India's inflation is set to zoom with the announcement by the
Manmohan Singh government on the freeing up of petrol and diesel
prices. The announcement has raised hopes of a further decontrol of
the oil sector over the next few years, which could help balance
public finances and let private companies challenge state-run
firms' decades-old retailing monopoly.
Prices of cooking gas and kerosene, the biggest component of
subsidies, were raised lower than recommended by a panel of
experts, to avoid burdening poor people and ward off opposition
within the coalition.
Meanwhile, India's annual monsoon rains, key to farm output and
economic growth, are expected to be better than previously
forecast, raising prospects of good harvests and possibly helping
cool double-digit food inflation. Monsoon rains, which deliver
75-90 percent of India's rainfall, are expected to be at 102
percent of the long-period average for the June-September season,
the weather office and government officials said on Friday.
Mangalore key port for coffee exports
Mangalore has emerged the key port for export of coffee. If reports
from exporters turn out to be true, it has become the leading port
for the commodity's exports this fiscal. With Maersk stopping its
direct line service to Chennai from the US east coast, the
Karnataka port has turned out to be the favourite of the exporter.
"C/offee is exported in green and soluble or instant forms. Chennai
is the port for export of instant," said Mr Milan Shah, an exporter
based in Bangalore.
FMC may allow sugar futures by October
The commodity market regulator, the Forward Markets Commission (
) plans to allow sugar futures trading by October. The trading in
the commodity is banned till September 31 due to a rapid rise in
the commodity's prices in the recent past.
"Earlier, we had planned to wait till September to have a better
view about crop prospects. However, as the crop acreage is higher
this year with a better production estimate, we will not extend the
ban beyond September 31," B C Khatua, chairman, FMC, said on the
sidelines of a consumer awareness programme organised by the
National Multi Commodity Exchange here.(
Europe crisis hits India coffee exports
The impact of Europe's economic crisis on India's coffee exports
has started to show, in the form of weak demand for the robusta
parchment variety. Major exporters have expressed concern that
despite the spurt in robusta and arabica prices on the London and
New York coffee exchanges over the last month, sales have not
picked up to the anticipated level.
India produces 15,000-20,000 tonnes of robusta parchment, all of
which is exported. While the latest crop was expected to be above
25,000 tonnes, growers said there were feeble inquiries for the
same. The debt-hit countries -
Greece, Italy, Spain and Portugal - account for 34 per cent of
India's coffee exports.
MCX gets approval for IPO
India's largest commodity bourse, Multi Commodity Exchange (
), has got unconditional approval from regulator Forward Market
) to launch an initial public offer (
On April 22, FMC had granted a no-objection certificate (
) to MCX for its proposed IPO, subject to the condition that the
exchange sells a 10 per cent stake to public sector firms and
agri-co-operatives.However, the exchange could not find any buyers
for its offer last month and hence approached the FMC for exemption
of this condition.
NSEL to launch 15 commoidities under E-Series
National Spot Exchange Ltd. (
) has announced its plan to launch 15 commodities under E-Series
for developing a full-fledged "cash" or "investment" segment in
commodities. This is happening for the first time in the history of
the commodity market in India, according to an NSEL release.
Commodity exchanges are generally known for providing a hedge
instrument for protection against price risks. But they do not
provide an instrument for investment where retail investors can
park their funds with a view to enjoying price appreciation. In
order to cater to this need, the market has to develop and launch
investment products in commodities. This will give birth to a niche
segment of commodity market investors, who wish to diversify their
portfolio by parking part of their surplus funds in commodities,
the release said
BSE Sensex steady
The benchmark index of the Bombay Stock Exchange (
), the Sensex, closed barely changed for the week, but dropped 0.9%
on Friday, in tandem with world markets on worries of global
economic recovery and expectations of tighter financial regulation
ahead of a summit of the Group of 20 nations in Toronto.
