Mumbai: The optimistic undertone in castor seed futures is hoped to continue as the arrivals likely to shrink further in the coming days. Castor seed is sown in July and August and harvested in January. The inflow into Gujarat spot markets has fell to 30,000 bags (of 75 kg each) during the week from 80,000 bags. Prices of castor seed in the spot markets are on the increase amidst strong export demand and are quoted at about Rs 570 for a 20 kg bag. Export price of castor seed oil meal is quoted at $150 a tonne. India is one of largest exporters of castor seed and its derivatives like oil and oil meal. The weakness in barley futures is hoped to remain in the short term. The steady decline in open interest and low volumes amidst softening prices indicate that the market is in overbought position.
Monday, June 30, 2008
Increases Coonoor Tea Rates For Demand - June 30,2008
Coonoor: Despite a immense offer of 13.82 lakh kgs the highest for any single auction in more than two years prices increased Rs 2 a kg on the average at Sale No: 26 of the auctions of Coonoor Tea Trade Association (CTTA) on June 27 because demand was adequate to absorb the volume. Exporters said that Pakistan found it advantageous to acquire here in the context of tight supplies and high prices at Kenya's Mombassa auctions where it is used to pick up the bulk of its requirements. CIS bought blacker smaller sorts paying Rs 50. Internal purchasing was generally strong. Western Indian buyers operated actively on the bright liquoring teas.
Whole leaf orthodox grades were dearer by Rs 3-4 a kg. Brokens and fannings got Rs 2 more. High-priced CTC teas were up by Rs 1-2. Primary orthodox dusts got Rs 3-5 more. Its BOPF grade got Rs 110 a kg, the highest price for any CTC tea from bought-leaf sector at the auction. Darmona was the only factory to remain in Rs 100 and plus category. Homedale Estate received Rs 97, Hittakkal Estate and Shanthi Supreme Rs 90 each, Professor Rs 87, Vigneshwar Estate, Ella Estate and Kannavarai Estate Rs 86 each, Highfield Estate Special, Aroma Estate and Green View Estate Rs 85 each, Deepika Supreme and Sree Tea Supreme Rs 84 each, UPASI Rs 83, Garswood Estate Rs 82, Selva Ganapathy Supreme Rs 80.
Whole leaf orthodox grades were dearer by Rs 3-4 a kg. Brokens and fannings got Rs 2 more. High-priced CTC teas were up by Rs 1-2. Primary orthodox dusts got Rs 3-5 more. Its BOPF grade got Rs 110 a kg, the highest price for any CTC tea from bought-leaf sector at the auction. Darmona was the only factory to remain in Rs 100 and plus category. Homedale Estate received Rs 97, Hittakkal Estate and Shanthi Supreme Rs 90 each, Professor Rs 87, Vigneshwar Estate, Ella Estate and Kannavarai Estate Rs 86 each, Highfield Estate Special, Aroma Estate and Green View Estate Rs 85 each, Deepika Supreme and Sree Tea Supreme Rs 84 each, UPASI Rs 83, Garswood Estate Rs 82, Selva Ganapathy Supreme Rs 80.
Extremely Optimistic During The Weekend Session - June 30,2008
Kottayam: The rubber prices ended higher on June 28. RSS 4 increased further to Rs 131 from Rs 130 a kg as covering groups continued to procure the raw material offering better quotes. Supply worries and intensified monsoon rains kept the market mood extremely optimistic during the weekend session. Spot prices (Rs a kg) were RSS-4: 131 (130), RSS-5: 129.50 (127.50), ungraded: 127 (125), ISNR 20: 130 (128.50) and latex 60 per cent: 89 (88).
Saturday, June 28, 2008
Crude Prices Record On Gold Futures Surge - June 28,2008
Gold futures surged above $930 an ounce Friday as a record high in crude oil, persistent weakness in the U.S. dollar and a recent plunge in the U.S. stock market encouraged investment demand for the precious metal. Gold for August delivery rallied $16.20 to end at $931.30 an ounce on the New York Mercantile Exchange. The precious metal posted a weekly gain of $27.60 from last Friday's closing level of $903.70.
MCX Gold August expiry closed the session at Rs 12871 per 10 grams. The next target for Gold will be 13 k when it resumes its journey with COMEX on Monday. Today’s session is expected to be less volatile.
Crude-oil futures climbed to a fresh record of nearly $143 a barrel in Friday afternoon on NYMEX, a weekly gain of more than 5%.
MCX Gold August expiry closed the session at Rs 12871 per 10 grams. The next target for Gold will be 13 k when it resumes its journey with COMEX on Monday. Today’s session is expected to be less volatile.
Crude-oil futures climbed to a fresh record of nearly $143 a barrel in Friday afternoon on NYMEX, a weekly gain of more than 5%.
Copper Prices Fresh Breakouts The Trading Session - June 28,2008
Copper prices gave fresh breakouts in the trading session last night. This has made Copper a new contender for the rally ahead of Aluminium which is getting dull on the rise of inventories.
The price of copper rose to a one-month high above $8535 per tonne in LME futures trade on Friday as a weaker dollar, falling warehouse stocks, and possible labor issues in Peru helped provide the underpinnings for the stronger price action. The dollar extended declines against the euro on Friday after U.S. stock markets accelerated their losses.
Copper inventories in Shanghai fell 3 percent to 32,401 tonnes in the week ended Thursday, compared with 33,417 tonnes the previous week. London Metal Exchange (LME) copper warehouse stocks fell by 150 tonnes to 122,900 tonnes on Friday -- down nearly 40 percent since the start of the year.
MCX Copper which hovered around 360 mark gave fresh breakouts touching a new all time Rs 367 per kg before closing at Rs 366.8 per kg. MCX Copper June expiry gained 1.2% during the week. Today the movements are expected to be light as the international markets are closed.
The price of copper rose to a one-month high above $8535 per tonne in LME futures trade on Friday as a weaker dollar, falling warehouse stocks, and possible labor issues in Peru helped provide the underpinnings for the stronger price action. The dollar extended declines against the euro on Friday after U.S. stock markets accelerated their losses.
Copper inventories in Shanghai fell 3 percent to 32,401 tonnes in the week ended Thursday, compared with 33,417 tonnes the previous week. London Metal Exchange (LME) copper warehouse stocks fell by 150 tonnes to 122,900 tonnes on Friday -- down nearly 40 percent since the start of the year.
MCX Copper which hovered around 360 mark gave fresh breakouts touching a new all time Rs 367 per kg before closing at Rs 366.8 per kg. MCX Copper June expiry gained 1.2% during the week. Today the movements are expected to be light as the international markets are closed.
Spot Rubber Made A Smart Gain - June 28,2008
Kottayam: Spot rubber made a smart gain on June 27. RSS 4 went up to Rs 130 a kg from Rs 128 a kg as covering groups remained extremely aggressive on the grade during the session. Major manufactures were purchasers on sheet rubber up to Rs 128 a kg but they failed to procure the raw material as it was traded much above their preferred levels. The grade ended at Rs 139.73 (139.65) a kg at Bangkok spot. Spot prices (Rs per kg) were RSS-4: 130 (128.00) RSS-5: 127.50 (125.50) Ungraded: 125 (124) ISNR 20: 128.50 (127) and latex 60%: 88 (86.50).
Friday, June 27, 2008
Maize Futures On NCDEX Touched The Upper Circuit - June 27,2008
Mumbai: Maize futures on NCDEX touched the upper circuit at Rs 973 a quintal on strong domestic and world demand. Turmeric closed up 2.27 per cent at Rs 4,427 a quintal on the back of fresh purchasing in the spot markets. Short covering pushed pepper futures high by 1.74 per cent at Rs 14,180 a quintal. Jeera increased 1.67 per cent at Rs 12,051 a quintal on good export demand. Castorseed increased by 1.46 per cent to Rs 578 a quintal on declining arrivals in Gujarat spot markets and delay in sowing in Andhra Pradesh due to less rains. Chilli futures recorded a loss of 1.04 per cent at Rs 5,255 a quintal on heavy selling amidst increased arrival. While cardamom touched the upper circuit of 3 per cent at Rs 694 a kg, mentha oil declined 1.63 per cent to Rs 494 a kg.
Good Export Demand For Coimbatore Tea Auctions See - June 27,2008
Coimbatore: Despite higher volume on offer, tea rates were dearer last week with exporters picking quality teas. Though internal purchasers were active in select counters, Hindustan Unilever Ltd was absent. The total offerings at the weekly auction held at the Tea Trade Association here on June 27 totaled to 6.47 lakh kg with leaf grades accounting for 2.33 lakh kg and the balance 4.14 lakh kg of dust grades. CIS exporters and purchasers for the West Asian market lent fair support. There was good support from internal purchasers. The demand was generally good for the CTC leaf grades. Clean and blacker teas were quoting dearer by up to Rs 2.
Market Feeling The Shortage Of Raw Material - June 27, 2008
Kottayam: Physical rubber prices increased further on June 26. RSS 4 closed firm at Rs 128 against Rs 127.50 a kg on covering buys. The market seemed to be feeling the shortage of raw material once again as south-west monsoon started to strengthen all over the plantation areas. The absence of major manufacturers on the purchaser's side and the slip in world indices were the dominating factors restricting the day's price movements. The grade declined to Rs 139.65 from Rs.140.08 a kg at Bangkok. The per kg spot prices were:RSS-4 : 128 (127.50); RSS-5 : 125.50 (125); ungraded : 124 (123); ISNR 20 : 127 (126) and latex 60% : 86.50 ( 86).
Thursday, June 26, 2008
Rubber Sees Steady Trend - June 26, 2008
Kottayam: The rubber market ruled steady on June 25. RSS 4 increased to Rs 127.50 from Rs 127 a kg as covering groups remained active on the grade. Spot prices (Rs a kg) were: RSS-4 : 127.50 (127); RSS-5: 125 (124.50); ungraded : 123 (122.50); ISNR 20: 126 (125.50) and latex 60%: 86 ( 86).
Lower Global Cotton Output May Keep Prices Firm - June 26, 2008
Chennai: If the revised outlook on cotton production by Cotton Outlook is an indicator, the textile industry is in for a tough time.
In its outlook on raw cotton production for 2008-09 (August-July) season, the journal has pruned the production estimated by 1.39 million tonnes (mt) from last month’s estimated of 26.25 mt. The output for the coming season is seen at 24.78 mt against last year’s 25.81 mt
Fears
The production estimate has been cut mainly on fears of fall in production in Australia, Turkey, the US and other growing nations. In Australia, the production is now expected to be 0.29 mt against earlier estimates of 0.34 mt. Last year, it produced only 0.13 mt.
According to the journal, reports are pointing to larger diversion of land for food and oilseeds crop, much against initial expectations.
One example is the US, where the production estimate has been cut by 94,000 tonnes from last month’s projection. And compared with last year, the production could be some 1.2 mt lower during the coming season.
Besides diversion of land to other crops, hot and dry weather in the key US growing regions and much of central Asia has been less than ideal for early development of plants. Again in China, excess rains in could spell trouble, though the journal has left last month’s production estimate of 7.65 mt unchanged. However, it is lower than last year’s 7.8 mt.
Between May and June, there has been a 0.44 mt drop in the production estimate of cotton.
On the other hand, offtake by major consuming nations is expected to increase to 26.18 mt against 26.05 mt. However, it is lower than last month’s estimated of 26.25 mt.
The Chinese consumption, one of the major importers of cotton from India, is expected to be around 11 mt against 10.8 mt last year. Indian offtake has been projected at 7.4 mt, up from last month’s estimate of 7.31 mt and 7.24 last year. Consumption is expected to decline in the US, Turkey, European Union and other nations. The net carryover stock is seen declining by 1.3 mt next season.
Higher Chinese consumption and lower production would mean demand for Indian cotton in the global market. This year, nearly 85 lakh tonnes have been exported. At least four lakh bales (of 170 kg) from the new crop have been contracted for exports from the new crop due in October.
Already, reeling under higher cotton prices, the textile industry is demanding a halt to exports, at least until December. The Tamil Nadu Chief Minister, M Karunanidhi, has also demanded curbs on exports to ensure supply to the textile mills.
Lower production and carryover stock besides higher consumption would mean prices will continue to rule firm in the coming months, in the domestic and global markets. Currently, the popular Shankar-6 variety is quoted at Rs 27,000 for a candy of 355.62 kg against Rs 26,000 last week.
In its outlook on raw cotton production for 2008-09 (August-July) season, the journal has pruned the production estimated by 1.39 million tonnes (mt) from last month’s estimated of 26.25 mt. The output for the coming season is seen at 24.78 mt against last year’s 25.81 mt
Fears
The production estimate has been cut mainly on fears of fall in production in Australia, Turkey, the US and other growing nations. In Australia, the production is now expected to be 0.29 mt against earlier estimates of 0.34 mt. Last year, it produced only 0.13 mt.
