SMC Global Monthly Report on Other Commodities

02 November 2013

Monthly Report On

OTHER COMMODITESNOVEMBER 2013

Presented by:Subhranil Dey [email protected]: 011-30111000 Extn. 674

1

Snapshot of price movements in futures and spot markets (October 2013)

Price movement of other commodities on NCDEX

Source: SMC Research

Price movement of other commodities on spot markets (October 2013)


®

-2.72

0.10

4.40

5.88

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Kapas Sugar Wheat Chana

% Change

-14.51

-4.15

3.06 3.19

-16.00

-14.00

-12.00

-10.00

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

Cotton 29mm (Rajkot) Sugar M (Kolkata) Chana (Delhi) Wheat (Delhi)

2

MARKET MOVEMENT AHEAD

Commodity: CHANA Trend: Down Range: 3020-3275 (December)

Domestic Fundamentals

�The ministry of agriculture has proposed a steep hike in import duty for pulses in the range of 20-30%. The proposal is being discussed with the department of revenue.

�According to industry data, reportedly, traders are importing tur at Rs 3,300-3,500 per quintal from Myanmar currently, while domestic prices are ruling at Rs 4,300 per quintal.

�India has adequate stocks of chickpeas in the domestic market.

�According to the Economic Outlook for 2013-14, the Prime minister's economic advisory council (PMAEC) pegged the output of pulses to be over 20 million tonne in 2013-14. In 2012-13, India had produced 18.45 million tonne of pulses, the best so far.

�According to the first advance estimates of pulses production (2013 -14) released by the Government, kharif pulses output is estimated at 6.01 million metric tonnes compared with 5.95 million metric tonnes in the previous season.

�Desi Chana at Delhi market noticed firm tone amid festival demand in the market.

�The Cabinet Committee on Economic Affairs (CCEA) has increased the minimum support price of chana/chickpeas for 2013 -14 season to Rs.3100 per quintal from previous Rs.3000 per quintal and masoor has been increased from Rs.2900 per quintal to Rs.2950 per quintal.

�According to Ministry of Agriculture, acreage under rabi pulses till date is reported at 8.8 lakh hectares compared to 5.98 lakh hectares during the same period last year.

�According to IBIS, imports of pigeon pea in the month of September increased to 0.34 lakh metric tonnes compared to 0.28 lakh metric tonnes during the previous month.

�At spot market, chana (kanta) being quoted at Rs 3,050-3,100, while chana (desi) ruled at Rs 2,900.

�There is adequate carryover stock, arrival of new crops and continuous flow of imported chana in the domestic market.

�Against an imported deal of $500-520 a tonne in November, chana import deals for November-December have declined to $460-470.

�Chana dal (average) was being quoted at Rs 3,700-50 , chana dal (medium) at Rs 3,800-4,000, while chana dal (bold) ruled at Rs 4,100-4,400.

�Slack demand and buying support have also dragged dollar chana both in the domestic and export market. Dollar chana (chickpea) was quoted at Rs 4,000-4,200 amid an arrival of 5,000-6,000 bags in Indore mandis.

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Spot Prices

Source: Agriwatch

Nov Dec Jan Feb

Nov - - - -

Dec -77.00 - - -

Jan -116.00 -39.00 - -

Feb -107.00 -30.00 9.00 -

Calendar spread of Chana futures

As per closing on 31st October 2013 Source: SMC Research

�In container also, dollar chana ruled sluggish on slack export demand with dollar chana (42/44 count) being quoted at Rs 5,000-25 , 44/46 count at Rs 4,700-25, 46/48 count declined to Rs 4,500-25, 58/60 count at Rs 3,675-3,700, while dollar chana (60/62 count) ruled at Rs 3,575-3,600 a quintal respectively.

International Fundamentals

�According to Agriculture Canada, exports of chickpeas in the current season is forecast at 85,000 MT compared to 68,000 MT during the previous season. Domestic use is forecast at 63,000 MT compared to 59,000 MT during the previous season.

