Commodity Online
After the surge in sugar prices amidst supply concerns, now the global concerns have shifted to rubber with supply-demand mismatch leading to surge in futures prices. Consumption in India, China and emerging markets are zooming in recent times due to heavy industrial demand.Many farmers in Ivory Coast are abandoning cocoa and turning to rubber production as low yields, caused by diseases and ageing trees, trump benefits from 10-year highs in up-country farmgate prices. Despite these highs, few farmers say they have improved their lot and some agronomists estimate that thousands in the top grower may join the exodus from cocoa to rubber.
Exporters say prices have ranged from 900 CFA francs ($1.83) per kg to 1,000 francs per kg since October, at the opening of the marketing season to early March.
Chinese manufacturers produced 654.64 million tyres between January to December in 2009, up 18 per cent compared with 2008. According to data released by the China National Bureau of Statistics (CNBS), 57.19 million tyres were produced in China in December 2009, up 52 per cent compared with the year before. In addition CNBS said synthetic rubber production rose 8.7 per cent to 2.76 million tons during 2009. In December, synthetic rubber output rose 15 per cent compared with the same period last year, reaching 268 thousand tons.
Furthermore, Chinese Rubber Industry Association, CURC, reported that Chinese Customs statistics show that China imported 170,000 tons of natural rubber (up 190.3 per cent) in January 2010. Imports of synthetic rubber rose 182.3 per cent to 1,271,290 tons. According to the figures, the price of raw materials rose sharply in the international market, especially natural rubber and synthetic rubber, where prices rose 3.95 times and 1.95 times respectively
POINTERS
India’s GDP to be 8.5% :The government’s chief economic adviser, Kaushik Basu said economic growth was expected to rise to 8.5 per cent in the fourth quarter, while inflation was likely to be lower from May-end. “In the third quarter, economy did not do well as agriculture shocks were concentrated… in the fourth quarter, we expect a growth of 8.5 per cent,” Basu said.
The economy grew 6 per cent in the October-December period, after expanding a stunning 7.9 per cent in the second quarter and 6.1 per cent in the first quarter.
To achieve 7.2 per cent growth for 2009-10, as estimated by the Central Statistical Organisation, the economy must grow over 8 per cent during the fourth quarter.
India’s Inflation eases to 16.22% : Inflation eased for the third straight week in mid-March even as fuel inflation remained steady. Government data showed the food price index rose an annual 16.22 per cent in the week-ended March 13, lower than the previous week's annual reading of 16.30 per cent.The fuel price index rose 12.68 per cent in the year to March 13, flat on the week. The Government had raised motor fuel prices in late February.
US stocks ease on Greek debt rescue, Japan’s Nikkei up: Japan's Nikkei average climbed 1.6 percent to its highest close in 18 months on Friday as recent weakness in the yen buoyed exporters, and helped by investors looking to secure dividends before the financial year end.Tokyo shares have gotten off to a solid start in the first quarter after lagging overseas indexes last year.
However, a rally on U.S. markets collided with a rescue plan for Greece Thursday that shifted currency values and pulled the rug out from under U.S. commodities. France and German reportedly reached an accord on helping Greece, perhaps welcome news, but a development that turned a Dow Jones industrial average gain of more than 100 points to a near breakeven 5.06 point gain.By close, the DJIA was up 0.05 percent at 10,841.21 points. The Standard & Poor's 500 index closed down, off 0.17 percent, 1.99 points, to 1,165.73. The Nasdaq composite index lost 0.06 percent, 1.35 points, to 2,397.41.