According to the journal, reports are pointing to larger diversion of land for food and oilseeds crop, much against initial expectations.
One example is the US, where the production estimate has been cut by 94,000 tonnes from last month’s projection. And compared with last year, the production could be some 1.2 mt lower during the coming season.
Besides diversion of land to other crops, hot and dry weather in the key US growing regions and much of central Asia has been less than ideal for early development of plants. Again in China, excess rains in could spell trouble, though the journal has left last month’s production estimate of 7.65 mt unchanged. However, it is lower than last year’s 7.8 mt.
Between May and June, there has been a 0.44 mt drop in the production estimate of cotton.
On the other hand, offtake by major consuming nations is expected to increase to 26.18 mt against 26.05 mt. However, it is lower than last month’s estimated of 26.25 mt.
The Chinese consumption, one of the major importers of cotton from India, is expected to be around 11 mt against 10.8 mt last year. Indian offtake has been projected at 7.4 mt, up from last month’s estimate of 7.31 mt and 7.24 last year. Consumption is expected to decline in the US, Turkey, European Union and other nations. The net carryover stock is seen declining by 1.3 mt next season.
Higher Chinese consumption and lower production would mean demand for Indian cotton in the global market. This year, nearly 85 lakh tonnes have been exported. At least four lakh bales (of 170 kg) from the new crop have been contracted for exports from the new crop due in October.
Already, reeling under higher cotton prices, the textile industry is demanding a halt to exports, at least until December. The Tamil Nadu Chief Minister, M Karunanidhi, has also demanded curbs on exports to ensure supply to the textile mills.
Lower production and carryover stock besides higher consumption would mean prices will continue to rule firm in the coming months, in the domestic and global markets. Currently, the popular Shankar-6 variety is quoted at Rs 27,000 for a candy of 355.62 kg against Rs 26,000 last week.
Wednesday, June 25, 2008
Chilli Futures Extend Losses On Arrival Pressure - June 25, 2008
Chilli futures in NCDEX have extended losses due to arrival pressure in the spot market. In NCDEX, Chilli August was quoted at Rs 5372, down 1.29 % at 13:30 IST, after trading as low as Rs 5355. Trading has been resumed in the main spot market at Guntur since Monday after a strike by traders demanding compensation to farmers and traders who had incurred losses in a fire last month. The Guntur market had earlier been closed for annual summer holidays since the last week of May and was supposed to open on June 9th; but accounting the lost trading days due to the strike, the re-opening of the market is after effectively a month. In the morning session, chilli was quoted at Rs 4840, down Rs 67 a quintal.
Tuesday, June 24, 2008
Indian Copper Slips - June 24, 2008
Indian copper futures fell more than a percent in late trade as a strong dollar and falling imports from China forced the red metal to drift lower. At 6.26 p.m., the benchmark June copper MCCM8 on the Multi Commodity Exchange of India (MCX) was down 1.04 percent at 358.55 rupees per kg.
The dollar gained on Monday as some investors bet on a message from the Federal Reserve later in the week.A strengthening dollar makes dollar-denominated commodities expensive for holders of other currencies and caps demand.Sentiment was also dampened by the weak Chinese import figures. China's refined copper imports fell 26.4 percent on month and 19 percent on year in May on the back of strong international prices. Copper inventories in exchanges monitored by the London Metal Exchange fell 875 tonnes to 123,125 tonnes, but failed to turnaround sentiment.
The dollar gained on Monday as some investors bet on a message from the Federal Reserve later in the week.A strengthening dollar makes dollar-denominated commodities expensive for holders of other currencies and caps demand.Sentiment was also dampened by the weak Chinese import figures. China's refined copper imports fell 26.4 percent on month and 19 percent on year in May on the back of strong international prices. Copper inventories in exchanges monitored by the London Metal Exchange fell 875 tonnes to 123,125 tonnes, but failed to turnaround sentiment.
Indian Jeera Trade On Good Export - 24 June, 2008
Indian jeera futures, firm in early trade on good export demand from the Middle East and European countries, pared gains and ended lower on profit-taking and a rise in arrivals, analysts said.All the contracts hit the initial two percent lower daily price limit.
The benchmark September contract has risen more than 12 percent in the last eight trading sessions.The recent rise in prices also prompted farmers to offload more stocks, which increased arrivals in the physical market, said Alimuhammad Lakdawala, an analyst with Anand Rathi Commodities.India's jeera production in 2008 is likely to touch 2.5 million bags due to conducive weather and increased area under cultivation. Arrivals in the physical market were about 14,000-15,000 bags, compared with about 10,000 bags last week, said Manibhai Patel, a Unjha-based trader.The September contract would get support at 12,000 rupees and face resistance at 12,900 rupees.
The benchmark September contract has risen more than 12 percent in the last eight trading sessions.The recent rise in prices also prompted farmers to offload more stocks, which increased arrivals in the physical market, said Alimuhammad Lakdawala, an analyst with Anand Rathi Commodities.India's jeera production in 2008 is likely to touch 2.5 million bags due to conducive weather and increased area under cultivation. Arrivals in the physical market were about 14,000-15,000 bags, compared with about 10,000 bags last week, said Manibhai Patel, a Unjha-based trader.The September contract would get support at 12,000 rupees and face resistance at 12,900 rupees.
Monday, June 23, 2008
Gujarat Kharif Acreage Likely To Touch 90 Lakh Hectares - June 23, 2008
The Gujarat government is planning to bring around 9 million hectares under cultivation for various crops this season (June-September). Last year, 8.9 million hectares were under Kharif cultivation. Additionally, kharif production is expected go up by 5 per cent. Around 10 per cent of sowing is over mainly in Kutch and Saurashtra regions of the state.
The average acreage and production of food grains in Gujarat over the last three year comes to around 3.38 million hectares and 6.11 million tonnes (MT) respectively. As compared to this, the state authorities have aimed at a higher target of foodgrain acreage and production this Kharif season at 3.42 million hectares and 6.66 million tonne. Similarly, area to be brought under pulses cultivation is estimated to rise to 0.99 million hectares during Kharif 2008-09 as against the average acreage of 0.84 million hectares, while the state government targets around 0.7 million tonnes of pulses production, up from 0.65 million tonne last Kharif season, the source said.
Area to be brought under oilseed crops is targeted at 3.34 million hectares and its production at 4.71 million tonnes. The average acreage and production of oilseeds in Gujarat has been 2.93 million hectares and 4.14 million tonnes respectively over the last three years. Government expects area under groundnut crop is likely to be higher at 1.85 million hectares than average of 1.77 lakh hectares. Similarly, the production target has also been kept at 2.75 million MT this Kharif season as against the average production of 2.64 million MT. The target of cotton crop area shows that around 2.24 million hectares are likely to witness cotton sowing while the average acr
India's Soyameal Exports Up 64 Per Cent - June 23, 2008
India's soyameal exports for the first eight months of this season has gone up by a significant 64 per cent in terms of value compared to the total shipment value for the entire 2006-07, according to industry data available. India's soyameal exports for the period ending May stood at Rs 5,917 crore against Rs 3,619 crore in the entire 2006-07 season, says the data compiled by Indore-based Soyabean Processors Association of India (SOPA). Soyabean season runs from October to September,
In terms of quantity, the country has exported 40.80 lakh tons during October-May 2008. The total soyameal export in 2006-07 season stood at 35.20 lakh tons. In the current season the shipment is expected to cross 45 lakh tons as demand for Indian soyameal is still good in the overseas markets, SOPA coordinator Rajesh Agarwal said. Indian soyameal is fetching high price in the global markets. The commodity was shipped at an average price of 420 dollars last month against 350 dollars in October 2007, beginning of the current season. In 2006-07 season, traders exported soyameal, a major animal feed, in the range of USD 204-305. Higher exports are driven an increase in output as well. According to the government's third advance estimate, soyabean production is estimated at record 94.3 lakh tons in 2007-08 season. Vietnam and Japan have emerged as the key markets for Indian soyameal during the current season. Exports to Vietnam stood at 10.46 lakh tons, a rise of over 43 per cent, while shipments to Japan have increased by over 71 per cent to 6.99 lakh tons.
Saturday, June 21, 2008
NECC Seeks Ban On Maize Futures - June 21, 2008
Coimbatore: The National Egg Coordination Committee (NECC) has reiterated its demand for a ban on the forward trading in maize and soyameal saying the unprecedented rise in the prices of these commodities seen in recent time is due to the forward trading.
The committee has also urged the Centre to canalise the export of these goods through a designated Government agency so as to curb the speculative tendency in the market.
The steep increase in maize and soyameal has severely hit the consuming industry such as the poultry feed and the poultry farming which use these as ingredient in their feed manufacture, the NECC said adding that in the absence of a corresponding increase in farm-gate prices, poultry farmers and breeding farms/hatcheries suffered huge losses.
Already 10 per cent of the poultry industry, most of whom are small farmers, have already closed down and if the situation continued, another 30 per cent of the industry would be forced to close down in the near future, it added.
The NECC in a communication has also wanted the Government to provide an eight per cent interest subvention on bank loans availed by the poultry farmers to enable them to tide over the current difficult condition.
The committee has also urged the Centre to canalise the export of these goods through a designated Government agency so as to curb the speculative tendency in the market.
The steep increase in maize and soyameal has severely hit the consuming industry such as the poultry feed and the poultry farming which use these as ingredient in their feed manufacture, the NECC said adding that in the absence of a corresponding increase in farm-gate prices, poultry farmers and breeding farms/hatcheries suffered huge losses.
Already 10 per cent of the poultry industry, most of whom are small farmers, have already closed down and if the situation continued, another 30 per cent of the industry would be forced to close down in the near future, it added.
The NECC in a communication has also wanted the Government to provide an eight per cent interest subvention on bank loans availed by the poultry farmers to enable them to tide over the current difficult condition.
Spot Rubber Declines On Global Cues - June 21, 2008
Kottayam: The physical rubber prices declined on Friday. The sentiments were badly affected by the weakness in global indices and the market made all-round declines as certain dealers and growers came forward to join the sellers queue.
RSS 4 moved down to Rs 124.50 a kg from Rs 126.50 a kg and the volumes were comparatively better. The tyre sector stayed back during the session to put further pressure on the prices.
The June contract for RSS 3 moved down further to ¥336.9 (Rs 134.47) from ¥341.2, July to ¥336.6 (340.1), August to ¥336.7 (340.1), September to ¥336.8 (340.1), October to ¥336.4 (341) and November to ¥337.6 (341) a kg at TOCOM. The grade weakened to Rs 140.91 (141.79) a kg at Bangkok spot.
Spot prices were (Rs/kg): RSS-4: 124.50 (126.50); RSS-5: 122.50 (123.50); ungraded: 119.50 (121.50); ISNR 20: 121 (122.50) and latex 60 per cent: 85 (86).
RSS 4 moved down to Rs 124.50 a kg from Rs 126.50 a kg and the volumes were comparatively better. The tyre sector stayed back during the session to put further pressure on the prices.
The June contract for RSS 3 moved down further to ¥336.9 (Rs 134.47) from ¥341.2, July to ¥336.6 (340.1), August to ¥336.7 (340.1), September to ¥336.8 (340.1), October to ¥336.4 (341) and November to ¥337.6 (341) a kg at TOCOM. The grade weakened to Rs 140.91 (141.79) a kg at Bangkok spot.
Spot prices were (Rs/kg): RSS-4: 124.50 (126.50); RSS-5: 122.50 (123.50); ungraded: 119.50 (121.50); ISNR 20: 121 (122.50) and latex 60 per cent: 85 (86).
Friday, June 20, 2008
Wheat Production Touches 78 M Tonnes This Year - June 20, 2008
New Delhi: Wheat production of the country has touched 78 million tonnes in 2007-08 season, higher than what government has projected in its third advance estimate.
"Wheat production has touched 78 million tonnes this year," Food Corporation of India (FCI) Chairman and Managing Director Alok Sinha told reporters here
As per the government's third advance estimate, wheat production is projected at a record 76.78 million tonnes in 2007-08 season as compared with 75.81 million tonnes in the previous year.
On the back of record production and higher minimum support price, FCI -- the nodal agency for procurement and distribution of foodgrains under public distribution system -- along with other state agencies has so far procured 22.14 million tonnes of wheat against the targeted 15 million tonnes.
The government has fixed the wheat MSP at Rs 1,000 per quintal to boost procurement during ongoing marketing season. The Centre had to import 7.3 million tonnes of wheat during last two years because of low procurement than targeted.
"Wheat production has touched 78 million tonnes this year," Food Corporation of India (FCI) Chairman and Managing Director Alok Sinha told reporters here
As per the government's third advance estimate, wheat production is projected at a record 76.78 million tonnes in 2007-08 season as compared with 75.81 million tonnes in the previous year.
