Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities

Content
News & Market Highlights Chana Sugar Oilseed Complex Spices Complex Kapas/Cotton

Research Team
Vedika Narvekar - Sr. Research Analyst vedika.narvekar@angelbroking.com (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Analyst anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132

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Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities
News in brief
Growers await monsoon for turmeric to gain colour
Turmeric farmers and traders are eagerly waiting for rainfall, so that prices of their produce may increase .For the past one month, turmeric prices are declining and exporters have not received good upcountry orders. This is due to the severe summer in North India and other places. Contrast to the traditional practice of getting North Indian orders during the month of May, this year only negligible number of orders were received by the exporters for the yellow spice, said R.K.V. Ravishankar, President, Erode Turmeric Merchants Association. He said that if it begins to rain, farmers will start sowing. This year for want of rain, no farmer has raised turmeric crop so far. This will result the price hike only during the next year. But this year the farmers will bring their accumulated stock with them to the market for sale. (Source: Business Line)

Market Highlights (% change)

Last Prev. day

as on May 14, 2013

WoW MoM YoY

Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz

19722 5995 54.81 94.21 1425

0.16 0.25 -0.05 -1.01 -0.68

-0.84 -0.80 1.37 -1.47 -1.68

8.11 8.44 0.52 3.20 -5.08

21.62 22.16 1.63 -0.60 -8.71

.Source: Reuters

Private buyers crowd out Government in wheat procurement process

The projected fall in yield of wheat in Punjab & Haryana has led to private traders purchasing substantial quantities of the crop from producers across India. In MP & Rajasthan too private traders are buying huge quantities of wheat, despite a bonus on the prices. Owing to rhis, the govt procurement target of 44 million tones for this year has been scaled down. As wheat prices may rise due to low arrivals & weak demand from exporters, it is prudent to purchase now, at a price slightly higher than the minimum support price. .(Source: Business Standard)

With futures trade resuming, area under guar may rise

The resumption of futures trade in guar complex may help boost guarseed acreage. It is seen rising this year as farmers in Rajasthan and Haryana, lured by higher returns, could be planting more. Trade sources expect guarseed acreage to at least double this year since the returns, even at the current price levels, were still attractive compared with other competing crops such as cotton and pulses. Guarseed is trading at around Rs 9,000 a quintal in the spot market, while guar gum is being traded at Rs 27,500. Guar gum, derived from guar seeds, is used as a thickening agent and additive in food products such as instant soups, ketch ups, ice creams and processed meat products. Guar gum is also used for applications in paper, textiles, ore floatation, explosives and fracking of oil and natural gas formations, with demand mainly coming from the US, Canada and China among others. On Tuesday, after a gap of 14 months, futures contracts in guar complex were re-launched on commodity exchanges - NCDEX and MCX. Lifting the ban late on Monday, the Forward Market Commission allowed trading in June, July and October contracts. (Source: Business Line)

Seed supply for kharif sowing sufficient except maize: Govt

Ahead of kharif sowing, the govt said Tuesday that availability of certified & quality seeds for planting of most summer crops are sufficient except for maize. Sowing of kharif (summer) crops begins with the onset of southwest monsoon from June. As against the likely requirement of about 140 lakh quintal, nearly 154 lakh quintal seeds are available. However, there is a slight shortfall in the availability of maize seed. (Source:
Financial Express)

India's April palm oil imports down, refiners rely on stocks

India's palm oil imports declined for a third straight month in April, a trade body said, as refiners in the world's biggest buyer used stocks and processed the new rapeseed harvest. But India, the world's largest importer of edible oils, is still on track to surpass last year's record purchases of 10 million tonnes of cooking oil as demand rises with a swelling population and increasing wealth. India's overseas purchases of palm oil hit an all-time high in January as leading producers Indonesia and Malaysia made their exports attractive by varying tax levels. But imports have been falling since then as India retaliated in the second half of January with a duty on crude palm oil purchases. In April, refined palm oil imports soared 84.5 percent to 253,489 tonnes, keeping the fall in overall palm oil imports limited to 30 percent at 498,960 tonnes, Mumbai trade body the Solvent Extractors' Association said on Tuesday. (Source:
Reuters)