3

Chana futures Seasonal Index V/s Monthly close price 2013


®

3,059.00

3,136.00

3,175.00 3,166.00

3,000.00

3,020.00

3,040.00

3,060.00

3,080.00

3,100.00

3,120.00

3,140.00

3,160.00

3,180.00

3,200.00

Nov Dec Jan Feb

Forward curve of Chana futures


0.95

0.92

0.93 0.940.95

0.99

1.05

1.031.04

1.10

1.061.05

3550.00

3334.00

3343.003432.00

3235.00

3094.00

2635.00

3207.00

2889.00

3,059.00

2500.00

2700.00

2900.00

3100.00

3300.00

3500.00

3700.00

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Seasonal Index Monthly close price 2013

4

Commodity: KAPAS Sentiment: Rangebound Range: 930-1000 (APR'14)

Domestic fundamentals

�Heavy rainfall in several areas of Andhra Pradesh, in the past

few days has caused damage to more than 40,000 hectares of

cotton crops.

�The Cotton Association of India (CAI) said in its third estimate,

that the cotton crop for the season 2013-14, that began this

month, is expected at 381 lakh bales (each bale is 170 kg).

�With production this year estimated at 37-40 million bales

and consumption at 27-28 million bales, it could leave 10-12

million of surplus cotton, of which almost 10 million could be

easily exported.

�Even as late rains delayed arrivals of seed cotton, the available

moisture is likely to help increase yields and result in a larger

than estimated crop.

�The output is expected to be good at 207.50 bales especially in

the central region comprising Gujarat, Maharashtra and

Madhya Pradesh, compared to 173.75 bales last year.

�Indian Cotton Federation estimates for 2013-14 at 384 lakh

bales, about 44 lakh bales above the forecast of the Cotton

Advisory Board.

�The cotton harvest in India, the world's second-biggest

grower, will probably increase to a record this year as the best

monsoon since 2007 improves yields.

�Exports are estimated to decrease 11 percent to 9 million bales

from a year earlier, said Joshi. Local demand for cotton from

textile mills may climb to 25.8 million bales from 25 million bales,

while stockpiles will be 4 million bales by Sept. 30.

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Calendar spread of Kapas futures (NCDEX)

Feb '14 Mar '14 Apr '14

Feb '14 - - -

Mar '14 -24.50 - -

Apr '14 -55.50 -31.00 -


Forward curve of Kapas futures


911.00

935.50

966.50

880.00

890.00

900.00

910.00

920.00

930.00

940.00

950.00

960.00

970.00

980.00

Feb Mar Apr

International fundamentals

�China is planning to end its stockpiling programme in order to

support its farmers, creating deficit in its import.

�Consumption of cotton will increase significantly in

Bangladesh in FY 2013-14, due to consistent export growth of

readymade garments and yarn.

5

Kapas futures Seasonal Index V/s Monthly close price 2013


®

0.95

0.99

1.03

0.98

1.01

0.98

1.000.99

0.97

1.011.01

1.06

913.00

1006.50953.50

852.00

1100.00

1052.50

975.00

1039.00

993.50

966.50

800.00

850.00

900.00

950.00

1000.00

1050.00

1100.00

1150.00

0.80

0.85

0.90

0.95

1.00

1.05

1.10




�Wheat exports from the Black Sea countries could be modest

in November as Russian farmers withhold crop in expectation

of higher prices and as Kazakhstan needs more time to get a

clear estimate of the quality of its harvest.

�Russia has harvested 53.3 million tonnes of wheat by bunker

weight from 95% of sown area.

�Expectation of modest wheat exports from the Black Sea

region in November is also supported by dwindling

exportable surplus of Ukraine, Romania and lower quality in

Kazakhstan.

�Australian wheat prices have firmed this week owing to

damage to standing crop in eastern wheat belt due to frost.