On the back of record production and higher minimum support price, FCI -- the nodal agency for procurement and distribution of foodgrains under public distribution system -- along with other state agencies has so far procured 22.14 million tonnes of wheat against the targeted 15 million tonnes.
The government has fixed the wheat MSP at Rs 1,000 per quintal to boost procurement during ongoing marketing season. The Centre had to import 7.3 million tonnes of wheat during last two years because of low procurement than targeted.
Rubber Price Declines - June 20 ,2008
Kottayam: Spot rubber prices lost ground on June 19. The international rubber futures turned lower as selling became dominant on late trading claiming the absence of fresh positive factors specific to rubber. RSS 4 declined to Rs 126.50 a kg from Rs.127.75 a kg on June 19. Certain major manufacturers were purchasers on sheet rubber up to Rs 127 a kg during the morning session. Spot prices were (Rs/kg): RSS-4: 126.50 (127.75); RSS-5: 123.50 (124); ungraded: 121.50 (122.25); ISNR 20: 122.50 (123) and latex 60 per cent: 86 (86).
Thursday, June 19, 2008
Sugar Output Seen Below 265 Lakh Tonnes - June 19, 2008
New Delhi: The country’s sugar production is likely to end up a shade below 265 lakh tonnes (lt) in current 2007-08 crushing season (October-September).
Mills closed
According to official estimates, total output in the season up to May 31 amounted to 254.02 lt, down from the 271.09 lt for the corresponding period of 2006-07. Mills have closed down for the season in virtually all States, barring Tamil Nadu (TN), Maharashtra and Karnataka.
Industry sources say that Maharashtra’s final production will be about 91 lt (against 88.5 lt till May 31), while these would be 30 lt for Karnataka and 21 lt for TN. “At the most, there will be an extra 10 lt produced during the four remaining months of the season, which would take overall output in 2007-08 to just below 265 lt,” they pointed out.
Current stocks
The current season began with stocks of 110 lt, based on the Excise Department’s assessment of sugar lying with mills (though the trade puts this number lower by at least 10 lt). Taking production at 265 lt, officially estimated domestic consumption of 210 lt (which is again 10 lt below what the trade believes it would be) and exports of 40 lt, the season will end with stocks of 125 lt. The trade’s figure would be 105 lt or less.
The real problem, however, is in estimating the likely output in the ensuing 2008-09 season from October 1. There is unanimity over production being lower, but not on how much lower. Sanjay Tapriya, Director (Finance) at Simbhaoli Sugars Ltd, feels that production in Uttar Pradesh alone will be 10 lt or more lower than the current season’s 73 lt.
Maharashtra’s production
The Managing Director of the Maharashtra State Cooperative Sugar Factories’ Federation, Prakash Naiknavare, projects sugar output in his State for 2008-09 at 70 lt – a drop of over 20 lt. “We would be able to crush only 610 lt of cane, which at 11.5 per cent recovery, gives slightly above 70 lt,” he noted.
With the two leading States producing 30 lt less and others put together registering another 10 lt drop, there is likelihood of sugar output in the coming season falling to 220-230 lt, which is around the level of anticipated domestic consumption. “Even after accounting for the opening stocks, there would not be much surplus left for exports. The country could even turn importer in 2009-10,” the sources said.
But all these projections are always liable to change. For example, Maharashtra was initially expected to produce only around 85 lt in the current season because of less cane crushed by mills. “We have crushed only 762 lt, compared to last season’s 798.23 lt. However, the average sugar recovery, at 11.93 per cent, has turned out to be way above the 11.39 per cent. So, we will e nd up producing more or less the same quantity of sugar as in 2006-07,” Naiknavare said.
Global scenario
The other uncertainty is on the international front. In the last one week, the August London white sugar contract has gone up by over $ 25 to $ 379 a tonne, while raw sugar futures at New York (No. 11 for October) has climbed more than a cent to 12.70 cents a pound.
These, in turn, have been fuelled by record corn (maize) prices arising from flood damage to the US crop. As a result, the demand for fuel ethanol is expected to be met increasingly from Brazilian cane, leaving that much less crop available for making sugar.
Already, with ethanol prices going through the roof, alcohol-based chemical manufacturers such as Jubilant Organosys, India Glycols and Lakshmi Organic Industries have apparently decided to go slow on import plans.
Mills closed
According to official estimates, total output in the season up to May 31 amounted to 254.02 lt, down from the 271.09 lt for the corresponding period of 2006-07. Mills have closed down for the season in virtually all States, barring Tamil Nadu (TN), Maharashtra and Karnataka.
Industry sources say that Maharashtra’s final production will be about 91 lt (against 88.5 lt till May 31), while these would be 30 lt for Karnataka and 21 lt for TN. “At the most, there will be an extra 10 lt produced during the four remaining months of the season, which would take overall output in 2007-08 to just below 265 lt,” they pointed out.
Current stocks
The current season began with stocks of 110 lt, based on the Excise Department’s assessment of sugar lying with mills (though the trade puts this number lower by at least 10 lt). Taking production at 265 lt, officially estimated domestic consumption of 210 lt (which is again 10 lt below what the trade believes it would be) and exports of 40 lt, the season will end with stocks of 125 lt. The trade’s figure would be 105 lt or less.
The real problem, however, is in estimating the likely output in the ensuing 2008-09 season from October 1. There is unanimity over production being lower, but not on how much lower. Sanjay Tapriya, Director (Finance) at Simbhaoli Sugars Ltd, feels that production in Uttar Pradesh alone will be 10 lt or more lower than the current season’s 73 lt.
Maharashtra’s production
The Managing Director of the Maharashtra State Cooperative Sugar Factories’ Federation, Prakash Naiknavare, projects sugar output in his State for 2008-09 at 70 lt – a drop of over 20 lt. “We would be able to crush only 610 lt of cane, which at 11.5 per cent recovery, gives slightly above 70 lt,” he noted.
With the two leading States producing 30 lt less and others put together registering another 10 lt drop, there is likelihood of sugar output in the coming season falling to 220-230 lt, which is around the level of anticipated domestic consumption. “Even after accounting for the opening stocks, there would not be much surplus left for exports. The country could even turn importer in 2009-10,” the sources said.
But all these projections are always liable to change. For example, Maharashtra was initially expected to produce only around 85 lt in the current season because of less cane crushed by mills. “We have crushed only 762 lt, compared to last season’s 798.23 lt. However, the average sugar recovery, at 11.93 per cent, has turned out to be way above the 11.39 per cent. So, we will e nd up producing more or less the same quantity of sugar as in 2006-07,” Naiknavare said.
Global scenario
The other uncertainty is on the international front. In the last one week, the August London white sugar contract has gone up by over $ 25 to $ 379 a tonne, while raw sugar futures at New York (No. 11 for October) has climbed more than a cent to 12.70 cents a pound.
These, in turn, have been fuelled by record corn (maize) prices arising from flood damage to the US crop. As a result, the demand for fuel ethanol is expected to be met increasingly from Brazilian cane, leaving that much less crop available for making sugar.
Already, with ethanol prices going through the roof, alcohol-based chemical manufacturers such as Jubilant Organosys, India Glycols and Lakshmi Organic Industries have apparently decided to go slow on import plans.
Rubber sees down trend - June 19, 2008
Kottayam: Spot rubber turned weak on June 18. Sheet rubber fell to Rs 127.75 from Rs 129 a kg on purchaser resistance. RSS 3 surrendered slightly at its June contract. Spot prices were (Rs/kg): RSS-4: 127.75 (129); RSS-5: 124 (125.50); ungraded: 122.25 (122.50); ISNR 20: 123 (123.50) and latex 60 per cent: 86 (86).
Wednesday, June 18, 2008
Rubber Price Improves - June 18, 2008
Kottayam: The physical rubber rates increases further on June 17. Sheet rubber RSS 4 ended better by 50 paise at Rs 129 (128.50) a kg on scattered trading as there were no quantity sellers or buyers in the market. Spot prices were (Rs/kg): RSS-4: 129 (128.50); RSS-5: 125.50 (125); ungraded: 122.50 (122); ISNR 20: 123.50 (123) and latex 60 per cent: 86 (86).
Mentha Oil Hits Upper Circuit June 18, 2008
Mumbai: Mentha oil futures continued its bull run to hit the upper circuit of four per cent on MCX on Tuesday. It closed higher at Rs 510 a kg on concerns of crops damage in Uttar Pradesh due to the recent rains.
Cardamom gained 1.88 per cent to Rs 706 a kg on strong demand in the spot markets. Jeera and soyabean futures which opened strong on NCDEX hit the upper circuit, but fell sharply to end the day in the red. Soyabean touched the day’s high of Rs 2,748 crore fell down to close at Rs 2,649 a quintal, down 0.45 per cent over previous day’s close.
Guarseed gains
Reports of crop damage in the US due to incessant rain have pushed soyabean futures in the Chicago Board of Trade. Solvent Extractors’ Association has released encouraging data on soya meal export data.
Guarseed was up 1.94 per cent at Rs 1,789 a quintal on short covering.
Barley fell 1.2 per cent to Rs 1,363 a quintal on profit booking after the recent sharp rally in prices. RM seed was down 0.41 per cent to Rs 657 per 20 kg following long liquidation.
MCX recorded a turnover of Rs 6,910 crore up to 5 pm, while it was Rs 2,184 crore on NCDEX.
Cardamom gained 1.88 per cent to Rs 706 a kg on strong demand in the spot markets. Jeera and soyabean futures which opened strong on NCDEX hit the upper circuit, but fell sharply to end the day in the red. Soyabean touched the day’s high of Rs 2,748 crore fell down to close at Rs 2,649 a quintal, down 0.45 per cent over previous day’s close.
Guarseed gains
Reports of crop damage in the US due to incessant rain have pushed soyabean futures in the Chicago Board of Trade. Solvent Extractors’ Association has released encouraging data on soya meal export data.
Guarseed was up 1.94 per cent at Rs 1,789 a quintal on short covering.
Barley fell 1.2 per cent to Rs 1,363 a quintal on profit booking after the recent sharp rally in prices. RM seed was down 0.41 per cent to Rs 657 per 20 kg following long liquidation.
MCX recorded a turnover of Rs 6,910 crore up to 5 pm, while it was Rs 2,184 crore on NCDEX.
Tuesday, June 17, 2008
Coffee Output Seen Up On Helpful Weather - June 17, 2008
Chennai: Good and well-distributed rainfall during October 2007-March 2008 is seen as the primary reason for a rebound in the country's coffee production during 2008-09 (October-September) season by nearly 12 per cent.
According to Coffee Board's post-blossom estimates, coffee production next season is expected to be 2.93 lakh tonnes (lt) against 2.62 lt this season. Of the 2.93 lt, arabica is estimated to be one lt and robusta the rest. Last year, arabica output was pegged at 92,500 tonnes and robusta 1.69 lt.
"Good and well-distributed rainfall during October-March helped in moisture retention for longer period which in turn helped in the production of bearing wood for the crop during the current season. Further, the blossom and backing showers were reported to be good and adequate in almost all coffee-growing zones of Karnataka," the board said on its Web site while putting out the estimates.
The post-blossom estimates are made after the coffee flower blossoms and setting of the fruit begins.
The board also said that lower crop last year coupled with good weather and bush condition and better husbandry practices had helped in production regaining ground in Karnataka zone.
Meanwhile, provisional exports from January 1 to last weekend have been pegged at 1.21 lt against 1.16 lt. However, minus re-exports, the figures show a marginal dip (1.09 lt versus 1.10 lt).
In Karnataka, the increase in production is more pronounced in Hassan where the crop is up 46.28 per cent over last year, while output in Chikmagalur and Kodagu is seen up at 12.64 per cent and 5.22 per cent respectively.
Again rise in robusta is more (59 per cent in Hassan and 20 per cent in Chikmagalur). In arabica, the increase is 40 percent in Hassan and surprisingly, it is down in Kodagu by 1.5 per cent.
For the oncoming season, Karnataka will account for 73 per cent of the total crop, followed by Kerala. In Kerala, timely rains have helped, while the crop being free of any adverse effect in Wayanad and Travancore has also helped. Production in Kerala is pegged at 57,200 tonnes.
TN situation
On the other hand, production is expected to decline in Tamil Nadu. This is because arabica is a biennial crop and last year it was an "on" one. Also, blossoming in the State was hit by continuous rains during December-March, compounded by low temperatures.
Last year, coffee production, which was expected to be 3 lt, was affected by heavy rains in the growing regions which led to the plants developing wet feet.
This particularly affected robusta production. The wet feet phenomenon is a sort of coma stage for the crop whose roots fail to work and do not consume nutrients and respond to sunlight.
