Posts Tagged ‘COMEX’

COMMODITY WEEKLY COMMENTARY 4th – 8th October

Once again international gold prices tested their new highs last week as prices breached the psychological level of $1300 and silver marked the 30 year high on COMEX division. However local gold prices were mostly remained sideways during the week amid stronger rupee and profit booking which limited the upside in prices.

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Nevertheless, silver once again overshadowed gold movements and surged high to claim 33000 mark on MCX. In base metal pack copper along with nickel, zinc and lead started the week with positive energy but dull economic data from U.S and Europe economies pressurized the prices in later part. However improved Chinese  manufacturing data once again underpinned the prices and supported copper and nickel to end the week in green zone.


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Earlier, shanghai copper dropped to its lowest in more than a month last week as China’s move to curb property prices dented sentiment, but losses were limited by improving demand prospects and ongoing weakness in the dollar. In energy counter crude oil settled up last week helped by data showing a drop in U.S. crude and product inventories.


Further fall in dollar index also helped the prices to move up. U.S. crude stocks fell 475,000 barrels last week, data from the Energy Information Administration showed. U.S. distillate inventories fell by 1.27 million barrels in the week to Sept. 24, counter to analyst expectations for a 300,000 barrel build.


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In agro commodities spices pack witnessed see saw moves during the week and remained volatile. Pepper futures ended the week with negative impression amid weak exports and low trading activity. As per Spices Board data, pepper exports from India have gone down by 5% in volume term during April-August 2010 as compared to same period last year. Jeera futures also traded on a negative note during the week on extended selling pressure backed by weak domestic and export demand. Expectations of rise in acreage under jeera crop this season have also supported the down side.

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In oil seeds section soya bean and mustard remained under pressure as factors like bumper soya crop expectation and pick up in fresh arrivals to the spot market led the market to show a negative trend. The chana futures traded on a positive note for most part of the week retreating from previous losses on fresh buying from retail sector.

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COMMODITY WEEKLY COMMENTARY 13th – 17th September 2010

Silver along with gold once again shoot up last week as international prices tested $20 and $1255 respectively on COMEX division. Each time a rise in gold hits the headlines, it steals the limelight from silver. But this time silver has not only followed rallies in gold, but usually out performed, as can be seen in a fall in the gold/silver ratio. Prices went towards north last week as global stocks tumbled and the euro slipped on renewed fears about the health of the global economy.

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Base metals witnessed see saw movements as highly volatile currency market is rolling the prices in both direction. However, bias remained down side as fresh concerns about the health of the European banking sector fed a wave of risk reduction in the broader market and helped drag red metal (copper) prices away from four-month highs. Energy counter also remained under pressure as investor’s eye U.S economic strength and demand on fuel, while the dollar gains against a basket of foreign currencies amid the jittery sentiment. In other related news the dull hurricane season also limiting the upside in prices. The U.S. National Hurricane Center was monitoring three tropical systems in the Atlantic basin, one approaching the Caribbean Sea and two near Africa’s west coast. The NHC said cloudiness and showers over the Leeward Islands and northeastern Caribbean Sea were associated with Gaston’s remnants, but the system had just a 20 percent chance to become a tropical cyclone.

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Despite holiday’s shortened week, agro commodities witnessed active trading. After a noteworthy decline, oil seeds and edible oil counter was somehow able to cap the downside on the news of better soyameal export amid short covering in overseas market. Crude palm oil was also trading up. On the other hand upside was limited on the absence of fresh demand.

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Favourable weather and better outlook of crop shed the gain of wheat futures. Northward journey of maize futures supported by multi month’s higher prices in CBOT surprised the market players. Spices counter traded with downside bias moreover. Chilli, jeera, turmeric and cardamom were down on lower offtake in physical market. Turmeric futures were in complete grip of bears on lower demand in spot market. It touched multi week lows on NCDEX as well. It was only pepper in spices counter which propped up on fresh buying. Mixed sentiment in guar compelled guarseed to trade in slim spread whereas guargum was rangebound with upside bias.

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Chana continued to witness downtrend following lower demand in the domestic market.

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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.

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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.

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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.

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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.

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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.

