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Commodities & Currencies

Weekly Tracker

Commodities Weekly Tracker

Contents Returns • Non Agri Commodities • Currencies • Agri Commodities Policy Review • RBI • FOMC

Non-Agri Commodities • Gold • Silver • Copper • Crude Oil

Currencies – DX, Euro, INR

Agri Commodities • Chana • Black Pepper • Turmeric • Jeera • Soybean • Refine Soy Oil & CPO • Sugar • Kapas

Monday | June 24, 2013

Commodities Weekly Tracker Monday | June 24, 2013

4.1

3.1

2.3

1.4 1.2

(0.9)

(1.7) (1.8)(2.0)

(1.0)

0.0

1.0

2.0

3.0

4.0

Currencies Weekly Performance


2.0

(0.6)

(1.5)

(3.5) (3.6)(4.1) (4.3)

(6.7)

(8.9)(9.0)

(7.0)

(5.0)

(3.0)

(1.0)

1.0

Non-Agri Commodities Weekly Performance

*Weekly Performance for July contract, Mentha Oil Cotton & CPO- June Contract,



RBI Monetary Policy Review Silent on Interest Rates

• Citing growth-inflation dynamics and recent developments in the external sector, the Reserve Bank of India (RBI) kept interest rates unchanged as expected.

• Indications for further changes in interest rates in the July’13 policy are currently mute but may change over time, given that the monsoon this year is expected to be normal, thus reducing the supply-side pressure and thereby easing inflation.

• Fall in the WPI to 4.7 percent has not been a strong enough factor for the central bank to reduce interest rates as food inflation remains high.

• While factors like distribution and supply of food are affecting food inflation, measures to tackle the same need to be introduced. A good monsoon progress on a pan-India scale ahead of time will help to bring down food inflation in the coming months.

• Developments on the external sector front, being one of the major factors that drove the RBI’s decision, need to be looked at closely.

• Sharp depreciation in the Rupee along with a widening of the trade deficit due to a surge in gold imports has restricted interest rate cuts by the RBI.

• In its review, the central bank has indicated that the key to boosting economic growth could be done through increasing investment by creating a favorable and conducive environment for private investment, improving project clearance and raising the role of public investment.

• This move by the RBI has largely dampened sentiments at a time when the world economy is suddenly witnessing a slowdown in growth momentum. • Recent measures in order to reduce the Current Account Deficit (CAD) by way of curbing gold imports through restricting its supply and increasing customs duty, it looks like the RBI is using indirect measures to reduce economic hurdles and is also applying the same strategy to boost economic growth.

Repo Rate 7.25% Reverse Repo Rate 6.25%

Cash Reserve Ratio 4% Bank Rate 8.25%

Repo Rate 7.25%

Reverse Repo Rate 6.25 %

Cash Reserve Ratio 4%

Bank Rate 8.25%

Repo Rate 7.25%

Reverse Repo Rate 6.25 %

Cash Reserve Ratio 4%

Bank Rate 8.25%

8.5

7

6

9

6.5

4.75

6.75

8.5

7.25

4.2

5.2

6.2

7.2

8.2

9.2

10.2

27-0

4-20

01

28-0

5-20

01

23-1

0-20

01

28-0

3-20

02

30-1

0-20

02

3-03

-200

3

19-0

3-20

03

25-0

8-20

03

27-1

0-20

04

26-1

0-20

05

8-06

-200

6

31-1

0-20

06

31-0

3-20

07

25-0

6-20

08

20-1

0-20

08

8-12

-200

8

5-03

-200

9

19-0

3-20

10

2-07

-201

0

16-0

9-20

10

25-0

1-20

11

3-05

-201

1

26-0

7-20

11

25-1

0-20

11

17-0

4-20

12

19-0

3-20

13

17-0

6-20

13

Repo Rate (%)

6.5

5.5

4.5

6 6

3.25

5.25

7.5

6.25

3

3.5

4

4.5

5

5.5

6

6.5

7

7.5

8

27-0

4-20

01

28-0

5-20

01

23

-10-

2001

28-0

3-20

02

30-1

0-20

02

3-0

3-2

003

19-0

3-20

03

25-0

8-20

03

27

-10-

2004

26-1

0-20

05

8-06

-200

6

31

-10-

2006

31-0

3-20

07

25-0

6-20

08

20

-10-

2008

8-12

-200

8

5-03

-200

9

19

-03-

2010

2-07

-201

0

16-0

9-20

10

25

-01-

2011

3-05

-201

1

26-0

7-20

11

25

-10-

2011

17-0

4-20

12

19-0

3-20

13

17

-06-

2013

Reverse Repo Rate (%)