Vegoil imports fall 29% in April on sluggish demand

Vegetable oil imports declined by over 29 per cent to 6.54 lakh tonnes in April as inventories piled up on sluggish local demand. The country had imported 9.25 lakh tonnes (lt) in the same month last year, according to the Solvent Extractors Association of India. The decline was led by the drop in palm oil imports. Imports slowed down in April as inventory was huge due to excessive purchase of vegetable oils from the global market in the last five months, the association Executive Director B.V. Mehta said in a statement. Normally, the surplus stock is kept to meet the demand for 30 days, but the inventory was for 45 days, he said. Currently, 18.20 lt of vegetable oils are lying at ports and in pipelines, according to the data. In April, refined palm oil imports doubled to 2.5 lt from 1.37 lt in March. Of total imports in April this year, edible oil comprised 6.41 lt, while 13,500 tonnes were non-edible oil. However, overall import of vegetable oils in the first half of the 2012-13 oil year (November-October) rose by 12 per cent to 52 lt (47 lt), data showed.
(Source: Business Line)

U.K. wheat imports top exports for 10th month after wet harvest
The U.K. was a net-importer of wheat for a 10th consecutive month in March after wet weather reduced domestic supplies last year, the Agriculture & Horticulture Development Board said. Wheat imports during the month were 251,176 metric tons, against exports of 32,947 tons, the Kenilworth, England-based AHDB said in an e-mailed report today, citing customs data. Since the 2012-13 marketing year began July 1, imports total 2.12 million tons, compared with exports of 580,908 tons. In the same period a year earlier, imports were 664,800 tons and exports were 2.23 million tons. The U.K. may be a net-importer of wheat this season for the first time in 11 years, the AHDB has said, after the second-wettest year on record in 2012 slashed the domestic harvest by 13 percent. The U.K. is the European Unions third-biggest wheat grower.
(source: Bloomberg)

Cheaper commodity prices signal relief for consumers

The prices of sugar, coffee, rubber and fertilizer prices have witnessed a sharp decrease in the past few months signalling a relief for consumers who have been hit by the double whammy of consistent rise in prices amidst negligible increase in real income. "The macro bull run in commodities that lasted almost a decade has come to end. A broad reversal (in prices) is there," says Kishore Narne, Head, Commodities, Motilal Oswal Securities While global sugar prices have fallen 10.2% in 2013, rates have dropped at a lower rate in the Indian market. Sugar prices are trading at Rs 3,067 for a 100 kg bag in the domestic market, a 6% drop in the current year. (Source: The Times Of India)

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Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities
Chana
Emergence of demand at lower levels is seen supporting an upside in the chana prices since last two sessions. However, higher supplies and record output expectations are capping sharp upward movement in the prices. Higher supplies of the new crop from the major producing states such as Madhya Pradesh, Rajasthan and Maharashtra was a major reason attributed to recent fall in chana prices. However, supplies are expected to slow down towards the end of the month. Also, stockists are build inventories at lower levels to meet the demand for the entire season. Thus, tracking seasonality pattern, chana prices may start recovering gradually from June onwards.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3368 3345 Prev day 0.95 0.66

