Archive for May 21st, 2010

Commodity Weekly Update

Fearing the worst, investors were heading their bets and turning to gold. Last week gold futures hit arecord high of $1,249.70 an ounce on COMEX division, a gain of nearly 20 percent since early February2010, as investors sought safety from turmoil in government bond markets and the risks of Greece’s debt crisis spreading to other countries.

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Domestic silver also kissed the crucial level of Rs.30, 000 per kg tailing the gains in international market. In base metals section, copper along with nickel and zinc slide in later part of the week as the investors continued to fret about China’s growth profile.

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Demand concerns within China, as world’s top copper consumer may try to curb inflation and cool its economy after data this week showed consumer inflation climbed to 18-month high in April. Also, gains in dollar index remain intact which capped the upside in future prices. In energy counter crude oil prices once again dragged down last week by economic concerns and rising U.S. petroleum inventories.

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The front month contract on NYMEX division had tested the lowest level since Feb. 12, 2010 and has erased more than $14 from a high of $87.15 hit on May 3, 2010, the highest in almost 19 months. Crude oil inventories at U.S. Cushing, Oklahoma hit a fresh record of 39 million barrels in the week to May 11, according to Genscape, an energy industry data provider. However natural gas witnessed some gains last week backed by short-covering after a government report showed a smaller-than-expected weekly inventory build.

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The U.S. Energy Information Administration report showed total domestic gas inventories rose 94 billion cubic feet to 2.089 trillion cubic feet for the week ended May 7.

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Most of the agro commodities caught up in the negative mood. Despite steep fall in production, guar complex surrendered its previous gain on the news of normal monsoon amid dull demand. Even spices were sideways to downwards on profit booking at higher levels, except pepper. The king of spices, pepper saw a smart recovery on raising quality issue by US for Vietnam pepper. Now Indian pepper has taken the center stage worldwide and demand has shifted towards India. Rally in turmeric appeared tired and traders preferred profit booking. Similarly, after witnessing a whopping rise in thecardamom prices last to last week, prices cooled down on profit booking.

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On the back of steady supply together with restricted supply propped up gur prices in both spot and future market. Range trading with downside bias noticed in oil seeds complex on mix fundamentals. Total vegetable oil imports in India during the April period were down 22% to 5.43 lakh tonnes on the account of ample stocks of vegetable oil at major ports. After making new contract low in recent trade chana futures were just trying to consolidate at lower levels. After a steep fall, mentha oil futures recovered marginally on short covering.