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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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Agricultural Commodities
News in brief
Minimum Support Prices for Major Farm Crops Raised Substantially in Recent Years
Government announces minimum support price (MSP) for major crops during the two main crop seasons rabi and kharif every year. MSP is the price which the government ensures to farmers for their produce. In recent years, MSP for various crops has been raised year after year. For example, the MSP for wheat has been raised to Rs. 1350 per quintal this year while it was Rs. 650 in 2005-06. In the case of rice, MSP has gone up to Rs. 1250 per quintal from Rs. 570 per quintal in 2005-06. Pulses and oilseeds have seen similar or bigger hikes in MSP over the years. The substantial hike in MSP has resulted in better prices available to farmers for their produce. Successive rise in MSP has also led to overall food security to the country: India is now self-sufficient in wheat and rice. 2011-12 has seen record production in the case of wheat, rice, pulses and oilseeds. Even there was wide-spread drought in the monsoon season in 2012, overall foodgrain production dipped only marginally. While rice, wheat and major coarse cereals are purchased by procuring agencies, government helps producers of pulses, oilseeds and some other crops by market intervention when prices tend to fall below the MSP. The government is strengthening the procurement infrastructure so that farmers do not have to resort to distress sale of their produce. For sugarcane, the government changed the Statutory Minimum Price regime recently into a more scientific Fair and Remunerative Price (FRP). The present FRP is Rs. 170 per quintal. States can top up FRP to give farmers a more remunerative price. (Source: PIB, GOI)
as on June 4, 2013
WoW MoM YoY
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
.Source: Reuters
Prices of vegetables & spices crash upto 20% due to the brisk start to monsoon
Prices of vegetables and spices have dropped up to 20% in the past month and are likely to remain low as higher output along with the brisk start to the monsoon has calmed the market. The drop in vegetable prices, on top of the global fall in various commodities from aluminium to zinc, is good news for policymakers as stubbornly high inflation has hindered moves to cut interest rates. Expectations of higher farm output after last year's slump would also boost overall economic growth, economists said. The fall in vegetable prices in the past month has been the steepest in recent times. Prices had shot up in previous years because of erratic rainfall, particularly in 2012 when rainfall was 30% below normal in June. (Source: Economic Times)
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Agricultural Commodities
Chana
Chana corrected yesterday on account of profit taking after witnessed significant gains in the previous session and settled 0.66% lower. Prices touched a fresh contract low of Rs. 3105 last week. Higher supplies in the domestic markets have pressurized prices over the last few weeks. Peak arrival period this season has been extended on account of record high production and delayed start to harvesting. Supplies are at its peak as new crop from the major producing states such as Madhya Pradesh and Rajasthan have increased significantly. However, supplies are expected to slow down towards the end of the month. Also, stockists are building 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 3289 3167 Prev day 1.07 -0.66
as on June 4, 2013 % change WoW MoM 1.99 -3.97 -0.50 -7.48 YoY -21.92 -22.36
Source: Reuters
Source: Telequote
Technical Outlook
Contract Chana July Futures Unit Rs./qtl Support
3190-3215
Trade Scenario
According to IBIS, imports of chana in the month of April declined to 0.04 lakh metric tonnes compared to 0.11 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 may trade on a mixed note today. Lower level buying may support prices. Demand from stockists at lower levels may also provide some support to the prices. However, higher supplies coupled with higher output estimates cap the upside and mount pressure at higher levels. Seasonal pattern in chana indicates that prices generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. Thus, going forward downside seems to be limited as prices are nearing its MSP levels.
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Agricultural Commodities
Sugar
Sugar traded on a flat note yesterday and settled marginally higher by 0.07% on Tuesday. Buying by the stockists coupled with concerns about the cane output this season due to drought conditions in Maharashtra have supported prices. However, comfortable supplies have capped the gains. Weak international markets have also kept prices under check. Prices have recovered from lower levels 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 w.e.f 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. 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. According to the Ministry of Agriculture, Sugarcane has been planted in 41.24 lakh ha as compared to 46 lakh ha at this time last year. Less area is reported mainly in Karnataka, Maharashtra and Tamil Nadu.
Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX June '13 Futures Rs/qtl Last 3057
as on June 4, 2013 % Change Prev. day WoW 0.02 -0.50 MoM 0.59 YoY 4.62
Rs/qtl
3042
0.07
0.76
4.21
#N/A
Source: Reuters
International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 476.9 364.00
as on June 4, 2013 % Change Prev day WoW 0.17 -0.30 0.32 -1.74 MoM -4.01 -6.56 YoY -13.84 -14.06
.Source: Reuters
Source: Telequote
Technical Outlook
Contract Sugar July NCDEX Futures Unit Rs./qtl Support
3060-3070
Outlook
Sugar futures may trade on a mixed note today. Demand from stockists and coupled with output concerns this season and the governments partial decontrol of sugar sector may support prices. However, higher supplies and lower than expected demand may pressurize prices. Weak international markets may also keep prices under check.
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Agricultural Commodities
Oilseeds
Soybean: Soybean declined by 0.82% on Tuesday on account of
weak meal export demand coupled with early arrival of the monsoon in the southern states. However, poor supplies have supported prices at lower levels. The government has set the MSP for Soybean (yellow) at Rs.2250/qtl as again Rs. 2200/qtl last year. Indias soy meal exports for the month of May 2013 were 0.97 lakh tonnes, lower by 29.74 percent from 1.39 lakh tonnes a year ago. According to the 3rd advance estimates, Soybean output is pegged at 14.14 mn tonnes. IMDs forecasts of normal monsoon have raised hopes of better output next season too.
Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX June '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX June '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3842 3762 712.6 705.5 Prev day 0.47 -0.82 -0.34 -0.47
as on June 4, 2013
International Markets
CBOT Soybean corrected on Tuesday due to profit taking and settled 0.24% lower. Prices have gained as planting delay coupled with tight soybean stocks and good demand for US soymeal supported prices. Soybean planting has been delayed due to heavy rains in the US Midwest and is reported at 57% as against 44% last week. However, it is much lower as against 93% last year and five year average of 74%. It is said to be the slowest in 17 years. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. Argentinas agriculture ministry has cut its 2012/13 forecast to 50.6 mn tn from its April forecast of 51.3 mn tn. NOPA reported that the soybean crush fell to 120.11 million bushels in April, from 137.08 million in March. China is forecast to import a record 66 mn tn of soy in 2013/14, 11% higher than the estimates of current season, driven by robust domestic demand and low stocks.
Source: Reuters
as on June 4, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1529 48.59 Prev day -0.24 -0.14 WoW 1.80 -0.08 MoM 5.07 -1.16 YoY 13.28 0.19
Source: Reuters
as on June 4, 2013 % Change Prev day WoW -0.85 -0.25 -0.81 0.15
Unit
CPO-Bursa Malaysia June '13 Contract CPO-MCX- June '13 Futures
Refined Soy Oil: Ref soy oil as well as CPO settled 0.47% and
0.25% lower on Tuesday tracking weak Malaysian palm oil prices. . Palm stocks in Malaysia and Indonesia are expected to decline & demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products in May declined 3.4 percent to 1,248,014 tonnes from 1,292,371 tonnes shipped during April. It is expected that output in Malaysia, the world's second largest producer, to slow this month and help to further ease stocks that have dipped below the psychological 2 million tonne mark to 1.93 million tonnes in April. Stocks data from industry regulator the Malaysian Palm Oil Board showed inventory levels at the end of April down 11.3 percent against the previous month's 2.17 mn tn. 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.