as on May 14, 2013 % change WoW MoM -0.96 -7.15 -1.56 -7.90 YoY -21.75 -19.34

Chana Spot - NCDEX (Delhi) Chana- NCDEX May'13 Futures

Source: Reuters

Technical Chart - Chana

NCDEX June contract

Demand supply scenario

Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. The Centre has hiked the MSP by 14 per cent to Rs 3,200 a quintal for chana and as part of its strategy to encourage farmers to grow more pulses to reduce import dependence. Chana sowing in the current season is 5.65% higher at 95.17 lakh ha compared to previous year. Acreage is up in Rajasthan, Maharashtra, MP and AP at 15.7 lakh ha, 12.53 lakh ha, 32.99 lakh ha and 7.33 lakh ha respectively. According to third advance Estimates released on 3 May 2013, Total pulses output for 2012-13 season has been pegged at 18 mn tn, up 5.76% compared to previous year. The target for 2012-13 pulses crop output was set at 18.24 million tonne during the year. Out of the total pulses output, kharif output is estimated at 4.03% lower at 5.95 mn tn while rabi pulses output is pegged 9.25% higher at 12.05 mn tn compared with the final estimates of 2011-12. Chana output is pegged marginally lower to 8.49 mn tn compared with its second advance estimates of 8.57 million tonnes. However, chana output is expected to breach its 2010-11 record output of 8.2 mn tn in 2012-13. Erratic weather in M.P. lowered the yield.
rd

Source: Telequote

Technical Outlook
Contract Chana May Futures Unit Rs./qtl Support

valid for May 15, 2013 Resistance 3430-3460

3345-3375

Trade Scenario
According to IBIS, imports of chana in the month of February declined to 0.46 lakh metric tonnes compared to 2.31 lakh metric tonnes during the previous month. India imports Chana mainly from Australia and Canada and higher availability in these countries at comparatively cheaper rates is seen boosting imports of Chana to meet the domestic shortfall. In Australia, total chickpea production in 201213 is estimated to have increased to a record 713000 tones as compared with 485000.

Outlook
Chana prices are expected to remain firm in the early part of the session on account of robust buying by the stockiest at lower levels. However, sharp upside may be capped on account of higher arrivals. Seasonal pattern in chana indicates that prices may generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. On the downside, we dont expect chana prices to go below Rs 3200 per qtl levels as this being the MSP levels farmers may hold back their stock. Considering the record output expectatations and seasonal patterns and demand side fundamentals, we expect chana prices to trade in the range of Rs 3200- Rs 3800 per qtl over the medium term (3 months).

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Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities
Sugar
After showing some signs of recovery last week, Sugar prices remained flat in the current season as higher supplies is seen offsetting summer season demand. Prices recovered last week after the government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector. Improving demand from bulk consumers and expected lower output next season in Maharashtra also supported an upside in the prices. The Minimum Initial Margin has been revised to 5% of the value of the contract or VaR based margin whichever is higher and will be imposed on all running contracts and yet to be launched contracts wef beginning of trading day Monday, May 13, 2013. The Government has cleared the partial decontrol of sugar on April 4, 2013, however, notified the same after almost a month. According to this, the government will now have to buy sugar from the mills at open market prices. Also the release mechanism will be done away with, after September 2013. India's sugar output is set to decline 10-15 per cent in the 2013-14 crushing season due to lower cane availability from drought-hit Maharashtra districts, where sowing could not be finished or crops were damaged due to lack of monsoon showers in 2012. (Source: Business Standard.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX May '13 Futures Rs/qtl Last 3060

as on May 14, 2013 % Change Prev. day WoW -0.24 0.63 MoM -0.12 YoY 2.92

Rs/qtl

3061

0.39

4.54

4.94

3.62

Source: Reuters

International Prices
Unit Sugar No 5- LiffeMay'13 Futures Sugar No 11-ICE May '13 Futures $/tonne $/tonne Last 478 378.22

as on May 14, 2013 % Change Prev day WoW -1.46 -1.33 -3.24 -3.51 MoM -8.46 -5.60 YoY -14.20 -16.03

.Source: Reuters

Technical Chart - Sugar

NCDEX June contract

Domestic Production and Exports

According to ISMA, Indias Sugar production between OctoberApril stood at 24.52 mn tn, lower by 3% during the same period last year. Maharashtras production dipped 10% to 8 mn tn while production in Uttar Pradesh increased by 7% to 7.43 mn tn.
India is likely to produce 24.6 mn tn of sugar in 2012-13 year ending on Sept. 30, higher than the previous estimate of 24.3 mn tn, the Indian Sugar Mills Association (ISMA) said last week. With the opening stocks of 6.5 mn tn, domestic Sugar supplies are estimated at higher against the domestic consumption of around 22. 5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly.

