Commodity Weekly Commentary 28th June – 2nd July

Last week we have experienced a profound volatile session in bullion section. On COMEX division gold August future contract notched another all-time high of $1266.50 on Monday and traded as low as $1225.20 during the Wednesday session. This volatility is a direct result of the continued uncertainty with the fiscal crisis in the European Union as well as the growing geo-political tensions world –wide. Silver also tracked moves in gold and equity markets and settled in red territory.


However mixed economic data from U.S front kept the base metal pack sideways during the week. U.S. data last week has been a mixed bag so far with Thursday’s data showing weekly jobless claims falling last week and a bounce in U.S. durable goods orders in May helping offset poor new home sales data and the Federal Reserve’s subdued assessment of the economy on Wednesday.


Once again, with a weakening economic outlook, some terrible housing numbers and a not so inspiring Energy Information Agency report, crude oil prices remain under pressure in early trades of the week but on Friday prices get underpinned and ended up to hit a seven-week high as odds increased that an Atlantic storm would form and head to the Gulf of Mexico, where oil production may be disrupted.


Turmeric futures rebounded on fresh buying. Once again jeera and pepper followed the same direction as they did in past. They have seen continuous three week jump in the prices. It was a good short covering in jeera futures. Even lower level stimulated fresh buying despite fragile fundamentals.


The overseas demand is weak due to the higher prices of Indian Cumin seed over Syrian and Turkey cumin seed prices. Pepper was up on good overseas demand. Good export demand propped up cardamom futures, however the upside was limited on improving arrivals and rains.


Export of spices and spice products from India has crossed 5,00,000 metric tonnes for the first time in the history of spice trade this year. It was not a good week for chilli and again it marched towards it support of around 4600 on absence of buyers and profit booking at higher levels. Very uncertain movements were witnessed in oil seeds complex which kept investors aside throughout the week. Guar complex moved gradually as support came from lower level buying and fear of fall in acreage. There is a fear in market that farmers may switch to barley and other crops which are enjoying good MSP. Maize shot up on short covering.


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