Posts Tagged ‘oilseeds’

Weekly Update 4th – 8th October 2010

Global markets closed on a mixed note in the week gone by, with Indian markets closing in positive on weekly basis. To send a message to China to raise value of its currency, the U.S. House of Representatives this week approved a bill that would let domestic companies petition for duties on imports from China to compensate for the effect of weak yuan. U.S. Treasury Secretary Timothy F. Geithner said he is confident that tensions over China’s currency, the yuan, won’t lead to escalating trade sanctions or feed into a broader global currency conflict.

.

.

European confidence in the economic outlook unexpectedly improved this month. An index of executive and consumer sentiment in the 16 euro nations rose to 103.2, the highest since January 2008, from a revised 102.3 in August. The European Commission forecasted a more “moderate” expansion in the second half of the year as governments from Ireland to Portugal step up spending cuts to push down deficits. ECB President Jean-Claude Trichet said that there is “continuing uncertainty” about the outlook.

.

China’s manufacturing expanded at the fastest pace in four months in September. According to China’s logistics federation and statistics bureau, the purchasing managers’ index rose to 53.8 from 51.7 in August. The data is viewed very positively by the market as it shows that China’s economic momentum may counter weakness in the global recovery. It is believed that growth may be further aided in coming months as government plans to speed the completion of stimulus projects and boost public housing construction.

.

In Japan, the jobless rate fell to 5.1 percent from 5.2 percent. After intervening few days back in the foreign exchange market in order to stem the yen appreciation, Japan’s Finance Minister reiterated that Japan is ready to keep intervening after selling yen for the first time in six years last month.

.

Core infrastructure industry that account for 26.7 percent of industrial output in India slowed to 3.7 per cent in August, as compared to 6.4 per cent in the same month last year. Going forward we expect the markets would remain firm as it is supported by strong portfolio investments. The best strategy to ride the tide would be stay invested. Nifty has support between 5940-5870 and Sensex between 19640-
19200 levels.

.

Bullions may continue to lead the charge in the commodities counter as both silver and gold recently tested life time highs in MCX. The latest boon to the metal has been increasing expectations that the Federal Reserve will further ease monetary policy with measures including the purchase of Treasuries. Jitters about European sovereign debt problems have also supported gold higher as a safe-haven investment. Better jobless claims data and a revised upward GDP in US supported the crude counter which can make further gains in next coming week. Base metals will take cues from LME as China markets will remain closed for a week. In agro counter pulses along with oilseeds may trade in range while spices can get some support from upcoming festive season. Mentha oil firm export demand and low crop will assist the prices to make fresh high in MCX.

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.

.

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.

.

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.

.

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.

.

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.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

Cracking “Da – Futures – Code” Final Part

Continuing the final part 🙂

  • Small Speculator : Non- reportables  are small users of futures markets are more likely to be speculators than hedgers. In other words, they’re everybody else who participates in the futures markets — the proverbial “little guy.”

.

The commercials do switch sides from time to time, which offer a tremendous opportunity for small traders. The commercials are not always right in terms of making profit from their long or short positions, but they should always be watched for their behavior.

.

ANALYSIS “Da – Futures – Code”

.

An easy and important way for an individual to examine this report is to watch out for the actual positions of the categories of traders– specifically the net position changes from the prior report.

.

For example, by examining the open interest records of commercial traders in crude as compared to prior week, implies that money  managers cut net crude oil long positions on  the New York Mercantile Exchange in the week to 172,121 in the week through June 22 from 177,653 in the period to June 18. Long positions have declined by 5532 since last week and short positions have increased by 6701.

.

This seems to indicate that there is some decline in bullish sentiment. This is a signal that, investors buying sentiments is cooling off and one needs to become more cautious about their risk exposure with tighter stops or protective options.

Analyzing the data from COT report, it is seen that soybean futures market is caught between the bulls & pressure. There is an increase of net long position by 9462 and shorts have decreased by 5279 from the period of June 18-22, resulting to recovery of net positions placed on downside.

.

However, looking at the broader picture, the area of net positions still remains in the negative area which implies that speculators are with mixed sentiments over this counter & some are committed to the long side of the soybean futures in the near term. The fundamental factor also supports that La Nina “leads to a reduction in the crop size” may hurt soybean crops in the U.S., between early August and February, likely curbing yields..

.

Therefore, keeping track of what speculators are doing with the weekly Commitment of Traders Report and by examining the levels of bullishness trend overseas in near term, and accordingly manage the portfolio and follow the changes on a weekly basis.

