Copper Futures Are ExpecteS To Open - Aug 08 , 2008

MUMBAI: Copper futures are expected to open little changed on Friday on the back of soft demand outlook and rising stocks, an analyst said. The benchmark August copper on the Multi Commodity Exchange of India (MCX) closed on Thursday at 320.05 rupees.

It may open around 320 rupees per kg, one analyst said. Copper prices are expected to trade steady later in the day after gaining slightly on bargain hunting on Thursday ,the analyst added. August zinc closed at 74.45 rupees and lead for August delivery ended at 90.5 rupees per kg. Nickel prices are expected to trade strong on Friday.

August nickel closed at 793.7 rupees. Nickel prices gained more than 5 percent on Thursday on short covering and news of a deferred expansion plan from Australia's Minara Resources Ltd, the world's second largest nickel miner.

GOLD: India's gold futures are expected to open lower on the MCX on Friday, tracking foreign markets that tumbled to a seven-week low, losing some of its shine as an alternate investment after the dollar strengthened, an analyst said.

The benchmark October gold is expected to open below 12,000 rupees per 10 grams from its closing at 12,028 rupees the previous day, the analyst added. Silver futures are also seen falling on the back of gold. September silver is likely to open around 22,750 rupees per kg from its close at 22,817 rupees, the analyst said.

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.

Zinc Futures In MCX May Remain Bearish

Mumbai: Zinc futures in MCX may remain bearish, despite the recent devastating earthquake in China.

According to the International Lead and Zinc Study Group, the global zinc production exceeded the demand by 72,000 tonnes in the first quarter of 2008. The world refined zinc usage in the quarter dipped 2.76 million tonnes (mt) from 2.79 mt a year ago, while the output remain stable at 2.84 mt.

In 2008, production is forecast to increase 6.47 per cent to 12.06 mt while the consumption likely to increase 4.7 per cent to 11.85 mt.

China factor

New mines that are expected to commence production this year include Sotkamo in Finland (capacity of 60,000 tonnes a year) and Penasquito in Mexico (1.35 lakh tonnes).

The demand for zinc in China is expected to take a beating on the back of economic slowdown.

According to the World Bank reports China is estimated to grow at 9.4 per cent in 2008, against 11.4 recorded in 2007.

The overall decline in China’s economy may lead to reduced zinc consumption and can further dampen the zinc prices.

China is the world’s largest producer of both mine (28 per cent of world production in 2008) and refined zinc (34 per cent).

The loss of zinc smelting due to the earthquake is about 3.5 lakh tonnes and production is expected to be down by around 20,000-30,000 tonnes, which is less than 1 per cent of China’s total output.

China’s investment in lead and zinc smelting sector surged by 126.43 per cent year-on-year to $40.80 million in the first two months of 2008, while in the lead and zinc mining sector it fell 12.26 per cent to $13.42 million, according to China Nonferrous Metals Industry Association.

Major projects

Major zinc projects that are coming on stream by the third quarter include Shaanxi Dongling Group’s 80,000-tonne zinc smelter, Yuguang Lead and Gold Group and Zhuzhou Smelter Group 1 lakh tonne each. The capacity expansion projects are likely to increase China’s refined zinc output by about 3 lakh tonnes to 4.05 million tonnes this year.

MCX Is Planning To Open Additional Delivery For Precious Metal

New Delhi: Encouraged by the good response to its Gold Guinea futures contract, leading commodity exchange MCX is planning to open additional delivery centres to facilitate delivery of the precious metal.

"We are planning to have more delivery centers soon," an MCX official said, adding it becomes convenient for players who would like to take the delivery.

Currently, the contract has opened delivery centres at Ahmedabad, Delhi, Mumbai, Hyderabad, Bangalore, Chennai and Kolkata. The delivery centres become important in a mini contract especially when the contract has compulsory delivery norm, an expert said .

'Gold Guinea' futures contract, which can be traded in eight-gram unit, was launched on the MCX on May 8, on the Hindu festival of 'Akshaya Tritiya.' It has received huge response from the participants, the exchange official said.

"This is for the first time a commodity exchange in the country launched a contract that caters to even smallest of retailers. The unit size at 8 gm is quite convenient to trade especially for the retailers who cannot afford to trade in contracts of bigger size," an analyst said.

