Global commodity prices have begun to soften as China's economic
juggernaut slows. The prices of steel, zinc and aluminium have
fallen in the past three months. China's manufacturing sector
growth rate has dropped to February 2009 levels, when global
markets had just bottomed out after the Lehman impact. While
absolute price levels still remain above the year-ago levels, the
softening of commodity prices is expected to impact Indian
companies in coming quarters.
FMC to join band of independent regulators
Will get powers to levy fines and penalties and allow options
trading in commodities. The commodities futures market is poised to
get an independent regulator. The government has decided to
designate the Forward Markets Commission (
) as the regulator for this market, according to a top government
official. This market is now bigger than its equities
At present, FMC is part of the consumer affairs department,
which will soon approach the Union Cabinet for approval to
introduce a Bill to amend the Forward Contracts Regulation Act (
) in a way that gives statutory backing to FMC.
Raw-Sugar futures slump
Raw-sugar futures declined, capping the biggest weekly drop since
late May, on concern that India, the world's second-biggest
producer, may boost exports as rain aids its cane crop.
India may be able to export about 1 million metric tons in the
year starting in October, Macquarie Group Ltd. said in a report.
India's monsoon, the main source of irrigation for the nation's 235
million farmers, was 16 percent above average last week, the
meteorological department said yesterday.
Petroleum Ministry to support divestment in ONGC,
The petroleum ministry will support disinvestment in two
state-owned oil majors ONGC and Indian Oil Corporation only after
there is clarity on the subsidy sharing formula even as the
ministry is examining a proposal by the disinvestment
"IOC is bleeding due to the heavy subsidy burden and ONGC is
also not sure about its contribution as upstream discount," an oil
ministry official said, adding that the ministry is not in favour
of disinvestment at this stage
FM gives more leeway to states on GST
The Centre will rework the draft constitutional amendment as it
bends backwards to accommodate states' concerns to ensure a timely
rollout of the country's most ambitious indirect tax reform, goods
and service tax (
), from the next financial year.
Cutting across party lines, states have objected to the
constitutional amendments suggested by the Centre to facilitate
GST, which will replace a plethora of indirect taxes, saying that
they impinged on their fiscal autonomy
India to invest in model farm in Zambia
Indian commercial farmers plan to invest in a new model farm in
Zambia, according to the government, which seeks to diversify the
economy by promoting agriculture as an alternative to copper and
Zambia's ministry of foreign affairs said on Thursday that
Indian farmers were interested in investing in the 155,000-hectare
Nansanga model farm bloc, where the government had built roads and
dams to attract investors to grow export crops.
"Indian commercial farmers, mostly specialising in sugar
production, are expected in Zambia in December 2010 to explore
prospects of investing in Nansanga farm bloc," the ministry of
foreign affairs said in a statement.
For some time gold was hovering below $1200 per ounce as its safe
haven demand seemed to weaken but towards weekend gold rebounded
thanks to US data showed pay rolls fell for a 2nd straight month
which eventually led dollar lower.
Spot gold rose to $1210.85 as against Thursday's close of 1193
while US Gold for December delivery rose close to $10 at $1209.20
levels. The US dollar approached 15 year low against Euro and
stocks fell sharply. Traditionally gold and dollar share an inverse
relationship with weakness in gold lifting gold appeal and making
dollar priced commodities cheaper for holders of other
Other factors that support gold demand include China's decision
to open up its gold trade and gains in physical demand for gold in
India. Stronger rupee cushioned local buyers from the impact of the
rising dollar prices. Festival season demand has begun in August
ahead of Raksha Bandhan which will continue into Dhanteras in
MCX October Gold fell sharply by Rs 408 to end at Rs 17,937 with
support levels at 17850, 17550
US copper hit a three-month high of $3.4105 on positive market
sentiments bolstered ahead of US unemployment data but fell back
towards weekend to $3.3430 per pound on lesser than expected US
unemployment data raising concerns of economic recovery.
Copper losses were offset to an extent by market perception of
stronger near term demand
Copper inventories at Shanghai Futures Exchange rose 2% to
106,368 tonnes this week. Chile's Codelco expects China copper
demand to grow 8% this year from last year. Comex Copper
inventories fall to 99,970 short ones. LME Copper down by $30 at
$7370. India's MCX Aug Crude contract rose to 3-month high of
344.90 last week but weakened to Rs 338. The contract gained Rs
6.75 for the week with support at 332 levels.
