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January 17, 2009 |
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Commodity Online
Recessionary trend continue to impact world markets and Wall Street will greet Barack Obama next week with high hopes for a fresh start, but a deluge of corporate earnings reports pointing to a deepening recession could spoil the welcome party.
Turn over in India’s commodity exchanges surged by 35.62% to Rs 3,684,795 crore in the current fiscal till December with bullion contributing the highest turn over. Futures trading in gold, silver and crude oil helped cover up the major fall witnessed in agri-commodities. The turnover from farm commodities declined 31.63 per cent to Rs 4,41,287 crore during the first nine months of the current fiscal as compared to Rs 6,45,453 crore in the same period previous year.
Inflation continued its declining trend for the tenth straight week, with the annual Wholesale Price Index-based inflation rising to 5.24 per cent for the week-ended January 3, down from the previous week’s annual rise of 5.91 per cent, according to data released by the Government on Thursday.
Precious Metals
Gold prices tumbled in the last week, as rising dollar against major currencies and falling crude oil prices eroded demand for yellow metal. Spot gold touched a low of $801/oz after it failed to sustain above $850/oz range. Physical demand for gold came down after recent rally in gold. Gold imports by India, the world’s biggest buyer, fell to about 3 metric tons from 16 tons a year earlier, for a second straight month in December, according to the Bombay Bullion Association Ltd. Gold hit a 5-week low following the rising dollar which headed to the upside against the euro and hit a five-week high of 1.3026.
Towards the end of trading week, prices managed to bounce back, as a string of bad economic news with some investors buying gold as a safe haven against economic troubles supported gold. The Dollar continues to gain in strength against the Euro for past few weeks with resistance for the Dollar Index seen at 86.80 levels whereas support is seen at 81.0.
Also, the ECB President signaled that there would not by further rate cuts next month, which lent support to the Euro after it witnessed a sharp fall on Thursday. As the global stock markets are also not showing any signs of improvement, investment sentiments the world over is taking a beating.
Silver continues to track both gold & base metals, as partly as an investment class and partly because it being an industrial metal, correlated with base metal prices which have also fallen over the past few days. Physical demand in coming months shall play a crucial role in supporting bullion prices on the downside. Spot Gold continues to meet with resistance around $840- $860 levels, whereas crucial support is seen at $800/oz, closing below that may lead to further fall in prices.
Rubber
Rubber witnessed a steady to weak trend during the weak. On Monday, markets opened better at Rs 73 per kg for sheet rubber. On Friday, market improved on covering purchases apart from taking cues from better closing in TOCOM Futures. Rubber prices were ruling at Rs 71 per kg as consuming industries didn’t make major purchases. RSS 4 weakened at its February futures to Rs 73.21 (73.96), March to Rs 74.21 (74.87), April to Rs 75.26 (76.36) and May to Rs 77 (77.10) a kg on National Multi Commodity Exchange (NMCE).
Better performance at TOCOM was attributed to short covering amidst gains in oil futures and Yen’s decline against dollar. Meanwhile, the prediction that RSS 4 prices may drop to Rs 15 a kg by President of All India Rubber Industries Association (AIRIA) has resulted in the growers becoming panicky although International Rubber Study Group (IRSG) has forecast a modest consumption decline of 5% in 2009 stating that any prediction of rubber prices in a crisis situation is difficult to make.
Crude Oil
Crude Oil prices in the last week traded lower, as continuous rising inventory and weak demand for energy products put pressure on oil prices. Crude inventories at Cushing, Oklahoma, the delivery point for crude futures traded on the New York Mercantile Exchange (NYMEX), rose 2.5% to 33 million barrels. Inventory at Cushing has increased by 20% in past four weeks and it is approaching the storage capacity of about 34Mbbl, putting downward pressure on near month oil prices.
A deepening recession in the U.S., reflected in a steeper-than-expected drop in retail sales in December also pulled energy futures lower. Inventory data has once again shown that demand for oil and oil product is falling in the world’s largest oil consuming nation. Total product demand in the U.S. averaged 19.7Mbbl over past four weeks, down by 4% compared with the same period last year. Crude oil market is trading in Contango, where near month contract is trading at discount to next month contract. This gap indicates that oil prices can rebound in future, so instead of selling oil at depressed prices amidst sluggish demand, companies and investors are hoarding oil for future sales. Any rise in oil prices can be short lived, as rising inventory levels throughout the major industrialized nations and heavy demand destruction is likely to dominate sentiments in the market. In the short term, Crude Oil prices are likely to face resistance around $48 levels and on the downside good support is seen at $35.