The Guinea contract has offered the competitive price as compared to physical market where guinea is being sold at 12-14 per cent higher than futures prices.

At 1600 hours today the gold guinea July contract was traded at Rs 9,729 per 8 gram, while that of August delivery at Rs 9,748.

On the first day of the launch, the turnover of both the July and August contracts in terms of volume recorded 181 kg and in terms of value it was Rs 21.5 crore and with open interest on May 9 standing at around 1500 guineas.

However, the average daily volume is 100-120 kg as open interest reached at 13 kg till date, sources said.

MCX And NCDEX Managed To Retain Their Turnover

Mumbai: National commodity exchanges—MCX and NCDEX—managed to retain their turnover despite the recent ban on four commodities by the Government.

MCX recorded a turnover of Rs 5,261 crore (Rs 4,098 crore) up to 5 pm, while it was Rs 1,747 crore (Rs 1,641 crore) on Friday.

Mustard sed futures hit 3 per cent upper circuit at Rs 580 per 20 kg as arrivals in the spot markets fell sharply. Castor seed gained 2.58 per cent at Rs 532 per 20 kg on strong edible oils prices and firm spot markets.

Barley up

Barley was up 1.15 per cent at Rs 1,152 per quintal on strong demand. Guar seed rose 1.15 per cent at Rs 1,855 per quintal following good export demand as rupee depreciated further against dollar.

Pepper futures dipped 2.34 per cent to Rs 13,750 per quintal due to lacklustre demand from exporters.

Turnover On Commodity Exchange Took Severe Beating On Monday

Mumbai: Turnover on the commodity exchanges took a severe beating on Monday after the Finance Minister, P. Chidambaram’s statement that the Government is weighing the option to suspend futures trading in some more products.

The Finance Minister made the statement in an interview to a television channel in Madrid.

Turnover on MCX plunged 55 per cent to Rs 1,938 crore till 5 pm on Monday, while on NCDEX it fell 6 per cent to Rs 1,471 crore. On Saturday, MCX recorded just Rs 421 crore turnover up to 2 pm.

Jute Futures On MCX Set For Correction

Mumbai: The jute futures on MCX, which rallied for the past few weeks on lower production estimates, are all set for a correction. In the last ten days, jute for June delivery on MCX has rallied from Rs 1,562 to Rs 1,621 a quintal on Saturday.

“Although the overall bullish trend remains, prices are likely to take some correction due to lack of buying support at higher levels,” said Veeresh Hiremath, research analyst, Karvy Commodities.

Prices may come down by Rs 50-60 in the futures trade due to long liquidation before the near-month contract expires on April 30, he said. Currently spot prices are quoting around Rs 1,400 (TD-4) in spot markets of West Bengal.

According to trade estimates, output is likely to come down to 75-80 lakh bales (180 kgs a bale) from 103.49 bales logged last year. Carry forward stocks are likely to be around 20-22 lakh bales by end of season. The area under jute cultivation is lagging as farmers have shifted to other commercial crops, said an analyst.

Government increased minimum support price (MSP) for Jute (TD 5) to Rs 1,250 a bale for 2008-09 effective from July 2008.

Usually, sowing is done between February and April. Depending on the rainfall, harvest starts in June and continues till September. For getting a good combination of fibre quality and yield, about 120 days after sowing is found to be the optimum time for harvesting. Sowing in the eastern region is almost complete.

Jute is the most important cash crop, industrial raw material and the biggest foreign exchange earner in India and Bangladesh. It is among the least expensive and most versatile of textile annual fibre crop.

Jeera may gain

The concerns over crop damage in Syria and Turkey — major jeera producers — may push up jeera futures on NCDEX further. Forecast of strong wind coupled with heavy rainfall in parts of Rajasthan may damage the crop, particularly at the harvesting stage.

In the last one week, the May contract on NCDEX has gained Rs 173 to Rs 8,817 a quintal on Friday. Similarly, the July delivery moved up by Rs 113 to Rs 9,051 in the same period.

Arrivals in the Unjha spot markets have slowed down in last few days to 16,000 bags from 20,000 bags earlier. It will fall further as farmers have adopted a wait-and-watch policy with the recent Syria development, said a trader. “Buy futures at Rs 8,700 with a target of Rs 9,086,” said Ventura Commodities Ltd.

