Posts Tagged ‘guarseed’

COMMODITY WEEKLY COMMENTARY 11th – 15th October

International gold hit yet another new high and tested $1364 as the US currency slumped to fresh 15-and-a-half year lows against the Japanese Yen. The euro and British pound both neared 8-month highs vs. the dollar after their central banks failed to cut rates or expand their quantitative easing. The shiny metal continued breaching new high records by taking advantageof concerns surrounding global recovery which raise speculations that central banks will add tostimulus to bolster growth. This time domestic gold and silver also rose to their fresh highs on MCX. Base metal prices traded on the mixed note with lead prices ending in red while copper along with aluminium and nickel prices managing to end in the green territory.

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The base metal prices remained volatile mainly due to weakness in the dollar index and profit taking at highlevels. In energy counter crude oil remained volatile as prices got support by a weaker dollar and investors’ demand for higher-yielding assets. Prices were also under pinned by the drop in motor gasoline and distillates inventories off setting the buildup in crude inventories.Regarding agro commodities, oil seeds and edible oil counter revived on some bargain buying atlower level amid falling dollar index. Strong buying by soyabean millers together with rising soyameal export also encouraged buying in both spot and future market. Fresh arrivals in Haryana and Rajasthan washed out the profit of guargum and guarseed futures. Prices were also discouraged by strong production estimates of guarseed in the current year.

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Despite tight supply position against strong demand pepper futures closed the week on negative note on profit booking. Turmeric rose on improved demand. Chilli was sideways with upside bias on mixed fundamentals while jeera and cardamom moved southward. Receding stocks in major mandies accompanied with strong export demand by traders and exporters gave terrific rise tothe mentha prices. Even in future market it breached the level of 950 on MCX. Mint exports inApril- August, 2010 surged by 2 percent to `723.95 lacs against 595.57 lacs reported last year inthe same period. Chana appeared shy to breach the resistance of 2300 and it closed down on profit booking at higher levels.

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Commodity Weekly Commentary 20th – 24th September 2010

Its seems that sky is the limit for bullion counter now a days, as prices surged high to their life time highs on domestic bourses. However, strong Indian rupee limit the upside movement in prices in both gold and silver. In international markets gold hit a record high above $1,280 per ounce last week, as currency market jitters and broader economic uncertainty enticed more investors towards the metal’s safe-haven credentials. The metal’s rise this year has been fueled largely by investor nervousness that stemmed from the fallout from the euro zone debt crisis and from economic data that has suggested global economic growth may be losing momentum.

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Base metals also surged high last week on weakness in dollar index and after reassuring comments from China’s central bank about its plans to keep monetary policy loose. In energy counter crude oil lost its esteem and traded down. Crude traded around $76 per barrel amid low U.S inventories, while Chicago pipeline leak continues weighing on prices as new Tropical Storm Karl threatens the Gulf of Mexican. The EIA report showed a drop in fuel demand by 1% to 19.5 MB. Gasoline also shed 694 thousand barrels to 224.5 MB. This comes at a time where imports have reached their lowest level in five months.

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Unlike metals, agro commodities fell like nine pin, even fall in dollar index could not supported them very much. It was not a good week for spices as sellers were more active than buyers in spot market. Future market reacted in the same fashion. Panic selling was continued in turmeric, jeera and chilli as well. Cardamom was also the victim of arrival pressure and closed down. Stockiest liquidation at higher levels dragged down chana futures on NCDEX as well. With declining prices of churi and korma, guarseed and guargum continuously traded southward.

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Wheat closed down on negative cues. Furthermore, traders preferred profit booking at higher levels in menthe futures. Strong crop projection of soya bean along with rise in crop projection of mustard seed crop in rabi season compelled oilseeds and edible oil futures to trade in negative zone. Higher domestic stocks, imports in the middle of arrivals in the domestic mandies further pressurized the oil seeds prices. As per expectation, the total crop size of soyabean in the current season is likely to be around 95 lakh tonnes, up 2% from last year.

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However there was a commodity which surprised the market with its nonstop three week upside on higher offtake amid tight supply and it was maize.

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BARLEY…. “CLOCKING WITH VOLUMES”

When analyzing a particular commodity, it is very important to attempt to identify the “leader finished product” of that commodity which would drive the prices of the raw material and provide the most impressive investor returns. Here, in this column, illustrating some of the features of barley and the potential of barley futures which has directly or indirectly entered into the new luxury segment of malt industry & distilleries evolving within premium Indian brands.

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DEMAND COMING IN FROM…

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Demand from the distilleries and malt industries have always supported the barley market. Out of the total output, around 70 per cent goes to the malt industries which use it for beer making. The rest is used mostly as cattle feed. Major malt industries are located in and around the National Capital Territory (Delhi) in Haryana, Uttar Pradesh and Rajasthan.

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However, the facing a competition from Ukraine and Uzbekistan (the main competitors of India in barley production) where its availability is at cheaper rates, barley procurement by different companies has been slowed down from the Indian markets.

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The grain commodity has also taken supportive cues from the rising rates of other grains such as maize, jowar, bajra and guarseed. Another factor, which may contribute in rise of barley prices is the higher rates of molasses from the sugarcane industry. Apart from these consuming industries, poultry is another big consumer of barley in the country.

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EVOLVING MARKETS

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Keeping in mind the growth & design to meet the growing demand from the European Malting Barley sector, NYSE Liffe, the Europe-based derivatives business of NYSE Euronext (NYX), has launched Malting Barley futures and options on 10 May 2010, which will encompass Malting Barley from any European origin in a 50-tonnes lot size. It is unique in being the only market available worldwide to meet the specific hedging requirements of maltsters, brewers and distillers as well as those engaged in the production and trade of Malting Barley.

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CROP PROSPECTS

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Area under barley in India is stagnant near to 1600 metric tonnes, whereas the yield is expected to lower down to 2.03 metric tonnes per hectare in 2010-11 as compared to 2.17 in the year 2009-10. Rajasthan, Punjab, Haryana, Uttar Pradesh and Madhya Pradesh are the main barley producing states in the country.

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As per the latest released by Canadian Wheat Board, global barley production in 2010-11 is at 138 million metric tonnes, down from 144 million tonnes the previous year. The global malting barley import demand would increase slightly, to 4.46 million tonnes in 2010-11, from 4.36 million. The stocks will remain more than sufficient to meet the demand.

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FUTURES & SPOT UPDATE

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Travelling through a volatile path, with lots of upside & down, barley prices have managed to gain profits at 15.68% to Rs 1,040 per quintal in spot market (NCDEX) & by 22.24% to Rs. 1100 per quintal in the futures trade following increased positions by the investors. Tracking the spot & futures prices, it has been seen that from the beginning of month of April, with summer temperatures soaring, prices of barley heats up. There is a huge surge in the trading volumes. Last year volume in the same quarter was at about 16,160, whereas it has now clocked to 82,470 quintal.

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Taking into consideration, of increasing procurement by consuming industries & brewing industry operating at their full capacity during this period of summer, an investor can buy barley before the commencement of summer season during the harvesting period around March and April & accumulate till the month of June for getting decent returns on investment.

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In recent days, the barley futures (NCDEX June contract) have shown a breakout above its weekly resistance of 1080 levels, trading at 1108/quintal, depicting & apprehending that prices may remain stronger with an upside target of 1120 in medium term, & downside is likely to be restricted at 1020 levels, supported by continuous pipeline demand from the consuming industries.

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The fact brewing industry growing at 15-18 per cent a year, & increasing stock-touse ratio, barley cultivation is slated to become the next big opportunity.