Source: Telequote

Global Sugar Updates

Raw sugar futures hit a fresh 34-month low on Tuesday, extending the previous session's losses, after the UNICA data showed sugar production in Brazil surged last month and the pace of the top producer's bumper harvest picked up. Sugar production in Brazil's main cane belt surged in April, outpacing last year's early harvest by 210 percent, as rains cleared in the middle of last month to allow crushing. Cool, dry weather in Brazil has boosted cane crushing and will allow uninterrupted exports. Sugar prices in the international markets are trading at their lowest levels in since July 2010 on account of a surplus situation for the third consecutive year. According to Unica, South-Central Brazil cane crush projected at 589.60 million tons for 2013/2014. Main center-south sugar cane crop will produce a record 35.5 mn tn of sugar in the 2013/14 season, higher by 4.1% compared to 34.1 mn tn last year.

Technical Outlook
Contract Sugar May NCDEX Futures Unit Rs./qtl Support

valid for May 15, 2013 Resistance 3050-3065

3000-3020

Outlook
Although higher supplies and weak international markets may cap sharp upside in the prices, overall sentiments for sugar remain positive on account good demand from bulk manufacturers at such low levels. Also, government has notified cabinets decision to remove two key controls on sugar sector, which may keep sentiments upbeat.

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Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities
Oilseeds
Soybean: soybean futures gained on Tuesday as poor supplies in
the domestic markets continue to support prices at lower levels. However, weak meal export demand coupled with IMDs prediction of a normal monsoon capped sharp upside. According to the 3rd advance estimates, Soybean output is pegged at 14.14 mn tonnes. The spot as well as the June Futures settled 0.77% and 0.85% higher on Monday. Indias soy meal exports for the month of April 2013 were 99.451 tonnes, lower by 68.31 percent from 313,832 tonnes a year ago.

Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX May '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX May '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 4088 4107 728 725.7 Prev day 0.81 0.26 0.30 0.51

as on May 14, 2013

WoW 1.67 2.64 0.19 1.80

MoM -0.68 0.93 0.48 0.36

YoY 21.78 26.92 0.63 0.42

International Markets
CBOT Soybean extended the gains of the previous session and settled 0.23% higher on Tuesday on account of concerns over US planting. According to the weekly crop progress report, only 6% has been planting as against 43% last year and five year average of 24%. There are delays in planting in the Midwest. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. According to the Rosario Grains Exchange, Argentinas 2012 -13 soybean production is estimated at 48.3 mn tn. Chinas soybean imports were reported at 3.98 mn tonnes in April, lower by 18.4% in April last year, but marginally higher compared to 3.84 mn tonnes in March. The decline is attributed to delays in shipment from Brazil coupled with weak demand on the back of outbreak of the bird flu.

Source: Reuters

as on May 14, 2013 International Prices Soybean- CBOTMay'13 Futures Soybean Oil - CBOTMay'13 Futures Unit USc/ Bushel USc/lbs Last 1525 49.26 Prev day 0.23 -0.71 WoW 4.17 0.35 MoM 7.89 0.06
Source: Reuters

YoY 9.68 -3.03

Crude Palm Oil

as on May 14, 2013 % Change Prev day WoW -0.04 -0.47 1.88 2.27

Unit
CPO-Bursa Malaysia May '13 Contract CPO-MCX- May '13 Futures

Last 2280 467.6

MoM -1.08 0.93

YoY -27.73 -18.95

Refined Soy Oil: Ref soy oil settled 0.51% higher tracking positive
bean prices while MCX CPO settled 0.04% lower on account of weak KLCE palm oil futures. India's palm oil imports declined for a third straight month in April. But India, the world's largest importer of edible oils, is still on track to surpass last year's record purchases of 10 million tonnes of cooking oil as demand rises. Exports of Malaysian palm oil products from May 1 to 15 inched down 7.6 percent to 599,300 tonnes from 648,275 tonnes shipped during April 1 to 15. Stocks data from industry regulator the Malaysian Palm Oil Board showed inventory levels at the end of April down 11.3 percent to 1.93 million tonnes against the previous month's 2.17 mn tn.