On the New York Stock Exchange, 1,256 shares advanced and 1,779 declined on a volume of 5.6 billion shares traded. The benchmark 10-year U.S. Treasury note lost 9/32 to yield 3.884 percent. The euro fell to $1.3284 from Wednesday's $1.3325. Against the yen, the dollar rose to 92.70 yen from Wednesday's 92.16 yen. In Japan, the Nikkei 225 index added 13.82 points, 0.13 percent, to 10,828.85. In Britain, the FTSE 100 index gained 49.77 points, 0.88 percent, to 5,727.65
India crude oil imports rise 13.2% :India's crude oil imports jumped up 13.2 per cent in February even though domestic fuel demand dropped marginally, according to data released by the Oil Ministry. Domestic fuel sales at 11.39 million tonnes in February were 0.2 per cent lower than 11.41 million tonnes of petroleum products consumption in the same month a year ago.
Indian Rupee touches 18 month high: The rupee on Friday touched an 18-month high against the dollar, as the US currency came under selling pressure in both local and international markets.The rupee ended the day at 45.24, the level last seen in September 2008. Dealers said the dollar's weakness against other major currencies, selling of greenback by corporates and capital inflows into the country helped the rupee gain.
Drought in China: The worst drought in a century has been ravaging China's southwest provinces of Yunnan and Guizhou and the region of Guangxi, leaving 20.5 million residents and 12.6 million heads of livestock with insufficient drinking water.
The drought centres on China's major sugar and rubber areas and could have a big impact on output, forcing the country -- already a major rubber importer -- to source more from overseas. A reduction of sugar output will expand domestic shortages and require more imports later in the year
Bullion
Spot Gold prices declined in the last week as the dollar gained, reducing the appeal of the yellow metal as an alternative safe-haven investment. The dollar index which measures its performance against six other major currencies of the world touched a high of 82.24 on March 25, 2010 the highest level in last 10 months. The debt crisis in the Greece led the dollar to strengthen as a safe-haven investment. The ailing country is facing debt redemptions of around 20 billion Euros in the next two months. However, the gold prices wiped out earlier losses towards the end of the week as expectations of a solution to Greece’s issue from the EU summit at Brussels supported prices.
Slight recovery in risk sentiments in the financial markets also stalled the sharp rally in the dollar and helped the yellow metal prices to rebound. In the coming week, the US dollar could come under pressure as a rise in risk appetite will affect demand for the low-yielding dollar. This may help the gold prices to wipe out earlier losses as the yellow metal usually trades inversely to the greenback. Spot gold have a strong support at 1084/1065 levels and Resistance at 1120/1135 levels. MCX April Gold has a strong support at 16100/15960 levels and resistance at 16515/16750 levels.
Base Metals
The base metals pack suffered last week on the LME as the strength in the dollar weighed on the prices. Mixed sentiments in the financial markets in the earlier sessions of the week also exerted pressure on the metal prices. The dollar was on a continuous gain last week on the back of increasing concerns in the Euro-zone. There are fears that the problems may spread to the neighboring countries including Spain, Portugal and Italy. Economic data from the US last week was mixed as the new home sales declined unexpectedly. But, durable goods orders increased in the world’s largest economy in the last month. Moreover unemployment claims decreased by 14,000 which also helped in improving the investor sentiment. Another factor which is weighing on the metal prices is the concern of Chinese government raising interest rates.
It is expected that China may very soon increase interest rates to control inflation which may slow down growth in the world’s fastest growing economy. There is a belief that the ministers in the Euro-zone are agreeing to help Greece partly through IMF. This may help the base metal prices as investor sentiment may get a boost. In the coming week, copper prices may bounce back as the safe-haven buying in the dollar could reduce and make metals look attractive for holders of other currencies. MCX April Copper shall find a strong support at 332/328 levels and resistance at 345/350 levels for the coming week.
Energy
Crude Oil prices ended in the red last week as fundamentals like rising inventories and strength in the dollar weighed on the commodity. Recovery in risk sentiments failed to provide upside to oil as markets remain susceptible over demand. Sudden surge in inventories of crude oil by 7.25 million barrels last week in the US, has led to a concern over the demand in the world’s largest consumer. Constant increase in inventories is denting the short-term outlook.
