Posts Tagged ‘oil seeds’

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 6th-10th September 2010

International gold prices rose back above $1250 an ounce for the second time in a week, as government bonds ticked lower together with energy prices. Silver prices also touched a new 16-week high at $19.57 an ounce on international bourses while it made a life time high on MCX.

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Apart from bad economic news globally, a weak Rupee is also pushing up prices in India. Base metal pack also ended higher last week on positive manufacturing and improved jobless data from both China and US which pushed prices higher. However, lower dollar index also supported prices. After being top performer for many days, Nickel has marginally underperformed other base metals as inventories on LME increased. In energy counter, crude oil futures got jiggled in hands of both bulls and bears. Prices remained volatile for the week amid mixed fundamentals.

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On one hand, prices got support from improved economic data but upside was offset by building inventories. The positive sentiment was offset by the effect of the abysmal inventory status report.

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U.S commercial crude oil inventories increased by 3.4 million barrels from the previous week; at 361.7 million barrels. U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 0.2 million barrels last week, and are above the upper limit of the average range.

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It was an action pack week for agro commodities in which they agro commodities saw big movements. Most of the spices closed on negative note bearing in mind the overseas weakness coupled with arrivals in some spices. Dip in Brazilian and Vietnamese pepper parity put pressure on Indian pepper as well and hence we saw two week continuous weakness. Similar to pepper, jeera futures also dragged down on dull spot trading. There was no respite for turmeric futures and they fell like nine pins for straight seven week on low stock buying amid the news of increase in acreage in Andhra Pradesh.

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Cardamom was sideways, while chilli was marginally up on short covering tracking the firm spot markets. Due to strong arrivals in major mandies coupled with beginning of fresh sowing of kharif pulses, chana futures surrendered their previous gain to some extent. Timely arrival of monsoon in southern and western regions has improved the sowing activity. Selling intensified in oil seeds and edible oil on the back of better crop estimate together with weakness in overseas market. Damaged crops in Russia, Europe and Canada, boosting demand for U.S. supplies to make animal feed, food and fuel revived maize futures. Guar counter was up on lower level buying.

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Weekly Update 9th – 13th August

The last week saw good amount of buying in U.S and other markets as the companies reported better numbers than the expectations in the result season. However the concerns remain over the U.S. recovery as the consumer spending, pending home sales and factory orders were all weaker than projected in June indicating moderation in the second half of the calendar year.

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In China, banking regulator has asked the lenders to conduct a stress test including worst case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively. The test highlights the government concern over the health of property market even after the regulator has tightened the real estate lending to crack down on speculation since mid April.

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Huge foreign money inflow, strong auto sales and manufacturing data together with good monsoon especially in the fortnight ending 4th August 2010 kept the markets on upbeat note. Life Insurance Corporation said that it plans to invest `2 trillion stocks and bonds in the current fiscal year. So far the Insurance major has invested 390 billion in the first quarter including 100 billion in equities.

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Approximately 2080 companies that have announced numbers have shown a mixed picture. The combined net profit of all companies fell 9.2% to 57,560 crore on 20.7% rise in sales to 7,07,925 crore in Q1 June 2010 over Q1 June 2009.

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Stock specific movement in market is likely to continue as some of the major companies like Bharti Airtel, State Bank, Reliance Communication, Suzlon, etc. are coming out with the results in the coming week.

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Pranab Mukherjee has already expressed concerns over the aggressive interest increase as it may moderate the economic growth. The Index of Industrial Production that saw some moderation in growth in May and also revised downward for the month of April is further expected to show some moderation in the month of June. Six core industries having weight of 26.68 percent in IIP have experienced a 3.4 percent expansion in June compared to 6.3 percent in the prior month. The data scheduled to be released on 12th August is likely to influence the markets and may help in gauging the central bank move in the coming months.

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Overall trend of world markets is up. Volatility indicators near lows are a sign of concern as it reflects that investors are not worried at all in taking positions. But till the trend of stock market is up, one should be playing on the long side only. US dollar index fall in last 3 months has also contributed to the rise of various asset classes. Nifty has support between 5350-5300 levels and Sensex between 17800-17600 levels.

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It appears that bulls are dominating bears in commodities. Market is looking very enthusiastic on the back of better results together with buoyant equity market. It is evident by the increased volume of commodity bourses across the globe. Noteworthy decline in dollar index has also supported buying in commodities.

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However, 80 is very good support for dollar index. The week is full of event risk. Traders may refrain to take large position in bullions before FOMC rate decision meeting. CPI and advance retail sales data of US will provide further direction to the base metals. Ongoing hurricane season is likely to keep crude oil in upper range. Severe drought and the decision to halt the export from 15th August to 31st December have stimulated fresh buying in grains and they are continuously moving up. Oil seeds and edible oil complex is looking promising and investors should utilized every dip as buying opportunity.

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SOYABEAN “Influenced by ………..”

Double digit food inflation has become a nightmare for Indian economy. Hot discussion is still on. But the question is how oil seeds will contribute in food inflation,  which is the major part of it and the second largest import item of India. What will be the price behavior of oil seeds in futures? Let us have a look.

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PAST YEAR MOVEMENT.

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If we have a look at the price movements of soyabean in the year 2009, it had started its yearly rally at around Rs 1900 per quintal with recovery in international palm oil and energy prices; it touched a yearly high of Rs 2824 per quintal. Smart recovery in international demand mainly from China and India coupled with crop loss in Brazil and Argentina played crucial role in giving upside to the international oilseeds and edible oil prices. Zero import duty on crude edible oil and very nominal duty on refined palmolein have favoured the import over domestic oils at the expenses of Indian oilseed producers and crushers.