.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,http://www.smctradeonline.com
,http://www.smcwealth.com

Commitment of Trader’s Report……. Cracking “Da – Futures – Code” Part 1 :)

Years passing by and with the increased vagaries of world economies whether it be Greece, Italy, Hungry in Euro zone or high jobless claims, lower housing starts in U.s, Currencies, other macro factors like monsoon , a typical speculative fever is getting over the commodities futures market these days and has become a ubiquitous headline.

.

So, it is very important for an investor to know the market sentiment whether it is bullish, bearish or plain neutral. Understanding the same one can handle its position tactfully and also profit from it by simply looking at the bigger picture and not get drifted away. So, now the question is ” How do you gauge the market sentiment?”

.

THE COMMON MAN’S LAW

.

Before finding the answer to this question, let’s understand  the common thought that when prices go up, investors want to buy more contacts and producer want to sell more of what they are trading and vice versa.

.

The traditional commercial consumer/ producer cares about the prices. A producer has a cost involved in production and if the price drops below that production cost, they are going to lose money. So they hedge around that production cost. An enterprise on the other hand obviously needs the commodity for their business; if prices move higher, they will increase their hedging to protect themselves. This is an important law of world we live in.

.

TRACKING CHANGES

.

Many commodities groups like oilseeds complex, base metals, bullions on the national bourse, etc. track the price movements on the international exchanges. The data provided by the exchange on daily basis daily includes lots of information as amount of future contracts outstanding, volumes traded, their strike price and date of maturity. This is useful as far as it goes, but the data sheet has its own limitations. As we all know that all futures contracts have two sides- a long and short. Now, this is where the The Commitment of  Traders (COT) report released weekly by the commodity futures trading commission (CFTC) in the US is useful because it tell us much about whether speculators are long or short..

.

The C.O.T report is released weekly-every friday afternoon. The report has three categories of market-user: commercials, non commercials and non reportable.

.

.

  • Commercial Hedgers: Traditionally, as the commercials”the big guys” (like farmers, miners, international businesses and processors) are seen as entities using the market for hedging business risks. They are generally believed to have the best fundamental supply and demand information on their markets, and thus position their trades accordingly. The high large-speculative position denotes a real commitment to the trend.

.

  • Non- Commercials: The non-commercials are assumed to represent speculative interest. An example of a large speculative account might be a large commodity pool (a fund) that trades futures for speculative profit.

Stay Tuned for the final part 🙂

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,http://www.smctradeonline.com
,http://www.smcwealth.com

Weekly Update 5th-9th April

Domestic markets continued to build on the gains for the eighth consecutive week. The undertone remained buoyant as the growth signs are becoming clearer. A closer look on the gains gives impression that emerging economies would continue as a favorite investment destination. Hopes of good result season, continued buying by foreign institutional investors & recent upgrade of India’s credit rating are some of the factors that are keeping up the investment momentum in the market. On the global front, in US the recent payroll data has further boosted the confidence among the investors as it looks the deepest recession has ended.

Payrolls, a major indicator rose by 162,000 workers, the third gain in the past five months and the most since March 2007. Home prices in US unexpectedly rose in January for an eighth month. Home prices in 20 US cities rose 0.3% in January, indicating the housing market is stabilizing as the economy expands.

.

According to some estimates US economy probably grew by 2.8 percent in the first quarter of 2010 after a 5.6 percent pace of expansion in the fourth quarter of 2009. Apart from the tightening in monitory policy by RBI the other trigger for the markets would be monsoon forecast. A healthy monsoon would improve agriculture output & thereby rural incomes. It would also be crucial from the inflation point of view, as it is still a worry factor & may affect the growth momentum.

.


Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. The Indian Meteorological Department (IMD) issues a monsoon forecast, usually in the second half of April after considering weather observations in different parts of the world and extrapolating statistical data.

.

Overall trend of world stock markets is up and Commodities which were under pressure some time back also had a good rally last week. It seems now the mid cap and small cap are leading with mainline Nifty or Sensex lagging behind. The global liquidity is leading to various asset classes being chased by investors at every reaction. Nifty has support between 5150-5050 levels and Sensex between 17200-16800 levels.

.

Firm U.S., Chinese and European manufacturing figures along with decline in SHFE and LME stockpiles may continue to keep the base metals on upbeat note. Lack of clear risk sentiment may keep gold directionless. Drop in U.S. jobless claims may lend further support to crude prices. Oil prices have risen about 23 percent from early February as the industrial sector leads a gradual recovery in the US economy. Possible new round of sanctions against Iran, maybe within weeks rather than months, could be underpinning the crude market.

.

Spices pack may extend further gains while oilseeds may witness some short covering.