�Australian prime wheat prices rose by USD 12/MT to USD

297/MT FOB for December delivery and Australian prime

hard wheat with 13% protein gained USD 10/MT to USD

355/MT, FOB.

6

Commodity: WHEAT Trend: Range Bound Range: 1570-1670(November)


�The Government has reduced the floor price for wheat

exports by $40 a tonne to $260. This is to make Indian wheat

shipments more viable in the global market.

�India primarily exports wheat with 11 percent protein

content. For buyers in the Middle East, Indian wheat costs

$325 a tonne C&F, while the same variety from the Black Sea

region is available at $275-$280 a tonne C&F.

�Bumper wheat production is expected in 2013-14 owing to

good and extended monsoon, providing sufficient soil

moisture for wheat plantation which is likely to begin by early

November.

�Wheat MSP has been raised by Rs 50/Q from Rs 1350/Q to Rs

1400/Q for 2014-15 marketing year.

�As of 1st October wheat in Central pool was 36.1 million

tonnes as compared to 43.15 million tonnes. North Zone has

the highest stock of 26.94 million tonnes. Punjab has the 13.3

million tonnes in its stock followed by Haryana at 8.63 million

tonnes.

�The Haryana government has fixed a target to achieve

production of 127.48 lakh tonnes (LT) of wheat during the

ongoing rabi season 2013-14 (October-March) as against the

production of 113.42 LT last year.

Spot prices

Source: Agriwatch

®

Calendar spread of Wheat (Delhi) futures

Nov Dec Jan Feb

Nov - - - -

Dec -29.00 - - -

Jan -48.00 -19.00 - -

Feb -56.00 -27.00 -8.00 -


7

Source: Agriwatch

Source: Agriwatch

®

8

Export Scenario

Source: Agriwatch

Source: Agriwatch

Source: Agriwatch

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9

Wheat futures Seasonal Index V/s Monthly close price 2013


Forward curve of Wheat futures


®

1.01

0.97

0.90

0.94

0.96 0.96

0.99

1.031.01

1.07

1.09 1.081551.00

1524.00

1393.00

1478.00

1608.00

1566.00

1559.00

1565.00

1545.00

1,613.00

1250.00

1300.00

1350.00

1400.00

1450.00

1500.00

1550.00

1600.00

1650.00

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15



1,613.00

1,642.00

1,661.00

1,669.00

1,580.00

1,590.00

1,600.00

1,610.00

1,620.00

1,630.00

1,640.00

1,650.00

1,660.00

1,670.00

1,680.00

Nov Dec Jan Feb

10

Commodity: SUGAR Trend:Down Range: 2940-2800 (November)


�Considering lower prices compared with the cost of

production, producers are hesitatant to sell.

�On the other hand, they seem to be asking for a price at which

stockists are not willing to buy.

�As sufficient stocks are lying in the Vashi wholesale market

due to routine demand ahead of Diwali, stockists are keeping

away from building up inventories.

�Producers are continuously selling due to higher carryover

stocks from last year and expecting better prospects this

season.

�The Vashi market carries stock of about 115- 120 truckloads.

�India produced 25.1 million tonnes (mt) of sugar in the crop

season ended September 30, about 4.5 per cent lower than in

the previous crop year, owing to low rainfall in Maharashtra,

Karnataka and Tamil Nadu in 2012, as stated by the Indian

Sugar Mills Association.

�The Indian Sugar Mills Association (ISMA) revealed their first

advance estimates for the 2013-14 sugar season – 250 lakh

tonne – based on satellite images of the country's sugarcane

yield in August 2013.

�This would be the fourth successive season when sugar

production is higher than domestic demand, which is seen at

230 lakh tonnes annually.

�According to the first official estimates for the 2013-14 crop

season, sugarcane production is expected to stand at 341.7

mt, just 0.82 per cent more than last year.