FOMC Update Withdrawal symptoms seen as Fed prepares to taper • Federal Reserve Chairman Ben Bernanke confirmed that the US

economy was growing at a strong enough pace and that the central bank could now begin with tapering the stimulus

• World stocks, commodities and bonds slumped on this statement

• However, US Treasury yields on the 10-year note rose to a 15-month high of 2.36 percent on the day of the announcement

• The Fed is more confident about US economic growth than before, thus making the expected move more certain in the near future

• However, Ben Bernanke left two cues in terms of the future as he said that – the Fed could stop reducing its bond purchases or raise it again if the job market does not stabilise

• It was reiterated in the Fed’s policy meet that interest rates would not be increased until the unemployment rate hits 6.5 percent or lower, given that the inflation outlook remains below 2.5 percent

• Also, the withdrawal process would begin once the unemployment rate comes around the comfort level of 7 percent

• The Dollar Index strengthened on Wednesday and Thursday but the currency could weaken in the short-term as liquidity is expected to continue until the pullback actually begins in the later part of the year

• The panic seen after Federal Reserve Chairman Ben Bernanke’s announcement yesterday clearly shows that the world financial markets witnessed withdrawal symptoms much ahead of the stimulus pullback process.

• Fear of removal of excess liquidity from markets and its impact on

the world economy led to sharp selling across risky asset classes

immediately after the Fed’s announcement.

• Emerging markets are witnessing withdrawal symptoms already,

with capital flows receding and currencies depreciating.

• Foreign Institutional Investors (FIIs) are not finding India a very

attractive investment destination and the improving US economic

scenario is leading to a shift in investment patterns from emerging

and developing economies to the world’s largest economy – the

US.

• The Indian economy too will face a repercussion of the withdrawal

and the domestic equities have seen a major negative reaction. A

rise in US Treasury yields is seen, while the Indian 10-year

benchmark yield is seen declining.

• Arbitrage opportunity for FIIs is vanishing in the Indian markets due

to increase in hedging cost as Rupee has depreciated sharply.

Hence, Treasury yields in the US look more attractive at this point

in time, making the Indian bond market situation less attractive.

• Emerging markets would face the burden of this withdrawal plan

as investors would move towards fixed income assets, while riskier

investment classes will face downside pressure.

• World equity markets and the economy at large will undergo a

weak economic phase once the withdrawal begins. Capital flows to

emerging markets could be hit in a big way, thus affecting

economic fundamentals.


Gold Weekly Price Performance

• Following Fed’s announcement, gold prices slumped sharply below $1300/oz levels last week as the pullback in stimulus measures would lead to strength in the Dollar Index and investors would move away from gold as a stronger dollar will make it more expensive for holders of other currencies

• Spot Gold prices touched a weekly low of $1268/oz on Friday, falling around 7 percent over the week

• On the MCX, prices touched a weekly low of Rs26,727/10gm on Friday, slipping 3.1 percent over the week

• Fall in Indian markets was lower than that in the international markets due to the Rupee depreciation factor

SPDR Gold Holdings fall below 1000 tonnes

• Reacting to the Fed’s announcement, ETF Holdings in the SPDR Gold Trust, fell to

999.56 tonnes on Wednesday, erasing more than $23 billion in the funds value

• Over the year, holdings have slipped 26 percent and further decline in holdings could

be seen as the safe-haven status of gold has faded drastically

Increased Gold Imports Widen Trade Deficit in India

• Gold and Silver imports jumped 90 percent in May’13 to $8.3 billion from $4.4 billion

in May’12.

• India’s trade deficit has widened to a 7-month high in May’13 to $20.1 billion from

$16.9 billion in May’12 . Trade deficit has widened due to a sharp increase in gold

imports coupled with a fall in exports. A high trade deficit affects the current account

deficit and the value of the Rupee

• Merchandise exports slipped 1.1 percent to $24.5 billion and the weaker Rupee did

not help as world demand slowed while the government banned gold trading in

Special Economic Zones (SEZ)

