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					Commodities & Currencies

     Weekly Tracker

Commodities Weekly Tracker
Monday | September 19, 2011

   • Non Agri Commodities
   • Currencies
   • Agri Commodities
   Non-Agri Commodities
   • Gold
   • Silver
   • Copper
   • Crude
   • DX & INR
   Agri Commodities
   • Weekly Highlights- First Advance Estimates
   • Guar
   • Chana
   • Turmeric
   • Black Pepper
   • Soybean
   • Sugar
   • Wheat

Commodities Weekly Tracker
Monday | September 19, 2011

Commodities Weekly Tracker
Monday | September 19, 2011

Commodities Weekly Tracker
Monday | September 19, 2011

    Commodities Weekly Tracker
    Monday | September 19, 2011

                            RBI Mid-Quarter Monetary Policy Review
•      The anti-inflationary stance of the RBI continues as inflationary pressures remain due to high commodity prices.

•      Despite slowdown in growth and the ongoing global economic crisis, India has maintained this tough stance.

•      Last week, the RBI increased repo and reverse repo rate by 25 bps to 8.25 percent and 7.25 percent respectively.

•      The central bank indicated that it was too early to step back from its anti-inflationary policy as inflationary risks
       continue to persist.

•      In the first-quarter (1Q) 2011-12, gross domestic product (GDP) witnessed deceleration to 7.7 percent from 7.8
       percent in the previous quarter and 8.8 percent in the corresponding quarter of the previous year.

•      Although the rate hike by the RBI is considered as negative, keeping the current inflationary pressures in mind the
       rate increase has come at the right time. Increase in petrol prices will lead to further build-up of inflationary

•      Keeping the current context in mind, we feel that further rate increases could affect economic growth to a large
       extent, especially considering the impact of slow growth in the advanced economies on account of the ongoing
       economic crisis. On the back of this, we are of the view that the central bank may pause its monetary tightening
       stance further.

     Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•    Spot gold dropped sharply by 2.6% w-o-w, while MCX gold declined
     around 1.5%
Factors affecting prices
•    Rise in risk appetite in the global financial markets made gold look
     unattractive for investors.
•    This reduced safe-have demand for gold.
•    Dollar weakness did not provide any respite to prices.
ETF Performance
•    Holdings in the SPDR Gold Trust, world's largest gold-backed exchange-
     traded-fund (ETF), rose 0.8 percent to 1,251.91 tonnes till 16th
     September from the previous level of 1241.92 on 9th September 2011.
Demand Supply scenario
•    World gold investment declined by 24 percent to 624 metric tonnes in
     the first half of the current year. Net implied disinvestment declined
     by 67% to 94 tonnes in the first six months of 2011 as compared to 284
     tonnes in the same period a year ago.
•    We expect gold to trade higher on account of global economic
     concerns that will spur demand for the yellow metal as a safe-haven.
Weekly Strategy
•    Buy MCX Gold October in the range of 27570-27470 with strict stop-
     loss below 26900 Targeting initially 28500 and then 29200. (CMP:

•    Spot Gold : Support 1792/1750 Resistance 1861/1912 (CMP: 1820.40)

    Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•   Spot silver dropped sharply by more than 2% w-o-w and prices on
    the MCX slipped by 1%
Factors that led downside
•   Fall in gold prices.
•   Positive sentiments in global markets affected demand for silver.
•   Silver being an industrial metal also took cues from base metals
ETF performance
•   Holdings in the iShares Silver Trust, the world's largest silver-
    backed exchange-traded fund, rose 1.1 percent to 9,956.32
    tonnes by 16th September from the previous 9847.82 tonnes on
    9th September 2011.
•   Silver is expected to rise during the week as economic concerns
    continue and will boost demand for precious metals. Sharp
    upside however could be capped if economic worries heighten.
Weekly Strategy
•   Buy MCX Silver December in the range of 64100-64000 with strict
    stop-loss below 62800 Targeting initially 66800 and then
    67400.(CMP: 64965)
•   Spot Silver Support 39.50 / 38.20 Resistance 41.50 / 42.60 (CMP:

    Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•   LME copper declined 1.6% w-o-w and MCX copper November contract
    slipped around 0.5%
•   On a weekly basis, copper LME inventories rose around 0.2% to
    466,025 tonnes. Shanghai weekly copper stocks dropped by 1.1
    percent to 112,061 tonnes last week .
Prices took cues from
•   Rise in inventories on the LME warehouse.
•   Strike in Indonesia and Peru cushioned further losses.
Demand Supply scenario
•   Strike involving thousands of workers at Freeport McMoRan's
    Indonesian copper mine and port has delayed around 133,000 tonnes
    of copper ore concentrate shipments. This strike has created the
    supply concerns which would be supportive for copper prices.
•   Copper is expected to come under pressure this week on account of
    economic concerns and a stronger dollar. However, supply concerns
    will cushion sharp downside in prices.
Weekly Strategy
•   MCX Copper: Support 408/402 Resistance 420/427 (CMP: 409.15)

•   LME Copper: Support 8560/8430 Resistance 8850/9000 (CMP: 8517)

    Commodities Weekly Tracker
     Monday | September 19, 2011

Crude Oil
Weekly Price Performance
•    Nymex Crude Oil gained almost 1% w-o-w and on the MCX prices rose
US Energy Department Inventory
•    Last week witnessed a sharp decline in inventory levels by 6.7 million
     barrels to reach 346.4 million barrels for the week ending 9th
     September. Gasoline stocks increased 1.9 million barrels to 210.8
     million barrels, whereas distillates rose by 1.7 million barrels to reach
     158.5 million barrels in the same week.
Fundamentals affecting oil prices
•    The International Energy Agency (IEA) has cut its estimate for global
     oil demand this year by 1,60,000 barrels per day to 1.04 million
•    Demand growth for 2012 is estimated to decline by 1,90,000 bpd to
     1.42 million bpd. The OPEC and the US department of energy both
     have also cut their forecasts for global oil demand growth this month.
•    Sharp fall in US crude oil inventories.
•    Crude oil prices are expected to trade with a negative bias this week
     on expectations of slowdown in oil demand amid the global economic
     worries will add pressure on prices.
Weekly Strategy
•    MCX October Crude          Oil:   Support   4037/3890        Resistance
     4320/4450(CMP: 4137)

•    Nymex Crude Oil: Support 86.30/82.50           Resistance 90.50/93.50
     (CMP: 86.67)

     Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•    The US Dollar Index (DX) weakened almost 1% w-o-w
•    The Indian Rupee (INR) depreciated around 1.8% w-o-w
Factors that led downside in DX
•    Upbeat sentiments in the global equity markets (S&P 5.5% , Dow Jones
     almost 5%)
•    Rise in the Euro due to easing concerns over Euro Zone debt crisis (Euro
Factors that affected movement in INR
•    Decreasing capital inflows exerted pressure on the currency
•    However, further depreciation was not witnessed on the back of dollar
     weakness coupled with rise in domestic equities.
FII inflows
•    FII inflows in the month September totaled to Rs 1829.30 crores. On a
     year to date basis, FII inflows stood at Rs 1696.10 crores till 16th
     September 2011.
•    The DX is expected to strengthen this week as market sentiments could
     turn choppy on the back of escalating economic concerns. The Rupee is
     expected to depreciate mainly taking cues from weak sentiments in the
     global markets and dollar strength.
Weekly Strategy
•    USD/INR MCX Sep: Support 47.30/46.70 Resistance 48.05/48.75 (CMP:
•    US Dollar Index: Support 76.80/75.80 Resistance 77.56/78.60 (CMP:

    Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Highlights- First Advance Estimates (Kharif crop) for 2011-12 season
Record Kharif Rice to lower food inflation & open door for exports
•   Kharif Rice output estimated higher by 8% at 87.1 mt up for 2011-12
•   Total Kharif and Rabi output last year stood at 95.32 mt
•   Target set for 2011-12 season (Jul-Jun) – 102 mt
•   8% higher output could open the door for further exports, currently capped
    unofficially at 2mt of non basmati variety and 1 mt of parboiled variety
Lower Pulses output - no respite from imports
•   A 10% drop in Pulses output mainly attributed to lower Urad and Moong output.
•   Tur output pegged marginally higher by 0.35% due to favorable monsoon in
    August and September.
•   Indian pulses imports which declined sharply by 26% to 2.6 mt in 2010-11 may
    again increase in 2011-12 fiscal.
Oilseeds output almost steady despite higher acreage
•   Soybean and groundnut output estimated lower by 0.71%
•   Despite 10% hike in area under Soybean, output is estimated lower on account
    of heavy rains which damaged almost 15%-20% of the crop in MP
Higher Sugarcane output to open exports further in 201-12
•   Sugarcane output estimated higher by 0.89% at 342.2 mt due to higher acreage.
•   Exports which are capped at 1.5 mt in 2010-11 may increase further in 2011-12
    due to huge carry over stocks and higher crop estimates.
Record Cotton crop for the second consecutive year
•   Cotton output estimated higher by 10% due to higher acreage and yield.
•   Record high cotton prices boosted acreage.
•   Unrestricted exports under Open General License may push prices higher in the
    current season too.
     Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance                                                              Guarseed
                                                                                                           Price Trend: Guarseed and Guargum
•    Guar seed and Guar gum futures gained 2.4 percent wow owing to lower             4600                                                                                       15000
     stocks and reports of delay in arrivals.
                                                                                      4500                                                                                       14500
First Advance Estimates of Rajasthan
•    Sowing - 29 lakh hectares in 2011-12 against 30 lakh hectares in 2010-11                                                                                                    14000
•    Production - 11.36 lakh tons in 2011-12 against 15.46 lakh tons in 2010-11                                                                                                  13500
Harvesting/ Arrivals                                                                                                                                                             13000
•    Harvesting of early sown Guar crop would be delayed by 15 days and
     commence by mid October                                                          4000                                                                                       12500

•    Arrivals Rain fed crop would start by November end.
Demand Supply scenario
                                                                                                           Guarseed Price (Rs/qtl)               Guargum Price (Rs/qtl)
•    Production estimated lower than last year , but still is higher compared with
     10 lakh tonnes of average output of last 5 years.
•    Exports continue to remain robust in 2011-12 season - April 2011 exports are                   Area Production and Yield of Guarseed in
     up 51% compared to the same period last year.                                                                Rajasthan
                                                                                         35                                                                                  600
•    Lower stocks of Guar- 15 to 20 lakh bags against normal 35 to 40 lakh bags.                                                     33                  30
                                                                                                           28.09        29                                         29
                                                                                         30                                                                                  500
Outlook                                                                                          24.44
•    Forecast of delay in withdrawal of South west monsoon from Rajasthan (after                                                                                             400
     25th September) may delay the arrivals of early sown Guar crop.                                                                                          15             300
•    Owing to lower stocks of Guar gum, prices are expected to remain firm till the      15                                  12       13
     fresh crop arrives.                                                                 10                   6.58
Weekly Strategy                                                                              5                                                   2

•    Buy NCDEX Guar Seed October between 4490 - 4500, SL – 4420, Target - 4650               0                                                                               0

                                                                                                   Area     (lakh ha)             Production (lakh tn)             Yield (kg/ha)
     Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•    Chana futures made a new high of Rs 3515 and settled 5.4% higher wow
•    Good demand amidst lower stocks of Chana is seen supporting prices.
Sowing of Kharif Pulses
•    Kharif Pulses sowing down by 9.7% as on 9th September, 2011
•    105.83 lakh ha has been covered against 117.23 lakh ha in the last year.
First Advance estimates of Kharif Pulses
•    Kharif Pulses output estimates for 2011-12 season is down by 9.6% at 6.43 mt.
•    Tur output estimates is up by 0.35% while moong & Urad is down by 21% & 16%
Rabi Sowing
•    Sowing of Rabi Pulses would be delayed slightly if the monsoon withdrawal
     extends beyond September.
•    prospects for sowing are better owing to better soil moisture levels.
Demand Supply scenario
•    Chana output estimated higher for 2011 season at 8.25 million tonnes
•    Demand for Chana estimated at 71 million tonnes
•    Chana prices may gain further in the coming week on lower stocks amidst good
     demand ahead of festive season.
•    Forecast of late withdrawal of monsoon may also support bullish markets
     sentiments as it may delay harvesting of Kharif crops and sowing of Rabi crops.
Weekly Strategy
•    Buy NCDEX Chana October between 3560-3580, SL – 3480, Target - 3750
     Commodities Weekly Tracker
     Monday | September 19, 2011