According to Coffee Board's post-blossom estimates, coffee production next season is expected to be 2.93 lakh tonnes (lt) against 2.62 lt this season. Of the 2.93 lt, arabica is estimated to be one lt and robusta the rest. Last year, arabica output was pegged at 92,500 tonnes and robusta 1.69 lt.
"Good and well-distributed rainfall during October-March helped in moisture retention for longer period which in turn helped in the production of bearing wood for the crop during the current season. Further, the blossom and backing showers were reported to be good and adequate in almost all coffee-growing zones of Karnataka," the board said on its Web site while putting out the estimates.
The post-blossom estimates are made after the coffee flower blossoms and setting of the fruit begins.
The board also said that lower crop last year coupled with good weather and bush condition and better husbandry practices had helped in production regaining ground in Karnataka zone.
Meanwhile, provisional exports from January 1 to last weekend have been pegged at 1.21 lt against 1.16 lt. However, minus re-exports, the figures show a marginal dip (1.09 lt versus 1.10 lt).
In Karnataka, the increase in production is more pronounced in Hassan where the crop is up 46.28 per cent over last year, while output in Chikmagalur and Kodagu is seen up at 12.64 per cent and 5.22 per cent respectively.
Again rise in robusta is more (59 per cent in Hassan and 20 per cent in Chikmagalur). In arabica, the increase is 40 percent in Hassan and surprisingly, it is down in Kodagu by 1.5 per cent.
For the oncoming season, Karnataka will account for 73 per cent of the total crop, followed by Kerala. In Kerala, timely rains have helped, while the crop being free of any adverse effect in Wayanad and Travancore has also helped. Production in Kerala is pegged at 57,200 tonnes.
TN situation
On the other hand, production is expected to decline in Tamil Nadu. This is because arabica is a biennial crop and last year it was an "on" one. Also, blossoming in the State was hit by continuous rains during December-March, compounded by low temperatures.
Last year, coffee production, which was expected to be 3 lt, was affected by heavy rains in the growing regions which led to the plants developing wet feet.
This particularly affected robusta production. The wet feet phenomenon is a sort of coma stage for the crop whose roots fail to work and do not consume nutrients and respond to sunlight.
Rubber Price Increases - June 17, 2008
Kottayam: The rubber prices turned better on June 16. RSS 4 ended at Rs 128.50 against Rs 128 a kg on the previous weekend. RSS 3 (spot) increased to Rs 142.08 (141.09) a kg at Bangkok. Spot prices were (Rs/kg): RSS-4: 128.50 (128); RSS-5: 125 (124); ungraded: 122 (120.25); ISNR 20: 123 (121.50) and latex 60 per cent: 86 (85.50).
Monday, June 16, 2008
Gold To Test Resistance Levels - June 16, 2008
Comex gold futures ended marginally higher on short-covering on Friday, as buyers covered short positions before the weekend and pulled prices up from lower levels.
Investors awaited the outcome of this weekend’s meeting of G8 Finance Ministers. Any comment on inflation at the meeting may fuel expectations for a US rate hike, which could strengthen the dollar, pressuring gold. Nonetheless, with the dollar remaining broadly weak, the outlook for interest rates uncertain, and inflation on the rise, markets remain broadly positive towards the long-term outlook for gold.
Comex August gold futures fell lower against our expectations. As cautioned, in the previous update, fall below $880 forced us to abandon our bullish bias. Moreover, a head-and-shoulder pattern has formed and its neckline broken. This could lead to a sharp decline towards $795 or even lower in the coming sessions. Rallies to $800 and $895 are now expected to cap the upside.
Our favoured view is to expect a fall below $855 to trigger the decline as long as $908-909 caps upside attempts. We believe that the third wave could have ended at $1033 and the fourth wave is in progress right now. We could now be tracking a wave four A-B-C in progress and once the correction ends, a potential fifth wave impulse could be in the making.
Only a rise above $955 would confirm this view. The RSI is in the neutral zone, indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator, suggesting a bearish reversal.
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Only a crossover above the zero line will now restore confidence for bullishness ahead. Therefore, expect gold to test the resistance levels and fall lower subsequently.
Supports are at $863, 851 & 832. Resistances are at $880, 895 & 907.
Investors awaited the outcome of this weekend’s meeting of G8 Finance Ministers. Any comment on inflation at the meeting may fuel expectations for a US rate hike, which could strengthen the dollar, pressuring gold. Nonetheless, with the dollar remaining broadly weak, the outlook for interest rates uncertain, and inflation on the rise, markets remain broadly positive towards the long-term outlook for gold.
Comex August gold futures fell lower against our expectations. As cautioned, in the previous update, fall below $880 forced us to abandon our bullish bias. Moreover, a head-and-shoulder pattern has formed and its neckline broken. This could lead to a sharp decline towards $795 or even lower in the coming sessions. Rallies to $800 and $895 are now expected to cap the upside.
Our favoured view is to expect a fall below $855 to trigger the decline as long as $908-909 caps upside attempts. We believe that the third wave could have ended at $1033 and the fourth wave is in progress right now. We could now be tracking a wave four A-B-C in progress and once the correction ends, a potential fifth wave impulse could be in the making.
Only a rise above $955 would confirm this view. The RSI is in the neutral zone, indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator, suggesting a bearish reversal.
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Only a crossover above the zero line will now restore confidence for bullishness ahead. Therefore, expect gold to test the resistance levels and fall lower subsequently.
Supports are at $863, 851 & 832. Resistances are at $880, 895 & 907.
Nickel Futures Seen Heading up - June 16, 2008
Mumbai: After the sharp decline in early 2008, nickel futures are set for an upward move in the short term.
The recent explosion at Apache Energy’s plant on Varanus Island in Western Australia on June 3 is expected to hit gas supply to mining companies thus hampering production.
Western Australia’s biggest source of gas supply was cut off after two pipelines feeding offshore gas ruptured, causing an explosion at the plant and the total evacuation of staff.
Smelter Furnace
BHP Billiton, the world’s largest miner, has reportedly closed a nickel factory in Western Australia for four months, while it rebuilds its smelter furnace. The company said it has to renovate the furnace at Kalgoorlie nickel smelter, as it has become unsafe for use. The Kalgoorlie smelter has an annual production capacity of about one-lakh tonne of nickel-in-matte, which is fed into the Kwinana refinery and exported to customers.
The shutdown will halt production at Kwinana refinery and reduce global supply by two per cent. Analysts estimate that the shutdown of Kwinana would cut nickel sales by 25,000 tonnes in its next financial year to June 2009 and by 3,000 tonnes for the current fiscal year ending June 2008. The company recorded a sales turnover of 1.01-lakh tonnes last financial year.
Minara Resources, Australia’s second largest nickel miner, has also cut production.
A day after the blast, Apache invoked a force majeure clause, absolving its responsibility to meet supply contracts, leaving users looking for other gas supplies as well as diesel fuel and electricity.
More than 40 companies have reported reduced production, as a result of the gas shortage, while many resource companies have made the costly switch to diesel power. Western Australia is home to 1,030 operating mine sites, producing over 50 different minerals and supplying about a third of the world’s iron ore, 20 per cent of the gold and tens of thousands of tonnes of copper, nickel, zinc, lead and other industrial staples.
Production of ammonium nitrate and cyanide in the State had been completely halted due to the cut in gas supply. Both the materials are needed by miners of gold and minerals sands, such as zircon.
Nickle prices were down by about 10 per cent till May 2008, due to poor demand from stainless-steel manufacturers, which consumes two-third of global nickel production. Prices on MCX have been on the upswing since June 3. It has shot up 10 per cent to Rs 1,046 per kg on Saturday.
The recent explosion at Apache Energy’s plant on Varanus Island in Western Australia on June 3 is expected to hit gas supply to mining companies thus hampering production.
Western Australia’s biggest source of gas supply was cut off after two pipelines feeding offshore gas ruptured, causing an explosion at the plant and the total evacuation of staff.
Smelter Furnace
BHP Billiton, the world’s largest miner, has reportedly closed a nickel factory in Western Australia for four months, while it rebuilds its smelter furnace. The company said it has to renovate the furnace at Kalgoorlie nickel smelter, as it has become unsafe for use. The Kalgoorlie smelter has an annual production capacity of about one-lakh tonne of nickel-in-matte, which is fed into the Kwinana refinery and exported to customers.
The shutdown will halt production at Kwinana refinery and reduce global supply by two per cent. Analysts estimate that the shutdown of Kwinana would cut nickel sales by 25,000 tonnes in its next financial year to June 2009 and by 3,000 tonnes for the current fiscal year ending June 2008. The company recorded a sales turnover of 1.01-lakh tonnes last financial year.
Minara Resources, Australia’s second largest nickel miner, has also cut production.
A day after the blast, Apache invoked a force majeure clause, absolving its responsibility to meet supply contracts, leaving users looking for other gas supplies as well as diesel fuel and electricity.
More than 40 companies have reported reduced production, as a result of the gas shortage, while many resource companies have made the costly switch to diesel power. Western Australia is home to 1,030 operating mine sites, producing over 50 different minerals and supplying about a third of the world’s iron ore, 20 per cent of the gold and tens of thousands of tonnes of copper, nickel, zinc, lead and other industrial staples.
Production of ammonium nitrate and cyanide in the State had been completely halted due to the cut in gas supply. Both the materials are needed by miners of gold and minerals sands, such as zircon.
Nickle prices were down by about 10 per cent till May 2008, due to poor demand from stainless-steel manufacturers, which consumes two-third of global nickel production. Prices on MCX have been on the upswing since June 3. It has shot up 10 per cent to Rs 1,046 per kg on Saturday.
Saturday, June 14, 2008
India Should Export Some Wheat, Rice - June 14, 2008
Mumbai: India attracted a lot of flak, of late, from various quarters for contributing to the ongoing global food crisis. The country’s appetite for food has been blamed for the price spurt. Here is an opportunity for India to actually contribute to cooling of world cereal prices.
With production of about 76 million tonnes (mt) and procurement topping an unprecedented 22 mt, India is smugly placed as far as wheat is concerned. Including the opening stock, the Food Corporation of India may currently be holding more than 26 mt of wheat. With such a comfortable inventory, the prospect of import has all but vanished
IGC outlook
The global wheat scenario is one of optimism too. For the year 2008-09, latest estimates suggest wheat production going to a record high. The London-based International Grains Council (IGC) has projected the world production at a new high of 650 mt , from the previous year’s 604 mt.
The US Department of Agriculture earlier this week came up with a bumper crop estimate of 663 mt (611 mt). Australia, European Union, Canada, China, Russia, Ukraine and USA are all set to harvest larger crops.
World wheat consumption is set to grow robustly. IGC sees wheat use expanding by 20 mt to 632 mt. Driven by lower prices, food and feed use is expected to increase. Yet, clearly, world consumption is sure to trail production given the strong output growth. No wonder, the market has already taken cognisance of the ensuing developments and prices have begun to slide.
Weather uncertainties
Despite a large global surplus, wheat prices are most unlikely to crash or even decline to levels seen two years ago. Further, weather uncertainties, especially in origins such as Australia, can change the current rosy picture.
Additionally, the prospect of a large corn (maize) crop in the US is receding because of wet weather in the Midwest. High corn prices are sure to divert a part of consumption demand towards wheat, especially for feed purpose, and to a lesser extent for ethanol.
Although world prices are correcting down, they would still be at a high level. India should take advantage of the global price situation.
There is an opportunity to export at least 2-3 mt of wheat.
The Government has procured wheat at the support price of Rs 10,000 a tonne. After adding local and other levies, wheat at the warehouse costs about Rs 11,000 a tonne. In addition is the cost of carry, which is not less than Rs 2,500 a tonne a year.
With government holding in excess of 25 mt now, the opening stocks for the next season may be conservatively placed at 7-8 mt, the cost of which would be Rs 13,500 a tonne. There is an opportunity to cut at least partially the wasteful food subsidy incurred on storage of excessive quantities of wheat.
The rupee too is favourably placed for exports at over 42.50 to a dollar. So, an export price of anything over $300 a tonne free-on-board should make a lot of sense for the country.
Export of 2-3 mt wheat from India would aid in cutting the subsidy burden besides helping to cool international wheat prices. But timing is the key. Also, the decision to export would require tremendous political will and courage. At the same time, steps to ensure wheat production next year remains at the same level, if not higher, need to be initiated.
Similarly, the complete ban on export of non-basmati rice should be reviewed and lifted, albeit partially. It is rather ironical that the Government talks about record rice production of 94 mt and goes on to impose an export embargo. Export of up to two mt of non-basmati rice in a well-regulated manner would ease global supplies and cool rice prices.
Maize exports
Maize exports from the country are going on. Shipments have exceeded two mt. This has provided the growers with remunerative prices.
The kharif season is upon us; and the primary objective should be to maximise grains output, especially rice and maize. Large production in India and the possibility of exports out of the country would surely help contain global food prices, and counter negative publicity about India’s border control measures.