However, losses were capped as investors cheered a new gas
supply agreement between the recently reconciled Ambani brothers
and as the government approved market-determined petrol prices. The
30-share BSE Index declined for the second session as it closed
down 0.88% or 155.71 points, to finish at 17,574.53.
Spot Gold prices declined in the first half of the week but wiped
out major losses towards the end of the week as risk aversion in
the financial markets increased demand for the yellow metal. Spot
gold prices touched a record high of $1265/oz in the previous week.
China's indication to end its currency peg against the dollar led
to risk appetite in the financial markets in the initial part of
the week. But the positive sentiments faded away on concerns over
the European crisis. Credit ratings agency, Standard and Poor's,
slashed its economic growth forecast for Spain to the average of
0.7 percent a year through 2016 in the last week. The Federal
Reserve left interest rates unchanged below 0.25% last week.
The FOMC committee said that the financial conditions have
become less supportive of economic growth on balance, largely
reflecting developments abroad. Economic data from the US since the
last week has been very poor indicating signs of a fragile
recovery. Gold prices have gained around 14% on a year-to-date
basis. Even the major central banks of the world are adding gold to
their reserves to stay insulated in times of financial uncertainty.
The Central Bank of Russia bought another 26.6 tonnes of gold over
the past quarter, the World Gold Council reported. The official
gold holdings of the central bank now accounts to 668.6 tonnes or
5.5% of its total reserves.
The Philippines central bank bought 9.5 tonnes of gold, taking
its gold holdings to 164.7 tonnes or 13.7% of total reserves. For
the coming week, Gold prices will continue to gain in the medium
term as the Euro-zone concerns still persist. Fears over the
sovereign debt crisis in the Euro-zone will continue to haunt the
investor sentiments. Moreover, economic data released from the US
is indicating signs of a fragile recovery in the world's largest
economy. This will help the gold prices to gain as the yellow metal
is treated as a traditional safe-haven investment in times of
financial uncertainty. For the coming week, Spot gold has a strong
support at $1222/$1205 levels and resistance at $1270/$1290 levels.
MCX August Gold has a strong support at Rs.18500/Rs.18440 levels
and resistance at Rs.19200/Rs.19300 levels.
Base metal prices gained on the LME in the later part of the week
on the back of the weakness in the US dollar index (
). The weakness in the DX made the metal prices more attractive for
holders of other currencies. Copper prices gained more than 2.5% on
the LME last week. Weakness in the DX coupled with positive data
from Japan helped the red metal prices to gain. Japan's output of
rolled copper product increased by 50.4 percent to 72,627 tonnes
from a year earlier. Another factor that supported copper prices
was the declining inventories at the LME warehouse. Inventories
reached 454,250 tonnes, the lowest level in this year. We expect
the DX to strengthen as risk aversion in the global financial
markets will lead to higher demand. The G20 summit which begins on
Saturday is a close watch as the financial ministers of the major
economies would discuss on economic and financial reforms. Metal
prices may wipe out gains and come under pressure taking cues from
the movement in the DX. MCX June Copper shall find a strong support
at 295/290 levels and resistance at 313/318 levels for the coming
Crude oil prices came under pressure last week after the US energy
department reported that crude stockpiles rose 2.02 million barrels
to 365.1 million in the week ended June 18. Concern over rising
inventories in the US is denting the outlook for crude oil.
Moreover, the International Energy Agency (
) said in its report that growth in world oil demand will slow in
the next five years as the pace of Chinese consumption moderates.
Consumption will climb 1 percent to 91.93 million barrels a day in
2015, down from 1.5 percent growth in 2010. The National Hurricane
center said on Thursday that Hurricane Celia strengthened to a
Category 5 storm but it did not pose a threat to land. Crude oil
prices will trade with a negative bias taking cues from the
movement in the DX. The stronger DX will keep the crude oil prices
under check. But, any news from the hurricane front could provide
support to the prices. MCX July Contract shall find a strong
support at 3450/3400 levels and resistance at 3680/3730 levels for
the coming week. NYMEX August Crude has support around $73/$70
levels whereas resistance is seen around $80.50/$84.20 levels.