MYR/Tonne Rs/10 kg
Source: Reuters
RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX June '13 Futures Rs/100 kgs Rs/100 kgs Last 3509 3486 Prev day 0.27 0.09 WoW 0.85 0.69
Source: Reuters
Outlook
Soybean prices may trade with a positive bias today on the back of poor supplies as well as positive international markets. However, weak meal export demand coupled with forecast of a normal monsoon may pressurize prices at higher levels. Mustard may also gain tracking positive edible oil pack. Soy oil as well as CPO may continue to gain due to lower yield period. However, comfortable stock levels may cap the upside.
Source: Telequote
Technical Outlook
Contract Soy Oil July NCDEX Futures Soybean NCDEX July Futures RM Seed NCDEX July Futures CPO MCX June Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl
valid for June 5, 2013 Support 686-688 3685-3710 3505-3520 479-481 Resistance 693-695 3750-3765 3550-3565 485-487
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After opening on a positive note, Jeera prices declined towards the end of the day and settled 0.42% lower on Tuesday. Prices have gained on reports of some fresh export enquiries Good arrivals have also capped the upside. Currently, about 25-30% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices have declined sharply over the last few months 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. Export orders may still continue to be diverted to India 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 4,0005,000 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 June '13 Futures Rs/qtl Rs/qtl Last 13490 13095 Prev day 0.65 -0.42
as on June 4, 2013 % Change WoW 0.07 0.34 MoM 0.44 1.63 YoY 0.89 5.97
Source: Reuters
Outlook
Jeera may trade on a mixed note today. Prices may find support at lower levels on improvement in overseas as well as domestic demand. However, higher arrivals may cap sharp upside. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.
Market Highlights
Prev day 0.42 0.53
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX June '13 Futures Rs/qtl Rs/qtl
Turmeric
Turmeric futures recovered from lower levels on declining arrivals and settled 0.53% on Tuesday. However, lack of fresh overseas demand coupled with huge carryover stocks capped sharp upside in the prices. NCDEX issued a circular whereby the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. The regulator also withdrew special margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. Special Margin of 10% on the Long Side on all the running contracts in Turmeric have been withdrawn w.e.f Thursday, May 16, 2013.
Technical Outlook
Unit Jeera NCDEX July Futures Turmeric NCDEX July Futures Rs/qtl Rs/qtl
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Agricultural Commodities
Kapas
NCDEX Kapas declined 0.91% due to tracking higher sowing of cotton this season. However, MCX Cotton traded on a positive note and settled 0.59% higher on Tuesday on account of good yarn demand coupled with lower arrivals. Active selling by the CCI in the open markets has also capped the upside in the prices. CCI has offered 38,100 bales earlier last week through e-auction of which 6,000 bales have been sold. Emergence of fresh demand at lower price levels is also supporting an upside in the prices. 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.
Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1086 18880
as on June 4, 2013 % Change Prev. day WoW -0.91 3.09 0.59 3.85 MoM YoY 4.27 16.97 3.85 24.87
Source: Reuters
International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 84.56 91.5
as on June 4, 2013 % Change Prev day WoW 2.67 4.78 3.04 1.55 MoM -0.19 -2.14 YoY 26.42 #N/A
Sowing Progress
Cotton planting has been reported at 11.86 lakh ha as against 10.4 lakh ha during the same period last year. Higher sowing is report from Punjab and Haryana while a decline has been reported in Rajasthan.
Source: Reuters
Source: Telequote
Source: Telequote
Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX June Futures Unit Rs/20 kgs Rs/bale
valid for June 5, 2013 Support 1070-1080 18640-18760 Resistance 1095-1110 19000-19120
Outlook
Cotton is expected to continue to trade with a positive bias as good yarn demand may support further upside in the prices. Sharp recovery in the international markets coupled with lower sowing in the US and expectatations that cotton may lose acreage to more remunerative crops like soybean and grains in India may also support an upside in the prices over the medium term. However, the governments selling of cotton stocks in the open market may cap sharp upside.
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