisation and a three-year lock in.

Similarly, in case of construction development projects, investment by registered FIIs under the portfolio investment scheme would be distinct from the FDI and outside the provisions of Press Note 2 (2005).

Besides the minimum capitalisation of $10 million for the wholly-owned subsidiaries and $5 million for joint ventures with Indian partners, the Press Note 2 specifies that original investment cannot be repatriated before a period of three years from completion of minimum capitalisation. It also stipulates other conditions such as minimum area to be developed.

Gold, Silver Prices Drop

Mumbai: Gold prices that touched Rs 12,000 per 10 gm on Tuesday came down a tad and were quoted at Rs 11,900 per 10 gm in the local bullion market on Wednesday. Gold price closed at Rs 11,785 per 10 gm on Wednesday against Rs 11,845 per 10 gm on Tuesday.

The Rs 12,000 per 10 gm mark was reached for the first time ever in the country.

Gold price in the international market touched an all time high of $927.50 an ounce on Tuesday came down to $923.75/oz on Wednesday in the London spot market.

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The gold market both international as well as national is awaiting the outcome of the FOMC meeting on Wednesday. The price should correct to about $902/oz in the event of rates remaining unchanged and should go up to $946/oz if there is a rate cut, said Suresh Hundia, President of Bombay Bullion Association.

Silver for immediate delivery in London rose as much as 12 cents to $16.84 an ounce, the highest since November 1980. It traded at $16.76 an ounce as of 11:56 a.m. local time.

NABARD Asks Ngos To Reach Out To Rural Communities

Hyderabad: The National Bank for Agriculture and Rural Development (NABARD) has asked non-governmental organisations (NGOs) to chalk out new plans in rural areas to increase incomes of farmers.

NABARD organised a meeting with about 30 NGOs here on Tuesday to familiarise them with bank’s assistance offered for developmental activities, particularly in the areas of micro credit, natural resource management and non-farm sector.

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Addressing the meeting, S. R. Aluru, Chief General Manager of bank’s regional office, asked the organisations to use their reach and help out the rural communities.

Raw Cotton Prices Rise On Slower Arrivals

Coimbatore: Raw cotton (kapas) prices across varieties have firmed up this week amidst constraints in arrivals of kapas in key markets. The price increase ranged between Rs 200 and Rs 500 per candy (356 kg) and among the varieties that saw spurting are long-staple DCH-32, V-797, J-34 from Punjab, Jayadhar, MCU-5, MECH-1/H-4 and Bengal Deshi.

Arrivals of kapas (raw cotton) turned scarce this week as anxious spinners, hamstrung with minimum cotton stocks, went into buying mode. This is believed to have stoked the price surge, according to market sources.

The slower arrivals is attributed to farmers/ginners holding on to their stocks in anticipation of higher demand in the coming weeks.

Daily arrivals of cotton have dropped to 80,000 bales (of 170 kg each) from December last week/January first week’s levels of two lakh bales a day.

Lint output may fall

According to Ashok Daga, President of Coimbatore Cotton Association, part of the price increase is on account of a lower ratio of lint to cottonseed recorded this year. As compared to the normal lint realisation at 35 per cent against seed weight of 65 per cent, this year the Bt cotton yields have revealed a higher cottonseed weight that has gone up to 67 per cent bringing down the yield of lint.

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This factor, according to Daga, is expected to bring down the overall lint production this season from the projected 310 lakh bales to around 290 lakh bales. This ratio difference has led to lint prices increasing by Rs 700 per candy.

According to Ramani, Joint Secretary, South India Cotton Association, though the international cotton prices have dropped by Rs 1,000 per candy this week, domestic cotton prices continue to remain firm partly on account of the higher holding capacity of cotton farmers who are reluctant to part with their kapas at the prevailing prices.

These farmers, having already sold 50 per cent of their produce at a seller’s market, now prefer to wait for the market to go up before they offload their remaining stocks. The higher kapas yield recorded by farmers especially in Punjab and Gujarat this season has enabled cotton growers in these tracts to hold back their stocks. Sizeable volume of cotton exported also gave the pep to the domestic raw cotton market in keeping prices firm.

Spices Export Cannot Be Separated From Domestic Sales

Mumbai: Exports have without doubt been an important and integral part of our country’s spices sector, but the burgeoning domestic market cannot be lost sight of by staying overly dependent on overseas markets.

“In the years ahead, as the Indian market matures, we can no longer separate exports from domestic sales,” said Jairam Ramesh, Union Minister of State for Commerce. In the course of his inaugural address to the 400-strong gathering of delegates (including 150 from abroad) at the World Spice Congress in Goa early this week, the minister expressed confidence that spices export would be able to reach a $10 billion target in 10 years. Commending the Spices Board for setting up a new company Flavourit Spices Trading Limited for promoting professional marketing and value-addition, he said substantial investments would be made to develop and promote this brand both in domestic and international markets. Hinting at immense opportunities for promoting spices production in non-traditional areas (spices have historically been perceived as Kerala-centric), Ramesh said the north-east provided a wonderful natural zone for organic spices; and public-private partnership was the way forward to explore the opportunity.

The minister exhorted the industry to utilise traditional knowledge about the therapeutic values of spices to commercial products like anti-oxidants and anti-microbials. Sound science should inform consumption of spices. International participation is invited in the plan to set up an Indian Institute of Spice Technology, he said.

In his welcome speech the Spices Board Chairman, V. J. Kurian, expressed optimism that the country’s spices exports would reach the landmark figure of $1 billion (about Rs 4,000 crore) in fiscal 2007-08. He reaffirmed Spices Board’s commitment to quality and technology, the drivers of growth.

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“Let me assure you that food safety is at the top of our agenda,” he said. He referred to various initiatives taken by the Board to promote the sector, like setting up of ‘spices park’ etc.

The two-day conference had Indian and international experts exchanging notes on a wide variety of topics including harmonization of food laws, analytical methods, food legislation in India, global food sector growth trends and related issues.

Current and emerging issues such as research priorities to fight global warming that are likely to impact the spices sector were discussed.

India Exploring Wheat Import Options

Mumbai: The global commodity markets are currently in a state of uncertainty. Prices remain volatile and outlook has turned increasingly uncertain in the backdrop of broader market concerns, especially in financial and energy markets. The global grains market is no exception. Wheat and soyabean prices spiked recently on the futures bourses to set new records. Corn (maize) too is tightening.

Investors are increasingly turning to agricultural commodities. The next 2-3 months are crucial. From now on, the focus of the global grains market participants would increasingly be on developments in the US. How the US farmers would respond to price changes in recent months, what would be their planting intentions and what considerations would weigh with them for any change in acreage allocation (including weather and disease outlook) are questions that would be pondered over.

The focus would also be on the northern hemisphere as a whole, with outcomes of crops in China and India being keenly watched. As far as the US is concerned, if the extent of price rally is the basis of decision by the farmers there, then wheat stands the best chance of an area expansion, followed by soyabean. Corn would be third in priority as its prices rallied less than the other two.

Volatility hook

However, until acreage numbers crystallise, the market would only be double-guessing the actual outcome. Therefore, a lot more choppy trading and volatility can be expected. According to the London-based International Grains Council (IGC), on current reckoning, the 2008 outlook for wheat is generally positive. Assuming reasonable weather in main producing areas, world wheat output is forecast to rebound by about 40 million tonnes (mt) to a record 642 mt.

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There is also strong expectation that soyabean production in 2008 would rebound by at least 10 per cent, especially in the US, from the previous year’s low of 70 mt (down 16 mt from 2006). Should that expectation materialize, and if combined with large oilseeds crop in China and India, the outcome will have price implications for the global vegetable oil market, notwithstanding the frenzy created by the bio-diesel sector.

Scouting for wheat

Meanwhile, there are reports about Indian wheat acreage having reached close to last year’s levels (27 million hectares). Official statements suggest expectation of crop size close to 2007 level of 75 mt. There are also reported statements that India would not need to import any more wheat.

Despite the brave assertions, it is believed that India is seriously scouting for wheat in the global market. The Government may be unwilling to take a chance as far as availability and prices are concerned, especially when elections are looming large.

Explorations are going on rather quietly because of the ruckus the last import contract created. The Government is currently engaged in examining various options. A barter deal with Russia is being studied. Exercising the ‘call option’ is another step that is under contemplation, although the last time it fizzled out.

Discussions with US

Importantly, discussions with even the US are currently on for wheat imports. It maybe recalled, the US could not supply to India because the latter refused to loosen the strict phyto-sanitary requirements. Meanwhile, the domestic trade has other ideas about the crop size.

Gold Prices Touch All-Time High

Mumbai: Gold prices on Tuesday shot up to an all-time high of Rs 11,825 on the bullion market on fresh buying by stockists triggered by a sharp rise in New York amid anticipation of another interest rate cut by the US Federal Reserve.

Gold futures touched fresh highs on Monday in New York on support from weak dollar, stronger crude and equities, supply disruptions and options-related buying, a dealer said.

Nearby January gold rose $16.60 to settle at $927.10, an all-time front-month high on the Comex division of the New York Mercantile Exchange. Most-active April gold jumped $16.60 to $932.80 after reaching a new high of $935.40.

Silver also hit new peak. Comex March silver settled at $16.75 an ounce, up 26 cents, after hitting a contract high of $16.795.

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In the local market, standard gold (99.5 purity) resumed higher by Rs 115 per 10 gram at Rs 11,825 from the yesterday's close of Rs 11,710. Pure gold (99.9 purity) also firmed up to Rs 11,880 from Rs 11,760.

Silver ready (.999 fineness) also opened strong above Rs 21,000-mark after more than 20 months to Rs 21,060 per kg from Rs 20,880 previously.

Tea Shipments Through Amingaon Likely To Continue

Kolkata: Tea shipments through the Amingaon (Guwahati) inland container depot (ICD) will continue till March, in keeping with the trend observed last year, according to various agencies involved in shipments. Till a couple of years ago, the shipments used to come to an end in end January/early February. The ICD shipments will continue till March because many buyers would like to stagger their buying according to the market demand, instead of taking delivery early and spending on warehousing. A leading tea exporter says he has still two million kg to export in the next two months.