Last week, NCDEX July Soybean prices opened the week at Rs
1907/quintal and touched a high of Rs 1916/quintal on first day of
the week aftermath it fell slightly on account of weak fundamentals
of oilseeds (domestic as well as global). But found good support at
Rs 1892/quintal and finally closed at Rs 1908/quintal with a gains
of Rs 4/quintal as compared to previous week's close of Rs
1988/quintal. Prices moved in a narrow range of Rs 1892-1916 per
quintal in the last week on lack of fresh fundamentals. Higher
carry-over soybean stocks this year as compared to last year and
progress of monsoon. In the coming weeks, higher global soybean
production estimate this year as compared to last year and poor
export demand of domestic soy-meal may drag price down. The Solvent
Extractors' Association of India has compiled data of oil meals
export for the first two months of financial year i.e. April and
May 2010, it is reduced to 3.78 lakh tonnes as compared to 4.17
lakh tonnes in April 2009 i.e. down by 9%. It is only due to lower
crushing and disparity. NCDEX July contract shall find a strong
support at 1870/1850 levels and resistance at 1925/1960 levels for
the coming week.
Black pepper prices surged in the last week on account of thin
arrivals i.e. 30-40 metric tonnes. There are reports that the
Indonesian crop is expected to be lower this year as compared to
last year. Demand from the local stockists is present in good
quantity in anticipation of higher prices in near term. Prices at
the spot market surged by 4.53 percent and touched a high of Rs.
17, 144/qtl. In the coming week, prices are expected to be firm.
NCDEX July contract shall find a strong support at 16750/16300
levels and resistance at 17800/18100 levels for the coming
Physical rubber prices have zoomed to Rs 177 per kg for RSS 4 grade
thereby recording an all-time high supported by bullish cues from
global markets. Natural rubber prices gain last week on fears that
heavy rains will lhurt output in Thailand, the largest producer of
A monsoon is dumping heavy rains on many parts of Thailand, the
world's largest NR producer, and rains are not expected to
dissipate soon. NR for November delivery increased by 4.3 yen to
285.2 yen/kilogram ($3,184/metric ton) before settling at 284.7 yen
on the Tokyo Commodity Exchange.
India's spot rubber prices zoomed from Rs 170 per kg levels to
Rs 177 even as supplies were limited at higher prices.NMCE July
contract zoomed from Rs 168.48 to Rs 177.85 while August contract
rose from Rs 163.50 to Rs 170.50. TOCOM June futures contract
expired higher indicating growth in global demand,
Analysts said that China, the world's biggest importer of
natural rubber, is expected to increase its imports of NR to 1.68
million tons this year, up from 1.59 million in 2009. Inventory
levels there are said to be "worse than expected," Bloomberg
reported. As a result, analysts expect rubber prices to potentially
increase 26% next year.
In the near term, NMCE July has support at Rs 170 and August has
support at Rs 168, the undertone will continue to be bullish with
profit taking likely to weaken prices.
After exhibiting weakness for some time, chana prices have gained
last week thanks to rising spot market demand and squeezed
supplies. Production of chana in 2009-10 is estimated to be 7.38 mn
tonnes as against 7.05 mn tonnes last year. Monsoon months favour
chana as vegetable supplies are affected due to rains raising the
demand for pulses such as chana and its cheaper substitute yellow
peas. Chana has a major bearish factor in higher output hopes
although demand in spot markets from dal millers is gaining
momenturm. The July Contract at NCDEX rose from rs 2165 to Rs 2220
while August contract rose from Rs 2207 to Rs 2280 suggesting near
term demand for chana is good and spot market demand is supportive
(With analytical inputs from Angel Commodities, Mumbai)