With production of about 76 million tonnes (mt) and procurement topping an unprecedented 22 mt, India is smugly placed as far as wheat is concerned. Including the opening stock, the Food Corporation of India may currently be holding more than 26 mt of wheat. With such a comfortable inventory, the prospect of import has all but vanished
IGC outlook
The global wheat scenario is one of optimism too. For the year 2008-09, latest estimates suggest wheat production going to a record high. The London-based International Grains Council (IGC) has projected the world production at a new high of 650 mt , from the previous year’s 604 mt.
The US Department of Agriculture earlier this week came up with a bumper crop estimate of 663 mt (611 mt). Australia, European Union, Canada, China, Russia, Ukraine and USA are all set to harvest larger crops.
World wheat consumption is set to grow robustly. IGC sees wheat use expanding by 20 mt to 632 mt. Driven by lower prices, food and feed use is expected to increase. Yet, clearly, world consumption is sure to trail production given the strong output growth. No wonder, the market has already taken cognisance of the ensuing developments and prices have begun to slide.
Weather uncertainties
Despite a large global surplus, wheat prices are most unlikely to crash or even decline to levels seen two years ago. Further, weather uncertainties, especially in origins such as Australia, can change the current rosy picture.
Additionally, the prospect of a large corn (maize) crop in the US is receding because of wet weather in the Midwest. High corn prices are sure to divert a part of consumption demand towards wheat, especially for feed purpose, and to a lesser extent for ethanol.
Although world prices are correcting down, they would still be at a high level. India should take advantage of the global price situation.
There is an opportunity to export at least 2-3 mt of wheat.
The Government has procured wheat at the support price of Rs 10,000 a tonne. After adding local and other levies, wheat at the warehouse costs about Rs 11,000 a tonne. In addition is the cost of carry, which is not less than Rs 2,500 a tonne a year.
With government holding in excess of 25 mt now, the opening stocks for the next season may be conservatively placed at 7-8 mt, the cost of which would be Rs 13,500 a tonne. There is an opportunity to cut at least partially the wasteful food subsidy incurred on storage of excessive quantities of wheat.
The rupee too is favourably placed for exports at over 42.50 to a dollar. So, an export price of anything over $300 a tonne free-on-board should make a lot of sense for the country.
Export of 2-3 mt wheat from India would aid in cutting the subsidy burden besides helping to cool international wheat prices. But timing is the key. Also, the decision to export would require tremendous political will and courage. At the same time, steps to ensure wheat production next year remains at the same level, if not higher, need to be initiated.
Similarly, the complete ban on export of non-basmati rice should be reviewed and lifted, albeit partially. It is rather ironical that the Government talks about record rice production of 94 mt and goes on to impose an export embargo. Export of up to two mt of non-basmati rice in a well-regulated manner would ease global supplies and cool rice prices.
Maize exports
Maize exports from the country are going on. Shipments have exceeded two mt. This has provided the growers with remunerative prices.
The kharif season is upon us; and the primary objective should be to maximise grains output, especially rice and maize. Large production in India and the possibility of exports out of the country would surely help contain global food prices, and counter negative publicity about India’s border control measures.
Covering Purchases Help Rubber Recover - June 14, 2008
Kottayam: The physical rubber prices showed a mixed trend on Friday. A positive closing in Japanese markets catalysed the domestic sentiments partially and sheet rubber RSS 4 recovered to Rs 128 from Rs 127 a kg on covering purchases.
The volumes continued to be low. “We expect the prices to remain firm due to fundamental reasons and the chances for a sharp decline are remote”, an observer said.
Dull mood
Major consuming sectors continued to stay back and the market mood was quite dull in their absence.
RSS 3 improved at its June contract to ¥335.8 (Rs 133.10) from ¥331.3, July to ¥336.5 (332), August to ¥336 (332.9), September to ¥335.6 (330.8), October to ¥337.7 (330.9) and November to ¥339.7 (332) a kg at TOCOM. The grade slipped to Rs 141.09 (141.49) a kg (spot) at Bangkok.
Spot prices were (Rs/kg): RSS-4: 128 (127); RSS-5: 124 (124); ungraded: 120.25 (120); ISNR 20: 121.50 (122) and latex 60 per cent: 85.50 (85.50).
The volumes continued to be low. “We expect the prices to remain firm due to fundamental reasons and the chances for a sharp decline are remote”, an observer said.
Dull mood
Major consuming sectors continued to stay back and the market mood was quite dull in their absence.
RSS 3 improved at its June contract to ¥335.8 (Rs 133.10) from ¥331.3, July to ¥336.5 (332), August to ¥336 (332.9), September to ¥335.6 (330.8), October to ¥337.7 (330.9) and November to ¥339.7 (332) a kg at TOCOM. The grade slipped to Rs 141.09 (141.49) a kg (spot) at Bangkok.
Spot prices were (Rs/kg): RSS-4: 128 (127); RSS-5: 124 (124); ungraded: 120.25 (120); ISNR 20: 121.50 (122) and latex 60 per cent: 85.50 (85.50).
Friday, June 13, 2008
Jeera Futures Gain On Short Supply - June 13, 2008
Mumbai: Jeera futures on NCDEX gained 1.62 per cent to Rs 11,015 a quintal on reports of a drop in global supply. Moreover, arrivals in the domestic market declined sharply. Maize was up 1.51 per cent at Rs 940 per quintal on fresh buying interest.
Castorseed rose 1.07 per cent to Rs 536 per 20 kg on shrinking arrivals and strong export demand. Cocud moved up 0.99 per cent at Rs 468 per 50 kg on strong demand from Rajasthan and Gujarat.
Reports of rainfall in parts of Rajasthan and Gujarat pulled down guarseed futures by 2.6 per cent to Rs 1,722 per quintal.
Turmeric dips
Turmeric settled a tad down at Rs 4,175 on profit taking coupled with weak sentiment in the physical market.
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On MCX, cardamom rose 2.48 per cent to Rs 702 per quintal on lower arrivals and strong domestic demand.
MCX registered a turnover of Rs 6,119 crore up to 5 pm on Thursday.
Castorseed rose 1.07 per cent to Rs 536 per 20 kg on shrinking arrivals and strong export demand. Cocud moved up 0.99 per cent at Rs 468 per 50 kg on strong demand from Rajasthan and Gujarat.
Reports of rainfall in parts of Rajasthan and Gujarat pulled down guarseed futures by 2.6 per cent to Rs 1,722 per quintal.
Turmeric dips
Turmeric settled a tad down at Rs 4,175 on profit taking coupled with weak sentiment in the physical market.
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On MCX, cardamom rose 2.48 per cent to Rs 702 per quintal on lower arrivals and strong domestic demand.
MCX registered a turnover of Rs 6,119 crore up to 5 pm on Thursday.
Rubber Rate Declines On Lack Of Purchasing Support - June 13, 2008
Kottayam: The rubber market lost its steam once again as TOCOM rubber futures made sharp falls on June 12. RSS 4 ended weak at Rs 127 a kg against Rs 128 a kg lacking follow-up support from traders. Even a steady closing at Rs 141.49 (139.82) a kg for RSS 3 (spot) at Bangkok failed the cheer the domestic players as the trend setting Japanese indices were under immense pressure on late trading. Spot rates were (Rs/kg): RSS-4: 127 (128); RSS-5: 124 (125); ungraded: 120 (121); ISNR 20: 122 (122) and latex 60 per cent: 85.50 (85.50).
Thursday, June 12, 2008
Rubber Rates Regain Partially - June 12, 2008
Kottayam: Spot rubber rates regained partly on June 11. RSS 4 closed at Rs 128 against Rs 126 a kg mainly on covering buys. The grade firmed up to Rs 139.82 (138.49) a kg at Bangkok spot. Spot prices were (Rs/kg): RSS-4: 128 (126); RSS-5: 125 (122); ungraded: 121 (119); ISNR 20: 122 (120) and latex 60 per cent: 85.50 (85).
AP Targets 200 Lakh Tonne Foodgrain production - June 12, 2008
Hyderabad: The Andhra Pradesh Government has prepared an integrated agricultural action plan with a cumulative investment of Rs 32,074 crore for the year 2008-09 across 21 different departments that have a bearing on agriculture.
Releasing the action plan here on Wednesday, the Chief Minister, Dr Y S Rajasekhara Reddy, said the cumulative investment on agriculture was only Rs 4,280 crore in 2003-04 (the last year of Telugu Desam Government).
He said the government set a target of 200 lakh tonnes of food grain production this year as against 190 lakh tonnes last year.
“We have attained a growth rate of 12 per cent in agriculture and allied sectors in the state as against a national average of 4.5 per cent. Overall growth too exceeded the national average of 9.03 per cent with 10.64 per cent in 2007-08,” he said.
Releasing the action plan here on Wednesday, the Chief Minister, Dr Y S Rajasekhara Reddy, said the cumulative investment on agriculture was only Rs 4,280 crore in 2003-04 (the last year of Telugu Desam Government).
He said the government set a target of 200 lakh tonnes of food grain production this year as against 190 lakh tonnes last year.
“We have attained a growth rate of 12 per cent in agriculture and allied sectors in the state as against a national average of 4.5 per cent. Overall growth too exceeded the national average of 9.03 per cent with 10.64 per cent in 2007-08,” he said.
Wednesday, June 11, 2008
NMCE Modifies Coconut Oil Contract Norms - June 11, 2008
Ahmedabad: The National Multi-Commodity Exchange (NMCE) has introduced ‘premium grade coconut oil’, in addition to the existing basis ‘edible grade’ coconut oil with certain modifications in contract specifications.
The exchange is simultaneously launching three new futures contracts in coconut oil from June 16, 2008. Each contract will be concurrently traded on NMCE e-platform. They will expire on August 14, September 15 and October 15 respectively in 2008, NMCE said in a release here.
As per the modifications, the oleic acid content as Free Fatty Acid (FFA) in the ‘premium grade’ coconut oil should not exceed 1 per cent. And, in case, it exceeds 1 per cent, the buyer shall have the option to reject. In case of the existing ‘basis edible grade’ coconut oil, the oleic acid content as FFA should not exceed 1.5 per cent limit.
The permissible iodine value in the ‘premium grade’ coconut oil is 7.50 to 9 units, whereas that for the existing basis ‘edible grade’ is 7.50 to 10 units.
Ticker size
For easier transactions, the ticker size for trading is being changed to one rupee from 10-paise earlier. However, it will be continued to be traded in lots of one metric tonne and the price quoted in rupees per quintal, as earlier. The premium grade coconut oil is tenderable at a premium of Rs 2.50 per kg.
Other parameters of the ‘premium grade’ coconut oil remain the same as the ‘basis edible grade.’ The changes have been approved by the commodities market regulator Forward Markets Commission (FMC).
In another change, applicable to both the grades, the commodity could be delivered anywhere in India, as decided by the Exchange from time to time, provided the seller compensates the buyer for extra freight and taxes incurred by the buyer if such delivery is made from a place 100 km away from the existing delivery centre at Kochi in Kerala.
As per the prevailing quality specifications, coconut oil as obtained from copra, should be clear and taste sweet, free from any other oil or substance, suspended or other foreign matters and from rancidity.
Meanwhile, NMCE launched new series for futures contract in guarseed (10 MT) and turmeric with effect from Tuesday, June 10, 2008, both expiring on October 20, 2008.
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NMCE also provides trading platform for copra, pepper, isabgol (psyllium seed), rape/mustard seed, sacking, castor seed and non-ferrous base metals among other commodities.
The exchange is simultaneously launching three new futures contracts in coconut oil from June 16, 2008. Each contract will be concurrently traded on NMCE e-platform. They will expire on August 14, September 15 and October 15 respectively in 2008, NMCE said in a release here.
As per the modifications, the oleic acid content as Free Fatty Acid (FFA) in the ‘premium grade’ coconut oil should not exceed 1 per cent. And, in case, it exceeds 1 per cent, the buyer shall have the option to reject. In case of the existing ‘basis edible grade’ coconut oil, the oleic acid content as FFA should not exceed 1.5 per cent limit.
The permissible iodine value in the ‘premium grade’ coconut oil is 7.50 to 9 units, whereas that for the existing basis ‘edible grade’ is 7.50 to 10 units.
Ticker size
For easier transactions, the ticker size for trading is being changed to one rupee from 10-paise earlier. However, it will be continued to be traded in lots of one metric tonne and the price quoted in rupees per quintal, as earlier. The premium grade coconut oil is tenderable at a premium of Rs 2.50 per kg.
Other parameters of the ‘premium grade’ coconut oil remain the same as the ‘basis edible grade.’ The changes have been approved by the commodities market regulator Forward Markets Commission (FMC).