Area Sowing of Rabi Crops Crosses Last year Level

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

.

Area sown under Rabi wheat picks up

.

Area sown under Rabi wheat picks up

.

Sowing of Rabi wheat, rice, coarse cereals and pulses has crossed last year’s level but there is a decline of about 6.2 per cent in the acreage of oilseeds.

.

The shortfall in oilseed is mainly due to the decline in acreage of mustard in Rajasthan on account of poor weather conditions.

.

A crop and weather watch group coordinated by the Ministry of Agriculture reviewed the situation on Friday.

.

It was informed that as against a coverage of 88.85 lakh hectares in oilseeds last year, so far 83.33 lakh hectares had been sown this year.

.

The shortfall was in mustard, groundnut, safflower, and Seamus sowing.


The area under pulses, however, increased to 125.60 lakh hectares this rabi, against 120.84 lakh hectares in the corresponding period last year.

.

The highest area coverage was in Madhya Pradesh, followed by Uttar Pradesh and Karnataka.

.

In the case of wheat, the area sown so far is 260.71 lakh hectares compared to 255.62 lakh hectares last year.

.

Sowing in Uttar Pradesh was delayed owing to a late harvest of the kharif sugarcane crop.

The area under coarse cereals stood at 326.20 lakh hectares as against 324.04 lakh hectares in the corresponding period last year.

.

Rabi rice was sown in 4.55 lakh hectares against 3.61 lakh hectares last year.

.

In Other major Commodities Updates there is news of government allowing import of refined sugar at zero duty up to December 31 this year.

🙂

.

Govt allows duty free sugar imports till Dec end

.

The government allowed import of refined sugar at zero duty up to December 31 this year in the wake of sweetener prices nearing Rs 50 a kg in the retail market.

.

The Cabinet Committee on Prices (CCP) also decided to permit UP mills to process imported raw sugar outside the state due to restrictions there.

.

Import of white sugar was allowed till March 31 this year earlier.

.

🙂

.

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

INFLATION – “THE SILENT CREEPER” Final Part

Hello Friends here we come up with an extension of our previous blog, INFLATION

–  “THE SILENT CREEPER” Part 2.

.

INFLATION – “THE SILENT CREEPER” Part 3

In previous Blog we had touched upon the possible Measures to check inflation.

.

Now in this part we would look into other concerns in Indian economy regarding the parameters to check inflation.

.

Concerns in Indian Economy Regarding Inflation :

.

Apart from reasons and measures to check inflation, other concern in Indian economy is the parameters to check inflation.

.

It is well known that India is the only country which considered WPI (Wholesale Price Index) while rest of the countries measured CPI (Consumer Price Index).

.

WPI consists of 435 goods over 1993-94, as base year in which the weightage of food items is only 16%, which has large weightage of consumer spending in India.

.

Though WPI in India is still in single digit, if we consider CPI it is already in double digit due to dearer farm articles and their higher weightage in measures.

.

In CPI, food articles have 50% weightage.

Hence there is a wide gap between the weightage of food articles of WPI and CPI, which are unable to give the clear pictures.

.

Furthermore, 2/3rd of the price quotations used to calculate the WPI are sourced from only four metros.

Hence to get the real picture, area should be widened.

.

comparison between food inflation and WPI from January, 2008 to October, 2009.

.

In the above chart, it is a comparison between food inflation and WPI from January, 2008 to October, 2009.

.

Line chart is representing WPI monthly inflation whereas bar chart is indicating food article inflation.

.

It appears that food article inflation is on continuous rise while WPI monthly inflation saw both side movements.

.

It has started its northward journey in the month of March-April and it is still continued.

.

Arrival of kharif crop is less likely to cool it as we are expecting 18% decline in kharif crop.

.

Hence downside will be limited, rather it may move in a range with upside bias.

.

The words of future RBI (Reserve Bank of India) has revised its outlook for inflation and expecting that it should be between the range of 5% to 6-6.5% for the year ending March 2010.

.

There is a fear in the economy that the real impact of almost 18% drop in kharif rice production is to reflect in inflation.

.

It would occur when kharif produce; rice, pulses, oilseeds and cereals would start coming in the market.

.

With witnessing favourable weather conditions, economy is expecting strong rabi produce, which may cool off inflation of food articles to some extent.

However, we cannot rule out the possibility adverse weather.

.

Ultimately what matters is final produce and yield.

Government has to take care of everything like, demand –supply equilibrium, money supply, distribution etc.

.

Otherwise it will become nightmare for “aam admi” and hamper the economic growth.

.

🙂

.

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