• Imports climbed around 7 percent, backed by rise in gold and silver imports

1,280

1,380

1,480

1,580

1,680

1,780

25,500

26,500

27,500

28,500

29,500

30,500

31,500

MCX and Comex Gold Price Performance

MCX- Near Month Gold Futures - Rs/10 gms Comex Gold Futures - $/oz

79.0

80.0

81.0

82.0

83.0

84.0

85.0

1,275

1,325

1,375

1,425

1,475

1,525

1,575

1,625

1,675

Spot Gold Vs Dollar Index

Spot Gold -$/oz US Dollar Index


Gold CME raises margins on gold futures

• Sharp selling in gold futures led the CME to increase margins on the

gold contracts on Thursday after prices fell to the lowest levels seen in

September 2010

• Minimum cash deposit for gold traders will increase 25 percent to

$8800 per 100 ounce contract

Gold exports from SEZ allowed after value addition

• Sharp decline in gold exports concerned the government, which then

allowed units in SEZs to export gold items after a minimum value

addition of 3 percent in gold jewelry and 5 percent in gold and precious

stone studded jewelry.

• This measure would help to increase gold exports from India as gold

exports had taken a hit of $0.8 billion in May’13.

Base Rate Cut

• Indian government cut the gold base import price to $450/10 gms from

$459/10 gms

Reliance Cap to restrict gold backed loans

• In the Indian markets, sentiments towards gold purchases is turning

mixed as Reliance Capital announces its decision to suspend gold sales

• This step by the company is taken In order to support the RBI’s decision

to curb gold imports, reduce the current account deficit and help to

control the rising demand for the yellow metal

• Reliance Capital has suspended sales of gold coins and sale of gold in

the physical form along with refinancing against gold, which is a very

big market in India

• New subscriptions will also be suspended in the Reliance Gold Savings

Fund, which has a corpus of Rs2600cr

Stocks of Gold mining companies correct

The steep fall in gold prices led to selling pressure in stocks of gold mining

companies as margins would come under pressure due to low gold prices

With the yellow metal trading around the marginal cost of production,

gold miners are expected to witness a slow growth phase

US Commodity Futures Trading Commission Data (CFTC) • The latest CFTC report showed that hedge funds and money managers

have reduced their bullish bets on gold futures and options for the second

consecutive week

Outlook Over the week, gold prices in dollar terms are expected to trade lower as sentiments towards the yellow metal have turned weak. With clear indication that the Federal Reserve will begin its stimulus withdrawal in the coming months, the Dollar Index is expected to strengthen, thereby adding pressure on gold prices. In the Indian markets, a sharp correction in prices will be cushioned due to the depreciation in the Rupee. But the overall trend in the Indian markets is also bearish.

Weekly Technical Levels • Spot Gold : Support 1,247/1,196 Resistance 1,321/1,370. (CMP: $1282.5) • Sell MCX Gold August between 27,280-27,330, SL-27,551, Target -26,500. (CMP: Rs 26,695)


Silver Weekly Price Performance

• Spot silver prices slipped below the $20/oz crucial mark, falling around 9 percent over the last week. In dollar terms, prices touched a low of $19.35/oz on Friday

• In the Indian markets, prices corrected 5.2 percent over the week and on the MCX, the near-month contract touched a low of Rs40,716/kg on Friday

ETF Performance

• Holdings in the iShares Silver Trust increased around 0.8 percent last week to 10,073 tonnes

Demand slows despite sharp price correction

• Silver prices have slipped around Rs41,000/kg levels currently from Rs55,000/kg in June’12

• Despite a sharp fall in prices, huge stocks remain with domestic bullion dealers. Demand is expected to revive in the festive season but the current scenario remains weak from the demand perspective

• Due to slowdown in the electronic industry, industrial demand for silver has also taken a beating . Exports of silver items from India to the US and Australia have also declined

Base-Rate Price cut

• Indian government cut the base import price of silver from $737/kg to $709/kg

Outlook • A bearish trend is expected in silver prices over the week, with sharp losses in

the Indian market to be cushioned due to Rupee depreciation.

