Posts Tagged ‘consumption’

US Economy to Surge Up in 2010 : Economists

World Largest Economy to Expand in 2010

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Market forecasters and analysts have put forth the view that US economy will most probably turn in its best performance this year since 2004 owing to the factor that companies have increased the investment and hiring.

With the increase in the spending of perks, also, it seems a near probability.

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Many US economists have  said that the world’s largest economy may expand 3-4% in 2010.

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As per the top economists, the rebound in stocks and rising incomes will prompt Americans to do what they do best — consume.

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Faced with dwindling inventories and growing demand, companies will soon become confident the expansion will be sustained.

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Market experts and economists believe that Household spending would pick up the steam as US economy would move into the second half of 2010.

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The overall picture for 2010 will be an economy growing rapidly enough to bring down the unemployment rate to an average of 9.6%.

The rate will reach about 9% by the end of 2010, major economists quoted.

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US employers expect to hire more new workers in 2010 than they did in 2009, a sign the US recession may be easing its grip, a research showed.

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One-fifth of employers plan to add full-time, permanent employees this year, up from 14% in 2009, according to an online job site that surveyed considerable number of hiring managers and HR professionals.

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Just 9% said they plan to cut headcount in 2010, down from 16% in 2009, according to the nationwide survey.

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The number of employers who say they’re going to add full-time workers is up from last year, and that is very good news. There’s definitely an uptick.

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RUBBER – STRETCHING & MOVING ON THE WAY AHEAD Part 1

Hello Friends here we come up with another write up on “Commodity Corner Series”.

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Topic is RUBBER ………… “STRETCHING & MOVING ON THE WAY AHEAD”

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RUBBER - STRETCHING & MOVING ON THE WAY AHEAD

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We would touch upon aspects like the investment scenario of rubber in India and price movement of the rubber in Indian market.

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We would also read about the gap in the demand and supply of the rubber in the market.

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Rubber is springy & has the potential energy of getting stretched.

These properties are also seen in the price movement of the prices.

The year 2009, has given stretchable & phenomenal return on investing in rubber futures.

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INDIAN SCENARIO :

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The four-month period between October and January is the peak season of rubber output in the country.

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The total area of plantations in the country is 662,000 hectares of which 92-93 per cent is in Kerala.

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Tripura is the second-largest rubber planting state in India after Kerala.

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DEMAND & SUPPLY GAP –Walkthrough 2009:

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As we know that profit increases when the difference or the gap between the cost price & the selling price increases.

This immense gap was witnessed in rubber prices.

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Tight supply & tracking the rise in Asian markets like Tokyo and Singapore gave momentum to the prices to rise through out the year.

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The Indian industry consumed 356,400 tonnes of natural rubber (58 per cent of the total domestic consumption) during April-November.

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In April-November, natural rubber production in India dropped 6.5 per cent at 538,125 tonnes against an increase of 3.5 per cent in consumption at 614,600 tonnes.

So there was a gap of 76,475 tonnes in production and consumption.

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PRICE MOVEMENT “Focus on the journey, not the destination”:

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The spot prices at the benchmark Kochi had begun its journey at Rs.67.23/Kg & touched the high of Rs. 139.19 within a year.

Strong appreciation in prices in all major global markets which touched Rs 130.48 per kg, made the domestic market bullish.

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Similarly, the futures at MCX posted a gain of 78.94% as of 22nd December, 2009.

This spike was also supported by the increased gap between production & supply.

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Next Blog we would read about the impact of the shortage of rubber industry on major industries and the scenario of the rubber production in other countries.

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Stay Tuned for more on this.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

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“Seasonal Index – “Time is Money” Part 2

Hello Friends here we come up with an extension of our previous blog, Seasonal Index……“Time is Money” Part 1

In previous Blog, we had touched upon the aspect like what is seasonal pattern and reasons for studying seasonal variation.

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Seasonal Index……“Time is Money”


Now we would see the analysis part of seasonal patterns in predicting the future prices of the commodity.

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The Analysis

Crop prices tend to follow a general seasonal pattern of their own, identifying the major turning points in prices, setting their seasonal low at harvest followed by a post-harvest rally, where the supply of the crop is fixed and consumption gradually takes that supply, causing prices to rise.

However, major market shocks or powerful influencing factors like monsoon, production figures, stock levels & demand may significantly alter seasonal patterns & the prices may experience the special condition.

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This is what happened with the Guar prices.

The ‘Guar’ legume plant is rain-fed monsoon crop.

Monsoon has been the decisive factor for the trend in guar futures.

The sowing period is July and August right after the first shower of the monsoon and the harvesting period is September and November.

Fresh arrivals of the crop from Haryana and Punjab begin immediately after the first week of September and continue till the month of December.

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One example would be redeploying capital in Guar futures in two phases by taking selling positions from April as monsoon sets in – boosting the production levels, and buying in the month of June when the rally begins.