The US Energy department reported that crude oil inventories increased by 7.25 million barrels in the previous week, denting the outlook for crude oil. In the coming week, we expect oil prices to trade lower as concerns over rising inventories will dominate market sentiments. However, sharp downside will be protected if the dollar weakens on the back of risk appetite in the financial markets. MCX April Contract shall find a strong support at 3645/3620 levels and resistance at 3720/3750 levels for the coming week.
Soybean
Soybean (NCDEX April contract) futures improved slightly on short covering and fresh buying at lower levels in the second consecutive week after continuous fall during the last 4 months. The April contract recorded weekly low and high of Rs 1997.50 & 2060.00 a quintals respectively. Lower imports of edible oil in the month of February also favoured to bulls. As per Solvent Extractors’ Association of India, the import of vegetable oils in the month of February 2010 was at 6.71 lakh tonnes, down 8 % as compared to 7.30 lakh tonnes in February 2009. Prices fell continuously in the last 4 months on account of poor export demand of soy meal and higher global output estimates this year as compared to last year.
As per the Solvent Extractors' Association, India's oil-meal exports in the first 11 months of the fiscal year (April 2009 – February 2010) declined to 30 lakh tonnes from 50.83 lakh tonnes during the same period last year (down by 41%). As per Central Organisation for Oil Industry and Trade (COOIT), Domestic Rabi oilseed output estimates increased to 94.60 lakh tonnes this year, up 2.50 % from 92.30 lakh tonnes in 2008-09. According to USDA report, World oilseeds production estimates for 2009-10 increased to 435.30 against 395.57 million tonnes in 2008-09. In the coming week, Soybean prices are expected to further improve on short covering and thin arrivals may provide support to bulls. NCDEX April contract shall find a strong support at 1990/1960 levels and resistance at 2065/2100 levels for the coming week.
Black Pepper:
Black pepper prices over a couple of days have surged in the domestic mandis due to slow arrivals and expected demand from the overseas market. On Thursday, pepper futures short on with all the contracts hitting the second ceiling on strong domestic demand amid limited supply and reports of firmer prices in Vietnam.
Buying pressure in the primary and terminal markets had also steered the prices of future contracts to hit the ceiling, Vietnam is a major producer of pepper, which has harvested only 30 percent of its pepper produce yet. Another factor, there is market about the lower production of pepper in India also provided support to bulls. India’s production is projected (by trader) at 37,000 tonnes this year as compared to 53,000 tonnes as expected earlier (by spice board). As per traders, that the domestic stockists are buying aggressively in anticipation of higher prices in coming days on account of lower production estimates.
Towards weekend, selling pressure in Karnataka led to weakenss in pepper futures. April contract on the NCDEX declined by Rs 93 to 15,128 a quintal. May and June dropped by Rs 109 and Rs 90 respectively to Rs 15,393 and Rs 15,600 a quintal. There was a reported selling pressure on Coorg pepper in Karnataka, which was being sold at Rs 14,500 a quintal delivered anywhere in India, and that had also driven down the prices on the futures market. According to an overseas report on Friday, Vietnam pepper prices were up in line with the Indian price trend. Most sellers there preferred to wait for the market to stabilise before offering firm.
Exclusive and reserved reports now open to public
However, China and West Asia Middle-East continued to buy. Brazil was reportedly regularly trading with South America and Africa. Most sellers in Brazil were said to be preferring to hold on to Asta pepper expecting better prices.
Prices of different origins in US dollar per tonne (c&f) New York were MG 1Asta – 3,550 – 3,650; Lampong Asta – will respond to firm bids; Vietnam 500 GLfaq - $2,800(fob); Vietnam Asta – 3,400; Brazil 500 GL and 550 GL – 2,850 and 2,900(fob) respectively; Brazil Asta 3,000 (fob); MLSV Asta – 3,500 c&f New York; Vietnam white pepper double washed $4,500 plus and Muntok white pepper $5,000 plus
NCDEX April Contract shall find a strong support at 14180/13800 levels and resistance at 15800/16100 levels for the coming week.