Marginally higher

The size of the ICD shipment this year, according to tea industry sources, will not be less than last year’s throughput of about 2,600 TEUs. The throughput could be even marginally higher this year than that in 2006-07, it is pointed out. This will happen because the supply from Kenya has become uncertain in view of the disturbed condition there. In Sri Lanka too, the situation, it is reported, is not all that favourable due to many reasons. Also, the prices of Sri Lankan teas, mostly orthodox, are high.

However, the shipping lines and the railways, which are the partners in ICD shipments, do not share the same kind of optimism. In their opinion, the shipments this year could be a little less than last year as is evident from the trend so far – 2,139 TEUs till the end of January this year as compared to 2,371 TEUs in the same period of last year. The country’s overall exports are less than last year for various reasons – lower production, high domestic demand and appreciation of the rupee vis-À-vis US dollar.

Another interesting feature of this year’s ICD shipment has been the rise in shipments to non-UK/Continent destinations – 1,189 TEUs so far. Last year, total shipments to non-UK ports were 1,330 TEUs.

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With some of the major blenders such as Unilever having set up its blending facility in Jebel Ali, large quantities of tea which would otherwise have gone to the UK/Continent are now first going to the UAE for blending.

Meanwhile, the movement out of Amingaon ICD so far this year are 2,064 TEUs of domestic rakes and 654 TEUs of Kolkata-bound rakes, according to Concor sources.

Traders Expect Gold Prices To Continue Rising

Hyderabad: Gold continues to hit new highs. On Tuesday, the price of standard gold was Rs 11,895 per 10 gram in the Mumbai bullion market, adversely impacting sales in the commodity in the local market.

Traders expect that it will further increase and rule in the range of Rs 12,000-12,500 by March. The price of gold was at Rs 8,850 in January 2007.

“The slowdown in the US economy, increase in crude prices, and stagnant mining have resulted in the sudden spurt in gold prices,” M.L. Gupta, Vice-President of Twin Cities Jewellers Association, told Business Line.

Safe option

“The fluctuations in the global economy have led investors to look at precious metals as a safe investment option. This has led to the growth. We expect this will further grow in the next few weeks and reach Rs 12,500 in March,” Gupta, who promotes Mussadilal Jewellers Exporters, said.

“Recession and sub-prime crisis in the US made the investors and equity funds opt for heavy buying into gold. The European Banks, which used to sell gold, also reduced the volumes,” Mahabaleshwar, President of Andhra Pradesh Bullion Importers’ Association, said.

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Stoppage of a mine in South Africa due to power shortage contributed to the problem as well.

Impact

Consumers have put off their plans to buy gold and jewellery, unless it is necessary. “They are buying only when there is a wedding round the corner. They are waiting for the price to come down,” he said.

With the wedding season approaching, traders are expecting an increase in sales in the next few weeks.

Pepper Futures Rise On Buying Support

Kochi: Pepper futures market on Tuesday moved up on good buying support. Speculatively, futures market was down and now it has corrected itself, market sources told Business Line.

Exporters having earlier commitments and investors were buying.

What ever quantity arrived at the terminal market which is almost half of what used to arrive normally at this time in the previous seasons, is easily absorbed, they said.

Even after the harvesting has picked up to full swing there has not been any selling pressure so far.

It appears that the growers who had liquidated their stock earlier when the prices were ruling high are replenishing their stock.

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Some dealers are, even, apprehensive of a fall in the production more than what was projected earlier, they said.

Not much offering from other origins also. Brazil continues to offer at $3,600 a tonne (f.o.b.).

Indonesian market is closed. Indian parity remained above $3,900 a tonne (c&f).

Spot market ruled steady.

CONTRACT POSITION

February contract on NCDEX moved up by Rs 164 a quintal on Tuesday to Rs 14,555.

The increase in other contracts was from Rs 92 to Rs 191 a quintal.

On NMCE, February contract went up by Rs 104 a quintal to Rs 14,360.

The increase in other contracts except May and June was from Rs 46 to Rs 134 a quintal, while May and June dropped by Rs 83 and Rs 91 respectively.

Turnover

Total turnover on NCDEX fell by 4,403 tonnes to 8,936 tonnes, while on NMCE it declined by 640 tonnes to 887 tonnes.

Open position

Total open interest on NCDEX dropped by 197 tonnes to 22,592 tonnes.

February and March positions dropped by 19 per cent and 62 per cent respectively. April moved up by 14 per cent.

On NMCE, total open interest declined by 50 tonnes to 1,644 tonnes.

Spot prices

Spot prices ruled steady at Monday’s levels at Rs 13,600 (un-garbled) and Rs 14,200 (MG 1) a quintal.

Red Revolution On In Mahabaleshwar

Pune: Many decades after the British introduced strawberry cultivation in the Mahabaleshwar- Panchgani belt, near Pune, an initiative to sell the fruit in European markets on an experimental basis last year has led to the first firm export order of 300 tonnes this season.

In early January, Hubli-based Ken Agritech India Ltd entered into an agreement with Sriram Fruit Processing Co-op Society, Mahabaleshwar to source the fruit for export. The overseas marketing will be done by Belgian company Jobrex N V that holds a stake in Ken Agritech.

Lack of IQF

According to Vivek Naik, Managing Director, Ken Agritech, while the export order augurs well for Indian strawberry, the export potential is much higher at 3000 tonnes per season. The primary limitation in moving toward this figure is the lack of Individual Quick Freezing (IQF), which essential to tap the overseas markets, he says.

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To overcome at least this stumbling block, Ken Agritech is investing Rs 10 crore in setting up Tropicool Fruits Pvt Limited, a large IQF facility at Hubli, in association with ITC. It is also planning to invest in setting up an in-field cold chain and has already undertaken the task of improving the quality and yield.

“Currently the yield is around 6-7 tonnes an acre that can be raised to 11 tonnes. We are helping farmers to adopt better farming practices including the use of approved pesticides, and are moving towards Eurogap by next year,” Naik said, adding that they are already implementing farmer history records from last year itself.

More area

On their part, the 850 small farmers who comprise the All India Strawberry Growers Association have been galvanized into action on account of growing demand from both overseas and the domestic market.

Kisan Bhilare, Chairman, Sriram Society, revealed that the area under cultivation is up 30 per cent from 1,500 acres last year to 2,000 acres this year, and the yield expected is 15,000 tonnes from last year’s 10,000 tonnes. The season typically lasts from November to March/April.

Local demand

The local produce not only is lapped up by companies like Reliance Fresh, active marketing by members of the producing farmer has helped it find its way into malls in Bangalore, Hyderabad and Pune. “Every family has one brother producing strawberry, and the other is marketing it. Our young men are no longer going to cities for work,” Bhilare said. Clearly, there’s another red revolution in the making and this time it’s happening at Mahabaleshwar.

Spot Rubber Stays Steady

Kottayam: The physical rubber rates were steady despite an all-round decline in domestic and global futures. RSS 4 closed unchanged at Rs 94 a kg at Kottayam but the grade slipped by 25 paise to Rs 93.75 a kg at Kochi. The market managed to sustain at the quoted levels since there has been no selling pressure in the main marketing centres, sources said.

“The peak production season has not shown any considerable increase in production may be due to weather related reasons. I am getting only 7 sheets as against the usual 21 that too in alternate days,” Panoose, a grower told Business Line. RSS 3 weakened at its February futures to ¥276.9 (Rs 102.45) from ¥277.8 a kg at TOCOM. It was almost steady at Rs 102.62 (102.60) a kg at Bangkok spot.

Futures decline

The rubber futures moved ahead the global trend quoting the March contract at Rs 95.35 (96.94) a kg on MCX. The February futures fell sharply to Rs 93.80 (95.42), March to Rs 95.33 (97.28), April to Rs 97.50 (99.29) and May to Rs 99.41 (101.44) per kg on NMCE. The volumes totalled 788 (678) tonnes transacting 278 (280) tonnes in February, 343 (227) tonnes in March, 123 (106) tonnes in April and 44 (65) tonnes in May.

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Spot prices were (Rs/kg): RSS-4: 94 (94); RSS-5: 91.50 (92); ungraded: 90 (90); ISNR 20: 90.75 (90.75) and latex 60 per cent: 59 (59).

Soya Futures Decline On Profit Booking

Mumbai: Soybean futures on NCDEX fell 2.07 per cent to Rs 2,034 per quintal on profit booking coupled with weak international markets.

Maize prices fell 1.47 per cent to Rs 769 per quintal on lack of demand in the spot markets due to outbreak of bird flu. Spot price in Delhi fell from Rs 1,000 per quintal to R 850 levels last week.

Guarseed dropped 1.05 per cent to Rs 1,796 per quintal on higher inventories at NCDEX accredited warehouses. After trading firm in the morning session, chana futures fell 1.05 per cent to Rs 2,265 per quintal.

Turmeric firm

Cocud recovered by 0.48 per cent to Rs 418 per quintal on strong spot markets. Turmeric prices traded on firm note and edged up by0.42 per cent to Rs 2,895 per quintal on fresh buying interest.

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On MCX, menth fell by 2.06 per cent to Rs 446 per kg on long liquidation. Cardamom shed 1.28 per cent at Rs 694 per kg on profit taking after the recent rally. Potato fell marginally profit taking after two week’s rally.

MCX recorded a turnover of Rs 4,621 crore up to 5 pm, while in NCDEX it was Rs 2,013 core.

Pepper Futures Continue To Decline

Kochi: Pepper futures market on Monday declined on bearish activities and reported arrival of imported material from Indonesia contracted earlier under advance licence.

Investors were selling futures and buying exchange delivered material while processor-dealers were covering from the primary markets. Indian parity continues to remain competitive. Indonesia, though have limited stocks, was offering at Indian parity levels. Brazil continues to remain the cheapest source at $3,600 a tonne (f.o.b.).

CONTRACT POSITION

February contract on NCDEX dropped by Rs 138 a quintal on Monday to close at Rs 14,381.