In another change, applicable to both the grades, the commodity could be delivered anywhere in India, as decided by the Exchange from time to time, provided the seller compensates the buyer for extra freight and taxes incurred by the buyer if such delivery is made from a place 100 km away from the existing delivery centre at Kochi in Kerala.
As per the prevailing quality specifications, coconut oil as obtained from copra, should be clear and taste sweet, free from any other oil or substance, suspended or other foreign matters and from rancidity.
Meanwhile, NMCE launched new series for futures contract in guarseed (10 MT) and turmeric with effect from Tuesday, June 10, 2008, both expiring on October 20, 2008.
Want to invest in Stock Market? Get expert advice on your mobile
NMCE also provides trading platform for copra, pepper, isabgol (psyllium seed), rape/mustard seed, sacking, castor seed and non-ferrous base metals among other commodities.
Spot Rubber Drops On TOCOM Cues - June 11, 2008
Kottayam: Spot rubber surrendered its gains on Tuesday. RSS 4 moved down sharply to Rs 126 from Rs 130 a kg at Kottayam as the rubber futures on Tokyo Commodity Exchange fell back marginally on long liquidation.
The volumes were low and the domestic market declined even without any quantity offers from dealers or growers. The market has over reacted to the minor variations in the global indices.
This might be due to unexpected absence of the major manufacturers on the buyers’ side. Covering groups could not hold the prices at higher levels for a long period of time without follow-up support from the consuming sector, an observer said.
June futures weaken
The June contract for RSS 3 weakened to ¥334.1 (Rs 134.28) from ¥337.1, July to ¥334 (336.9), August to ¥335.2 (336), September to ¥334.6 (335.7), October to ¥334.4 (335) and November to ¥336.5 (336.6) a kg at TOCOM. RSS 3 spot slipped to Rs 138.49 (139.36) a kg at Bangkok.
Spot prices were (Rs/kg): RSS-4: 126 (130); RSS-5: 122 (124); ungraded: 119 (120); ISNR 20: 120 (121) and latex 60 per cent: 85 (85).
The volumes were low and the domestic market declined even without any quantity offers from dealers or growers. The market has over reacted to the minor variations in the global indices.
This might be due to unexpected absence of the major manufacturers on the buyers’ side. Covering groups could not hold the prices at higher levels for a long period of time without follow-up support from the consuming sector, an observer said.
June futures weaken
The June contract for RSS 3 weakened to ¥334.1 (Rs 134.28) from ¥337.1, July to ¥334 (336.9), August to ¥335.2 (336), September to ¥334.6 (335.7), October to ¥334.4 (335) and November to ¥336.5 (336.6) a kg at TOCOM. RSS 3 spot slipped to Rs 138.49 (139.36) a kg at Bangkok.
Spot prices were (Rs/kg): RSS-4: 126 (130); RSS-5: 122 (124); ungraded: 119 (120); ISNR 20: 120 (121) and latex 60 per cent: 85 (85).
Tuesday, June 10, 2008
Rubber Touches Rs 130/Kg - June 10, 2008
Kottayam: Domestic rubber prices made another sharp uptrend on June 9. RSS 4 ended at Rs 130 against Rs 127 a kg at the previous weekend. Covering groups kept the market higher on the positive side hoping sheet rubber to hit Rs 140 a kg in short term. The grade flared up to Rs 139.36 (134.81) a kg at Bangkok spot. Spot prices were (Rs/kg): RSS-4: 130 (127); RSS-5: 124 (121); ungraded: 120 (116.50); ISNR 20: 121 (118.50) and latex 60 per cent: 85 (83).
Soyameal Exports Registers 151.8% Growth In May - June 10, 2008
New Delhi: Soyabean meal exports from the country have reported a 151.8 per cent growth during May. Total shipments during the month totaled to 306,615 tonnes as against 121,771 tonnes in May 2007. Exports for the April-May 2008 period was at 856,795 tonnes, 142.4 per cent higher than the 353,464 tonnes of the corresponding two months of 2007-08. On an oil year basis (October-September), too, soyameal shipments aggregated 40,80,714 tonnes till May - a 30.97 per cent jump over the 31,15,732 tonnes level of October 2006 to May 2007. During the current oil year, the two markets to have registered a significant growth in exports were Vietnam and Japan, according to data released by the Indore-based Soybean Processors' Association of India (SOPA).
Monday, June 9, 2008
India Oilseed Seen Up On Global Cues; Monsoon May Weigh - June 9, 2008
MUMBAI: Indian soybean and rapeseed futures may rise on Monday tracking a sharp price rise overseas, analysts said. At 9.35 am, benchmark August Malaysian palm oil contract on the Bursa Malaysia Derivatives Exchange rose 2.36 per cent to 3,685 ringgit.
However, the early progress of the monsoon into Maharashtra, the country's second biggest soybean grower, may weigh on the futures, analysts said. Soybean July futures on the National Commodity and Derivatives Exchange ended at 2,466.5 rupees per 100 kg in the previous session. Rapeseed September futures ended at Rs 664.15 per 20 kg on Saturday.
However, the early progress of the monsoon into Maharashtra, the country's second biggest soybean grower, may weigh on the futures, analysts said. Soybean July futures on the National Commodity and Derivatives Exchange ended at 2,466.5 rupees per 100 kg in the previous session. Rapeseed September futures ended at Rs 664.15 per 20 kg on Saturday.
Rubbers Touches Rs 127/Kg - June 9, 2008
Kottayam: Rubber rates bounced back in the weekend session. RSS 4 increased to Rs 127 from Rs 124.50 a kg as covering groups and purchase agents continued to remain active in the main marketing centres. Spot prices were (Rs/kg): RSS-4: 127 (124.50); RSS-5: 121 (119.50); ungraded: 116.50 (114.50); ISNR 20: 118.50 (117) and latex 60 per cent: 83 (82.50).
Saturday, June 7, 2008
Milk, Cereal Prices Push Inflation Up further - June 7, 2008
New Delhi: Inflation continued its northward trend to inch up further above 8 per cent, spurred on by increasing prices of primary articles including cereals, spices, milk and fruits, besides manufactured items such as iron and steel and edible oils.
The latest Wholesale Price Index-based inflation estimate of 8.24 per cent for the week ending May 24, as against the previous week’s annual rise of 8.10 per cent, does not, however, incorporate the hikes in fuel prices announced by the Government on Wednesday.
The impact of the diesel, LPG and petrol price hike is slated to figure two weeks from now, when the data for the week ending June 7 would be released.
Reacting to the latest inflation numbers, the Finance Minister, P Chidambaram, said the Centre would take m
The latest Wholesale Price Index-based inflation estimate of 8.24 per cent for the week ending May 24, as against the previous week’s annual rise of 8.10 per cent, does not, however, incorporate the hikes in fuel prices announced by the Government on Wednesday.
The impact of the diesel, LPG and petrol price hike is slated to figure two weeks from now, when the data for the week ending June 7 would be released.
Reacting to the latest inflation numbers, the Finance Minister, P Chidambaram, said the Centre would take m
Bond Yields Hit One-Year High, Re Gains As Dollar Demand Falls - June 7, 2008
MUMBAI: After rising through the week, bond yields shot up to a one-year high of 8.24% on Friday. Fears of monetary tightening dominated market sentiment, after RBI governor YV Reddy said on Thursday that the central bank was ready to take recourse to its complete range of instruments to allay inflationary expectations.
Yields on the 10-year benchmark bond, the 8.24% paper maturing in 2018, ended the day at 8.23%, above the Thursday’s close of 8.19%. The day’s high of 8.24% was also the highest level the bond has seen since it was issued in April this year.
Traded volumes remained thin, as dealers remained wary of what the next few weeks have in store. A dealer with a private bank said, "The governor’s statement was the confirmation that the rumours of a rate hike lacked."
The market has been expecting a hike in the repo rate - the rate at which banks borrow from the RBI - ever since the fuel price hike raised expectations of inflation crossing the 9%-level. Further, market participants do not see yields coming down from these levels any time soon.
"With liquidity set to come under strain next week after Friday’s auctions and advance tax outflows, we could well see yields heading towards the 8.5%-mark," said a senior official with a bond house. The RBI auctioned Rs 10,000 crore of two government securities on Friday. It also announced that Rs 3,500 crore of treasury bills will be auctioned on Wednesday.
However, liquidity remained comfortable on Friday, with banks parking surplus funds worth Rs 22,025 crore with RBI through reverse repo operations of its liquidity adjustment facility. Meanwhile, the rupee rose after the market experienced lesser demand from oil companies.
RBI had announced last week that it would directly sell dollars to oil companies, in exchange for oil bonds. The move was aimed at easing dollar demand from oil companies which had pulled the rupee down over the past month.
According to dealers, some action from RBI appears imminent considering that the rate of inflation is the same as the yield on 10-year g-secs.
"If inflation continues to remain high real interest rates will turn negative. Money supply growth at 22.5% is also way beyond RBI’s comfort level," said a dealer adding that the central bank is likely to come out with monetary measures to keep inflation in check.
The central bank’s decision to sell dollars directly to oil companies has helped to provide support for the rupee. The rupee ended the day at 42.66/67 against the dollar, rising from Thursday’s close of 42.90/91.
Yields on the 10-year benchmark bond, the 8.24% paper maturing in 2018, ended the day at 8.23%, above the Thursday’s close of 8.19%. The day’s high of 8.24% was also the highest level the bond has seen since it was issued in April this year.
Traded volumes remained thin, as dealers remained wary of what the next few weeks have in store. A dealer with a private bank said, "The governor’s statement was the confirmation that the rumours of a rate hike lacked."
The market has been expecting a hike in the repo rate - the rate at which banks borrow from the RBI - ever since the fuel price hike raised expectations of inflation crossing the 9%-level. Further, market participants do not see yields coming down from these levels any time soon.
"With liquidity set to come under strain next week after Friday’s auctions and advance tax outflows, we could well see yields heading towards the 8.5%-mark," said a senior official with a bond house. The RBI auctioned Rs 10,000 crore of two government securities on Friday. It also announced that Rs 3,500 crore of treasury bills will be auctioned on Wednesday.
However, liquidity remained comfortable on Friday, with banks parking surplus funds worth Rs 22,025 crore with RBI through reverse repo operations of its liquidity adjustment facility. Meanwhile, the rupee rose after the market experienced lesser demand from oil companies.
RBI had announced last week that it would directly sell dollars to oil companies, in exchange for oil bonds. The move was aimed at easing dollar demand from oil companies which had pulled the rupee down over the past month.
According to dealers, some action from RBI appears imminent considering that the rate of inflation is the same as the yield on 10-year g-secs.
"If inflation continues to remain high real interest rates will turn negative. Money supply growth at 22.5% is also way beyond RBI’s comfort level," said a dealer adding that the central bank is likely to come out with monetary measures to keep inflation in check.
The central bank’s decision to sell dollars directly to oil companies has helped to provide support for the rupee. The rupee ended the day at 42.66/67 against the dollar, rising from Thursday’s close of 42.90/91.
Friday, June 6, 2008
Pepper Exports Fetch Rs 213 Cr More In 2007-08 - June 6, 2008
Coonoor: Despite rupee appreciation and unsteady commodity market movements, India regained its prominence in global pepper trade in 2007-08, an analysis of the latest information available with the Spices Board and exporters reveals.
India earned Rs 213.30 crore more from pepper exports in 2007-08 over the previous fiscal.
Global short supplies created market buoyancy. Competitive suppliers such as Vietnam chose cautious selling. Collectively, demand gained strength and pushed up the prices. The average price of black pepper in the US rose to $4.05 a kg from $2.62 in 2006-07.
India’s prudent exporters used the opportunity to their advantage and elevated the trade with quality supplies which fetched mentionable demand.
As much as 35,000 tonnes of Indian pepper were bought by importers at an average price of Rs 148.43 a kg against 28,750 tonnes at Rs 106.50 in the previous fiscal. Consequently, India earned Rs 519.50 crore in 2007-08 against Rs 306.20 crore.
This meant a sharp increase of 70 per cent in value earned from an increase of 22 per cent in volume.
“This was the highest export of pepper from India in both volume and value in the new millennium,” Spices Board has noted.
The major importers of Indian pepper were the US, the UK, Italy, Germany and Canada.
The achievement was significant enough to surpass the target. The Board had fixed a target of 30,000 tonnes of export to earn Rs 450 crore. This meant that the achievement was 117 per cent of targeted volume and 115 per cent of targeted value.
Pepper prices continue to rule high throwing bright prospects for the current fiscal. In the domestic market, some future contracts have been entered into for Rs 149 a kg for July, Rs 152 for August and Rs 154 for September.
The US market continues to quote around $4.07 a kg. Some August-December deliveries have been contracted for $4.13 a kg. On an average, this is $1.50 more per kg than the 2006-07 levels.
India earned Rs 213.30 crore more from pepper exports in 2007-08 over the previous fiscal.