Weekly Technical Levels

• Spot Silver: Support 19.10/17.80 Resistance 20.55/21.65. (CMP:$19.58)

• Sell MCX Silver July between 42,500-42,550, SL-43,201, Target -40,200. (CMP:

Rs.40,661)

20

22

24

26

28

30

32

41,000

43,000

45,000

47,000

49,000

51,000

53,000

55,000

57,000

59,000

MCX and Comex Silver Price Performance

MCX- Near Month Silver Futures - Rs/ kg Comex Silver Futures - $/oz

79.0

80.0

81.0

82.0

83.0

84.0

85.0

19.5

21.5

23.5

25.5

27.5

29.5

31.5

Spot Silver Vs US Dollar Index

Spot Silver -$/oz US Dollar Index


Copper Weekly Price Performance

• LME Copper prices slipped 3.5 percent last week, while prices on the MCX near-month contract closed on a flat note, owing to Rupee depreciation in the last week

• Prices hit a low of $6692/tonne on the LME and on the MCX prices slipped to a low of Rs401.9/kg last week

• In dollar terms, prices have declined sharply and this indicates a bearish trend in the commodity especially amid demand-side worries from China

Copper Inventories

• On the LME and the SHFE, inventories jumped 7.5 percent and 3.2 percent to 664,850 tonnes and 189,209 tonnes respectively. Increase in inventories also acted as a bearish factor on copper prices last week

Supply-side Action – Freeport output starts, while strike at Codelco to begin

• Indonesia may allow mining operations at Freeport McMoran to begin after a prolonged shutdown following the accidents. The miner has started some operations, thereby erasing the supply-side threat

• However, there is an expected strike on Wednesday at Codelco in Chile. Hence, fundamentally, the supply-side support will remain but it will have little impact on prices due to worries over Chinese economic slowdown

Asian participation on LME bourse increases

• Asian participation on the LME has grown phenomenally, with demand from China being a major contributor, as the country consumes around 40 percent of base metals output on an annual basis

• Transactions during Asian trading hours accounted for 16 percent of electronic trading in the three-month futures contracts in 2012

• Industrial metals turnover at the LME stood around $14.5 trillion as compared with $4 trillion on the Shanghai Futures Exchange

365

375

385

395

405

415

425

435

445

455

6,700

6,900

7,100

7,300

7,500

7,700

7,900

8,100

8,300

LME and MCX Copper Price Performance

LME Copper Future ($/tonne) MCX Near Month Copper Contract (Rs/kg)

6,700

6,900

7,100

7,300

7,500

7,700

7,900

8,100

8,300

318,000

368,000

418,000

468,000

518,000

568,000

618,000

668,000

LME Copper v/s LME Inventory

Copper LME Inventory (tonnes) LME Copper Future ($/tonne)


Copper Net short position in Copper rises

• CFTC data showed that net short positions in copper increased sharply, marking the most in more than two months

• Negative Chinese economic data along with an overall slump in commodity prices has led to a bearish view for the metal

Outlook

• Copper prices are expected to trade with a negative bias during the week despite supply-side concerns as a slowing Chinese economy coupled with Dollar Index strength after the Fed’s announcement over the stimulus pullback will lead to pressure on prices on the LME.

• On the MCX however, sharp decline in prices are expected to be curtailed due to weakness in the Rupee.


• LME Copper: Support 6760/6630 Resistance 7010/7120. (CMP: $6671.0)

• MCX Copper: Support 402.50/396.50 Resistance 413/418. (CMP: Rs 397.95)


Crude Oil Weekly Price Performance

• Nymex WTI crude oil prices declined 4.3 percent last week and tested a low of $93.12/bbl

• On the MCX prices fell marginally by 0.5 percent over the week due to Rupee depreciation and oil touched a weekly low of Rs.5587/bbl

Inventories

• Over the week, the inventory report was mixed as the API report showed a fall of 4.3 million barrels, while the EIA report showed an increase by 0.3 million barrels

Crude Oil Supply in the US

• Domestic crude oil production outpaced imports in late May’13 for the first time since 1997 on account of increase in shale-led production

• Commercial oil stocks of 394 million barrels around their highest levels since 1980s

• The International Energy Agency (IEA) has forecasted that US oil output would touch 10 million barrels a day, rising 23 percent in two years

• American oil demand is expected to average lower at 18.6 million barrels a day in 2013, falling for the third straight year

• Fall in demand is due to decline in driving activity and rise in purchases of fuel-efficient cars . In 2005, US demand stood at around 21 million barrels per day

For the first time since 1970s, US could start exporting oil

• After the Arab oil embargo in 1973-74, the US had imposed a ban on oil exports, triggering supply shortage and a sharp increase in prices

• Due to advancement in oil production techniques such as hydraulic fracturing, there is an increase in output that could outstrip refinery capacity in the near future

• Net petroleum imports in the US now account for 40 percent of demand as against 60 percent in 2005

• Domestic oil production in the US last year stood at a record of 766,000 barrels a day