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The fall in other contracts was from Rs 133 to Rs 271 a quintal. On NMCE, February contract fell by Rs 180 a quintal to Rs 14,230. Spot prices also in tandem with the futures market trend declined by Rs 100 a quintal on Monday to close at Rs 13,600 (un-garbled) and Rs 14,200 (MG 1).

Chilli May Be Range-Bound In Short To Medium Term

Mumbai: Chilli for March delivery on NCDEX is expected to trade range-bound in the short to medium term under a weak undertone.

Stockists are now clearing inventories before new arrival begins early next month.

Chilli production in 2007-08 is expected to be around 13.5 lakh tonnes against 11.5 lt logged last year.

“High spot prices in first quarter of 2007 prompted many farmers to take up chilli cultivation in large scale,” said Harish Galipalli, Head of research, Karvy Commodities.

Andhra Pradesh output

Andhra Pradesh contributes 53 per cent of the total chilli output followed by Karnataka - 9 per cent, Orissa and West Bengal - 6 per cent, Maharashtra - 5 per cent and Madhya Pradesh - 4 per cent. Other States total the balance.

In Andhra Pradesh, Guntur alone contributes 30 per cent of the State’s output, followed by Warangal, Khammam, Krishna and Prakasam.

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According to trade estimates, production in 2008 is expected to be higher by 10-15 per cent in Andhra Pradesh and 50 per cent more in Madhya Pradesh. Favourable weather and higher yields are said to be the major reasons for a bumper crop this year.

Global output

Global chilli output is about 40 lakh tonnes a year. With India expected to reap a bumper crop this year, exports are anticipated to touch a new high.

Spice Board of India estimates say export may touch an all time high of 1.9 lt in 2007-08, up by 28.3 per cent against 1.48 lt (Rs 807 crore) shipped last year.

Chilli exports account for 48 per cent in terms of quantity and 28 per cent of the total export of spices from India.

India share

Last year, India accounted for 26 per cent of the global production, followed by China, Pakistan, Morocco, Mexico and Turkey.

Malaysia is the largest buyer of Indian chilli. About 29 per cent of the total export is to Malaysia, followed by Bangladesh 19 per cent, Sri Lanka 15 per cent and US 9 per cent, UAE 8 per cent and others 19 per cent.

China, also a major producer, imported over 900 tonnes from India in 2006-07 due to crop damage.

Sabmiller Promoting Barley Farming

New Delhi: SABMiller India, a leading brewer with brands such as Foster’s, has roped in nearly 6,000 farmers across 13,000 acres for contract farming of barley. Besides crop improvement, the move by the brewing major is aimed at strengthening its backward integrations.

“Barley, a critical component for the beer industry, has always been an orphan crop in India. We started this exercise not just for backward linkages but also to create a good quality yield,” SABMiller Director for Corporate Affairs, Sundeep Kumar, told Business Line.

Growth trajectory

Observing that the market for beer in India is on a growth trajectory with a CAGR of 15-18 per cent annually, he said the demand for malting barley is gaining ground.

“We believe that the increased beer production has a potential to benefit over 10 lakh farmers. The total barley production in India stands at 1.25 million tonnes, out of which 0.35 million tonnes is used for malt and only 0.20 million tonnes is used by the beer industry,” he said.

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SABMiller which started contract-farming under the Saanjhi Unnati project said the main aim is to increase the area under barley cultivations. The project has been initiated in arid regions of Rajasthan and Haryana. A lot of emphasis is also given to the upgradation of quality so that it is suitable for brewing.

While the per capita consumption in India is still low at one hectare as compared to the global average of 22, Kumar said barley produced in India is largely coarse and feed-grade resulting in poor quality with variable kernel size and high moisture content. “It is not a priority crop for farmers who get yields as low as 1.1 tonne per acre and don’t get a fair deal in terms of pricing,” he said.

The project’s activities include farmer education, soil testing, agronomic advice. This is done through innovative seeds-on-wheels campaign and establishment of social entrepreneurial units, he noted.

Consolidation

On the corporate front, the company is also looking to consolidate its presence in the market. SABMiller has a market share of around 37 per cent, which makes it the second largest player in the market. “We will be consolidating our presence by focussing on all our brand offerings,” he added. SABMiller’s brand portfolio includes Royal Challenge, Haywards 5000 and Castle Lager.

Good Demand For CTC Offerings

Kolkata: Last week, the CTC offerings at the North Indian auction centres in Kolkata, Siliguri and Guwahati met with good demand, with prices closely following the quality, according to J Thomas & Company Pvt Ltd, tea auctioneers.

Selected cleaner better sorts were around last week’s levels, while the remainder were on an easier trend following the decline in quality. There were good inquiries from major blenders and other domestic segments, while exporters were very selective.

Orthodox teas

Orthodox teas also met with good demand. Whole leaf grades tended lower while brokens and fannings were last and irregularly lower. The support from the CIS and West Asian shippers was fair with fannings meeting with inquiry from the major blender.

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Darjeeling whole leaf grades were readily absorbed while brokens and fannings were irregularly lower. Local dealers were the mainstay of the market with some support from a major packeteer. Exporters were selective.

CROP & OFFERINGS

Arrivals at the auction centres are showing a sharp weekly decline following the closure of the growing season in North India.

The demand at Mombasa auctions continued to be strong with all sorts appreciating substantially following strong support from the shippers from Pakistan, Egypt, Kazakhstan, Yemen and West Asia.

The Colombo market witnessed an easier trend following heavy arrivals. Traditional export markets were active.

Indian Pepper Turns Competitive

Kochi: Pepper futures market witnessed a sharp fall during the week, resulting in the Indian parity becoming competitive with other origins at $3,900-3,950 a tonne (c&f).

However, Brazil is currently offering lower at $3,600 a tonne (fob) and is reportedly drawing buyers from the world market. In such a scenario, all available stock in that country would dry up soon, market sources here told Business Line.

According to them, until the Vietnam new crop arrives in the world market India is expected to remain the only available source and, therefore, those who have to cover for the first quarter of the year might turn towards the country. Enquiries from Europe were floating last week.

Though harvesting has begun in India, arrivals were half of what was normally seen during this period in the past and indicates tight supply position. Domestic demand continues to be good and much of it is being covered directly from the primary markets.

All futures contracts on the exchanges fell sharply during the week. On NCDEX the drop was from Rs 776 to Rs 976 a quintal. On NMCE the fall was from Rs 550 to Rs 670 a quintal.

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Total turnover on NCDEX also fell sharply by 29,796 tonnes to 79,659 tonnes during the week while on NMCE it dropped by 3,302 tonnes to 9,301 tonnes.

Total open interest on NCDEX fell by 2,026 tonnes to 23,048 tonnes. February and March positions declined by 1,814 tonnes and 356 tonnes respectively, while April position moved up by 86 tonnes. However, on NMCE it moved up by 89 tonnes to 1,724 tonnes.

Spot prices, in tandem with the futures market trend, dropped by Rs 300 a quintal to close at Rs 13,700 (un-garbled) and Rs 14,300 (MG 1) on Saturday.

IPC Report

According to the International Pepper Community (IPC) report for the week, situation in the source markets showed a mixed trend. In India, market for black pepper was corrected due to selling pressure in the spot market coupled with lack of overseas demand.

Buyers in the world market were in a wait-and-see mode. The situation has dampened market sentiments. Pepper futures in India showed a declining trend this week after moving up during the past couple of weeks. At Kochi, prices of pepper on average have declined around 1-2 per cent from last week. It is reported that local prices in Lampung have risen to around 30,000 Indonesian rupiah per kg and for Lampung ASTA offered at around $3,750-3,800 a tonne (f.o.b.). In Sri Lanka, pepper prices in growing areas increased by 4 per cent this week.

WHITE PEPPER

The market for white pepper continued to firm up. In Bangka, price of Muntok white increased by 3 per cent. In Hainan, white pepper price at local market stayed at $4,582 a tonne and $4,718 a tonne (FOB). In Europe, the price also increased by 2 per cent.

Gold May Seek Further Highs On Investor Interest

Chennai: Last week, gold saw its roller-coaster ride, which we have been witnessing since the beginning of the year, take it to a new peak of $923.40 a troy ounce. The yellow metal was spurred by a power shortage in South African mines, including some of the world’s biggest. Power shortage affected production for at least two days in succession.

What next for gold? Certainly $1,000 an ounce is not far away and there are valid reasons for gold to top that level. Primary, of course, is the shape of things in the US. The Fed may have come up with an interest rate cut and could be up with another in the next few weeks, but things aren’t as the Fed Chairman, Ben Bernanke, would like us to believe.

According to Antal E. Fekete of Gold Standard University Live, the US is on its way to financial annihilation.

“Confidence in the system is gone, and banks no longer trust other banks. Irredeemable promises can only be redeemed by issuing more irredeemable promises. In such a system, the erosion of confidence cannot be checked. Investors must salvage their capital from the moribund international monetary system and invest in gold,” he says.

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Investing in gold helps transfer one’s capital to safety. The value of gold is more stable than the value of any non-monetary commodity, according to Fekete.

As we have pointed out in these columns before, investors, particularly abroad, would be trying to seek physical gold and try to convert their paper values into gold. This is because the dollar is under pressure, though the US currency is putting up resistance now and then supported by the bond market.

Profit-taking

If the gold market witnessed a fall earlier this month, it could be attributed to profit-taking and even sale by some central banks. But analysts feel once that gets over, gold is headed only one way, up. In fact, the rebound has seen it only seek higher levels as it was witnessed last week.

Gold, according to Fekete, isn’t moving on supply-demand fundamentals and speculators in the market aren’t interest in it either.

Profit-taking could rear its head in the gold market now and then; but it is certain to dry and lead gold to further highs. What will be its peak or when will the bull run is anybody’s guess.

Analysts feel that once profit-taking slows or dies down, gold could witness backwardation wherein spot prices will be higher than futures. That could also end contango or the situation where forward prices of long term futures are higher nearer ones.

Buying strategy

The strategy, therefore, for investors in bullion could be to buy at every dips. Silver, too, is set to keep following gold and a school of analysts even feels that silver could turn out to be a more profitable investment this year than the yellow metal.