Base Metals Positive On MCX

Chinese trade data on Monday offered the market some reassurance to Base metals. MCX Copper which closed the trades at Rs 320 per kg is now trading at Rs 321. Supports for the contract are at 313 levels. MCX Aluminium is at Rs 115 after closing the last session at Rs 114 with day’s low of 113, supports for Aluminium would be at 111. Among the other gainer’s was Nickel at Rs 1165 up Rs 14 while Lead was at Rs 111 up Rs 2. Zinc is also trading in green at Rs 94 up Rs 2. Supports for Nickel are at 1131 and 1125 levels while Lead will find supports at 110. The movements will be decided after the LME opens today after Easter holidays.

US Results To Set Tone For Gold, Silver

Commodity markets witnessed an extension of the bullishness in energy and bullion, at the expense of profit-taking in base metals. The weak economic outlook worldwide seemed to have impacted sentiments on base metals and fundamentals seemed to have caught up with prices.

Traded volumes shrank as the overall MCX week-on-week figures were lower by 9 per cent, whereas the market-wide open interest was lower by 6 per cent. Volume gainers last week were crude oil, mentha oil, potato and natural gas.

Open interest rose in aluminium, copper, gold, nickel, silver, zinc and mentha oil. This week is likely to be volatile, as news triggers from the US will impact prices ever more sharply.

Agri-commodities

Chana too has seen profit-taking and the 2,950-3,000 levels will now be an area of resistance, where overhead supply and long unwinding may occur. The support area of 2,600 may see some buying, but needs monitoring. Market internals indicate 1 per cent increase in open interest - a sign of short selling.

Kapas has seen a negative divergence on the charts and the 500 level will be a stiff near term resistance. A high pressure decline below the 487 level will create a head and shoulders top formation on the charts, with a profit motive at 475. That level may be used for booking profit on short sales.

Mentha oil is seeing a rally build up, but is running into resistance at the 460 levels. The litmus test for the bulls will be a sustained trade above this threshold on high volumes. Declines in the near term will see some support at the 432-438 band. Watch this area for fresh buying cues. Market internals indicate 94 per cent increase in turnover and 7 per cent increase in open interest.

Nickel is showing early signs of recovering from profit sales. Support is likely at the 1,230 level, but any further decline on high volumes will indicate a fresh bout of weakness.

On the flip side, any forceful trade above the 1,335-1,345 levels will see fresh buying as bulls return to the counter. Await a confirmed breakout before fresh buying. Market internals indicate 20 per cent decline in turnover and 6 per cent increase in open interest.

Silver has seen a rally in tandem with gold as the flight to safety syndrome was witnessed on this counter as well. The 24,750-25,000 band is now the near term support and unless this level is violated, bulls may hold charge. The 27,150 level will be the immediate hurdle in the coming week/s and a fresh upmove will commence if this resistance is broken through.

The immediate triggers will be the news from the US financial sector. Market internals indicate 11 per cent decline in turnover and 4 per cent increase in open interest. A buy and hold approach is indicated.

Zinc has seen some buying emerge at the 102 level, which will be a near term support. A fresh buying trigger will be trade above the 110 level on high volumes. Until that happens, avoid longs. Market internals indicate 28 per cent decline in turnover and 9 per cent increase in open interest.

Energy

Crude oil has seen a 1,000 point rally and the higher levels are witnessing some profit-taking. A consistent trade below the 4,370 level on higher volumes in the coming week will confirm profit sales. The 4,490-4,500 band will offer some resistance on the upsides and only high-volume trade above this threshold will imbibe bullish confidence in the market.

Market internals indicate 13 per cent increase in turnover and 42 per cent decline in open interest as expiry-related unwinding was seen last week.

Natural gas has seen minor profit sales at higher levels, in tandem with crude oil. A consistent trade below the 397 level on higher volumes will indicate profit-taking and the commodity will seek support at the 388 level. This week will see price discovery emerging, as the southern part of the US recovers from weather-related problems.

Market internals indicate 6 per cent increase in turnover and 4 per cent decline in open interest, indicating some unwinding at higher levels.