Global short supplies created market buoyancy. Competitive suppliers such as Vietnam chose cautious selling. Collectively, demand gained strength and pushed up the prices. The average price of black pepper in the US rose to $4.05 a kg from $2.62 in 2006-07.
India’s prudent exporters used the opportunity to their advantage and elevated the trade with quality supplies which fetched mentionable demand.
As much as 35,000 tonnes of Indian pepper were bought by importers at an average price of Rs 148.43 a kg against 28,750 tonnes at Rs 106.50 in the previous fiscal. Consequently, India earned Rs 519.50 crore in 2007-08 against Rs 306.20 crore.
This meant a sharp increase of 70 per cent in value earned from an increase of 22 per cent in volume.
“This was the highest export of pepper from India in both volume and value in the new millennium,” Spices Board has noted.
The major importers of Indian pepper were the US, the UK, Italy, Germany and Canada.
The achievement was significant enough to surpass the target. The Board had fixed a target of 30,000 tonnes of export to earn Rs 450 crore. This meant that the achievement was 117 per cent of targeted volume and 115 per cent of targeted value.
Pepper prices continue to rule high throwing bright prospects for the current fiscal. In the domestic market, some future contracts have been entered into for Rs 149 a kg for July, Rs 152 for August and Rs 154 for September.
The US market continues to quote around $4.07 a kg. Some August-December deliveries have been contracted for $4.13 a kg. On an average, this is $1.50 more per kg than the 2006-07 levels.
Rubber Merchants’ Plea To Kerala Govt On Refunds - June 6, 2008
Kochi: The Cochin Rubber Merchants Association has urged the Kerala Government to direct the sales-tax authorities to refund the excess amount deposited by the rubber dealers conducting inter-state trade.
The Association President, N Radhakrishnan, pointed out that rubber dealers conducting inter-state trade are passing through a crisis on account of blockage of funds with the State Government as they have deposited over Rs 120 crore towards excess amount on six lakh tonnes of anticipated rubber despatches this year.
Due to the recent notification of the Union Government reducing Central sales tax to 2 per cent, the dealers who pay 4 per cent VAT within the State on their purchases, can realise only 2 per cent on account of inter-state sale. As per the arrangement, the Central Government reimburses the amount to the State Government and the latter refunds the same to the dealer.
The State Government should realise that the amount being refunded is not in the form of subsidy or grant but only a refund of the amount excess deposited by the dealers, Radhakrishnan said. Rubber is sent outside Kerala with accompanying documents such as invoice, delivery note, lorry receipt etc. Once the goods move through the check posts with these documents duly verified by the officials, then only inter-state sale takes place. On the strength of these documents, the Government should authorise the sales tax authorities to refund the excess amount paid by dealers, he added.
He said that more than Rs 50 crore is now blocked with the State Government on this account and the dealers have to borrow money from bank and other sources in order to make good the gap towards working funds. They are not in a position now to raise more working funds and, therefore, are unable to effect further inter-state despatches, he said.
The Association President, N Radhakrishnan, pointed out that rubber dealers conducting inter-state trade are passing through a crisis on account of blockage of funds with the State Government as they have deposited over Rs 120 crore towards excess amount on six lakh tonnes of anticipated rubber despatches this year.
Due to the recent notification of the Union Government reducing Central sales tax to 2 per cent, the dealers who pay 4 per cent VAT within the State on their purchases, can realise only 2 per cent on account of inter-state sale. As per the arrangement, the Central Government reimburses the amount to the State Government and the latter refunds the same to the dealer.
The State Government should realise that the amount being refunded is not in the form of subsidy or grant but only a refund of the amount excess deposited by the dealers, Radhakrishnan said. Rubber is sent outside Kerala with accompanying documents such as invoice, delivery note, lorry receipt etc. Once the goods move through the check posts with these documents duly verified by the officials, then only inter-state sale takes place. On the strength of these documents, the Government should authorise the sales tax authorities to refund the excess amount paid by dealers, he added.
He said that more than Rs 50 crore is now blocked with the State Government on this account and the dealers have to borrow money from bank and other sources in order to make good the gap towards working funds. They are not in a position now to raise more working funds and, therefore, are unable to effect further inter-state despatches, he said.
Thursday, June 5, 2008
Coonoor Tea Offers Continue To Be High - June 5, 2008
Coonoor: Volume offered for the auctions of Coonoor Tea Trade Association (CTTA) continues to be high with brokers’ catalogues for Sale No: 23 to be held on Thursday and Friday totalling 13.22 lakh kg – the highest for a single auction in two years. This is 81,000 kg more than last week’s offer. It is as much as 6.9 lakh kg or 109 per cent more than the offer this time last year.
Fresh arrivals are said to be 10.79 lakh kg out of 13.22 lakh kg on offer. The balance comprises teas remaining unsold in previous auctions.
Fresh arrivals are increasing because of the favourable rains which have kindled growth in tea bushes. Auctioneers said that for a few more weeks, volume would be 3-4 lakh kg more than last year.
Of the 13.22 lakh kg on offer, as much as 9.52 lakh kg belong to the leaf grades and 3.71 lakh kg belong to the dust grades. Again, as much as 12.39 lakh kg belong to CTC variety and only 0.83 lakh kg, orthodox variety.
The proportion of orthodox teas continues to be low in both the leaf and dust grades. In the leaf counter, only 0.32 lakh kg belong to orthodox while 9.19 lakh kg, CTC. Among the dusts, only 0.51 lakh kg belong to orthodox while 3.20 lakh kg, CTC.
“Volume is, no doubt, high, but prices will look up like last week if domestic and export demand continues to be strong. High Sri Lankan and Kenyan tea prices are forcing some importers to buy affordable Indian teas”, an auctioneer told Business Line.
Upcountry buyers are scouting for quality offers for which, they are prepared to pay reasonable price. But, they have a general complaint that quantity increase has sacrificed quality. Buyers for Rajasthan market said that in the wake of Gujjars agitation blocking transport, tea movement is also hit.
“Only now, normalcy has come back after the Jaipur bomb blast. Gujjar stir is affecting trade. We are watching the situation before firming up purchases”, a buyer said.
Fresh arrivals are said to be 10.79 lakh kg out of 13.22 lakh kg on offer. The balance comprises teas remaining unsold in previous auctions.
Fresh arrivals are increasing because of the favourable rains which have kindled growth in tea bushes. Auctioneers said that for a few more weeks, volume would be 3-4 lakh kg more than last year.
Of the 13.22 lakh kg on offer, as much as 9.52 lakh kg belong to the leaf grades and 3.71 lakh kg belong to the dust grades. Again, as much as 12.39 lakh kg belong to CTC variety and only 0.83 lakh kg, orthodox variety.
The proportion of orthodox teas continues to be low in both the leaf and dust grades. In the leaf counter, only 0.32 lakh kg belong to orthodox while 9.19 lakh kg, CTC. Among the dusts, only 0.51 lakh kg belong to orthodox while 3.20 lakh kg, CTC.
“Volume is, no doubt, high, but prices will look up like last week if domestic and export demand continues to be strong. High Sri Lankan and Kenyan tea prices are forcing some importers to buy affordable Indian teas”, an auctioneer told Business Line.
Upcountry buyers are scouting for quality offers for which, they are prepared to pay reasonable price. But, they have a general complaint that quantity increase has sacrificed quality. Buyers for Rajasthan market said that in the wake of Gujjars agitation blocking transport, tea movement is also hit.
“Only now, normalcy has come back after the Jaipur bomb blast. Gujjar stir is affecting trade. We are watching the situation before firming up purchases”, a buyer said.
Rubber Rates Fell - June 5, 2008
Kottayam: Spot rubber prices declined further on June 4. RSS 4 fell to Rs 123 a kg from Rs 124 a kg on slightly improved selling from certain dealers and growers. The grade was firm at Rs 131.66 (131.22) a kg at Bangkok spot. Spot prices were: RSS-4: 123 (124); RSS-5: 118 (119); ungraded: 113.50 (114); ISNR 20: 116 (117) and latex 60 per cent: 82 (82).
Wednesday, June 4, 2008
Rubber Sees Steady trend - June 4, 2008
Kottayam: Rubber ruled almost firm on June 3. RSS 4 closed unaltered at Rs 124 a kg on buyer resistance probably following a weak closing of RSS 3 (spot) at Rs 131.22 (Rs 132.53) a kg at Bangkok. The volumes remained to be narrow. Spot prices were (Rs/kg): RSS-4: 124 (124); RSS-5: 119 (119); ungraded: 114 (113.50); ISNR 20: 117 (117) and latex 60 per cent: 82 (82).
JRG Sec Launches Crude Oil Futures On Dubai Exchange - June 4, 2008
Kochi: JRG Securities Ltd has commenced trading in crude oil futures on the Dubai Gold and Commodities Exchange (DGCX).
The recent launch of both WTI and Brent crude oil futures on DGCX is expected to provide access to the world’s two most significant crude oil benchmarks to regional and international market participants, allowing them to benefit from trading and clearing transactions under the UAE regulatory and taxation regimes.
JRG’s first contract
Executing JRG’s first contract on crude oil futures at DGCX, Sheikh Mana Bin Rashid Bin Mana Al Maktoum lauded DGCX for the timely step in launching crude oil futures contracts.
He said it was another first from JRG as the company had taken the quick initiative to launch crude oil contracts for its clients immediately after its debut on DGCX.
The main attraction for investors is that Indian companies with an arm in Dubai can now arbitrage between Mumbai-based MCX and DGCX.
Arbitrage opportunities
Addressing a press conference in Kochi, the Managing Director of JRG Securities said that the arbitrage opportunities could widen for companies that trade on MCX and have a subsidiary that trades on DGCX not only on the potential price differentials between the two exchanges, but also because of the dollar-rupee exchange rate fluctuations.
JRG has made all arrangements to provide details of DGCX crude oil contracts through all its offices in India and West Asia.
India has a more mature crude futures market with MCX launching crude oil futures way back in 2005.
Crude is now one of the most popular futures contracts on MCX.
Highest record
The exchange recorded the highest crude oil futures volume of 1,10,496 barrels on May 29.
The JRG Securities Director, Giby Mathew, said that the company will provide mobile trading and multi-lingual internet trading software at zero cost for the clients trading in crude oil futures on DGCX contracts.
New contracts
The company plans to charge only a nominal brokerage for the new contracts. JRG already has over 2,000 customers for its DGCX gold futures contracts and averages 7,000-8,000 transactions a day.
The recent launch of both WTI and Brent crude oil futures on DGCX is expected to provide access to the world’s two most significant crude oil benchmarks to regional and international market participants, allowing them to benefit from trading and clearing transactions under the UAE regulatory and taxation regimes.
JRG’s first contract
Executing JRG’s first contract on crude oil futures at DGCX, Sheikh Mana Bin Rashid Bin Mana Al Maktoum lauded DGCX for the timely step in launching crude oil futures contracts.
He said it was another first from JRG as the company had taken the quick initiative to launch crude oil contracts for its clients immediately after its debut on DGCX.
The main attraction for investors is that Indian companies with an arm in Dubai can now arbitrage between Mumbai-based MCX and DGCX.
Arbitrage opportunities
Addressing a press conference in Kochi, the Managing Director of JRG Securities said that the arbitrage opportunities could widen for companies that trade on MCX and have a subsidiary that trades on DGCX not only on the potential price differentials between the two exchanges, but also because of the dollar-rupee exchange rate fluctuations.
JRG has made all arrangements to provide details of DGCX crude oil contracts through all its offices in India and West Asia.
India has a more mature crude futures market with MCX launching crude oil futures way back in 2005.
Crude is now one of the most popular futures contracts on MCX.
Highest record
The exchange recorded the highest crude oil futures volume of 1,10,496 barrels on May 29.
The JRG Securities Director, Giby Mathew, said that the company will provide mobile trading and multi-lingual internet trading software at zero cost for the clients trading in crude oil futures on DGCX contracts.
New contracts
The company plans to charge only a nominal brokerage for the new contracts. JRG already has over 2,000 customers for its DGCX gold futures contracts and averages 7,000-8,000 transactions a day.
Tuesday, June 3, 2008
Coffee Exports Rise By 3.57% In Jan-May - June 3, 2008
Bangalore: Indian coffee exports (permit issued) for the first five months of 2008 have risen by 3।57% at 110,796 tonnes as against last year's exports of 106,970 tonnes. As on June 1, of the total 110,796 tonnes permitted to be exported, arabica parchment constituted 23,798 tonnes (16,316 tonnes last year), arabica cherry 4,829 tonnes (6,617 tonnes), robusta parchment 9,757 tonnes (10,802 tonnes), robusta cherry 46,230 tonnes (46,144 tonnes) and instant coffee 26,182 tonnes (27,091 tonnes). Provisional re-exports stood at 11,191 tonnes as against 6,023 tonnes in the same period last year. Coffee exports went up in May month as exporters rushed to honour their commitments. Allana Sons, Madhu Jayanti, Amalgamated Bean Coffee Trading Company, SLN Coffee and Ned Coffee were active and the major exporters. Among the buyers of Indian coffee, Italy continues to be the top importer buying 28,225.30 tonnes in the period, followed by Russia (9,204.90 tonnes), Germany (8,325 tonnes), Belgium (6,919.90 tonnes), Spain (4,768.50 tonnes), Finland (3,541.4 tonnes), Croatia (2,899.20 tonnes), Jordan (2,896.5 tonnes), Kuwait (2,667.9 tonnes) and Slovenia (2,428.20 tonnes).