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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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COMMODITY Weekly Commentary 24th – 28th May

Once again blood bath was witnessed in metal section with global financial markets in turmoil. This time both, gold and silver took a sign of relief after witnessing their all time highs on future bourses. Bearish signs were continuously seen in the markets when traders continued to sell the yellow metal to cover their losses in other markets. Equities continued to weaken amid fears that global economy may sink immediately after the nascent recovery from the recent recession.

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In base metal section, apart from nickel and copper all other metals settled in red zone. Some recovery was seen in later part of the week when France and Germany pledged to work together to solve the European debt crisis and support the euro. According to the World Steel Association, global crude steel production jumped by 31.8 percent year-on-year in the first four months of the year to 467.8 million tonnes.

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Energy section got hammered down as U.S. crude futures fell below $70 a barrel on fears that Europe’s sovereign debt crisis will harm economic recovery and weaken crude oil demand. Oil inventories at the key U.S. Cushing, Oklahoma crude oil hub rose by 500,000 barrels in the week to May 18 to 39.46 million barrels, according to a report from energy industry data provider Genscape released on last Thursday.

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In case of agro commodities, we can say that it was a week of recovery in most of the commodities. Expiry of May contract added more volatility in agro commodities at NCDEX. Firm sentiments in spice complex amid improved physical buying resulted in fresh buying and short covering in jeera.

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Well built fundamental further stimulated buying in pepper. Chilli took a sigh of relief, and it saw spellbound recovery in the prices after a fall of seven week. Yellow commodity turmeric fell for second consecutive week after a stellar run in past. It touched the low of 13640 (June contract) in NCDEX.

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Chana futures somehow managed to consolidate at lower levels. It saw marginal lower level buying. Talk of export in wheat gave much awaited rise in wheat futures whereas supply is still smooth in the market. Sharp upside move in maize surprised the market participants. Despite expectation of higher crop, maize prices jumped on the news of some export enquiries from South Korea. Uncertainties created a state of confusion in guar complex, as guarseed was trading in a range while guar gum was weak, which generally do not happen.

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Firm CBOT and BMD gave some support to soya counter; however, upside was limited on the expectation of normal monsoon.

ZONEWISE AGROMET ADVISORIES

Monsoons are needed to nourish crops and supplywater for farming communities. The quantity of monsoons in India has increased in the last 50 years. This year the much awaited South-WestMonsoon has reached the Indian territorialwaters. Below written are presented some Zonewise Agromet Advisories by taking the major crops into consideration.

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NORTH WEST INDIA [J & K, H. P., UTTARAKHAND, PUNJAB, HARYANA, DELHI, UP, RAJASTHAN]

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•Weather conditions are favourable for sowing of summer green gram and black gram in Delhi, select varieties for – Green gram– Pusa Ratna, Pantmung 1, Samrat, SML-668, Pusa Vaisakhi, Pusa Vishal, Pusa 105, PDM-11, SML-32; for Black gram – Pusa 1,AjadUrd 2,NarenderUrd-1,T-9, P.D.U.-1.

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•Harvesting of the already matured mustard is advised in Haryana, Punjab, Uttar Pradesh, Uttarakhand, Rajasthan and Delhi & Immediate threshing after drying is advised.Attack of painted bugwill bemore if crop is kept in the field for long time after harvest. Farmers are advised to plough the field deep in hot summer to destroy the various stages of pest under heat.

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EAST INDIA[ JHARKHAND, BIHAR , ORISSA ,WEST BENGAL & SIKKIM ]

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•In view of prevailing dry weather condition during last few weeks and also during next fewdays alongwith persisting high temperature, farmers are advised to apply light and frequent irrigation to the standing rabi crops in Bihar and Jharkhand.

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•As therewas excess rainfall during last twoweeks in Sikkim, farmers are advised to postpone irrigation to large cardamom, potato andmaize.

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•Due to high humidity and increased temperature in the flowering and fruiting stages, chilli may be infested with blight and die. Black depressed small black, circular spots are appeared on the skin of fruits. Two spraying any one of the fungicides like Carbendazim 50WP @ 1g or Saaf @ 2g / litre of water at 10 days intervals,when the disease symptoms are appeared.

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NORTH EAST INDIA[ARUNACHALPRADESH,NMM&T,ASSAM,MEGHALAYA]

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•Utilizing the recent pre-monsoon showers and expected rain, undertake sowing of the crops likemaize, jute,mesta and summer vegetables.