On the other hand, worry of recession in the US is all set to keep the base metals choppy. But the problems caused by rains in South Australia, where a couple of coal mines have declared force majeure, should see coal prices rising in the short term.

Make Credit Available To Farmers At 4%

New Delhi: The CPI (M) leader and Member of Parliament, Sitaram Yechury, on Sunday sought making available institutional credit at 4 per cent to farmers and a review of minimum support prices (MSP) for wheat and paddy.

Speaking after releasing a study of the Associated Chambers of Commerce and Industry of India on ‘Agricultural scenario: Agenda for farmers prosperity,’ Yechury also called for a revamp of the public distribution system and a substantial hike in public investment in the agriculture sector.

He also called for an immediate ban on commodity futures trading in agricultural products.

A statement issued by the chamber said that Yechury was of the opinion that the MSP for wheat should be Rs 1,250 per quintal, while that of paddy be Rs 1,000 per quintal.

This, he felt, would ensure that farmers got remunerative prices for their produce.

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Pointing out that the Government had already agreed to pay between Rs 1,200 and Rs 1,600 per quintal more for wheat imports, Yechury said the Government is still paying about Rs 1,000 per quintal to procure wheat from farmers.

Therefore, there was logic in increasing the MSP for wheat and paddy.

Futures trading

Calling for a ban on futures trading in essential agricultural commodities, Yechury said this was necessary as this promotes speculative trading which, in turn, results in prices of essential agricultural commodities shooting up.

On the Government’s proposal to increase the price of petroleum products, Yechury said the Left would oppose such a move and suggested that the Government first cut excise and other taxes on crude oil and extend the benefits of ad valorem duty to oil company to offset their losses.

Meanwhile, the Assocham study calls for setting up of agricultural clinics, which would test the soil and devise techniques for water management to ensure better yields for farmers in over 500 districts.

Funding for the suggested clinic should be drawn from all fertilizer, seeds and pesticide companies in equal proportion. The proposed clinics should motivate farmers to make value-additions to their agricultural and horticultural products.

US To Support Nilgiri Speciality Teas

Coonoor: The USA has assured its support to speciality teas from the Nilgiris considering their quality.

“We are comfortable dealing with India. Having seen for the first time how quality teas are manufactured in the Nilgiris, I will spread the message to tea traders in the US. We are impressed by the long tradition of Indian teas, spanning a period of 200 years. More and more tea rooms are now taking to Indian teas. The Nilgiris tea has not been all that popular with us compared to Darjeeling or Assam, but I will explain to the traders back home the superior quality of these teas,” said Joseph P. Simrany, President, Tea Association of the US.

Speciality teas

Launching the Glendale Speciality Tea retail packs at Glendale Estate in Coonoor he recalled how some of these teas had created records in the US by fetching $600 a kg. “This shows that there is support for quality supplies. We wish that you fetch more such prices in the days to come,” said Simrany who is also President of US Speciality Tea Institute and the Tea Council of USA.

His wife, Carol Simrany, received the first basket of Glendale Speciality Tea packs in the presence of Ali R. Rizvi, Director of Tea Promotion, London.

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Hailing the quality of these teas, R.D. Nazeem, Executive Director, Tea Board, said he had taken it up with the authorities of the Guinness Book of Records to give an entry to Glendale Tea on its having fetched the highest price of $600 a kg.

Glenworth prospects

K. Gopalakrishnan, Director, Glenworth Estate Ltd, which owns Glendale Estate, said that although the company produced some 1.5 million kgs annually, 75 per cent of it was exported. “But, the packs we are launching today are orthodox teas for the home segment in India, which will give the Indian consumers an opportunity to taste speciality teas. These come in vacuum packaging,” he said.

Short Covering Props Up Raw Cotton

Mumbai: Kapas khali (raw cotton) futures topped the list of gainers on NCDEX as the prices bounced back from previous losses on short covering. It gained 1.64 per cent to Rs 414 per 50 kg.

Rapeseed/mustad futures went up 1.15 per cent to Rs 483 per 20 kg on profit booking after the recent fall supported by strong fundamental like fall in production of mustard seed to 5.6-5.8 million tonnes from 6.02 million tonnes produced last year.

Chana prices rose 0.84 per cent to Rs 2,291 per quintal as retailers bought at lower levels. Guarseed was up marginally by 0.78 per cent to Rs 1,808 per quintal as the arrivals eased in the spot market coupled with robust export demand.

Barley drops

Barley settled down 1.5 per cent at Rs 983 per quintal on profit taking. Maize tumbled 1.27 per cent to Rs 778 per quintal on increased selling pressure after the recent bird flu outbreak in West Bengal. Maize is largely consumed in poultry feed industry.

Jeera was down 0.56 per cent to Rs 10,265 per quintal on increase in arrival pressure and weak sentiment in the Unjaha spot markets. Sugar futures continued its downward trend following UP government’s deadline for payment of cane arrears. It closed 0.48 per cent down at Rs 1,466 per quintal.

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On MCX, mentha oil surged 2.24 per cent to Rs 447 per kg on rising domestic demand from stockiest coupled with short covering after the recent fall in prices. Khapas khali futures edged up 1.13 per cent to settle at Rs 384 per 20 kg.

MCX recorded a turnover of Rs 5,594 crore up to 5 pm on Thursday, while it was Rs 2,095 crore.

TN Chamber Urges Ban On Edible Oil Exports, Online Trading

Madurai: The Tamil Nadu Chamber of Commerce and Industry has urged the Union Government to ban the export of edible oil, edible oil seeds and online trading of edible oil to contain the soaring prices of edible oil.

A delegation of the Chamber led by its President, S. Rethinavelu, accompanied by the Member of Parliament, Mohan, that met the Union Minister of State for Commerce, Jairam Ramesh, at New Delhi recently and submitted a detailed memorandum on steps to be taken to bring down the prices of edible oil, pointed out to the consistent upward trend in the international prices of crude edible oil, especially the crude sunflower oil in particular surging over 100 per cent on imported CIF value.

With domestic production per annum around 65 lakh tonnes only, the country is forced to import a sizable quantity of edible oil to meet the requirements that are mostly in crude form.

Exports

Against the backdrop of growing imports, situations have emerged in which speculative forces corner supplies in bulk and export the same.

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Already, more than 25,000 tonnes of groundnut oil have been exported in the last three months. The continuous purchasing against export contracts fixed at high international rates acts as a catalyst for further price increases even during the peak harvesting season.

“It is strange and ironical that while we are facing an acute shortage of edible oil on the one hand, exports are undertaken silently on the other hand without any let up or control.”

Cabinet Clears Changes To Forward Contracts Act

New Delhi: The Union Cabinet, on Thursday, approved the promulgation of an ordinance amending the Forward Contracts (Regulation) Act, 1952, paving the way for greater autonomy for the commodities market regulator, Forward Markets Commission (FMC).

The ordinance - which will eventually have to be endorsed by the Parliament through a Bill expected in the coming Budget session - also amends the definition of ‘forward contract’ to include ‘commodity derivatives’. As of now, the definition of what can be traded in commodity futures exchanges covers only ‘goods’ that are physically deliverable.

Implications

Once the definition is extended to ‘derivatives’, it will enable the exchanges to trade in commodity options, index futures, weather derivatives, carbon credits and other such intangibles that are not physically deliverable. Holders of options contracts, unlike futures, have the right but no obligation to deliver or buy the underlying goods on the settlement date. Parties to a futures contract, on the other hand, are necessarily obliged to fulfil the contract on the specified date of delivery.

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“While the ordinance enables trading in commodity-related intangibles, it leaves the decision of allowing particular exchanges to launch options, commodity indices and similar derivative contracts to FMC. The latter’s concurrence is necessary before NCDEX or MCX can trade in these contracts,” a Department of Consumer Affairs official clarified.

Empowering the regulator

As far as empowering the commodities regulator is concerned, the ordinance provides for an increase in the number of its members from the current four to nine, with up to three whole-time members and a chairman. It bars the future employment of FMC members with any person dealing with the commodity market or intermediary under the FCR Act. Moreover, the FMC will have the freedom to recruit its own officers and employees, levy fees and impose penalties on traders and intermediaries, and undertake search and seizure operations.

To ensure greater autonomy and independence to the regulator, the ordinance also permits all fees and other receivables (barring penalties) to be credited to the FMC General Fund. This Fund will be used to manage the affairs of the Commission. Also, the Securities Appellate Tribunal (SAT) will be designated as the ‘appellate tribunal’ for the purposes of the FCR Act. Appeals against the FMC’s orders will go to the SAT and from there to the Supreme Court.

Impending Budget session

The timing of the current ordinance is significant, given that the Budget session is barely a few weeks away.

Also, the Abhijit Sen Committee is yet to submit its report, recommending whether or nor futures trading in wheat and rice is to be resumed after a ban imposed early last year.

FMC Ordinance May Build Investor Confidence

Mumbai: The Union Cabinet’s decision to issue an ordinance to give autonomy to the Forward Markets Commission (FMC) is seen as a move that will help build the confidence of investors - be it investment or mutual funds, financial institutions or small traders.

“It is a positive signal to the commodities market that could now witness broad-based participation of players who matter rather than a handful of speculators,” said an official with a commodities advisory firm.

Indication

The move on ordinance is a silver lining to the commodity markets that would pave way for “progression towards a more mature market. Although we are long way to go, the ordinance would change the face of Indian commodity markets as it gives more power to the regulator FMC,” said Si. Kannan, Associate Vice-President of Kotak Commodity Services Ltd.

Enabling growth

According to Joseph Massey, Deputy Managing Director of MCX, the Centre’s approval of the ordinance before the passage of the Forward Contracts (Regulation) Bill (FCR) will enable the industry to grow on the lines of global exchanges. “The bill provides greater autonomy to FMC for better regulation of the market and it also allows the launch of new products such as options and indices. The participation of banks, FIIs and institutional investors was in some way linked to the approval of this Bill. With the autonomy of FMC, we believe, that these institutions will now be allowed to participate in commodity futures market,” he said.