MYR/Tonne Rs/10 kg

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX May '13 Futures Rs/100 kgs Rs/100 kgs Last 3499 3479 Prev day 0.34 -0.34 WoW 3.28 2.96

as on May 14, 2013 MoM -2.40 -2.74

Source: Reuters

YoY -9.44 -6.05

Technical Chart Soybean

NCDEX June contract

Rape/mustard Seed: Mustard Futures witnessed profit booking

and settled 0.34% lower on Tuesday. Prices had gained last week on account of lower level demand. Higher supplies of the new crop coupled with higher output expectations led to a sharp decline in the prices since April. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.

Outlook
Soybean prices are expected to trade with a positive bias on account of poor supplies in the domestic markets coupled with positive international markets. However, forecast of a normal monsoon coupled with weak meal export demand may cap sharp gains. Soy oil as well as CPO may gain due to higher international prices as well as lower yield period. However, comfortable stock levels may cap sharp upside.
Source: Telequote

Technical Outlook
Contract Soy Oil May NCDEX Futures Soybean NCDEX May Futures RM Seed NCDEX May Futures CPO MCX May Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl

valid for May 15, 2013 Support 695-697 3870-3925 3450-3475 464-466 Resistance 702-705 4000-4040 3535-3570 470-472

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Commodities Daily Report

Wednesday| May 15, 2013

Jeera Agricultural Commodities

After gaining sharply over the last three previous sessions, Jeera futures corrected yesterday on account of profit taking. Jeera prices have gained on reports of improvement in overseas enquiries. Arrivals have also declined from their peak in mid April. Demand from stockists and exporters also emerged at lower levels. The spot settled as well as the June Futures settled 0.23% and 0.79% lower on Tuesday. Over the last few months, prices have declined sharply on the back of higher production estimates. According to Gujarat State Agri Dept. sowing in Gujarat is reported at 3.352 lakh ha in 2013 compared with 3.719 lakh ha last year. Due to the ongoing geo-political tensions in Syria and Turkey, supply concerns from these two major exporting countries still exist. Expectations are that export orders may continue to be diverted to India from the international markets due to lack of supplies from Syria on back of the ongoing civil war. Production in Syria and Turkey is being reported around 17,000 tonnes and around 4,000-5,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,450 tn (FOB Mumbai) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 8-9 lakh bags.

Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX May '13 Futures Rs/qtl Rs/qtl Last 13475 13163 Prev day -0.23 -0.68

as on May 14, 2013 % Change WoW 0.75 4.05 MoM -2.26 -4.64 YoY -1.26 -1.15

Source: Reuters

Technical Chart Jeera

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 8,000 lakh bags on Tuesday. Production of Jeera in 2012-13 is expected around 38-40 lakh bags (55 kgs each), same as last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)

Source: Telequote

Market Highlights
Prev day -0.16 -0.17

as on May 14, 2013 % Change

Outlook
After correcting yesterday, Jeera Futures is expected to trade higher today. Improvement in overseas as well as domestic demand may support prices. However, higher output may cap sharp gains. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX May '13 Futures Rs/qtl Rs/qtl Last 5977 5788

WoW -0.53 -0.72

MoM -12.19 -16.38

YoY 66.96 56.18

Turmeric
Turmeric June Futures continued to decline yesterday and settled 0.51% lower on Tuesday on account of weak domestic as well as overseas demand coupled with huge carryover stocks. Quality of arrivals is also poor as farmers are holding back good quality stocks. However, there are expectations of improvement in overseas demand in June ahead of the Ramadan festival. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier.

