Posts Tagged ‘commodity exchange’

CASTOR SEED………. “Obsessed With Profit”

Castor, being a non-edible oilseed, has economic importance of its oil yielding seeds.Usage of castor seed products has grown tremendously over the years due to their biodegradable and eco-friendly nature. Looking at the profit it has given to the portfolio, it seems like the nature has blessed the investors, as if money sprouting out of the shiny seeds of castor plants.

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Consumption Pattern: The average Indian consumption of castor oil is 100,000 ton per year. The Indian variety of castor has 48 % oil content of which 42% can be extracted,while the cake retains the rest. On an average soap makers accounts for 25,000 ton while paint and allied sectors consumes 35,000 ton of the Indian consumption. In internal combustion engines, castor oil is renowned for its ability to lubricate under extreme conditions and temperatures, such as in air-cooled engines. The lubricants company Castrol takes its name from castor oil. Castor seed meal is offered in bulk & in plastic bags.

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Domestic scenario: India’s castor production fluctuates between 0.6 to 1 million tonnes a year. Castor is sown in August and harvested in Dec-Jan every year with majority of arrivals coming after February. Gujarat accounts for over 80% of India’s castor seed production, followed by Andhra Pradesh and Rajasthan.

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FACTS & FIGURES

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•Total area under Castor crop in India for the year 2009-10 is 7.40 lakh hectares. It has decreased by 10% as compared to previous year.

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•Estimated total production of Castor Seeds in India for the year 2009-10 is 9.34 lakh tonnes. It has decreased by 4% as compared to previous year.

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•Average yield for the year 2009-10 is 1261 kg/hectare as against 1180 kg/hectare during the year 2008-09. It has increased by 7% as compared to previous year.

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Kharif sowing: This kharif season the acreage under castor seed is far below the normal area of 8.130 lakh hectares. However, the good news according to the latest sowing data is that farmers have planted 1.252 lakh hectares which is more than the 1.115 lakh hectares covered at this time last year, are shifting from castor seed to cotton. The spurred kharif sowing figures of 66.090 lakh hectares under cotton as compared to 48.470 lakh hectares last year, itself depict that farmers this time have brought in more land under cotton. The reason being is the reaping profits from the later.

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EXIM scenario: Every month 40,000 tonnes castor oil and 5,000-8,000 tonne castor derivatives leave for foreign shores from India, From India castor oil is exported through mainly Kandla port. India exported more than 2.25 lakh ton castor seed till June this year compared to 1.22 lakh ton in same period of previous year. In May India exported 54000 ton castor oil. China imported 90000 ton castor oil in June only this year. Indian Government is providing 5% tax rebate to castor seed & oil exporter under Vishesh krishi and gram udyog yojana.

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…….. At the futures trade (Source: Forward market commission)

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•The Rajkot Commodity Exchange Ltd., Rajkot – The near month contract (i.e. June 2010) was quoted at its highest at Rs.3490/- per 100 kg on 30.6.2010 and at its lowest at Rs. 3159/- per 100 kg on 16.6.2010. During the fortnight, the total value of trade was Rs.354.95 crore. The net open position in the near month contract was at its highest at 25 MTs on 16.6.2010.

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•Bombay Commodity Exchange Ltd., Mumbai – The near month contract (i.e. August 2010) contract was highest price at Rs. 3522.00 on 30.6.2010 and lowest price at Rs.3256.00 on 16.6.2010. During the period, the total value of Castor seed was Rs.2.20 crore.

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Current scenario: Due do increase in demand in international markets, the prices of castor seed has increased by almost 15% recently and crossed the level of Rs 700/ 20 kg first time. Despite good monsoon in castor seed growing states the prices is not likely to go down as better demand from US, China and Europe.

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The snap shot of the future markets shows that the price is at a year high at Rs. 3748/ quintal giving a return of whooping return of 32% as on 13th July, 2010 from the year beginning. The forward month contract are in contango situation. The upward momentum can remain intact until the arrivals of new crop.

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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.

Weeekly Update 17th – 21st May

Global markets saw a sigh of relief with the start of new week after the European Union unveiled a 750 billion-euro ($949 billion) financial assistance program backed by European Central Bank bond purchases aimed to prevent a broader sovereign-debt crisis in the region. But thereafter could not build onto the gains as it was felt that the rescue plan may not help in averting a slowdown in the region. The concerns from developed nations to developing nations like china continued to cast a dark shadow on the investors mind. Chinese market went into a bear market on the concerns that the government will make borrowing dearer to check spiraling inflation & growth.