Base metals
With the annual round of commodity index re-balancing operations now drawing to a close, the metals complex is likely to be dictated by fundamental drivers in the short term, such as constantly rising inventories and the lack of Chinese physical interest until at least early February. Far from moderating, the continued deterioration in the global macro statistics is lending more credence to the argument that another leg lower in most financial and commodity markets could be coming.
There are also continuing concerns that the corporate reporting season will pour an increasing torrent of negativity into the marketplace and the lack of real physical demand for metals, it is hard to make a positive case for base metals in the short term. Overall, the bearish sentiments are not going away so soon, so any rally in the base metals is likely to be short-lived unless we see a substantial change in the overall global economic scenario.
Pepper
Domestic pepper market witnessed lacklasture trade during the week although there was buying interest in upcountry markets but it did not lead to rise in prices in the terminal markets which remained unchanged. However, Pepper futures bounced back on Friday with prices of all the contracts moving up significantly on tight supply and good demand. January contract increased by Rs 146 to Rs 11,811 on the NCDEX. February and March went up by Rs 120 and Rs 109, respectively, to Rs 11,866 and Rs 11,916 a quintal.
During the mid-week, the prices at the benchmark Kochi markets was offered at Rs. 11800 per quintal for garbled variety and Rs. 11300 per quintal for ungarbled variety. Overall black pepper activity at the physical counter was steady to firm. Uncertainty in transport strike limited activity while the supplied are not affected. However the sellers are unwilling to part with the inventories. Good underlying buying interest amidst tight supply is likely to keep the prices firm during the days ahead. With the truckers strike over, more demand is expected to come from upcountry markets while the trend is likely to be range bound to firm.
Refined Soybean Oil
Refined soybean oil futures moved lower to Rs 472/10 Kg from Rs.500 levels (down more than 5%) during the last week on profit booking after sharp rally in previous week. Higher imported edible oil in the month of December provided support to bears in the market. According to Solvent Extractor’s Association of India, total edible oil imports in the month of December, 2008 increased to 719,125 metric tonnes, up nearly 160% as compared to last year during the same period.
Import of crude soybean oil increased to 60899 metric tonnes, up by 712% as compared to last year during the same period (7,500 metric tonnes in Dec 2007). Higher global production estimates of soybean and other oilseeds are in favour of bears over the long term. Refined soybean oil prices are expected to trade in a bearish note on above mentioned fundamentals. In the coming week, Feb Refined soybean oil futures are likely to face support at 463/455 and resistance is seen at 485/493 levels.
Jeera
Jeera prices are being quoted at higher rates of Rs.11,000/qtl. to Rs. 11300/qtl. since past few days on account of better offtakes by the domestic and some buying by the overseas buyers. There are lower stocks of jeera with the exchanges and the stockists which is providing support to the prices. Prices in the futures surged from the lows of Rs.10,085/qtl and touched a high of Rs.11,324/qtl. Further, there are reports that the crop for the year 2009 is expected to be lower due to unfavorable weather conditions prevailing in the growing regions of Rajasthan and Gujarat. Jeera February contract has strong support at Rs.11,000/qtl and thereafter at Rs.10,640/qtl. Resistance may be witnessed at Rs.11,290/qtl. and thereafter at Rs.11,580/qtl.
Sugar
Sugar witnessed steady trend due to good demand from retailers and adequate supply from mills. Sellers have adequate inventories due to lower production estimation. Sugar production in the country in 2009 has been revised lower to 18.8 MMt as compared to the earlier estimation of 20 MMt, Last year, it was 26.3 MMt. However, the government has raised sugar supplies in the March quarter and tightens exports regulation to curb the prices. But, expectation that the government may allow duty-free imports of raw sugar restricted the upside.
As well, the average sugar recovery is expected to slip upto 0.7% this year due to an unexpected delay in maturing of crop. Total availability for the month of January is 1.7 MMt and 5 MMt for March quarter. In Maharashtra, sugar production has declined by 6.9% at 2.7 MMt as of January 13. Besides, NCDEX sugar M stocks were steady at 1948 metric tonnes in their warehouses as of Jan. 14. Sugar prices are supported upto medium term on lower production estimates.
(With analytical inputs from Angel Commodities, Mumbai)
To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold to find out more. You may Sell Gold to us too.
Recessionary trend continue to impact world markets and Wall Street will greet Barack Obama next week with high hopes for a fresh start, but a deluge of corporate earnings reports pointing to a deepening recession could spoil the welcome party.