Technical Chart Turmeric

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 4,000 and 6,000 bags respectively on Tuesday. Expectations are that production may be lower by 40-50%. There are reports of some crop damage in Erode region. Turmeric production in 2012-13 is expected around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 is projected at historical high of 10.62 lakh tn. It is estimated that next years carryover stocks would be around 10 lakh bags. According to Spices Board of India, exports of Turmeric in April 2012 increased by 1% at 7,300 tn as compared to 7,230 tn in April 2011. Outlook Turmeric is expected to trade with a negative bias today. Weak exports data coupled with higher supplies of the fresh crop and huge carryover stocks may pressurize prices at higher levels. However, expectations of improvement in export demand coupled as well as demand from stockists may support prices at lower levels. Crop damage and output concerns may also support prices at lower levels.
Jeera NCDEX May Futures Turmeric NCDEX May Futures

Source: Telequote

Technical Outlook
Unit Rs/qtl Rs/qtl

Valid for May 15, 2013

Support 13060-13160 5650-5760 Resistance 13400-13500 5960-6050

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Commodities Daily Report

Wednesday| May 15, 2013

Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton traded on a mixed note yesterday. Kapas traded with a negative bias as CCI is offloading stocks in the open markets and settled 0.1% lower. Prices are also taking cues from the weak global markets which declined after USDA released its monthly crop report which revealed that excess supplies would continue in the next year too. However, MCX Cotton gained 0.22% on account of short coverings coupled with some improvement in prices in the international markets. Emergence of fresh demand at lower price levels cushioned sharp downside in the domestic markets. The Cotton Corporation of India (CCI) and the National Agricultural Cooperative Marketing Federation of India (NAFED) are expected to offload over 8 lakh cotton bales (a bale weighs 170 kg) in the domestic market this month and the asking price may be lower by Rs 1,000 per candy than the previous price. In April, the government had offered a price of Rs 39,500 per candy, which received lukewarm response from the textile industry. (Source:
Economic Times dated 6th May 2013)

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1023 17940

as on May 14, 2013 % Change Prev. day WoW -0.10 -1.54 0.22 -0.11 MoM YoY 11.01 4.49 -0.11 8.86

NCDEX Kapas Apr Futures MCX Cotton May Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 86.92 93.25

as on May 14, 2013 % Change Prev day WoW 1.02 1.06 -0.43 -1.64 MoM 1.57 1.14 YoY 10.28 6.63

Source: Reuters

India's imports of cotton this year could reach 1.5 mn bales, missing earlier estimates of more than 2 mn as the govt may to start selling its stockpiles. Cotton supplies since the beginning of the year in October 2012 until February 10, 2013 were down at 183.4 lakh bales, down from 189.27 lakh bales a year earlier.

Technical Chart - Kapas

NCDEX April contract

Domestic Production and Consumption

CAB in its latest meet has projected cotton crop at 34 mn bales for 201213 season compared to the previous estimates of 33 mn bales. Mill consumption is expected to go up from 22.3 million bales last year to 23.5 million bales. Exports are estimated at 8.1 mn bales while Import are estimated 2.5 mn bales.

Global Cotton Updates

ICE Cotton futures gained 1.02% on Tuesday on concerns over delayed plantings in the US. Continued dry weather in Texas has also brought renewed concerns over delayed supplies. China cotton imports declined 18.5% in April compared to March. The USDA monthly crop report forecast a sharp rise in the in the cotton stockpiles by almost 10%. The U.S. Department of Agriculture has forecast global cotton stockpiles will rise almost 10 percent to a record high in 2013/14, pushing prices lower and reinforcing concerns about stagnating demand in China, the world's No. 1 textile market. According to the USDA report, planting intentions for the 2013-14 season are said to be at a 4 year low. Also, there are expectations of good export demand from China. Reports of India and China releasing stocks from the state reserve led to a decline in the prices.

Source: Telequote

Technical Chart - Cotton

MCX May contract

Outlook
We expect Cotton prices to trade on a negative note today as offloading from the state reserves may ease supplies in the short term. Weak international markets may also pressurize prices. However, improving demand at lower levels may support prices. Positive prices in the international markets may also support prices at lower levels. Also, farmers may not liquidate their stocks at lower prices unless they are in need of cash. US cotton planting intentions were reported at a 4 year low. China will continue its stockpiling policy, may also support prices.

Source: Telequote

Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX May Futures Unit Rs/20 kgs Rs/bale

valid for May 15, 2013 Support 1005-1015 17800-17880 Resistance 1030-1040 17990-18050

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