�Cane crushing by sugar factories in Maharashtra is not

expected to begin before Diwali for a variety of reasons, unlike

the usual date of November 1.

�As cited by USDA, India is likely to export upwards of 2.0 MMT

of sugar in MY2013/14, roughly one-third of which will be

raw sugar.

�In a latest development private trade has finalized export

deals of 1.75 lakh T raw sugar for Dec-Jan delivery.

�A handful of mills in Maharashtra have signed contracts for

around 300,000 tonne of raw sugar exports at an average

price between Rs 25.50-26 a kg.

�Average cost of sugar production in Maharashtra works out to

32 a kg as against realisation of Rs 29 a kg.

�USDA revises its 2012/13 and 2013/14 consumption

estimates for India, upwards to 25.2 MMT and 26.2 MMT,

respectively.

�In international market, Indian white sugar for this year's

delivery changed hands at discounts to London futures this

week, reflecting ample supply in the world's second-largest

producer, while Thai raw premiums were stuck in familiar

ranges.

�Indian white sugar was quoted at $460 a tonne, or roughly

about $40 below London futures, and down from $470

quoted last week.


�Weak harvesting is being witnessed in Brazil due to wet

conditions which ultimately decline the sugar production.

�Sugar output declined in key Brazil's Center South region by

15% in the first fortnight of October compared to last

fortnight of September 2013 due to recent rainfall in the

region.

�Unica downgrade brazil's Center south sugar production

estimate to 34.2 million tons which is around 3.7% lower

compared to six month previous estimate.

�In addition to it, around 3 lac tons sugar destroyed in a fire in

Brazil sugar terminal also support the prices.

Raw Sugar Import

Indian sugar refiners now slowly losing opportunity to import

raw sugar from Brazil as higher degree of decrease in sugar

prices in international markets compared to domestic markets

decrease the import parity in case of sugar imports. In addition to

it, govt. stand to increase raw sugar import duty to 15% also

dampen the possibility of import.

Indian indicative raw sugar CIF prices from Brazil quoted at

$520.31 per ton (including 15% import duty) and Indian

domestic refined sugar FOB prices quoted at $469.65 per ton

Kolhapur based.

®

11

Sugar futures Seasonal Index V/s Monthly close price 2013


®

As per closing on 31st October 2013

Forward curve of Sugar futures


Calendar spread of Sugar futures

Nov Dec Jan Feb Mar Apr

Nov - - - - - -

Dec 13.00 - - - - -

Jan -5.00 -18.00 - - - -

Feb -15.00 -28.00 -10.00 - - -

Mar -18.00 -31.00 -13.00 -3.00 - -

Apr -38.00 -51.00 -33.00 -23.00 -20.00 -


1.011.01

0.98

0.96

0.94

0.96

1.01

1.031.03

1.02

1.031.02

3147.00

3044.00

2922.00

2938.00

3019.00

2993.00

3025.00

3004.00

2860.00

2,863.00

2700.00

2750.00

2800.00

2850.00

2900.00

2950.00

3000.00

3050.00

3100.00

3150.00

3200.00

0.90

0.92

0.94

0.96

0.98

1.00

1.02

1.04

1.06



2,863.00 2,850.00

2,868.00 2,878.00

2,881.00

2,901.00

2,800.00

2,820.00

2,840.00

2,860.00

2,880.00

2,900.00

2,920.00

Nov Dec Jan Feb Mar Apr

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Disclaimer:

This report is for the personal information of the authorized recipient and doesn’t construe to be any investment, legal or taxation advice to you. It is only for private circulation and use .The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of the report. The report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn’t guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that we and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance if this material;(a) from time to time, may have long or short positions in, and buy or sell the commodities thereof, mentioned here in or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodities discussed herein (c) may have any other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High court.

For further any queries, please contact

Subhranil Dey Sr. Research Analyst [email protected]

Ph.: 011-30111000

Extn.: 674

®

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