86.0

88.0

90.0

92.0

94.0

96.0

98.0

4,700

4,900

5,100

5,300

5,500

5,700

Nymex and MCX Crude Oil Price Performance

MCX crude oil (Rs/bbl) NYMEX Crude Oil ($/bbl)

361.3

360.3

363.1369.1

371.7

372.2

376.4

377.53

381.4

384

382.7

385.9

388.6 388.9

387.6

388.6

395.3 395.5

394.9 394.6

397.6

391.3

393.8

394.1

360

365

370

375

380

385

390

395

400

Crude Oil Inventories (mn barrels)


Crude Oil Oil demand is the US falls in May’13 • Oil demand slipped more than 1 percent in May’13 as compared with a

year earlier, marked by a sharp decline in usage of gasoline by 3.3 percent

• Consumption stood at a monthly average of 18.503 million tonnes in May’13, touching a two-year low

• Gasoline demand fell to a 13-year low of 8.697 million barrels a day in May’13, per day use in gasoline fell 300,000 barrels from May’12

• Ultra-low- sulfur diesel use increased to 3.619 million barrels per day 5.1 percent y-o-y in May’13

Oil output in US • Output jumped almost 15 percent y-o-y to a 22-year high in May’13 to

7.287 million barrels per day, topping 7 million barrels a day for the seventh straight month

• New drilling technologies such as hydraulic fracturing and horizontal drilling has unlocked oil deposits trapped in shale rocks

• Demand for imported crude oil will reduce with increase in indigenous production and high oil inventories

• Oil imports in the US fell by around 1 million barrels per day as compared to a year earlier to an 18-year May low of 7.916 million barrels per day

• Crude oil stocks during May-end stood at 388.6 million barrels, touching the highest since 1981

• Refinery processing of crude oil rose by 0.2 percent y-o-y to 15.208 million barrels a day, thus increasing the output of major petroleum products

•

Outlook

• A comfortable supply-side scenario along with increase in inventories is expected to be bearish for crude oil. Over the week, prices are expected to trade on a negative note, with a stronger Dollar Index adding additional pressure on prices.

• Rupee depreciation will help cushion sharp decline in prices on the MCX.


• Nymex Crude Oil: Support: 91.65/89.35 Resistance 95.45/97.80. (CMP:$93.17)

• Sell MCX Crude July between 5680-5700, SL-5801, Target -5520. (CMP:Rs 5581)


Rupee and Dollar Index Weekly Price Performance

• Following Fed’s announcement, the Rupee touched an all-time low of 59.975 on Thursday as a result of sell-off across risky asset classes and sharp strength in the Dollar Index

• Over the week, the currency depreciated 3 percent against the dollar. Capital outflows along with expectations of further removal of FII flows from the markets led to weakness in the currency

Capital Flows

• For the month of June 2013, FII outflows totaled at Rs.5,028.70 crores ($848.17 million) as on 21st June 2013. Year to date basis, net capital inflows stood at Rs.78,176.40 crores ($14,504.80 million) till 21st June 2013.

Dollar Index

• Federal Reserve’s announcement of tapering in stimulus measures pushed the Dollar Index to a weekly high of 82.32

• Over the week the Dollar Index has strengthened more than 2 percent

US Treasury Yields Rise Sharply

• Post the Fed’s announcement, US Treasury yields touched a 22-year high to around 2.36 percent last week, while a sell off was seen in the Indian bond market

Factors that affected currency movement

• A high current account deficit, weak economic scenario and a slowing Indian economy acted as a negative factor for the Rupee

• An improving US economic scenario along with a pullback of stimulus measures by the Federal Reserve has boosted the appeal of the Dollar Index

Outlook

• Strength in the Dollar Index, capital outflows and weak domestic and global equity markets are expected to leads to depreciation in the Rupee this week


• USD/INR MCX June Support 57.90/56.50 Resistance 60.40/61.60. (CMP: 59.26)

• US Dollar Index: Support 81.10/79.80 Resistance 83.10/83.90. (CMP: 82.58)

53.0

54.0

55.0

56.0

57.0

58.0

59.0

60.0

$/INR - Spot

79.0

80.0

81.0

82.0

83.0

84.0

US Dollar Index


Euro Weekly Price Performance

• The currency touched a low of 1.3098, falling around 1.7 percent over the week, taking cues from a stronger Dollar Index

• Although economic data from the Euro Zone was supportive last week, the currency slipped as global markets were weak and as the Dollar Index strengthened

Economic data failed to impress • A positive consumer confidence report failed to push the Euro higher, thus

showing the impact that market sentiments had on the currency

• A slight improvement in Euro Zone manufacturing activity was also seen in the past month

Italy boosts infrastructure spending

• Italy, the fifth-largest European economy, announced its decision to boost infrastructure spending.