Crude oil prices weakened after a rally last week on weaker than
forecast growth in US company payrolls and raising concerns of
slowing of US economy-biggest consumer of energy. US Crude Oil for
Sept delivery fell to $80.70. An August 4 report showed that US
fuel supplies increased last week as demand dropped. US fuel
consumption dropped 2.5% to 19.3 mn barrels a day. Brent Crude for
September delivery at ICE Europe Futures fell to $80.16.
Meanwhile, cooling down of the Chinese economy is sure to impact
oil demand with demand for oil products falling to 4% from 14% in
the first half of 2010. Crude oil doesn't have any favourable
factors to stage another upside rally although rising equities and
weaker dollar helped in recent times. OPEC is expected to reduce
oil shipments while Euro-dollar movements will have its impact on
prices next week.
Support levels for US crude at $78, $80; MCX August crude is
down Rs 66 at Rs 3654
Rubber prices continue to be bullish on weather concerns in major
producing nations of Thailand and Indonesia hampering supplies and
emerging market demand from automobile sector pushing up prices.
TOCOM January contract gained 3.5% on the week on bullish
India's spot rubber prices rose to Rs 189 from Rs 184 for RSS 4
grade while NMCE August contract rose from 186.40 to Rs 190.50
while September contract rose from 173.12 to Rs 176.95.
Production of natural rubber in India increased close to 15 per
cent to 57,500 tonnes in July against 50,250 tonnes in the same
period a year ago. Although on a year-on-year basis, consumption
has remained more or less stable, it was 35 per cent more than
production in July. Consumption for the month was 77,500
The production-consumption difference continued to be wide due
to the lower tapping on account of the rains and decreased
Imports fell by half to 14,906 tonnes (29,702 tonnes) in July
mainly on account of the high international prices. While the gap
between domestic and international prices widened to Rs 30, the
high customs duty was the principal reason why imports have
NMCE August has support at Rs 182 levels while September has
support at Rs 170 levels, bullish trend to continue.
Pepper futures and spot markets were hit by lacklustre overseas
demand and profit booking at higher levels. Indian parity continued
to rule high thereby weakening its demand in global markets.
Vietnam production has fallen by 5% in 2010 while India's pepper
exports fell by 5% to 4650 tonnes from April-June 2010. At Kochi
spot prices rose to 19900 levels only to fall back to Rs 19576
NCDEX August Futures fell sharply from Rs 19537 to Rs 19127
while September contract fell from Rs 19751 to Rs 19335.
Bargain buying and festival demand may prop up pepper with
squeeze in supplies providing additional support. NCDEX Aug has
support at Rs 19000, while September contract has support at Rs
Chana market has weakened on good rains in kharif pulses growing
regions and higher sowing which offset lower level buying of the
commodity. As on August 5th, area under kharif pulses stood at 8,84
mn hectares, compared to 7.654 mn hectares a year ago.
NCDEX August futures fell from Rs 2302 to Rs 2261 while
September contract fell from 2346 to Rs 2308 last week.
Chana may make gains on lower level buying but underlying
fundamentals continue to be bearish. NCDEX Aug has support at Rs
2300 while September has support at Rs 2250 with festival demand
India's oilseeds market received a boost from global cues and rise
in soymeal exports in July which recovered after eight months of
weakness. US soybean rose last week on increased demand from China
which threatened to erode stockpiles in USA.
US sold 336,000 metric tonnes of soybeans to China for delivery
after September, US Department of Agriculture said. Soybean for
September delivery at CBOT rose to $10.335 a bushel.
India's soybean futures spurted to fresh contract highs on
robust spot demand and gains in global crude palm oil prices.
Festival demand is supportive of oilseeds while rains in Madhya
Pradesh, Maharashtra, Andhra Pradesh, Rajasthan have dampened the
bullish sentiments to an extent.
NCDEX Sept Soybean rose from Rs 2093.5 to Rs 2144 while Sept
soyoil rose from Rs 496 to Rs 507.15 while NCDEX RM seed traded
steady at Rs 563 levels.
India is likely to have produced 6.41 mn tonnes of rapeseed oil
in 2009-10 as against 7.2 mn tonnes a year ago
NCDEX Sept Soybean has support at Rs 2100 levels, Soyoil at Rs