 Weekly Price Performance
 •     Turmeric futures made a contract low for seventh consecutive week and
       settled 12% lower wow.
 •     Higher production estimates for 2011-12 season and record high arrivals in
       the current season is seen supporting bearish market sentiments.
 Bumper Production
 •     Production estimates for 2011-12 season - 82 lakh bags against 69 lakh
       bags in the previous year (1 bag = 70-75 kgs.
 Exports – April to July 2011
 •     According to Spices Board of India exports of Turmeric during April to July
       2011 stood at 29,250 tonnes a rise of 48 percent as compared to 19,750
       tonnes the same period previous year.
 Continued higher arrivals in Erode
 •     Arrivals in Erode mandi still at elevated levels of 8,000 bags to 10,000 bags
       per day.
 •     All India arrivals which normally stands around 8000-9000 bags every year,
       currently stands at 18000-20000 bag.
 •     Turmeric prices are likely to remain bearish with sluggish demand from
       the domestic and overseas buyers in the current week.
 •     For the month (September 2011) – Turmeric prices will depend on the
       overseas demand and production estimates for 2011-12. Sharp gains are
       likely to be capped on account of better crop estimation for the crop
       season 2011-12. Prices may trade in the range of 5500-6500.
 Weekly Strategy
 •     Sell NCDEX Turmeric October between 4900 to 5000, SL – 5400, Target -
    Commodities Weekly Tracker
    Monday | September 19, 2011

Black Pepper
Weekly Price Performance
•   Black Pepper futures made a news high of Rs 34930 and gained
    3.9% wow on the reports that the black pepper output may decline
    further in the domestic markets.
•   International prices of all the major origins quoting around $7,350
    per tonne to $7,750 per ton in the week ended 16th Sep 2011.
•   According to growers, the incessant rains pounding in the pepper
    growing areas of Indian are continuously for a several weeks now
    would and would bringing the output down. (Source: Pepper Trade
Exports – Domestic and International
•   Indian exports of pepper during April to July 2011 surged by 11% and
    stood at 7,550 tonnes as compared to 6,800 tonnes in 2010.
•   The largest pepper producer and exporter Vietnam, has exported
    around 98,000 tonnes of pepper in the first eight months of 2011 a
    rise of 6.5 percent as compared to 2010.
•   Exports of pepper from Brazil during January to August 2011 stood
    at 16,074 tonnes as compared to 15,151 tonnes in the same period
    previous year.
•   Pepper futures are expected to gain further in the coming week on
    lower stocks in the global markets and on the reports that the
    incessant rains may damage the domestic .
Weekly Strategy
•   Buy NCDEX Pepper October between 34800 – 35000, SL – 33700,
    Target - 37000
     Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly price performance
•    NCDEX Soybean futures declined 2.9% , while CBOT declined 4.3% wow.
•    Fresh arrivals and higher output estimates pressurized prices.
•    Fresh arrival started in some parts of Maharashtra and Madhya Pradesh
     with 20-25% of moisture contents.
•    Arrivals of soybean in Madhya Pradesh increased to 45,000 bags (including
     new crop) as compared to previous day of 25,000 bags.
First advance estimates
•    Kharif Oilseed output estimates for 2011-12 is up by 0.2% at 20.89 mt.
•    Soybean output estimated at 12.57 mt.
Monthly USDA report released on 12th September
•    USDA pegged soybean production higher at 3.085 billion bushels
•    USDA is expected to lower output of US soybean by 25 million bushels and
     ending stock by 5 million bushels as compared with the USDA August
     estimates of 3.056 billion and 155 million bushels respectively.
Demand -Supply scenario
•    Lower carry over stocks of 4-4.5 lakh bags (1 bag= 1 qtl)
•    Higher demand for vegetable Oils amidst festive season
•    Soybean prices may decline in the current week on expectations, the
     arrivals might increase in the coming week.
•    Also, higher output estimates for the next season may pressurize prices in
     the coming week
•    Sell NCDEX Soya Bean October between 2300 to 2310, SL – 2360, Target -
    Commodities Weekly Tracker
     Monday | September 19, 2011