• Italian Prime Minister accepted measures to invest more than 3 billion Euros of funds to develop roads and railway lines

• This move will help to increase employment levels in the country as the infrastructure spending is expected to create 30,000 jobs

Outlook

• Over the week, a stronger Dollar Index will continue to add pressure on the Euro

• Movement in the currency will be driven by the sentiments is the world financial markets, which are still connected to the Fed’s announcement made last week


• EURO/USD SPOT: Support 1.3056/1.2990 Resistance 1.3210/1.3310. (CMP:

1.3104)

1.275

1.285

1.295

1.305

1.315

1.325

1.335

1.345

1.355

1.365

Euro/$ - Spot

69.0

70.0

71.0

72.0

73.0

74.0

75.0

76.0

77.0

78.0

79.0

EURO/INR - Spot

Chana


Weekly Price Performance

• Chana futures declined sharply in the early part of the last week due to good pace of kharif pulses sowing and smooth advancement of monsoon. However, receding supplies and strong demand led prices to recover towards later part.

• On a weekly basis, spot prices settled 0.28% higher while Chana July futures settled 0.7% lower.

Cumulative rainfall 54 percent up for the period 1-19 June

• For the country as a whole, cumulative rainfall during this year’s monsoon has so far upto 19 June been 54% above the LPA.

Pulses sowing higher amidst early monsoon

• Kharif Pulses are mainly grown in the western and southern belts of India. 3.74 lakh ha of area is covered under kharif pulses as on 21st June 2013 as against normal 1.2 lakh ha.

Chana output estimated at record high - Third Advance Estimates

• According to the third advance estimates released last week, Chana output is pegged marginally lower to 8.49 mn tn compared with its second advance estimates of 8.57 million tonnes.

Seasonal pattern to restrict further downside in the prices

• Chana prices tend to follow a seasonality pattern, wherein prices decline during the harvesting period (Apr-May) and bottom out when arrivals reach their peak in the month of May. Thus, taking cues from seasonality pattern , chana prices are set to recover from the current month (June as arrival will decline gradually.

Outlook

• Chana prices may trade range bound with upward bias as demand is strong at current price levels while arrivals have started declining. Good sowing prospects of kharif pulses may cap sharp gains in the prices.

Weekly Strategy

• Buy NCDEX CHANA July between 3200-3190, SL -3140, Target - 3280 / 3290

Turmeric

Source: Agriwatch & Reuters



• Turmeric Futures traded higher last week extending previous week’s gains on account of declining arrivals. Heavy rains in the turmeric growing regions may cause delay in the sowing. Also, fresh export enquiries supported prices at lower levels.

• The spot as well as the futures settled 1.06% and 4.49% higher w-o-w.

Better than expected exports

• Turmeric exports in 2012-13 stood at 80,050 tn as against 79,500 tn in 2011-12.

Commencement of sowing of Turmeric for the 2013-14 season

• The area covered under Turmeric in A.P. as on 19/06/2013 stood at 0.01 lakh hectares. Sowing last year commenced late due to drought conditions. Normal sowing for the season is 0.68 lakh hectares. Production of turmeric declined in 2012-2013 season due to weak monsoon as well as lower turmeric prices.

Lower production in the 2012-2013 season

• Turmeric production in 2012-13 is expected around 50% lower compared to last year and is expected around 45-50 lakh bags. Production in 2011-12 is reported at historical high of 90 lakh bags/ 10.62 lakh tns.

Outlook

• Turmeric is expected to continue to gain this week as lower arrivals coupled with improvement in the overseas demand ahead of Ramadan may support prices. However, the carryover stocks are huge, which may cap sharp gains and pressurize prices. Arrivals of monsoon may also lead to improvement in sowing. The progress of monsoon needs to be tracked carefully as this may affect the acreage as well as the yield of the crop.

Weekly Strategy • Buy NCDEX Turmeric July between 5850 – 5830, SL – 5550, Target – 6300.


Source: Reuters & Angel Research.

Jeera

Source: Ministry of Agriculture, Gujarat.