If we follow the price index & compare it with the actual, then it is seen that the prices have followed the path of the seasonal trend many times in this year & have given their best highs from month of June to August.

The seasonality shown in the below graphs depicts that the positive wave has given a satisfying return on investment in both of these commodities, & the strategy adopted of “Sell in April” makes this clear.


Guar Seed Seasonal Index vs Actual

Guar Seed Seasonal Index vs Actual



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Again, the investors taking fresh buying positions from the end of June & holding till the end of the year have had always hard-earned profits.

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Stay Tuned for more on this.

In next blog we would read about that how an annual average method can be used to generate a seasonal pattern in predicting the future prices of the commodity and seasonal pattern in the year 2009.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please click here

After 20 Years, India to Import Rice

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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After 20 Years, India to Import Rice

After 20 years, India to import rice:

India, a traditional rice exporter, will import the grain for the first time in 20 years to meet a projected shortfall of the crop hit by drought and floods, government said yesterday.

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The government estimates that there would be a shortfall of over 15 million tonnes in the 2009-10 Kharif (summer) season due to drought and floods in several states.

Thailand’s Foreign Trade department announced that the world’s biggest rice exporter is expected to release part of its huge stock of almost six million tonnes of rice stockpile to India, besides eight other countries, through g-to-g sales programmes.

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In Other major Commodities Updates we can see that the demand-supply gap for natural rubber in the country is set widen.

Demand-supply gap for rubber stretches:

The demand-supply gap for natural rubber in the country is set widen as production is expected to fall and demand set to rise above earlier stimates.

Rubber production for April-October period was 9.4 per cent lower at 4,35,125 tonnes against 4,80,230 tonnes last year.

Consumption grewn three per cent to 5,36,100 tonnes (5,20,375 tonnes).

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The production-consumption mismatch resulted in a sharp rise in imports and a corresponding fall in exports.

Imports increased 133 per cent to 1,26,472 tonnes (54,283 tonnes), while exports plunged 92 per cent to 3,859 tonnes (34,000 tonnes), sources in the Rubber Board said.

The Rubber Board has scaled down the production target for the current fiscal by 2.8 per cent to 8.40 lakh tonnes from the earlier estimates of 8.67 lakh tonnes announced in April.

The forward estimates of production has moved up 6.8 per cent to 9.31 lakh tonnes from the earlier estimate of 8.81 lakh tonnes.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

CORN- The Un-discovered Legend Part 2 :)

Hello Friends here we come up with an extension of our previous blog, CORN………. “The Un-discovered Legend” Part 1

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CORN- The Un-discovered Legend Part 2

In previous Blog we had touched upon few points related to importance of Maize crop in Indian commodity market and its relevance in the context of Indian Scenario 🙂

In this blog, we would get to know of Potential sources of demand for Maize crops and industrial demand of maize crop.   Also read about the PVO (Price-volume-open Interest) Analysis of the Crop.

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Potential sources of demand:

The apparent increase in consumption demand has been sourced from the preference for corn based food products for human consumption as well as increased use in feed industries.

Human consumption – corn flakes, corn oil, corn flour, etc.,

Feed industry – poultry & animal feed

Ethanol – maize has already proved to be a potential source of ethanol.

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Corn consumption has seen a rapid growth during last few years.

Indeed, consumption patterns have changed at an accelerating pace especially during the winter season; from the time when it has
been introduced in numerous shopping malls around the world in the form of popcorns, baby corns etc.

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Industrial demand:

This commodity has placed itself in an advantageous position & made its presence felt in the industry.

Maize is a key ingredient in animal feed mix, & being the animal feed sector growing at a healthy pace with increasing demand for
meat and milk and milk products, coupled with stagnation in cattle population, there is a rising need to feed the existing population
of cattle with quality feeding.

Therefore, this has opened a window of opportunity for strengthening of global corn prices, which in turn is triggering enormous
demand for Indian maize in the Asian regions.

With the growing demand & expansion of starch sector, the overall demand for maize is likely to grow at a brisk pace.

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Change in % from 2008-09 to 2009-10 (India) Source: USDA

Area Harvested: 11.44%

Beginning Stocks: 51.72%

Production: 0.10%

Total Supply: 1.60%

Total Consumption: -1.1%

Ending stocks: 12.55%

Total Distribution: 1.60%

These positive figures indicate that India has sufficient & comfortable stocks of maize.

In 2009-10 the area harvested (India) is expected to increase by 11.44%, while the consumption is expected to remain almost flat or marginally down in next year.

The ending stocks are also quite high which can pressurize the prices in long term.

In a monthly update on 10th November 2009, USDA cut the corn forecast by 1 percent to 12.921 billion bushels (328 million tonnes).

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PVO (Price-volume-open Interest) Analysis:

Maize futures have proved the old saying “Slow & steady wins the race”.