According to International Coffee Organisation (ICO), global exports in the first-seven months of coffee year 2007-08 (October 2007 to April 2008) have decreased by 4 per cent to 54.9 million bags compared to 57.2 million bags in the same period in the last coffee year. In the 12 months ending April 2008, exports of arabica totalled 62.9 million bags compared to 63.6 million bags last year, whereas robusta exports amounted to 32.4 million bags.
Rubber Sees Weak trend - June 3, 2008
Kottayam: Spot rubber rates ruled weak on June 2. The domestic market continued under pressure as RSS 3 spot declined sharply to Rs 132.53 (136.64) a kg at Bangkok. Sheet rubber RSS 4 declined to Rs 124 from 125 on the previous weekend. Rubber prices should remain in tandem with the international prices. Spot prices were (Rs/kg): RSS-4: 124 (125); RSS-5: 119 (121); ungraded: 113.50 (114); ISNR 20: 117 (118) and latex 60 per cent: 82 (82).Monday, June 2, 2008
Cotton To Test Support Levels
Cotton futures ended lower on Friday in thin range-bound trade on speculative trading, moving in a volatile range ignoring direction from other commodities, which it has done so in the recent past.
Market has been mostly directionless with a bearish bias. The upcoming USDA monthly supply/demand data could provide further bearish clues.
Fundamentally, weather conditions are expected to be much drier in the Delta region, which will aid planting efforts there. The expanding cotton inventories could act as a drag on the market.
Active July cotton futures contract tested the resistance levels as per our expectations and then fell lower as expected.
Rallies to 72-74 cents found strong resistance and subsequently fell lower. Only a direct rise above 76 cents will turn the picture bullish. As seen in the chart, above an important trend line, resistance lies at 72.50 cents.
As mentioned in the previous update, even though prices pulled back towards 72-73 cents, the head and shoulder pattern is in the making and therefore we expected bearishness to set in with a possibility to test 60 cents on the downside.
Important support is at 64.50 cents followed by 63.20 cents now. The big picture counts still are giving mixed signals and would, therefore, prefer to watch the prices for more clues.
Indicators are displaying a neutral picture. The RSI is in the neutral zone, indicating that it is neither overbought nor oversold.
The averages in MACD have gone below the zero line of the indicator, indicating a bearish reversal. Therefore, look for cotton futures to test the support levels.
Supports are at 65.25, 63.20 & 61.75 cents and resistances are at 67.50, 69 & 72 cents respectively.
Coffee Output Next Crop Year May Be Hit
Chennai: Coffee production next crop year beginning October could only be a little higher than last after blossoming of plants was affected in some parts due to untimely rains in February and March.
“In some areas, which are not irrigated, the rains fell exactly when the flowers were to bloom. It has affected the crop and production will surely be hit,” said Bose Mandanna, a grower and former Vice-Chairman of the Coffee Board.
“But the crop will not be as bad as initially feared. The blossoms in irrigated areas, mainly robustas, was not affected much as the rains came only on the eighth day of the process,” said Anil Bhandari, former president of the United Planters Association of Southern India (Upasi).
For the current season, the Coffee Board has pegged production at 2.62 lakh tonnes. This is against initial estimates of 2.91 lakh tonnes. Last year, too, weather played havoc with the crop, especially with the growing regions in Kodagu experiencing heavy rains during monsoon.
Remnant circulation
What happened this year was that during the second week of March, heavy rains lashed across the South, affecting blossoming of arabica and robusta and endangering setting of fruits in the plants.
The rains lashed continuously in Tamil Nadu, Karnataka, Kerala and Andhra Pradesh due to a remnant cyclonic circulation. Rain does fall during March every year in the coffee-growing areas, but usually it is in isolated areas.
Kodagu, which accounts for over 50 per cent of coffee production in Karnataka and 40 per cent in the country, experienced heavy rainfall during that time. “15-20 per cent of the crop has been affected. The problem is more with robusta,” said Mandanna.
Bhandari said robusta was a cross-pollination plant, the reason why the crop was affected badly in non-irrigated areas. “The arabicas are self-pollinated and therefore, there is not much danger due to the weather,” he said.
However, the arabica continues to be affected by the white stem borer. “The disease is affecting the crop this year too but there is no increase in incidence compared with the previous one,” Bhandari said.
Export trail
Meanwhile, exports continue to do well. For the current year, until last weekend, provisional exports of coffee were 1.09 lakh tonnes against 1.05 lt during the same period last year. However, re-exports are pushing this year’s gains, estimated at around 11,000 tonnes against 6,000 tonnes during the same time a year ago.
“There are no problems with exports. We have to export since the whole sector depends on it,” Bhandari said. Nearly two-thirds of the coffee grown in the country is exported, though internal consumption is showing signs of improving.
Farmgate prices of coffee also continue to rule firm, with arabica parchment being quoted at Rs 4,925-5,000 a bag of 50-kg, while robusta cherry is quoted at Rs 2,325-2,475 a bag.
“In some areas, which are not irrigated, the rains fell exactly when the flowers were to bloom. It has affected the crop and production will surely be hit,” said Bose Mandanna, a grower and former Vice-Chairman of the Coffee Board.
“But the crop will not be as bad as initially feared. The blossoms in irrigated areas, mainly robustas, was not affected much as the rains came only on the eighth day of the process,” said Anil Bhandari, former president of the United Planters Association of Southern India (Upasi).
For the current season, the Coffee Board has pegged production at 2.62 lakh tonnes. This is against initial estimates of 2.91 lakh tonnes. Last year, too, weather played havoc with the crop, especially with the growing regions in Kodagu experiencing heavy rains during monsoon.
Remnant circulation
What happened this year was that during the second week of March, heavy rains lashed across the South, affecting blossoming of arabica and robusta and endangering setting of fruits in the plants.
The rains lashed continuously in Tamil Nadu, Karnataka, Kerala and Andhra Pradesh due to a remnant cyclonic circulation. Rain does fall during March every year in the coffee-growing areas, but usually it is in isolated areas.
Kodagu, which accounts for over 50 per cent of coffee production in Karnataka and 40 per cent in the country, experienced heavy rainfall during that time. “15-20 per cent of the crop has been affected. The problem is more with robusta,” said Mandanna.
Bhandari said robusta was a cross-pollination plant, the reason why the crop was affected badly in non-irrigated areas. “The arabicas are self-pollinated and therefore, there is not much danger due to the weather,” he said.
However, the arabica continues to be affected by the white stem borer. “The disease is affecting the crop this year too but there is no increase in incidence compared with the previous one,” Bhandari said.
Export trail
Meanwhile, exports continue to do well. For the current year, until last weekend, provisional exports of coffee were 1.09 lakh tonnes against 1.05 lt during the same period last year. However, re-exports are pushing this year’s gains, estimated at around 11,000 tonnes against 6,000 tonnes during the same time a year ago.
“There are no problems with exports. We have to export since the whole sector depends on it,” Bhandari said. Nearly two-thirds of the coffee grown in the country is exported, though internal consumption is showing signs of improving.
Farmgate prices of coffee also continue to rule firm, with arabica parchment being quoted at Rs 4,925-5,000 a bag of 50-kg, while robusta cherry is quoted at Rs 2,325-2,475 a bag.
Negative Signals For Gold In The Short Term
Chennai: Last week, gold dropped to a two-month low, giving credence to earlier views that every rally in gold has only been lower than the previous one. The precious metal slipped sharply and ended at $886.90
Pulling down gold last week were events such as stabilising dollar and receding fears of an economic recession in the US. The US data released during the weekend also seemed to be against the yellow metal.
Further positive news on the US economy can only hamper gold’s progress, which looks more likely now. Receding fears of recession also mean that investors are now looking at options other than gold. That’s one reason why gold tends to get hit when the economic outlook appears bright.
Geopolitical fears that existed a few months back are now receding, with the US heading for Presidential elections. India, too, is not helping the yellow metal’s cause, with no apparent signs of a pick-up in demand. ICICI Bank last week said it saw a fall in demand for gold in India this year. These signs are bearish enough to impact the precious metal.
Marriage buys
One aspect that is clear from the Indian angle is that the much-expected purchase for the marriage season has not taken place.
Also, the rabi crop harvest is over and most of the crops have reached the markets. Farmers have got better prices this time but that has not spurred them to invest in the yellow metal. Definitely not a sign that is encouraging or, maybe, we are facing the classic case of Indians being price-sensitive.
With the 40-day moving average below the average, short-term indicators are negative for gold. Along with it, the long-term indicators are also negative. Gold is also proving to be vulnerable to crude prices. With crude climbing off its record high of $137, gold has lost steam. On the crude front, the fear that high prices could affect demand has gripped the market and speculators.
For gold this week, the first test will be $887.9 an ounce, where it will face resistance. Past this, the next hurdle will be $901. At any cost, the $960 level could turn out to be a stumbling block in vaulting $1,000 again.
On the lower side, the precious metal will derive immediate support, on fall, at $866.5. Below this, it will get some protection at $859. According to Angel Broking, there is a possibility of gold testing $850 again and $834 from the base support. On the domestic futures exchanges, August gold will derive support at Rs 11,790 for 10 grams and below that at Rs 11,475. Resistance is first at Rs 12,650 and then at Rs 13,186.
Silver prices are expected to toe gold prices in near term. For mid-term, waning demand and rising dollar is expected to weigh its prices.
Crude Oil
Fears of a fall in demand are now turning to be bearish for crude and there are signs of growth in energy demand slowing. But long-term tight demand-supply fundamentals are indicators, according to Angel, of higher oil prices for coming days. It could touch $150 a barrel by the end of the year. Crude could derive support at $120 but firm resistance is in place at $135. Base metals could witness volatility. According to Angel Commodities, stocks in the LME warehouses could play a crucial role in the movement of the metals’ prices.
Pulling down gold last week were events such as stabilising dollar and receding fears of an economic recession in the US. The US data released during the weekend also seemed to be against the yellow metal.
Further positive news on the US economy can only hamper gold’s progress, which looks more likely now. Receding fears of recession also mean that investors are now looking at options other than gold. That’s one reason why gold tends to get hit when the economic outlook appears bright.
Geopolitical fears that existed a few months back are now receding, with the US heading for Presidential elections. India, too, is not helping the yellow metal’s cause, with no apparent signs of a pick-up in demand. ICICI Bank last week said it saw a fall in demand for gold in India this year. These signs are bearish enough to impact the precious metal.
Marriage buys
One aspect that is clear from the Indian angle is that the much-expected purchase for the marriage season has not taken place.
Also, the rabi crop harvest is over and most of the crops have reached the markets. Farmers have got better prices this time but that has not spurred them to invest in the yellow metal. Definitely not a sign that is encouraging or, maybe, we are facing the classic case of Indians being price-sensitive.
With the 40-day moving average below the average, short-term indicators are negative for gold. Along with it, the long-term indicators are also negative. Gold is also proving to be vulnerable to crude prices. With crude climbing off its record high of $137, gold has lost steam. On the crude front, the fear that high prices could affect demand has gripped the market and speculators.
For gold this week, the first test will be $887.9 an ounce, where it will face resistance. Past this, the next hurdle will be $901. At any cost, the $960 level could turn out to be a stumbling block in vaulting $1,000 again.
On the lower side, the precious metal will derive immediate support, on fall, at $866.5. Below this, it will get some protection at $859. According to Angel Broking, there is a possibility of gold testing $850 again and $834 from the base support. On the domestic futures exchanges, August gold will derive support at Rs 11,790 for 10 grams and below that at Rs 11,475. Resistance is first at Rs 12,650 and then at Rs 13,186.
Silver prices are expected to toe gold prices in near term. For mid-term, waning demand and rising dollar is expected to weigh its prices.
Crude Oil
Fears of a fall in demand are now turning to be bearish for crude and there are signs of growth in energy demand slowing. But long-term tight demand-supply fundamentals are indicators, according to Angel, of higher oil prices for coming days. It could touch $150 a barrel by the end of the year. Crude could derive support at $120 but firm resistance is in place at $135. Base metals could witness volatility. According to Angel Commodities, stocks in the LME warehouses could play a crucial role in the movement of the metals’ prices.
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