• Jeera traded on a positive note last week on account of good overseas as well as local demand. However, good arrivals coupled with higher production estimates capped sharp gains. About 25-30% of the new crop from Gujarat has already been exported to Singapore, Europe & Dubai.

• The spot as well as the July Futures settled 1.95% and 3.93% higher w-o-w.

Second consecutive year of higher output

• India’s 2013 Jeera output is estimated at 40-45 lakh bags (of 55kgs each), higher than 40 lakh bags in 2012. However, increase in the exports due to supply concerns in the global markets offset the impact of higher supplies on the prices and thus, medium term fundamentals remain supportive for the upside.

Global supply concerns boost Jeera exports

• Jeera exports in 2012-13 stood at 79,900 tn, as against 45,500 tn last year.

• The ongoing tensions in Syria and Turkey, coupled with output concerns has led to supply concerns, and thus, exports have been diverted to India.

International Scenario

• According to reports, production in Turkey is reported around 8,000-10,000 tonnes while production in Syria is expected to be lower, raising supply concerns in the international markets.

• Currently, Indian Jeera in the international market is being offered at $2,510/tn (FOB Mumbai).

Outlook

• Jeera is expected to trade higher this week on expectations of good overseas demand. Also, declining arrivals may support prices. However, higher production figures this season may cap sharp gains and pressurize pries at higher levels. Good progress of the monsoon may also limit the upside in the prices.

Weekly Levels • Buy NCDEX Jeera July between 13500 – 13550, SL – 13150, Tgt – 14000/14100.


Source: Reuters & Angel Research.

Soybean


Weekly price performance

• Soybean prices remained positive in the early part of the session as delayed US soy planting raised concerns over supplies. However, with good progress of monsoon and higher sowing in the domestic markets, soybean prices declined sharply towards the later part of the week. On a weekly basis July futures as well as spot settled around 1% and 0.3% lower w-o-w.

• CBOT Soybean Futures declined 1.53% as less threatening weather forecasts for late plantings and good development of crops across major growing belts dampened positive market sentiments.

Commencement of Kharif Sowing

• As per the Ministry of Agriculture, oilseeds’ sowing is completed under 8.13 lakh ha against normal 3.37 lakh ha.

• Groundnut was sown in 5.56 lakh ha against 2.21 lakh ha sown during the same period last year. Soybean was planted on 1.32 lakh ha, against 0.16 lakh ha last year.

India's soy meal Exports Fall by 57 Percent during FY13-14 – SEA

• India’s soy meal exports for the month of May 2013 were 96,492 tonnes, lower by 32.33 percent from 142,588 tonnes a year ago.

USDA to release planting report on 28th June

• US department of agriculture is schedule to release its planting report on Friday this week.

• In its preliminary report released on 28th March 2013, USDA estimated Soybean acreage around 77.1-million acres in 2013, the fourth highest acreage on record, but down marginally by 0.13 percent from last year.

Outlook • Soybean is expected decline this week on higher output expectations in the coming

season amidst increased sowing and good monsoon. Prices may also take cues from the USDA planting report which is schedule to release on Friday.

Strategy

• Sell NCDEX Soybean July between 3830 - 3850, SL - 3975, Target - 3680 / 3650

Refine Soy Oil and Crude Palm Oil


Weekly price performance

• Domestic edible oil prices continued with its upward trend in the initial part of the week on account of weakness in the Indian rupee along with firm international markets. However, prices declined sharply in the second half of the week amidst broad sell off in commodities caused on concerns the U.S. Federal Reserve may phase out stimulus. CPO managed to settle higher by 1.79% last week as rupee continued to weaken. However, Ref Soy oil settled 0.5% lower taking cues from the international markets.

Global Scenario

• Malaysian palm oil products Exports from June 1-20 rose 16 percent to 928,810 tons from shipped during May 1-20. Malaysia, the world's No.2 palm oil producer, will set its crude palm oil export tax for July at 4.5 percent.

Domestic Scenario

• As per the data released by the Solvent Extractors' Association of India Imports of vegetable oils, including non-edible oils, rose 40.2% to 917,964 tn in May, after dropping for 3 months, mainly due to surge in palm oil imports.

• India's refined palm oil imports hit a record high in May by jumping 47.5 percent from April. The world's top buyer of vegetable oils imported 373,837 tonnes of refined palm oil in May.

• Monthly soy oil imports rose 2.7% as local supplies are almost exhausted before the new planting season for soybean.