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In the oilseeds complex, soybean futures gave the investors the second highest return of 21.86% after CPO at 28.03%.

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However, by the end of 2009, prices cooled off significantly and glimpsed a downside of and respectively.

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A ROAD TRIP TO CHINA………..

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In a very short time, China has built up what is likely the world’s largest soybean processing sector to produce soymeal & soyoil. U.S. has become.one of the major beneficiaries to satisfy the insatiable demand of China. China is the main driver of global soybean prices. The increasing demand.for animal protein in China & competing demand for its farmland, the country will not be able to increase its production & will have to import the.commodity to retain its huge appetite. China accounted for 79 percent of U.S. soybean exports in the week ended April 8,2010 according to a U.S.

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Department of Agriculture report. China is forecasted to account for 54 % of global imports of the oilseed, and 25% of purchases of the edible oil.this year, according to the U.S. Department of Agriculture.

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EXIM SCENARIO

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During FY09-10, the soy meal exports were lower as compared to previous year except the month of October due to higher export price. Soyabean oil imports may exceed last year’s 990,000 tonne as the premium for soyabean oil over palm oil contract., Soyabean oil costs $92.66 a tonne more than palm oil, according to Bloomberg data. The premium narrowed to $60.81 on March 31, the lowest since November 7, 2007, reducing the appeal of palm oil, its substitute.

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SEMINAR OUTCOME

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Based on the outcome of meeting at 31st All India seminar on rabi oilseeds & oil trade and industry on 12th March, 2010 at New Delhi, total soyabean production has been set lower for this year at 85 lakh tonnes. The marketable surplus for crushing is also estimated to be lower at 75 lakh tonnes. The peak oilseed crushing season is the second half of the financial year, in which mills sign most of their meal supply contracts with overseas agencies. The Advance estimates peg oilseed production at 26.32 million tonnes, as compared to 28.16 million tonnes in last year second advance estimate which is 1.84 million tonnes less than the earlier estimates for 2008-09. However, the resulting overall production of Rabi oilseeds is lower than the earlier year’s 2nd advance estimates of 2007-08 & 2008-09 respectively.

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PRICE ANALYSIS of CURRENT SCENARIO

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NCDEX soybean futures have always been tracking the futures at CBOT& BMD alongwith the oilseeds complex futures at both NCDEX & MCX. This year soybean futures prices have been trading downtrend to sideways, starting the year at 2382 levels to a contract low of 1966.00 levels registered a decline of 13.72 % at the NCDEX.

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At CBOT soybean futures hit a three-month high, upbeat economic data from China strengthened the outlook for U.S. agriculture export demand & tracking firm crude oil market. The current status at the NCDEX & CBOT future market for soybean is in backwardation condition, where the prices of the forth-coming contracts are trading lower than the current month. This reveals that the overall trend is still bearish for this commodity. The factors supporting the bearish trend are:

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•Lack of fresh fundamentals & poor export demand.

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•Subdued trading activity.

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•According to the Solvent Extractors’ Association of India, the soybean stocks as on 1st April is at 4.5 million tonnes.

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•Factors such as record output in Brazil and Argentina is limiting the rally.

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SO, WHAT NEXT?

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In short term, the soybean futures are expected to trade on a positive note due to short covering and fresh buying at lower levels. In medium term, the future market may get some initial strength, taking a support at 2000 levels & also from the lower dollar and higher crude oil prices. If crude oil prices continue to rise, production cost of soybeans likely will continue to rise, & these higher costs necessitate higher corn and soybean prices for farmers to be profitable. However, downside is expected to be limited based on recovery of soybean prices since the beginning of month of April.

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We can expect the futures to witness the level of 2400 in the months to come.

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Food Inflation at 17.5%, Households Pay Price

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

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Food inflation at 17.5%, households pay price

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Food inflation at 17.5%, households pay price:

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The government on Thursday said that the average wholesale price of food items had increased by a whopping 17.5% in the past one year.

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The figure was 15.6% a week ago.

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RBI to shift to a tighter money policy,which in turn would lead to a rise in interest rates.

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The Centre has blamed this year’s poor monsoon for high food prices.

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It also put the onus on state governments to control prices through better management of food supply through ration shops.

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In Other major Commodities Updates, we bring you the news of Govt opting for transgenic tech to boost pulses production and Natural rubber prices going double in a year.

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Govt looks to transgenic tech to boost pulses production:

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The Union government is drawing up a comprehensive programme to introduce transgenic technology to improve the productivity of pulses.

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Bt refers to a gene sourced from a soil bacterium that is transferred to plants and acts as an insecticide.

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The Bt gene activates a toxin that kills a class of pests largely responsible for damaging plants and, thus, denting yields.

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They are genetically low yielding and less responsive to inputs compared with other cereals and oil seeds.

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Not only are they more prone to pests and diseases, hybrids and genetically modified varieties are not available to enhance productivity.

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The agriculture department has said it plans to increase pulse production by 2 mt and acreage by 4 million ha by 2012.

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Natural rubber prices double in a year:

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The natural rubber (NR) prices have almost doubled in a year.

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The benchmark grade RSS-4 variety was quoted at Rs 128 a kg on Thursday compared with Rs 65 a kg on same day last year.

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The rubber market is now poised to break all records despite good production this season.

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The local market follows its global peers resulting in a sharp increase in the prices in the futures trading.

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According to Rubber Board estimates, production in November increased to 103,000 tonnes compared with 95,550 tonnes in the same month last year.

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Production is expected to be at its peak in this month due to the winter season and supply is expected to improve further.

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The board estimates also revealed that the total stock in the country increased to 247,000 tonnes.

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This is due to the sharp increase in imports and a drop in exports during April-November.

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