MCX Re-Files For Public Issue

Mumbai: Multi Commodities Exchange of India (MCX) has re-filed its draft red herring prospectus (DRHP) with SEBI to tap the capital market with an initial public offering (IPO) of one-crore shares of Rs 5 each for cash. Run-up to Budget 2008-09

With an enterprise value of Rs 4,400 crore, analysts expect the issue price to range between Rs 500-600. MCX plans to raise Rs 500 crore to Rs 600 crore through the IPO.

IT infrastructure

Of the total issue on offer, 60 lakh shares will be issued afresh, while 40 lakh will be through ‘offer for sale’. Earlier, the exchange had filed DRHP in mid-2006, but had to defer the issue.

The net proceeds from the issue would be used for expansion and enhancement of the information technology infrastructure of the exchange. The proceeds will also be used to set up a Commodities Ecosystem Infrastructure, for equity investment in a clearing corporation set up by MCX, for strategic investments and acquisitions and also for general corporate and issue expenses, the company said.

For the nine months ended December 31, 2007, MCX net profit declined by 9.12 per cent to Rs 54.75 crore compared with Rs 60.24 crore logged during the same period of the previous fiscal.

Financial Technologies, the promoter, holds 32 per cent stake. NYSE Euronext Inc had bought a five per cent stake for about Rs 220 crore recently.

Spot Rubber Up As Covering Groups Turn Active

Kottayam: Spot rubber improved on Monday. According to sources, the prices firmed up as covering groups turned active procuring the raw material at lower levels probably inspired by the Bangkok rates.

RSS 4 moved up to Rs 94.50 a kg from Rs 94.25 and Rs 94 a kg respectively at Kottayam and Kochi. The transactions were dull though the market made all-round gains on better demand.

Futures firm

The March futures on MCX downed the shutters at Rs 96 (96.13) a kg while the February contract for RSS 4 ended at Rs 94.25 (94.28), March at Rs 96.58 (96.85), April at Rs 99.96 (100.07) and May at Rs 101.50 (101.74) per kg on NMCE.

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Spot prices were (Rs/kg): RSS-4: 94.50 (94.25); RSS-5: 92.50 (91.50); ungraded: 90.50 (90); ISNR 20: 91.75 (91) and latex 60 per cent: 59 (58.50).

Cold Weather Pushes Up MCX Potato Futures Prices

Mumbai: After a steep rally last month, potato futures on MCX are expected to consolidate at the current level with a possibility of a minor upside in the near to medium term.

Cold weather in the Northern states has pushed up potato futures on MCX by Rs 150 per quintal in January on concerns of crop damage.

“Prices are likely to come under pressure during peak arrivals in February. A clear trend will emerge mid-February,” said Harish Galipalli, Head of research, Karvy Commodities.

According to trade estimates, about 10-15 per cent of the crop has been damaged due to adverse weather conditions, however, final estimates of crop damage is yet to come.

Earlier, the National Horticultural Research and Development Foundation estimated potato output to increase by 11 per cent to 30 million tonnes from 27 mt last year. In West Bengal, output is estimated at 70 lakh tonnes this season.

Spot prices in Agra are quoting at Rs 400-420 per quintal. Last one month, potato for March delivery on MCX has risen 5 per cent to Rs 595 per quintal on Friday.

• Quarterly results of corporates: Check out

Like other agri commodities, potato also follow seasonal pattern as far as prices are concerned.

The wholesale price index of potato peaks in October and November due to decline in arrivals. From mid-December prices falls as stockist off load old stock in the wake of fresh arrivals in February. After March, prices gain momentum till October.

India ranks third in potato production in the world. A 34 per cent of the total production comes from Uttar Pradesh followed by West Bengal 24 per cent and Bihar 19 per cent.

These three States account for 77 per cent of total domestic production. Punjab, Gujarat, Madhya Pradesh and Karnataka also chip in with a small quantity. Though Uttar Pradesh has the largest potato production, Gujarat tops in yield.

The average yield per hectare in India is quite low at 18 tonnes.

In 2001-02, the productivity was high at nearly 20 tonnes due to use of high yielding varieties and favourable weather conditions. Of late, the yield has come down to an average of 17 tonnes.