                                                                                            Price Trend: NCDEX Sugar vis-a-vis Liffe Sugar
Weekly Price Performance                                                      NCDEX Sugar                                                        Liffe Sugar
•   NCDEX Sugar settled marginally higher by 0.6% while Liffe settled
    around 2% lower wow.                                                      2780                                                                          800
•   Festive season demand in the domestic markets supported Indian            2760                                                                          780
    Sugar prices, while long liquidation and contract expiry led to decline   2740
    in Liffe Sugar.                                                           2720                                                                          760
First advance estimates                                                       2680

•   Sugarcane output estimated higher by 0.9% at 342.2 mt.                    2660                                                                          720
•   Higher area under cultivation and favorable climate may increase          2640
    yield .
                                                                              2600                                                                          680
Higher Sugar Quota
•   The government has made available 19.31 lakh tonnes of Sugar for
    the month of September 2011. Thus, for Sugar year 2010-11 (Oct-
    Sep), govt has released 222.77 lakh tonnes of Sugar in the form of                  NCDEX Sugar futures (Rs per qtl)   Liffe Sugar (Cents per bushel)
    levy and non levy quota.
Demand Supply scenario
                                                                              Month-wise Sugar Quota Released (Lakh tn)
•   Overall supplies are sufficient to cater the festive season demand in        Month               Total Non             Levy                  Total
    the domestic markets                                                                               Levy                                     Release

•   Global Sugar output estimates is revised downward to 173.24 mmt              Oct-10                    17.5             2.48                  19.98
                                                                                 Nov-10                      14             2.15                  16.15
    due to downward revision in the Brazil’s Sugar output at 31.1 mmt.
                                                                                 Dec-10                    14.6             2.08                  16.68
Outlook                                                                          Jan-11                      17             2.18                  19.18
•   Sugar prices are expected remain firm on good demand ahead of                Feb-11                   16.23             2.16                  18.39

    festival season.                                                             Mar-11                   16.84             2.02                  18.86
                                                                                 Apr-11                      17             2.07                  19.07
•   Downward revision in global Sugar output and surplus may also               May-11                     17.5             2.13                  19.63
    support prices in the current week.                                          Jun-11                    16.5             2.07                  18.57
Strategy                                                                             Jul-11                15.6             2.12                  17.72
                                                                                 Aug-11                   17.03              2.2                  19.23
•   Buy NCDEX Sugar October between 2710 to 2720, SL – 2670, Target -
                                                                                 Sep-11                      17             2.31                  19.31
    2800                                                                        Total Release: 222.77 lakh tn for SY 2011-12
    Commodities Weekly Tracker
     Monday | September 19, 2011

Weekly Price Performance
•   Indian Wheat futures declined 2.3% wow
•   CBOT Wheat also ended on a weak note tracking reports that global output
    for 2011-12 has been forecasted higher.
Record stocks of wheat in the domestic market
•   Wheat stocks at the central pool at record high levels as on 05th August
    2011 are at 358.75 lakh qtl. This has raised hopes that government may
    likely permit exports of wheat.
Export ban on Wheat lifted
•   Government lifted the ban on wheat exports on September 08, 2011 and
    allowed exports of 2 million tonnes of the grain.
•   Indian exporters are offering Wheat at around $290-295 per ton including
    cost and freight while Russia is offering Wheat at $315 per ton.
International wheat crop status
•   According to USDA global end stocks increased by 1 mt form the previous
    forecast and stands at 191 mt                                                                       Global Wheat Balance sheet
•   International Grains Council (IGC) has forecasted global wheat output at 677
                                                                                                         2007-08       2008-09        2009-10        2010-11         2011-12
    million tonnes.
                                                                                    Production                 609           686            679            650             677
                                                                                    Trade                      110           137            128            122             127
•   Wheat futures may decline in the initial days of the week owing to weak int’l
    markets and higher supplies in India, however, prices may again bounce          Consumption                605           644            652            660             678
    back as positive decision with respect to wheat exports and competitive         Carry over stocks          131           172            199            189             191
    Indian wheat prices are seen supporting prices. Buying on dips is advisable.
                                                                                    YOY change                     4             41             27             -10             -2
•   Buy Wheat October between 1140 to 1145, SL – 1120, Target - 1200
   Commodities Weekly Tracker
   Monday | September 19, 2011

                                               Thank You!

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Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai - 400 093.
Corporate Office: 6th Floor, Ackruti Star, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 2921 2000
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