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With the fallout of European crisis it is widely believed that the central banks may not adopt tighter monetary policies with the fragile recovery. Chief of Indian central bank said that he plans to raise interest rates in a calibrated way given the risks to global growth. The belief led to a rally in the interest rate sensitive’s like Realty, auto & consumer durables in the domestic markets.

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Whereas the growth concerns continued to punish sectors like metal & oil.

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However safe heavens like gold & bond markets continued to see money coming in with investors seeking for safe shelters.

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Continued double digit growth i.e. 13.5% in march in Industrial production for the sixth consecutive month has mirrored one clear thing that India per se is on strong footing if compared to any part of world. Planning commission chief Montek singh ahluwalia saying that government is working out a 500 billion rupee fund to improve the infrastructure, is making our belief strong that infrastructure sector will see a robust growth in India over the long period.

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Trend of all world stock markets is still down and even a strong rally of Monday could not bring much relief as the markets gave up the rally in later part of the week on the back of weaking Euro and uncertainity in Europe. Neither the base metal commodities nor Crude is able to rally which shows lack of strength in the rally in stock markets. Nifty faces resistance between 5100-5200 levels and Sensex between 17000-17500 levels.

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The underlying unease over health of EU economy has room for more buying in bullions. At the same time bullions are paying no attention to dollar index the way they used to in general. Inflation in China, which is on 18 months highs, is indicating further monetary tightening, which may weigh on commodity prices in future. Overall trend of base metals and energy may remain weak, however, lower level buying cannot be denied in between. Important data from Japanese economy front may also give further direction to base metals and energy. On agro commodities front, they may remain volatile before expiry.

CARDAMOM SET TO A NEW HIGH :)

Even if with hue and cry in the commodities market with dollar index noticing terrific movements with a weaker rupee, cardamom the “Queen of all spices” price movement in 2010 began its journey with Rs. 1131 per kg, giving the investors a return of 27% (approx) in few months of time.

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Cardamom futures (May Contract) at MCX commodity bourse is now trading at life time high at Rs.1445/kg.

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Cultivation:

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Cardamom starts in bearing capsules three years after planting. There are three distinctive types of cardamom grown in India viz., Malabar, Mysore and Vazhukka type. Malabar and the Guatemalan are the two major commercial varieties of small cardamom in the world. Indian cardamom is slightly smaller. After the first crop, higher and sustained yields are obtained in subsequent years up to the tenth or fifteenth year, depending on the type cultivated and upon the level of management.

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Production in India:

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Production of cardamom is mostly concentrated in the ever green forests of Western Ghats in South India. It is grown in Kerala, Tamil Nadu and Karnataka.

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Large Cardamom is cultivated in the Sub-Himalayan region of North Eastern India, Nepal and Bhutan. Kerala is the largest producer of cardamom with a share of around 70% in the total production. Karnataka shares around 20% and rest comes from Tamil Nadu. India consumes almost 90% of the domestic production and exports only 5 to 8% of its total production. India also exports by-products of cardamom like cardamom oil and oleoresins to the European countries.

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Vandanmedu, Kumily, Thekkady in Kerala, Bodinayakanur, Pattiveeranpatti in Tamil Nadu, Saklashpur, Mercara, Medikeri, Mangalore in Karnataka are the major trading centers in India for cardamom

Production in world:

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Cardamom is also referred as “grains of paradise”. The world production of cardamom is around 35000 metric tonnes per year. Guatemala is the leading producer of this spice with a production of around 23000MT and around 66% share in the global production. India is now the second largest producer of cardamom in the world with production of around 12000 metric tonnes of cardamom every year. Tanzania, Sri Lanka, El Salvador, Vietnam, Laos, Cambodia and Papua New Guinea are the major cardamom growing countries.

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EXIM scenario

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In India, the Average production for Cardamom is around 12000 tonnes per year, but in 2009-10 the production is expected to fall down to around 8000 tonnes. With the domestic consumption very robust and exports looking good, cardamom prices are seen moving to record levels in the current season. Global shortage due lesser production in Guatemala is also adding the momentum of prices. Exports have gained almost 12-15% of its production during the first ten months of the last financial year that ends in March this year. Exports during April-January stood at 1,500 tonnes, up almost 283% from last year and it is the highest level in last 10 year, while in value terms the figures were estimated to be around Rs 118.71 crore, up 206% during the same period last year.

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Concluding with the view that each commodity has its own fundamentals, demand and supply profile, which drive its prices. Though, the secondary driver, dollar index often gives impact on the commodity prices significantly.