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Ravinder Sachdev, Head (Legal) of NCDEX said: “FMC will now be able to impose financial penalty on errant members and also regulate intermediaries like warehouses, depository participants and others. The investors who are not satisfied with an FMC order can appeal to the Securities Appellate Tribunal and then the Supreme Court.”

Kannan said that the Government had finally turned pro-active in allowing greater freedom to the commodity market regulator and hence, improving the market by way of ordinance as the final amendment in the Parliament might take some time. “Product innovations are a key to market strength and success and this ordinance, by allowing greater powers to FMC, would pave the way for products like option on futures, index futures and option, and weather derivatives. And more importantly the Indian market will have a commodity index (that may be tradable) for the world to look at, similar to ones in the developed countries,” he said.

FMC powers

The move to arm FMC with more power would give retail investors a platform to play safe, by way of portfolio management that is restricted now. Further, new product innovations like option on mini futures and structured products that are very popular in the capital market might be replicated in the commodity market if FMC wishes to do so, he said.

“Also, FMC can levy penalty, charge fees, take their own decisions like SEBI and can allow new product developments and amendments, enabling the decision making process to be faster in the much-needed commodity market,” Kannan said.

Tea Volume Continues To Be Low At Coonoor

Coonoor: Volume continues to be low for the fourth auctions for 2008 of the Coonoor Tea Trade Association (CTTA) to be held here on Thursday and Friday.

An analysis of the catalogues of the brokers indicates that the volume totals 9.19 lakh kg was some 18,000 kg lower than the offer of last week.

It is, however, 87,000 kg more than the offer this time last year.

Fresh arrivals are reported to be 7.98 lakh kg. The balance comprises teas remaining unsold in previous auctions.

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The low volume is said to be because of frost damaging substantial areas. According to the UPASI Tea Research Foundation, around 800 hectares suffered extensive and intensive frost bite in November. Moderate frost damage occurred again in the same affected areas in the third week of December. The affected fields are yet to come to yield.

Of the 9.19 lakh kg, as much as 6.48 lakh kg belong to the leaf grades and 2.71 lakh kg belong to the dust grades. Again, as much as 8.45 lakh kg belong to CTC variety and only 0.74 lakh kg, orthodox variety.

Orthodox lower

The proportion of orthodox continues to be low in both the leaf and dust grades. In the leaf counter, only 0.27 lakh kg belong to the orthodox while 6.21 lakh kg CTC. Among the dusts, only 0.47 lakh kg belong to the orthodox while 2.24 lakh kg CTC.

Offerings Lower At Coimbatore Tea Auctions

Coimbatore: With leaf and dust grades accounting for 1.47 lakh kg and 3.20 lakh kg respectively, the total offering at the weekly tea auction held at the Tea Trade Association here dipped marginally to 4.67 lakh kg last week.

Select well-made, high-growns ruled firm, while others quoted lower by Rs 2 to Rs 3 a kg. Internal demand was limited to whole leaf grades, while others remained quite.

Limited quantity of the orthodox dust was on offer; enquiries were also limited. Secondary type teas witnessed some withdrawals, and others remained barely steady. CTC leaf grades witnessed improved demand. Good liquoring teas, especially smaller brokens and fannings remained dearer. The medium, plainer, bolder grades saw improved export demand.

High-priced teas down

The orthodox high growns moved in the Rs 65 to Rs 76 price band while the best CTC grades quoted between Rs 52 and Rs 58 a kg. High-priced liquoring teas were quoting lower by up to Rs 3, while medium types were lower by Rs 1.

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Hindustan Unilever Ltd (HUL) lent fair support with additional support from internal buyers.

Pepper Futures Down

Kochi: Pepper futures market witnessed high volatility on Wednesday and closed marginally down, despite good buying support.

Exporters as well as the domestic players were buying spot. Cold wave in the North India is likely to create some more pressure to buy, market sources told Business Line.

Indian parity remained at $4,000 a tonne (c&f). Prices of other origins are also at our levels now, they said. Since India is the main available source for Asta grade some demands are likely to come in the coming days, they said, adding that overall production in the country is reportedly at low.

Contract position

February contract, on NCDEX, on Wednesday declined by Rs 27 a quintal to Rs 14,720. The drop in all other contracts except June was from Rs 75 to Rs 193 a quintal. June moved up by Rs 242 a quintal. On NMCE, February contract dropped by Rs 27 a quintal to Rs 14,590. All other contracts fell by Rs 15 to Rs 255 a quintal. Total turnover on NCDEX dropped by 3,707 tonnes to 15,201 tonnes.

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Spot prices also declined by Rs 100 a quintal on increase in arrivals on Wednesday to close at Rs 13,700 (un-garbled) and Rs 14,300 (MG 1).

Upsurge Continues In Cardamom

Kochi: The upsurge in cardamom prices continued on thin arrivals and good demand during the week at auctions held in Kerala and Tamil Nadu.

Kerala auctions

Maximum price at the e-auction held on Sunday by the Kerala Cardamom Processing and Marketing Cooperative (KCPMC) at Vandamettu increased to Rs 774 a kg and the minimum Rs 152 a kg.

Good colour 8 mm bold capsules were fetching Rs 750-800 a kg while 7.5-8 mm Rs 700-725 a kg and current bulk was being sold at Rs 650-675 a kg. The average price was Rs 643 a kg. Total arrival at this auction stood at 25.8 kg.

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According to P.C. Punnoose, General Manager, KCPMC, the arrivals in recent weeks were just half of what was coming during this period last year.

TN sale

At the CPA auction in Bodinayakannur on Monday, the arrivals were only seven tonnes of cardamom. The prices were said to be steady at higher levels. Arrivals at the ISPCS auction on January 19 stood at 8.5 tonnes and almost the entire quantity was sold out. The average price was Rs 638.78 a kg.

The active participation of the buyers at the auctions indicates that the investors are ready to buy and stock anticipating further increase in the prices, he told Business Line. Total arrival during the current season stood at 3,258 tonnes as on Januray 19 as against 4,835 tonnes during the same period last year registering a fall of 1,577 tonnes. Correspondingly the sales also dropped by 1,393 tonnes to 3,048 tonnes from 4,441 tonnes.

The average price as January 19 stood at 465.12 a kg as against Rs 295.03 a kg last season.

Prices range

Prices of the graded varieties were AGEB Rs 745-755, AGB Rs 685-695, AGS Rs 665-675 and AGS 1 Rs 635-645. Local market prices in Bodinayakannur were AGEB Rs 730-740, AGB Rs 670-680, AGS Rs 650-660 and AGS 1 Rs 625-640 a kg. Current bulk was fetching Rs 625-725 a kg.

Gold, Silver Prices Recover

Mumbai: Bullion market returned to a positive tone on the international development of a 75 basis point cut in interest rates by the US Fed.

Gold price in the London was fixed at $887.80 an ounce (A.M. fixing) on January 23, up from $862 /oz (A.M. fixing) and $875/oz (P.M. fixing) on January 22.

In a mirror reflection of the international market, domestic gold prices were quoted at Rs 11,370 per 10 gm on January 23 up from Rs 11,055 per 10 gm the previous day.

Despite the price level being near the psychological Rs 11,000-mark, there was some buying at the trade level.

In the domestic market, silver prices recovered and closed at Rs 20,570, a gain of Rs 420.

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During the last two days, there have been reports of wholesalers purchase to the tune of a couple of tonnes across the country by some banks, said Ajay Mitra, Managing Director of World Gold Council, India. However, overall offtake of the yellow metal has been mixed in the country, he added.

RiddiSiddhi Bullions Ltd, which introduced online trading in gold this month, said it is seeing 40 to 50 kg delivery per day in Mumbai and Ahemdabad.

“Demand is subdued as there is no seasonal buying as the prices are high,” said Prithviraj Kothari of RiddiSiddhi Bullions.

Currently, the firm has registered about 100 clients for online buying and selling of gold and expects about 300 kg turnover per day across all centres as prices soften and settle in at a level.

“We have seen some demand pick up with the dip in prices and we have booked some fresh consignments as we see some buying potential ahead,” said a bank official of Axis Bank.

Prices have to come further within a narrow price range to see heavy demand from wholesalers as well as retailers, said Moses Harding of Indusind Bank.

At the jewellery retail level, there has been a slight rush in buying as buyers feel the need to rush in their buying in expectation of further escalation of prices, said Ankit Gala, Director of Antara Jewellery Pvt Ltd.

But as prices have come off from the Rs 11,500 plus level, the market has not witnessed much scrap sales, said a scrap trader in Zaveri Bazaar.

Scrap sales came down to less than half from what was witnessed at the time prices where at the peak, he added. Today the scraps are sold at Rs. 11,000 per 10 gm.

India Set To Strengthen Commodities Regulator

New Delhi:India may move to beef up its commodity markets regulator at a cabinet meeting this week with new legislation to make it fully independent and armed with punitive powers, a minister said on Tuesday.

Unlike India's autonomous stock market regulator, the commodities regulator, known as the Forward Market Commission (FMC), is controlled by the Consumer Affairs Ministry and needs to seek government permission for many decisions.

"We are going to bring an ordinance this month to strengthen the Forward Markets Commission. The cabinet meeting is on January 24," Food Processing Minister Subodh Kant Sahai said.

"The main point is that the Forward Market Commission will become autonomous. Today, it is an attached office of the government," FMC Chairman B.C. Khatua told reporters when asked to explain the impact of the new laws, if approved.

"Many people do not know about commodity futures as it is relatively new here. To bolster people's confidence in the trade the regulator must have adequate powers to avoid any manipulation or excessive speculation."

He said strengthening the regulator would likely enable banks and financial institutions to enter commodities bourses and deepen trading.

The changes would also help the introduction of options trading in commodities, the minister said.

"I think the government plans to make the FMC independent like (stocks regulator) SEBI and give more punitive and regulatory powers," Anjani Sinha, managing director and CEO of the National Spot Exchange said.

"With more powers at its disposal, the FMC will be able to curb volatility and punish those who may try to manipulate the trade. It will help bring more transparency."

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The government only allowed trading in commodity futures in 2002 and options are still not permitted.