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•Fieldmust be ploughed and get ready for planting of ginger and turmeric inAssam.

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•To prevent Black Heart Disease in potatoes in Assam, it should not be stored and transit at high temperature (above 320C). The storage rooms should be well ventilated and bags should not be piled up very high.

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SOUTH INDIA[TN,AP, KERALA, KARNATAKA, LAKSHADWEEP,ANDAMAN&NICOBAR ISLANDS]

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•Light rainfall is expected in Brahmavar region; hence farmers are advised to take precautions in drying of pulse crops like green gram, black gram, cow pea and cashewnut etc.

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•Farmers in Central Dry zone of Karnataka are advised to apply irrigation to areca nut and coconut and pepper as temperature is increasing and to avoid sun scorching.

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WEST INDIA[GOA,MAHARASHTRA,GUJARAT]

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•Due to increase in temperatures summer chilli is likely to be infested by thrips & mites inMaharashtra, sprayMethyl dimeton 25 EC@15ml or Dimethoate 30 EC2 16 ml + Sulphur 80 %@20 g in 10 litreswater.

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•As dry weather prevailed during last week over the State and dry weather is likely to prevail during next fewdays, apply protective irrigation to the standing crops of Maharashtra. In view of persisting high temperature in East Vidarbha, farmers are advised to apply light and frequent irrigation to the standing crops.

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CENTRAL INDIA [M.P.,CHHATTISGARH]

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•Weather conditions are favourable for proper germination of maize to be grown for green cobs in Chattisgarh Plain zone.Hence, the farmerswho have assured irrigation facility are advised to complete the sowing of summer maize at the earliest.

(source: Indian Meteorological Department)

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.

COPPER…WHAT’S REALLY DRIVING THE PRICE?

Copper is a reddish brown non-ferrous mineral which has been used for thousands of years by many cultures. The metal is closely related with silver and gold, with many properties being shared among these metals. With world population and development on the increase, demand for copper is expected to continue to build well beyond current annual consumption to:

•conducting electricity and heat

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•communications

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•transporting water and gas

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•roofing, gutters and downspouts

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•protecting plants and crops, and as a feed supplement and

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•Making statues and other forms of art.

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World copper consumption is expected to grow 5.4 per cent this year, led by China which is expected to buy nearly 40 per cent of global output, industry experts told the World Copper Conference on 8th April, 2010.

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Primary copper production starts with the extraction of copper bearing ores. There are three basic ways of copper mining: surface, underground mining and leaching.

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Open-pit mining is the predominant mining method in the world. These are the top ten ranked mining countries.

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IN THE GLOBALEXCHANGES

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Three commodity exchanges provide the facilities to trade copper: The London Metal Exchange (LME), the Commodity Exchange Division of the New York Mercantile  Exchange (COMEX/NYMEX) and the Shanghai Metal Exchange (SHME). In these exchanges, prices are settled by bid and offer, reflecting the market’s perception of supply and demand of a commodity on a particular day. Exchanges also provide for warehousing facilities that enable market participants to make or take physical delivery of copper in accordance with each exchange’s criteria.

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FACTS

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The average LME futures price for March 2010 was US$7,790 per tonne, almost double from the March 2009 average of US$4,040 per tonne. The 2010 high and low copper prices through the end of March were US$7,870 and US$7,265 per tonne, respectively. As of the end of March 2010, copper stocks held at the major metal exchanges LME, totalled 514325 tonnes.

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ICGS PREDICTIONS

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As per ICSG press release on 1st February 2010 & based on existing facilities and announced project developments, annual mine production capacity in the period 2009-2013 is expected to grow at an average rate of around 4.3% per year (%/yr) to reach 23.1 Mt in 2013, an increase of around 3.6 Mt (19%) from that in 2009.

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CURRENT SCENARIO

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Copper hit a 20-month high above $8,000 a tonne on 6th April,2010, after reports showed manufacturing expanded in India, the US and Europe, as well as China, and after US payrolls expanded by the most in three years. Most gains were driven by upbeat employment data out of the U.S., which led markets to view the state of the world’s largest economy in a more positive light. Slow but sure decreases in LME inventories provided added signs of a recovering physical market. Again, pulling back from a 20-month high copper looks uncomfortable at $7850 along with copper futures at MCX tracking overseas markets and a firm rupee.