Turn over in India’s commodity exchanges surged by 35.62% to Rs 3,684,795 crore in the current fiscal till December with bullion contributing the highest turn over. Futures trading in gold, silver and crude oil helped cover up the major fall witnessed in agri-commodities. The turnover from farm commodities declined 31.63 per cent to Rs 4,41,287 crore during the first nine months of the current fiscal as compared to Rs 6,45,453 crore in the same period previous year.
Inflation continued its declining trend for the tenth straight week, with the annual Wholesale Price Index-based inflation rising to 5.24 per cent for the week-ended January 3, down from the previous week’s annual rise of 5.91 per cent, according to data released by the Government on Thursday.
Precious Metals
Gold prices tumbled in the last week, as rising dollar against major currencies and falling crude oil prices eroded demand for yellow metal. Spot gold touched a low of $801/oz after it failed to sustain above $850/oz range. Physical demand for gold came down after recent rally in gold. Gold imports by India, the world’s biggest buyer, fell to about 3 metric tons from 16 tons a year earlier, for a second straight month in December, according to the Bombay Bullion Association Ltd. Gold hit a 5-week low following the rising dollar which headed to the upside against the euro and hit a five-week high of 1.3026.
Towards the end of trading week, prices managed to bounce back, as a string of bad economic news with some investors buying gold as a safe haven against economic troubles supported gold. The Dollar continues to gain in strength against the Euro for past few weeks with resistance for the Dollar Index seen at 86.80 levels whereas support is seen at 81.0.
Also, the ECB President signaled that there would not by further rate cuts next month, which lent support to the Euro after it witnessed a sharp fall on Thursday. As the global stock markets are also not showing any signs of improvement, investment sentiments the world over is taking a beating.
Silver continues to track both gold & base metals, as partly as an investment class and partly because it being an industrial metal, correlated with base metal prices which have also fallen over the past few days. Physical demand in coming months shall play a crucial role in supporting bullion prices on the downside. Spot Gold continues to meet with resistance around $840- $860 levels, whereas crucial support is seen at $800/oz, closing below that may lead to further fall in prices.
Rubber
Rubber witnessed a steady to weak trend during the weak. On Monday, markets opened better at Rs 73 per kg for sheet rubber. On Friday, market improved on covering purchases apart from taking cues from better closing in TOCOM Futures. Rubber prices were ruling at Rs 71 per kg as consuming industries didn’t make major purchases. RSS 4 weakened at its February futures to Rs 73.21 (73.96), March to Rs 74.21 (74.87), April to Rs 75.26 (76.36) and May to Rs 77 (77.10) a kg on National Multi Commodity Exchange (NMCE).
Better performance at TOCOM was attributed to short covering amidst gains in oil futures and Yen’s decline against dollar. Meanwhile, the prediction that RSS 4 prices may drop to Rs 15 a kg by President of All India Rubber Industries Association (AIRIA) has resulted in the growers becoming panicky although International Rubber Study Group (IRSG) has forecast a modest consumption decline of 5% in 2009 stating that any prediction of rubber prices in a crisis situation is difficult to make.
Crude Oil
Crude Oil prices in the last week traded lower, as continuous rising inventory and weak demand for energy products put pressure on oil prices. Crude inventories at Cushing, Oklahoma, the delivery point for crude futures traded on the New York Mercantile Exchange (NYMEX), rose 2.5% to 33 million barrels. Inventory at Cushing has increased by 20% in past four weeks and it is approaching the storage capacity of about 34Mbbl, putting downward pressure on near month oil prices.
A deepening recession in the U.S., reflected in a steeper-than-expected drop in retail sales in December also pulled energy futures lower. Inventory data has once again shown that demand for oil and oil product is falling in the world’s largest oil consuming nation. Total product demand in the U.S. averaged 19.7Mbbl over past four weeks, down by 4% compared with the same period last year. Crude oil market is trading in Contango, where near month contract is trading at discount to next month contract. This gap indicates that oil prices can rebound in future, so instead of selling oil at depressed prices amidst sluggish demand, companies and investors are hoarding oil for future sales. Any rise in oil prices can be short lived, as rising inventory levels throughout the major industrialized nations and heavy demand destruction is likely to dominate sentiments in the market. In the short term, Crude Oil prices are likely to face resistance around $48 levels and on the downside good support is seen at $35.