Three exchanges -- the National Commodity and Derivatives Exchange, Multi Commodity Exchange, and the National Multi Commodity Exchange -- were set up in 2003.

According to the Forward Markets Commission, commodities worth $900 billion were traded in 2007 and the turnover is expected to touch $1 trillion next year.

But some trade and government officials have said a boom in commodity derivatives has fuelled food prices, which prompted the government to ban futures trading in rice, wheat, and lentils in February last year.

Spot Rubber Prices Drop On Global Cues

Kottayam: Physical rubber prices fell sharply on Tuesday. The bear spell was triggered and catalysed by heavy losses in international rubber futures and domestic stock markets. Sheet rubber RSS 4 moved down to Rs 93.75 and Rs 94 a kg respectively at Kottayam and Kochi from Rs 95 a kg on Monday. The market made all-round declines on buyer resistance.

Futures down

The February futures for RSS 3 nosedived to ¥268 (Rs 99.69) from ¥275.5 a kg at TOCOM. In fact, all the distant contracts hit the daily lower limit following declines in oil and gold before recovering the losses partially towards the fag end of the session. The grade closed at Rs 103.66 (103.69) a kg at Bangkok. On NMCE, the February futures weakened further to Rs 95.22 (95.79), March to Rs 97.05 (97.91), April to Rs 99.10 (100.03) and May to Rs 101.49 (102.04) per kg for RSS 4. The open interest stood at 8,125 (8,242) tonnes. Volumes improved to 1,324 (1,126) lots with 524 (464) lots in February.

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Spot prices were (Rs/kg): RSS-4: 93.75 (95); RSS-5: 91.50 (92.25); ungraded: 89.75 (91); ISNR 20: 90.50 (91.50) and latex 60 per cent: 59 (60.50).

Commodities Recover On FMC Chief Pep Talk

Mumbai: Futures trading in agriculture commodities on NCDEX followed the stock market downhill, but recovered at the later session. Pep talk by the FMC Chairman, B.C. Khatua, and the Government decision to consider autonomy to FMC also boosted sentiments.

Soyabean, barley and jeera futures hit the lower circuit, while maize was close to the lower circuit.

Soyabean hit the lower circuit of 6 per cent, but recovered marginally to close with a loss of 3 per cent at Rs 1,960 per quintal, while soya oil futures, which was down 2 per cent, trimmed loses to close lower by 0.87 per cent at Rs 581 per 10 kg.

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“It was bearish day for agriculture commodities. Hedge funds in the international markets have withdrawn from commodities to cover up their position in equities,” said an analyst.

Jeera slips

Jeera for February delivery fell 1.59 per cent to Rs 10,615 per quintal on weak demand. Barley for May delivery lost 1.82 per cent to Rs 992 per quintal on profit booking.

Among gainer, chana futures was up 1.27 per cent to Rs 2,319 after the Khatua said that FMC will urge the government to lift the ban on urad, tur and wheat.

After gaining by Rs 250 in the last 3-4 session, turmeric gained 2.96 per cent to Rs 2,820 per quintal on buying interest at lower levels. Fresh buying was also witnessed in maize which rose 1.24 per cent to Rs 785 per quintal. Potato was up 1.39 per cent to Rs 588 per quintal.

On MCX, cardamom lost 1.63 per cent to Rs 694 per kg, while potato gained 2.18 per cent to Rs 515 per quintal.

MCX recorded a turnover of Rs 8,380 crore up to 5 pm, while it was Rs 3,937 crore on NCDEX.

Gold Recovers After Initial Fall

Mumbai: Precious metals weren’t indifferent to the equity market volatility, witnessing profit booking and buying at low levels. Gold prices nosedived by about $20 an ounce to $849.50 in the international spot market but recovered thereafter to $863.70/oz.

Tracking the international trend, gold prices in India also softened initially, that triggered a short lived buying spree, said Suresh Hundia, President of Bombay Bullion Association.

But apart from some buying at low levels, there is still a wait and watch period, say traders.

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Gold prices dropped to Rs 10,920 per 10 gm from where it topped the psychological mark of Rs 11,000 per 10 gm.

Pepper Futures Market Recovers

Kochi: Pepper futures market which fell sharply on Monday has recovered on Tuesday and closed almost steady. Market witnessed highly speculative activities.

There was no selling pressure of the physical material, market sources told Business Line.

As the Indian parity has become competitive with other origins and a source of availability enquiries were coming in from the European sector for January and early February shipments, they said.

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Indian parity on Tuesday was $4,000 a tonne (c&f). Indonesia was offering at $3,800 a tonne (f.o.b.) while Brazil at $3,700 a tonne (f.o.b.). Vietnam was not active in the market. Given this situation some overseas demand is expected to come to India from those international operators who have to cover for their first quarter requirements, they said.

CONTRACT POSITION

February contract on NCDEX moved up by Rs 29 a quintal on Tuesday to close at Rs 14,694 from Rs 14,665. The other contracts except April and May declined by Rs 38, Rs 11, and Rs 305 a quintal. April and May went up by Rs 8 and Rs 84 a quintal. On NMCE, February contract declined by Rs 27 a quintal to close at Rs 14,561 from Rs 14,588. All other contracts except March dropped by Rs 81, Rs 196 and Rs 210 respectively while March moved up by Rs 25 a quintal.

Turnover

Total turnover on NCDEX dropped by 4,532 tonnes to 18,908 tonnes, while on NMCE it declined by 171 tonnes to 2,313 tonnes.

Spot prices

Spot prices ruled steady at previous level of Rs 13,800 (un-garbled) and Rs 14,400 (MG 1) a quintal on Tuesday.

Pepper Futures Fall Sharply

Kochi: Pepper futures market, which has been moving up during the past couple of weeks, witnessed a sharp fall on Monday following the major crash in the share markets.

The influence has been such that the prices fell by Rs 306 to Rs 744 on NCDEX and by Rs 85 to Rs 622 on NMCE.

This has brought down the Indian parity to $3,925 a tonne (c&f), almost on par with that of other origins. Indonesia reported to have raised the price of L Asta to 3,750-3,800 (f.o.b.) while Vietnam was said to be quoting almost at the Indian levels, market sources told Business Line.

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Buyers in the world market have gone on a wait and watch mode as the prices started moving up.

Contract position

February contract on NCDEX fell by Rs 611 a quintal on Monday to Rs 14,665. The drop in other contracts was from Rs 306 to Rs 744 a quintal. On NMCE, February contract dropped by Rs 597 a quintal to Rs 14,470. The fall in other contracts was from Rs 85 to Rs 622 a quintal.

Total turnover on NCDEX increased by 9,880 tonnes to 23,440 tonnes, while on NMCE it went up by 856 tonnes to 2,484 tonnes.

Total open interest on NCDEX fell by 821 tonnes to 24,253 tonnes. February and March positions dropped by 25 per cent and 58 per cent respectively while April moved up by 12 per cent.

On NMCE, total open interest went up by 17 tonnes 1,652 tonnes. Spot prices in tandem with the futures market trend fell by Rs 200 a quintal on Monday to close at Rs 13,800 (un-garbled) and Rs 14,400 (MG 1).

The market for white pepper also firmed up.

Prices at most origin as well as at European market increased up to 3 per cent.

Jeera Hits Lower Circuit

Mumbai: Jeera futures on NCDEX hit the lower circuit in a volatile trading on Monday. Most of the commodities closed in the red.

Jeera dipped 5.65 per cent at Rs 10,715 per quintal as the fresh crop is all set to hit the market.

Chilli drops

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Chilli futures gave in 3.87 per cent at Rs 3,600 per quintal on higher production estimate of 13 lakh tonnes (10.5 lakh tonnes) and expectations of new arrivals. Possibility of a fall in demand from poultry farmers pulled down soyabean and maize futures by 2.07 per cent and 3.31 per cent at Rs 2,011 per quintal and Rs 773 per quintal. MCX recorded a turnover of Rs 5,109 crore up to 5 pm, while it was Rs 2,760 crore in NCDEX.

Mysore Tobacco Auctions Close On High Note

Kolkata: Mysore tobacco auctions in Karnataka, which officially closed last week on a buoyant note, has set many records since the launch of tobacco auctions in the country in 1984.

Record time

According to Tobacco Board officials, for the first time since introduction of auctions, not a single day was lost on account of interruptions, leading to completion of the auctions in record time.

Officials said though the market began on a cautious note owing to steep appreciation of the rupee, farmers have realised 6 per cent more than 2006, indicating a strong demand for the Mysore Neutral Filler tobaccos.

Rapid pace

According to L. Anand, a veteran tobacco grower of Mysore, demand peaked post-Diwali and continued till closure of the auctions. During this period, spanning over 50 days auction days, more than 50 per cent of the leaf sold was allotted by Tobacco Board officials to the trade at a top price of Rs 68/kg, it is learnt.

The Mysore 2007 markets opened in 10 auction floors on September 6, 2007, with the maximum price of Rs 68/kg (same as in 2006).

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A total volume of 88 million kg (mkg) was marketed in 99 auction days (against 152 auction days in 2006), indicating a record turnover of volume handled per day.

Price realisation

It is learnt that despite increase in the production of medium and low grades, compared with 2006 season, the per kg farmer realisation price in 2007 has gone up owing to a favourable global demand for leaf tobacco.

The crop marketed in 2006 was 97 mkg with the average price realised at Rs 55.95/kg. Farmers, it is learnt, have realised an average price of Rs 59.21 per kg during Mysore 2007 season, said to be the highest since inception of tobacco auction system some 23 years ago. The bright and medium grades in the just concluded auctions fetched average per kg prices of Rs 67.3 (Rs 34) and Rs 61.54 (Rs 43) respectively.

The rapid pace of auctions this year, a clear departure from that in previous years, according to Karnataka Tobacco Growers’ Association sources, has generated a lot of value for all stakeholders in the industry - for farmers in terms of farm waste reduction and for the trade in terms of better retention of keeping quality and colour of the leaf.

CTC Dust Tea Prices Ease At Kochi Sale

Kochi: Prices of high quality CTC dust teas eased by Re 1-Rs 2 at the Kochi tea auction. Medium CTC dust varieties were barely steady to irregular at last week’s levels.