Rubber
India’s spot rubber prices have zoomed to Rs 155 per kg for RSS 4 grade on speculation and short covering amid global concerns of supply and rising demand. Global natural rubber prices continue to remain firm mainly on account of a sharp spurt in demand and heightened imports by China, India and Malaysia, according to market reports.
Preliminary estimates of import and consumption of rubber in January and February by the Association of Natural Rubber Producing Countries (ANRPC) reveal substantial growth over the previous year.Figures released by the ANRPC show that imports by China surged 63 per cent for natural rubber and 118 per cent for compound rubber in the first two months of this year. And, more than 95 per cent of the imported compound rubber consists of natural rubber.
In Malaysia, natural rubber import rose 34 per cent. During the same period, India posted a 17 per cent growth in consumption of natural rubber and over 100 per cent growth in imports. The ANRPC also pointed out that large scale capacity addition taking place in the Indian auto tyre industry indicate the possibility of a further acceleration in natural rubber demand.
TOCOM futures had risen 1.5% last week to $1.46/ kg on storng demand forecasts. August delivery contracts may touch $1.51/kg soon. The bullish trend was strengthened by news that Indonesia output is also set to drop sharply and a weaker yen.
The Indian tyre industry, the largest consumer of natural rubber, has urged the Centre to allow duty-free import of at least two lakh tonnes of natural rubber on a priority basis, preferably through a Government agency.
It has also asked for a differential customs duty structure allowing imports at a lower duty – about 7.5 per cent – to facilitate imports during the lean months of natural rubber production.
A target of 6 percent growth in world supply this year may not be met because of drought in major producing nations, the group, which represents countries accounting for 94 percent of global rubber production, ANRPC said in a newsletter. By weekend, Indian spot prices steadied to Rs 153/kg as there are no major buyers or sellers. NMCE April futures did not witness major spikes and remained steady at Rs 156 levels while May futures surged to Rs 158.
Wheat
India wheat futures are expected to continue the bearish trend in 2010 thanks to bumper crop and government decision not to go for exports. Higher temperatures in major growing regions were expected to curtail rabi output but scientists have allayed such fears and market has gone to bearish mode again. Temperature in major growing regions of Uttar Pradesh, Punjab, Haryana and Rajasthan are 4-6 degress centrigrade above normal. Government estimates the output to be 82 million tonnes around same levels as last year. Good, crop, early sowing and prolonger winter augurs well for the 2010 crop, agriculture analysts said. NCDEX April Futures fell from Rs 1138 to Rs 1119.160 before hitting intra-day lows of 1118. Prices are expected to fall further by Rs 50 per quintal on bearish market.
Chana
Chana futures continue to be undervalued even as recovery is seen in other major pulses varieties such as Urad and tur. However, last week, buying at lower levels helped sustain prices and a modest recovery was seen in NCDEX actively traded contracts. But gains were capped by increased arrivals from Madhya Pradesh and ample stocks. Maharashtra has exempted pulses from 4% Value Added Tax for another year. Fresh arrivals have started coming from Rajasthan and Madhya Pradesh. The acreage of chana is up at 8.92 mn ha as on March 11 agains t 8.35 mn ha a year ago. For the past week, higher arrivals in marketing centres of Indore, Nagpur, Delhi, Latur and Gulbara have strengthened bearish activity.
NCDEX April contract gain from Rs 2182 to Rs 2286 while May contract from 2265 to Rs 2371. The April contract may test resistance level of 2375 soon on lower level buying. Moreover, festivals and marriage season ahead may provide some support for pulses. NCDEX April Chana has support at Rs 2100 and May has support at Rs 2200 levels. (With analytical inputs from Angel Commodities, Mumbai)
(commodityonline.com)
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