Base metals
With the annual round of commodity index re-balancing operations now drawing to a close, the metals complex is likely to be dictated by fundamental drivers in the short term, such as constantly rising inventories and the lack of Chinese physical interest until at least early February. Far from moderating, the continued deterioration in the global macro statistics is lending more credence to the argument that another leg lower in most financial and commodity markets could be coming.
There are also continuing concerns that the corporate reporting season will pour an increasing torrent of negativity into the marketplace and the lack of real physical demand for metals, it is hard to make a positive case for base metals in the short term. Overall, the bearish sentiments are not going away so soon, so any rally in the base metals is likely to be short-lived unless we see a substantial change in the overall global economic scenario.
Pepper
Domestic pepper market witnessed lacklasture trade during the week although there was buying interest in upcountry markets but it did not lead to rise in prices in the terminal markets which remained unchanged. However, Pepper futures bounced back on Friday with prices of all the contracts moving up significantly on tight supply and good demand. January contract increased by Rs 146 to Rs 11,811 on the NCDEX. February and March went up by Rs 120 and Rs 109, respectively, to Rs 11,866 and Rs 11,916 a quintal.
During the mid-week, the prices at the benchmark Kochi markets was offered at Rs. 11800 per quintal for garbled variety and Rs. 11300 per quintal for ungarbled variety. Overall black pepper activity at the physical counter was steady to firm. Uncertainty in transport strike limited activity while the supplied are not affected. However the sellers are unwilling to part with the inventories. Good underlying buying interest amidst tight supply is likely to keep the prices firm during the days ahead. With the truckers strike over, more demand is expected to come from upcountry markets while the trend is likely to be range bound to firm.
Refined Soybean Oil
Refined soybean oil futures moved lower to Rs 472/10 Kg from Rs.500 levels (down more than 5%) during the last week on profit booking after sharp rally in previous week. Higher imported edible oil in the month of December provided support to bears in the market. According to Solvent Extractor’s Association of India, total edible oil imports in the month of December, 2008 increased to 719,125 metric tonnes, up nearly 160% as compared to last year during the same period.
Import of crude soybean oil increased to 60899 metric tonnes, up by 712% as compared to last year during the same period (7,500 metric tonnes in Dec 2007). Higher global production estimates of soybean and other oilseeds are in favour of bears over the long term. Refined soybean oil prices are expected to trade in a bearish note on above mentioned fundamentals. In the coming week, Feb Refined soybean oil futures are likely to face support at 463/455 and resistance is seen at 485/493 levels.
Jeera
Jeera prices are being quoted at higher rates of Rs.11,000/qtl. to Rs. 11300/qtl. since past few days on account of better offtakes by the domestic and some buying by the overseas buyers. There are lower stocks of jeera with the exchanges and the stockists which is providing support to the prices. Prices in the futures surged from the lows of Rs.10,085/qtl and touched a high of Rs.11,324/qtl. Further, there are reports that the crop for the year 2009 is expected to be lower due to unfavorable weather conditions prevailing in the growing regions of Rajasthan and Gujarat. Jeera February contract has strong support at Rs.11,000/qtl and thereafter at Rs.10,640/qtl. Resistance may be witnessed at Rs.11,290/qtl. and thereafter at Rs.11,580/qtl.
Sugar
Sugar witnessed steady trend due to good demand from retailers and adequate supply from mills. Sellers have adequate inventories due to lower production estimation. Sugar production in the country in 2009 has been revised lower to 18.8 MMt as compared to the earlier estimation of 20 MMt, Last year, it was 26.3 MMt. However, the government has raised sugar supplies in the March quarter and tightens exports regulation to curb the prices. But, expectation that the government may allow duty-free imports of raw sugar restricted the upside.
As well, the average sugar recovery is expected to slip upto 0.7% this year due to an unexpected delay in maturing of crop. Total availability for the month of January is 1.7 MMt and 5 MMt for March quarter. In Maharashtra, sugar production has declined by 6.9% at 2.7 MMt as of January 13. Besides, NCDEX sugar M stocks were steady at 1948 metric tonnes in their warehouses as of Jan. 14. Sugar prices are supported upto medium term on lower production estimates.
(With analytical inputs from Angel Commodities, Mumbai)
To buy Hallmarked 999.9 Pure Swiss Gold Bars, Gold Bullion, Gold Ingots & 916 Gold Coins in Singapore or convert your 916 Physical Gold to physical 999.9 Pure Swiss Gold Bars, Click on Buy Gold to find out more. You may Sell Gold to us too.
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