Plain CTC witnessed a dearer market. Orthodox dust varieties remained steady. Blenders were fairly active and medium dust varieties witnessed some export enquiry. There was 10,50,000 kg of dust on offer at the auction.

Best CTC varieties commanded Rs 65-77, medium CTC quoted Rs 55-64 and below medium was at Rs 43-48. High-grown BOPD fetched Rs 100-122, medium BOPD was at Rs 45-47 and secondaries ranged at Rs 40-42.

Primary good quality high grown orthodox leaf quoted higher. Other high-grown varieties were steady to easier. Prices of medium orthodox grades also eased. CTC grades opened at a lower level and became firm to dearer as the sale progressed.

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Orthodox grades witnessed good export enquiry. CTCs were absorbed by major blenders, exporters and inter-State buyers. Best Nilgiri varieties quoted Rs 85-120, medium orthodox realised Rs 53-65 and plain orthodox was at Rs 40-45. Best CTC leaf varieties fetched Rs 54-63, while medium CTC was at Rs 51-55.

Among the dust varieties, Kodanad BOPD fetched the top price at Rs 122 followed by Parkside BOPD at Rs 100. In leaf varieties, Havukal CLBOP fetched the top price at Rs 166 followed by Craigmore TGFOP at Rs 152.

Spot Rubber Rules Steady

Kottayam: Spot rubber closed steady on Monday. There was no technical or fundamental change in the market condition and sheet rubber stayed flat at Rs 95 a kg both at Kottayam and Kochi as on Saturday. The transactions were low.

Futures weak

The February futures weakened to ¥275.5 (Rs 103.01) from ¥276.3 a kg at TOCOM. Rubber fell on NMCE at its February futures to Rs 95.80 (96.94), March to Rs 97.70 (98.88), April to Rs 99.75 (100.88) and May to Rs 102 (102.94) per kg for RSS 4. The February contract slid to Rs 96.21 from Rs 96.97 on MCX.

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Spot prices were (Rs/kg): RSS-4: 95 (95); RSS-5: 92.25 (92.25); ungraded: 91 (91); ISNR 20: 91.50 (91.50) and latex 60 per cent: 60.50 (60.50).

Maize Price Remains Volatile Despite Bird Flu

Coimbatore: Maize price remained volatile last week with the rates for the commodities quoted at mandis touching Rs 7,200-7,220 per tonne, some three per cent higher than last week, market reports said. The volatility is due to bird flu in the eastern region and high exports.

The maize supplies to the eastern region were affected this week. There has been a supply crunch in other parts especially Gujarat where the maize deliveries were being made at Rs 8,800 per tonne or higher, according to the US Grains Council’s India reports.

The prices at upmarket centres including Nibaheda (Rajasthan) and Ratlam in Madhya Pradesh remained firm at the previous week’s level, the rates moved up slightly in southern centres including Nizamabad, Kareem nagar and Davangee with the increasing ranging from Rs 90-200 per tonne.

The report said of the total maize production of 16 million tonnes expected for 2007-08, poultry sector is expected to use close to 48 per cent and starch sector another 11.4 per cent.

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In the wake of the bird flu attacks in West Bengal, the wholesale prices of broilers and eggs went down by 20-25 per cent across all markets in the country.

Coonoor Tea Prices Drop On Inadequate Demand

Coonoor: Prices dropped on the average Rs 2 a kg at the third auctions of 2008 conducted by the Coonoor Tea Trade Association (CTTA) as the demand was inadequate to absorb at high bids the volume of 9.37 lakh kg on offer.

But, plainer sorts were the favourite of those looking for teas for blending. Consequently, the lowest price increased to Rs 42 a kg from Rs 39 at which level it ruled until now.

Exports

Export purchase was subdued. Pakistan bought cleaner blacker teas paying up to Rs 51 a kg, mostly to cover the short supplies from Kenya.

Although Mombassa auctions continued for the second week, political uncertainty affects the trade.

There, Pakistan has to pay around $2.24 a kg – some 77 cents more than this time last year.

But, strengthened orders from Pakistan are yet to come in the post-violent market trend following the murder of Benazir Bhutto.

“We are doing anticipatory buying”, an exporter told Business Line.

Other importers from Mombassa have not shifted their loyalty to India and so, no new buyer operated this week. The CIS bought medium bolder grades for around Rs 46 a kg.

Corporate buyers

Among the corporate buyers, Hindustan Unilever Ltd bought better medium leaf grades, but did not operate in the dust counter.

“Better medium CTC leaf grades were lower by Rs 1-2 a kg. Orthodox leaf grades eased Rs 2-3. Some 40 per cent of this variety was withdrawn. Orthodox dust lost Rs 5-10. High priced CTC dusts eased Rs 2-3”, an auctioneer said.

Among the CTC teas from bought-leaf factories, Darmona Estate topped with Rs 99 a kg, followed by Homedale Estate Rs 90, Selva Ganapathy Supreme Rs 86, Warwick and Ella Estate Rs 83, Green View and Deepika Supreme Rs 80.

Among the orthodox teas from corporate sector, Curzon topped with Rs 144 a kg, followed by Kodanaad Rs 132, Glendale Rs 128, Curzon, Prammas and Corsley Rs 127, Kairbetta and Tiger Hill Rs 120, Havukal Rs 119, Nonsuch Rs 109, Erinkadu and Kil Kotagiri Rs 108, Terramia Rs 106, Katary Rs 105, Coonoor Tea Estate Rs 103, Sutton, Chamraj, Pascoe’s Woodlands and Craigmore Rs 102 and Parkside Rs 100.

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Quotations held by the brokers indicated bids ranging from Rs 42 to 45 a kg for the plain leaf grades and Rs 64-77 for the brighter liquoring teas.

They ranged Rs 42-45 for the plain dust grades and Rs 63-78 for the brighter liquoring teas.

Good Demand For Ctcs At North Indian Sales

Kolkata: Last week, the CTC offerings at the three north Indian tea auction centres at Kolkata, Siliguri and Guwahati met with good demand, according to the tea auctioneer, J. Thomas & Company Private Ltd. Selected better varieties held levels, with the remainder declining in quality.

There were good inquiries from the major blenders and domestic segments.

The export inquiries were selective.

The orthodox teas also saw good demand with prices declining following quality.

Selected smaller brokens sold around last levels. The buyers for the CIS countries and West Asia dominated the market.

The Darjeeling varieties were well absorbed at steady rates for whole leaf and better fannings.

Brokens were irregular. There were good inquiries from local dealers and major packeteers, with selective export interests.

CROP & OFFERINGS

With the cropping season having come to a close, the arrivals at the auction centres are showing a sharp decline.

INTERNATIONAL

The political crisis in Kenya and the consequent adverse effects on the harvests pushed up the demand at the Mombasa auction with the result the prices shot up substantially.

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Pakistan, Egypt, the UK, the CIS and Sudan were active.

The Sri Lankan market witnessed an easier trend following a sharp increase in arrivals.

The bearish trend is expected to continue in view of the excess supply situation. The traditional exporters operated low.

Sugar Futures Expected To Trade Higher

Mumbai: After a lull, sugar futures on NCDEX are expected to trade on the higher side in the short to medium term due to delay in cane crushing in Uttar Pradesh and Maharashtra.

Caught between a bearish market and high cane advisory prices set by the Uttar Pradesh Government, sugar mills delayed crushing, leading to fall in production.

Sugar Season

The Union Agriculture Minister, Sharad Pawar, said recently that Indian sugar production in the ongoing sugar season started in October 2007 would fall by 8 per cent to 26 million tonnes (mt) due to the delay in crushing.

Earlier, the Indian Sugar Mills Association lowered its production estimates for 2007-08 by three mt to 30 mt. However, analysts predict that the fall could be more if the delay in crushing continued. The mills have also urged the Government to reduce the State advised prices from Rs 1,100 per quintal to Rs 900 per quintal.

The Union Agriculture Ministry has allocated 41 lakh tonnes as free sale quota for January-March. For January, 13 lakh tonnes have been allocated as non-levy quota.

“The Government decision augurs well for sugar mills as there are no major carry forward stocks from previous months,” said Sushil Sinha, Regional Head, Karvy Comtrade.

Export demand

Sinha said Bangladesh and Sri Lanka were showing keen interest to import sugar from India. The Government has recently allowed export of raw sugar along with refined sugar.

Brazil sugar output is set to be lower this year due to the sugar mills concentration on production of ethanol as it was fetching better margins.

“Brazilian cane mills are currently earning more from ethanol sales than sugar, and international sugar buyers will have to match or better the price of the biofuel,” said an analyst.

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According to recent reports, cane mills in Brazil have used up to 55 per cent of their crop for ethanol in the harvest that ended a few weeks ago. This compares with a near 50-50 mix from the previous crop season.

“The active Sugar M Grade currently trading at Rs 1,500 per quintal is expected to test Rs 1,575 per quintal in the short term. Later, a correction can be expected towards 1500-1475,” said Sinha.

Gold: Investment Demand To Pick Up

Mumbai: Despite heightened speculators’ interest, towards the end of last week, gold shed some of the gains it made in the previous days, following long liquidation and profit booking. The price correction occurred in the context of concerns relating to the US economy and equity market as also dollar movements.

On Friday, London PM Fix was $882 an ounce, down from $888.25/oz the previous day and down from $891/oz a week ago. Silver followed suit. On Friday, London AM Fix was $15.83/oz, down from previous day’s $15.88 and from previous Friday’s $16.06/oz.

The week also witnessed the largest ever outflow of funds (21.5 tonnes) from a gold exchanged traded fund (Street-Tracks). The GFMS gold survey continued to paint a positive picture for the outlook of the gold market.

Physical demand

There is belief that investment demand would drive the market up, despite physical demand showing clear signs of slowing. The report cautioned about the possibility of short- to medium-term price correction given the speed of the recent price rise and the speculative length. GFMS does view $1,000 as a clear possibility later this year.