The prices, volume & open interest in maize futures both in NCDEX & CBOT which had taken a backseat during the beginning of the
year 2009, have been rising again without much volatility in their behaviour.

The prices have been rising from the levels of Rs.795 to Rs.965 during January to November’09, which resulted into bull-run and resultantly futures made a high of 1015 levels on 3rd November ’09, giving a return of 21% till now.

Since the month of March ’09 prices have been seen rising witnessing some corrections during their journey; however factors like
higher international prices & continuous demand from starch & poultry industries have supported the prices.

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RBI’s Monetary Policy Stance – Part 3

Just an extension of our previous blog “RBI, Monetary Projections And Indian Economy


RBI’s Monetary Policy Stance - Part 3

RBI’s Monetary Policy Stance - Part 3

In this Blog we would touch upon the aspects as that of RBI’s Monetary Policy Stance and few more facts which carries direct or indirect connection with the RBI Policies.

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For example, business confidence index ,industrial recovery status, overall consumption and investment, export-imports status etc;

The True Facts:

So far business confidence has also improved, and demand conditions seem to have picked up, as seen by better order book and increased capital finance requirements.

Industrial recovery seems to be on its way with 5.8% growth in IIP during April-August ’09.

A revival in capital flows, and stronger performance of the core infrastructure sector (4.8% for April-August ’09) seems to be indicating a slight recovery in the economy.

However, there has been a deceleration in growth of private consumption and investment demand, and raw material prices are expected to rise on account of inflationary pressures.

The deficient monsoon could also reduce rural demand.

First quarter earnings of corporates reflect a decline in sales, and non-food credit growth has decelerated, with credit card and consumer durables related credit turning negative.

Exports have continued to decline as external demand dependent services remain sluggish.

The economy is showing some signs of recovery, while a rising CPI has now pushed WPI into the positive territory, mainly on account of higher food prices.

The RBI’s stance will thus have to manage the trade-off inflationary pressures between supporting growth and controlling .

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Monetary Policy Stance

On the basis of the above overall assessment, the stance of monetary policy for the remaining period of 2009-10 will be as follows:

– Keep a vigil on the trends in inflation and be prepared to respond swiftly and effectively through policy adjustments to stabilize inflation expectations.

Monitor the liquidity situation closely and manage it actively to ensure that credit demands of productive sectors are adequately met while also securing price stability and financial stability.

-Maintain a monetary and interest rate regime consistent with price stability and financial stability, and supportive of the growth process.

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Stay Tuned for more on the topic.

We would cover Analysis view from the Analyst with respect to the monetary point of view.

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Positive Undertones in the Economy – Part 2 :)

Positive Undertones In The Economy

Extending to the yesterday’s post on the positive undertones of the economy in the markets and investors tips, here we coming up with the more factors which investors should use for picking up fundamentally good stocks.

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1. Reality companies hike rates by 15%

Reality sector is witnessing a substantial demand, especially in the mature markets, after the prices dropped a few months ago.

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With the gradual return of residential property buyers, prices in NCR and Mumbai areas have moved up 10-15%.

How long these prices will sustain is hard to determine, but this indicates the confidence of investors.

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2. India..in Better Position

India can be considered as “balanced” in terms of investment and consumption with savings rate of 35% and consumption of 65% of its GDP.

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The fastest growing China leans towards investment, whereas most of the western countries are weighted more towards consumption.

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If we compare India’s Sensitive Index with its other Asian peers, Sensex is valued at 17.6 times estimated earnings where as China’s Shanghai Composite Index trades at 22 times earnings and the MSCI Asia Pacific Index is valued at 24 times.

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So, India remains very attractive and it is an opportune time for Indian companies to grab market share.

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3. Developments in the rest of the economy 🙂

If we see the positive economic numbers across the globe, it seems that world economy is moving towards recovery.

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Australian economy surprised with a jump in growth in the second quarter.

US have witnessed a growth in the current quarter GDP, US manufacturing and housing sectors appears to be gathering pace, quarter’s results came better than expected.

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European economies like France and Germany continued their gradual emergence from the worst crisis in decades and company results showed an upturn.

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4. Concerns Over Weak Monsoon!

Everyone is expecting that poor rains would push up food prices in the short-term, due to the reduced yield of kharif crop and it would add to inflationary pressures.

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But at the same time, we should also know that Indian agriculture is not limited to agro commodities only, but it is well diversified into horticulture, livestock and fisheries and their share in total output of the agricultural sector is increasing.

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Total agricultural output accounts for only 18.5 % of the gross domestic product and the kharif crops like cereals, pulses and oilseeds account for only 20% of it.

Moreover, government spending in rural areas will mitigate the effect of diminished monsoon rains.

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So, Looking at the above factors, India growth story remains strong in the long run.

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So, one can go for the companies, which will benefit from “Economic growth” like power plants, roads, service providers like banking and engineering sector.

Thanks 🙂