• Stockpiles of edible oil at ports on May 1 stood at 670,000 tn, the trade body said, off a record of 930,000 tn on March 1. “Stocks were still on the higher side despite the decline in monthly imports.

Strategy

• Buy NCDEX Ref Soy Oil July Support 1 - 688, Support 2 – 680 and Resistance 1- 706,Resistance 2 - 712

• MCX CPO July between 500 – 498, SL – 487, Target – 520/525 (CMP – 505.40)

Sugar



• Sugar prices declined last week after the government said that it will not increase the import duty until September 2013. Also, good progress of monsoon in the drought ridden state of Maharashtra has eased concerns over output.

• Liffe Sugar recovered from lower levels after touching 3 year low in the preceding week on account of short coverings. Prices have declined sharply on account of 3rd year of global sugar surplus.

Sugarcane acreage down 10 percent as on 14th June • According to the Ministry of Agriculture, Sugarcane has been planted in 44.55

lakh ha as compared to 49.3 lakh ha last year as drought affected Maharashtra and Karnataka have reported lower area.

• After producing surplus sugar in the current season, sugar output is expected to decline in 2013-14 season on account of lower plantings.

India sugar reserves at five-year high set to avert imports

• Sugar inventories in India, are poised to surge by 37% to 9.2 million tonnes at the start of October, a five-year high as exports halt because of slumping global prices. Exports have plunged to about 35,000 tonnes since 1 October from 3.4 million tonnes in 2011-2012.

Brazil's CS sugar output up 40 percent yoy

• Sugar and ethanol mills in Brazil's main center-south cane belt made strong progress harvesting record crop through mid-May, producing more than twice the amounts of sugar and ethanol than they did from last season's smaller cane crop. Mills in the region benefited from dry weather in late April and early May and produced mn tn of sugar, up 40 percent from a year ago.

Outlook

• Sugar prices may correct tracking god monsoons as well as government’s refusal to impose import duty. However, lower production estimates may support prices.

Strategy

• NCDEX SUGAR July between 3030-3040, SL -3075, Target - 2970 / 2950.

Kapas/Cotton



• MCX Cotton prices remained in the positive territory last week, due to lower supplies to cater strong demand from yarn manufacturers. However, gains were comparatively limited due to higher sowing and above normal monsoon.

• ICE Cotton futures declined 6.7% w-o-w as decline in U.S. exports raised concerns about demand. Recent rains in Texas, the biggest producing U.S. state, have eased concerns about upcoming supplies in the world's top exporter of cotton.

Kharif Cotton Planting Progress

• Cotton planting has been reported at 28.13 lakh ha as against 24.59 lakh ha during the same period last year. Planting is almost complete in North India and sowing in Punjab and Haryana declined marginally.

• In Maharashtra, 8.5 lakh hectares have been covered till 21st June, 2013 against 5.9 lakh ha sown last year (as on 25th June, 2012). In Andhra Pradesh area is reported higher at 3.53 lakh ha as on 19th June, 2013 against 2.97 lakh ha last year .

Cotton arrivals 2.2 percent down as on 6th June, 2013

• According to CCI, Cotton arrivals since the beginning of the seaosn (Oct 2012- Sep 2013) is reported at 318.62, down 2.2 percent compared to same period last year.

USDA to release planting report on 28th June

• US department of agriculture is schedule to release its planting report on Friday this week. Farmers are expected to have planted one of their smallest crops in decades as they have switched to higher priced grains.

• In its preliminary report released on 28th March 2013, USDA estimated upland cotton plantings would drop by 19 percent, or 2.3 million acres to 9.8 million acres.

Outlook

• Upward trend in Cotton may continue this week as USDA planting report may show lower acreage of cotton this season. Domestic fundamentals also remain supportive in the near term due to lower supplies in the markets.

Strategy

• Buy MCX Cotton July between 19800-19750, SL -19400, Target - 20400 / 20500

Thank You!

Angel Commodities Broking Pvt. Ltd. Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 3083 7700 Corporate Office: 6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 2921 2000 MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302 Disclaimer: The information and opinions contained in the document have been compiled from sources believed to be reliable. The company does not warrant its accuracy, completeness and correctness. The document is not, and should not be construed as an offer to sell or solicitation to buy any commodities. This document may not be reproduced, distributed or published, in whole or in part, by any recipient hereof for any purpose without prior permission from “Angel Commodities Broking (P) Ltd”. Your feedback is appreciated on [email protected]


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