While the medium-term outlook for gold looks positive on current reckoning, dollar is likely to be the key determining factor. Demand-supply fundamentals of the gold market are tight. Even small changes in demand or supply or both will have a disproportionately large impact on prices.

In India, very clearly, high prices have driven household buyers away. Scrap sales are expanding. Physical imports have begun to dwindle. In a market that displays volatility and rapid price rise, savvy speculators, and not actual users, benefit. Therefore, caution is needed in trading gold at these elevated levels.

Downside correction

With the market having recorded a phenomenal price increase in 2007 and prospects of further increases appearing positive, old resistance levels are now turning into support levels. Whether the downside correction has run its course remains to be seen. Technical analysts assert the yellow metal will resume its uptrend.

Base metals

After a positive start to the year, base metals have fallen back, with the short-term positive of buying due to index re-weighting now over. Poor US economic data, concerns over the outlook of Chinese growth and the not-so-encouraging OECD composite lead indicators are also weighing on the market at present.

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However, low inventory levels (low by historical standards) provide a silver lining. Any brightening of economic growth prospects would result in a big increase in physical demand and some sharp price appreciation, an analyst asserted. In addition, forward prices continue to be strong.

This is interpreted as market participants’ perception of current weakness as temporary. From a fundamental perspective the copper market looks tight, while tin too is tightening with further price gains to come. Current strength in nickel prices may be tempered by weakness in the stainless steel sector, which is expected to recover not before the second quarter.

Aluminium market looks to remain range-bound because of adequate stocks, while zinc — whose inventory levels are rising (10.6 per cent last week) — may fall further. According to technical analysts, copper prices remain a matter of concern. Odds favour a further downside and the risk is for a choppy decline to 6750. Aluminium too will have a choppy range. In the short-term, the risk is for weakness to 2395/2400.

Oil

Pressurised by release of a new batch of poor economic data and equity market weakness, crude market is softening. Indeed, it is to the credit of the market that despite growing macroeconomic pessimism, oil prices are holding above the $90-a-barrel mark. This reflects severe underlying tightness in the market.

From here on, prices may consolidate in the high 80s to low 90s levels, provided concerns over the economy continue and stocks expand seasonally. Weather over the next several weeks will play an important part in shaping the market sentiment.

Agriculture

In recent times, grains have performed extremely well in the entire commodity complex. Latest USDA data that showed global supply and demand balances in corn and wheat helped push prices higher. Whether there would be further price gains and if so in which crops would depend on how acreages in the US during the upcoming planting season unfold for wheat, corn, soyabean and cotton.

It is, however, clear that investors are increasingly attracted to grains markets by impressive price performance and the relative immunity of return to uncertain economic outlook that is hampering performance of other commodity markets such as energy and base metals.

According to experts, the share of speculative activity in grains markets is traditionally higher than in energy or base metals. However, there is little evidence that it is moving higher with prices. Price gains are primarily the result of widening gap between demand and supply; but speculation takes to a higher level.

High Gold Rates Push ‘Tolas’ To Extinction

As global gold prices surge, the precious metal market across the country is witnessing a slow death of 'tola’ - atleast for the small investors.

For ages, people across the country have been buying gold in tolas, but thanks to the recent surge in gold prices, the gold buying trend in the country has changed. About two years ago, when gold was available at about Rs 8,000 per 10 gram (1 tola = 11.66 grams), investors preferred buying the metal in good quantity.

“Now, as the prices have increased to Rs11,500 per 10 gram, retail gold buyers are investing a fixed amount in the metal which means the quantity or size of gold purchased is very less,” said president of Choksi Market Association of Ahmedabad, Rajnikant Chokshi. He further said investors are also moving towards other investment options which give better returns than gold. “For investors buying equity is more profitable than gold. So to some extent gold investment gets diverted to the equity market,” said Chokshi.

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Even in case of NRIs, the amount invested in gold buying is a bit higher than the previous year but, tonnage wise, gold sale is less. “In the previous year, due to chikunguniya, many NRIs didn’t visit the country. This year despite a good number of NRIs coming to India, investment in gold was limited,” said former president of the association and bullion analyst, Girish Chokshi.

The price of the yellow metal, which is believed to be a safe investment, has increased by around 90 per cent in six years.

Mumbai-based bullion analyst, Bhargav Vaiday believes that as an investment, gold should not be compared with equity or real estate.

“Gold is not an investment option but it’s a store of value,” said Vaidya. “Whatever happens, people will not stop buying gold, but quantity buying may reduce.” According to president of Gem & Jewellery Trade Council of India, Shanti Patel, gold buying will any day be economical. “Looking at the long term, the gold purchased today will always be economical. This is because price of the commodity will continue to climb in the future,” he said.

Sesame Seed Exports To Russia Likely To Be Affected

Kolkata: Even though the Russian authorities have provisionally (subject to conditions) lifted the temporary restrictions on import of Indian sesame seeds into that country, the problem for Indian exporters still remain because of the delay in procurement of pre-shipment testing certificates (of samples) from the single approved national laboratory.

Trade sources blame the delay on dependence for such certification on a single designated lab. A leading Gujarat-based exporter, fearing cancellation of his order by the Russian buyer of sesame seeds because of the delay in issuance of quality test certificate, has sent an SOS to Shellac and Forest Products Export Promotion Council (Shefexil) to either arrange for another accredited lab or convince the Russian authorities through the Government of India channels to approve and enlist a few more nationally accredited testing labs.

Immediate necessity

Two basic conditions that now need to be fulfilled by Indian exporters are, a) sesame seeds from GMP (genetically modified plant) sources shall not be exported to the Russian Federation; b) Each consignment of sesame seeds shipped shall be accompanied by a quality test certificate of Shriram Institute for Industrial Research for each lot.

The Shellac and Forest Products Export Promotion Council had suggested that the export policy for sesame seeds may be suitably modified to ensure that exports of the commodity to Russia may be permitted subject to a health certificate issued by the Export Inspection Council (EIC), based on a laboratory test report Shriram Insttitute for Industrial Research or any other agencies, as may be notified from time to time.

A Russian delegation, in India some months ago at the invite of Indian authorities to check out the accredited national labs for testing of export quality sesame seeds, had provided a copy of the model quality certificate for sesame seed and wanted the Indian labs to follow it while issuing the certificate.

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Following a closed door meeting with members of the visiting Russian inspection team, an approved format of the certificate of sesame seed quality was forwarded by the APEDA to the Indian Embassy in Moscow for formal acceptance of the Russian authorities.

It is learnt that at the said meeting, the Russian delegation had also recommended the name of Vimta Labs of Hyderabad.

The letter of assurance for export of groundnut and sesame seeds to the Russian Federation was signed on September 7, 2007, after the Protocol for rice export was initialled on July 10, 2007.

According to informed sources, the full compliance details of the commitments by the Indian side have already been submitted to the Indian Embassy in Moscow, for being forwarded to the Russian side.

The deadline for groundnut and sesame seeds was January 7, 2008.

SC Stays HC Order On Sugarcane Pricing

New Delhi: In a setback for the sugar industry, the Supreme Court has stayed the December 19 order of the Allahabad High Court quashing the Uttar Pradesh (UP) Government’s State Advised Price (SAP) of Rs 125-130 per quintal, payable by mills for cane bought during the 2006-07 season (October-September).

HC findings

A three-judge bench of the apex court — comprising the Chief Justice, K.G. Balakrishnan, Justice G.P. Mathur, and Justice R.V. Raveendran — on Friday, stayed the operation of the December 19 order. The latter had declared the SAP fixed for 2006-07 as “arbitrary” and “unreasonable”. It had also directed the State Government to reassess the SAP “backed by reasons giving adequate outlines of norms, criteria or guidelines”, with this price to be decided only after consulting all stakeholders and not unilaterally.

Consequences of the stay

The High Court bench of Justice Amitava Lala and Justice V.C. Mishra had further ruled that until such time that the new SAP was fixed, mills were obliged to pay only the Centre’s statutory minimum price (SMP), ranging between Rs 85-90 per quintal for the 2006-07 season.

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However, with the Supreme Court now staying this order, it would mean that the factories will have to discharge their outstanding SAP cane arrears, which amounts to around Rs 900 crore for private mills alone. Also, the recovery certificates (RCs) that were issued by the State Government against mills that had not paid the SAP would stand revived. The RCs empower the district magistrate concerned to seize the sugar stocks, plant and machinery, and land of the defaulting factory and put them up for auction in order to pay the growers.

Next hearing

The apex Court, while staying the order of the Allahabad High Court, has fixed the next date of hearing of the case on February 12, with the respondents seeking two weeks time to file counter-affidavits. The Supreme Court’s ruling was in response to a petition against the December 19 order filed by V.M. Singh of the Kisan Mazdoor Sangathan and the cane unions of Paliakalan and Basti. Separate petitions were also filed by the UP Government and the UP Cooperative Sugarcane Federation.

On Thursday, the Allahabad High Court had also exempted mills from paying the interim cane price of Rs 110 per quintal (fixed by a separate Lucknow bench) for the current 2007-08 season.

The Court had interpreted that since the UP Government had not yet complied with the December 19 order — requiring fixation of norms, criteria and guidelines for arriving at the SAP — there was no need for the mills to pay anything more than the Centre’s SMP. But with the Supreme Court staying the December 19 order, mills may for now have no option but to pay the SAP of Rs 125-130 per quintal fixed for the 2007-08 season as well.

Sugar Futures Firm On Low Production

Mumbai: Sugar futures were firm as there were expectations of lower sugar production. February contract on NCDEX opened higher with a gap.

Futures contract made an intra-day high of Rs 1,503 per tonne and an intra-day low of Rs 1,470 per tonne.

The contract closed nominally lower at Rs 1,500, up by Rs 30 from previous close.

Rising international sugar prices have created additional interest in the exporter community, said an analyst.

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In the international futures market, white sugar for March delivery gained $13.8 and closed at $351 per tonne in London. While raw sugar futures for March delivery gained 0.68 cent and closed at 12.45 cents a pound in US.

However the overall production of the sweetener is expected to be lower due to a long period of delay in crushing, said an analyst. As a result the prices are expected to be on a bullish trend, he added.