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Friday| July 05, 2013
Agricultural Commodities
Content
News & Market Highlights Chana Oilseeds Edible Oils Spices Sugar Cotton Guar Complex
Research Team
Vedika Narvekar Chief Manager- Agri Commodities vedika.narvekar@angelbroking.com (022) 2921 2000 Extn. 6130 Shruti Ghanekar Research Associate shruti.ghanekar@angelbroking.com (022) 2921 2000 Extn. 6133 Anuj Choudhary Research Analyst anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132
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Agricultural Commodities
News in brief
Govt to hike import duty on sugar to 15%
The Government has decided to increase the import duty on sugar to 15 per cent from 10 per cent at present to curb cheaper inflow of the sweetener into the country. Food Minister K.V. Thomas said the decision to hike import duty was taken after a meeting with Agriculture Minister Sharad Pawar and Finance Minister P. Chidambaram on Thursday. The Finance Ministry will decide from when the duty hike will be implemented, he added. The latest move follows representations by sugar co-operatives and farmers to hike import duty as a bearish trend in realisations has not only hurt the millers but has also delayed cane payments to farmers. (Source: Business Line)
as on July 4, 2013
WoW MoM YoY
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
.Source: Reuters
China textile mills lobby to boost cotton imports, cut local prices
Chinese textile mills are lobbying for permission to import more cotton as they struggle to find high-grade fibre locally, a move that would boost prices from key exporters such as the United States and Australia if the government grants its approval. But traders in the world's largest cotton importer are skeptical. Beijing will agree to larger import quotas while its reserves remain swollen with domestically grown cotton bought under an aggressive stockpiling programme. China strictly controls cotton imports to support local growers, making it difficult for some textile firms to source the high-quality cotton they need to make fabric for global clothing brands, with limited amounts of the grade grown locally. (Source:
Reuters)
Price stabilisation scheme for agro commodities extended for another six months
The ministry of commerce has decided to extend the price stablisation fund trust scheme (PSF) in its existing form for another six months ending September 30, 2012. According to officials, the new modified scheme proposed by the ministry will take time to get the cabinet approval. In the meantime, due to fluctuations of the domestic currency and prices in the global market of various commodities, the government has decided to continue with the existing scheme for next six months. The scheme was launched in 2003 to provide financial relief to the growers of various agricultural commodities when their prices fall below a specified level as a long term support rather than adhoc interventions during crisis. These primary commodities are tea, coffee, tobacco and rubber. (Source: Business
Standard)
European Commission: Despite weather extremes EU-27 cereal production in 2013 expected to be higher than last year
Despite weather extremes EU-27 cereal production in 2013 expected to be higher than last year This year total cereal production in the EU-27is forecast to be well above 2012 levels and above the average of the past five years. This agricultural year has so far been marked by an unusually prolonged winter for western and central Europe and heavy rainfall in May and June. However, the impact of poor weather on crops in some areas of the EU has been offset in other areas; for example, the Iberian Peninsula is expecting an excellent season. The yield forecast for cereals(wheat, barley, maize, other cereals) is 5.2 tonnes per hectare across the EU, clearly above last year (by more than 5%) and above the five-year average The total area used in the European Union for cereals in 2013 is slightly higher (+1.3%) compared to 2012. (Source: Google news)
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Agricultural Commodities
Chana
Chana futures traded on a flat note yesterday and settled marginally higher by 0.03% on Thursday on account of short coverings. Prices recovered on talks that government might impose import duty on Pulses so as to deter imports and also restrict further fall in the prices. However, no decision was taken on the same in the meeting. As per a circular by NCDEX dated July 01, 2013, the Minimum Initial Margin has been reduced to 5% of the value of the contract or VaR based margin whichever is higher on all running contracts and yet to be launched contracts of Chana w.e.f Wednesday, July 3, 2013. The CCEA declared the MSP for kharif pulses. The MSP of the MSP of Tur has been raised by ` 450 to ` 4,300/qtl, moong by ` 100 to ` 4,500/qtl while Urad has been kept unchanged at ` 4,300/qtl. Sowing of kharif pulses have commenced and 10.52 lakh hectares have th been covered as on 28 June compared to normal 1.22 lakh ha. Spillover effect of kharif pulses is capping sharp upside in chana prices. Sowing of kharif pulses was adversely impacted last year and was down by 16 percent due to deficient rains.
Market Highlights
Unit Chana Spot - NCDEX Chana- NCDEX July'13 Fut
`/qtl `/qtl
as on July 4, 2013 % change Last 3090 3041 Prev day 1.52 0.03 WoW -0.54 -1.81 MoM -6.05 -3.98
Source: Reuters
Spread Matrix
Closing 3090 3041 3111 3173 19-Jul-13 -49 0 -
as on July 4, 2013 20-Aug-13 21 70 0 20-Sep-13 83 132 62 0 as on July 3, 2013 Stocks as on 2nd July 80985 54121 11264 146370 Qty in Process 522 2458 120 3100
Trade Scenario
According to IBIS, imports of chana in the month of April 2013 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.
Source: Telequote
Outlook
Chana prices may trade on a mixed note. Good sowing of kharif pulses may keep prices under downside pressure. However, prices may recover on account of lower level demand. Expectations government may take some measure to restrict further fall in the prices may also support an upside in the prices.
Technical Levels
Contract Chana Aug Futures Unit `/qtl Support
3078-3093
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Agricultural Commodities
Soybean
Soybean futures recovered from lower levels yesterday and settled 1.12% higher on account of short coverings coupled with tight supplies in the domestic markets. However, farm month contracts did not gain sharply as higher sowing, thereby, expectations of a higher output capped sharp gains. As per a circular by NCDEX dated July 01, 2013, the Minimum Initial Margin has been reduced to 5% of the value of the contract or VaR based margin whichever is higher on all running contracts of Rapeseed Mustard Seed, Soybean w.e.f Wednesday, July 3, 2013.. The CCEA has increased the MSP of soybean (black) by `300 to `2,500/qtl and soybean (yellow) by `320 to `2,560/qtl. The regulator has withdrawn 10% special cash margin on the long side in July th contract w.e.f. 27 June, 2013. Oilseeds sowing is completed under 60.69 lk ha against 11.82 lk ha last year. Soybean in MP, and Maharashtra was planted on 29.74 and 8.26 lk ha, sharply higher against 2.75 and 2.58 lk ha last year. 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. International Markets CBOT soybean remained closed on Thursday on account of Independence Day holiday. The near month futures are trading higher due to tight supplies in the near term while the new crop far month contracts have decline on account of improved crop conditions for newly planted crops in the U.S. Farm Belt. Further USDA raised planting estimates to 77.728 mn acres against March forecast of 77.126 mn acres. As per USDA weekly crop progress report, 96 pct soybean planting is completed vs 92 pct a wk ago and 98 pct 5 yr average.
Spot 19-Jul-13 20-Aug-13 20-Sep-13
Market Highlights
as on July 4, 2013 % Change Prev day WoW 0.46 1.63 1.12 0.09 0.61 -0.49 0.74 2.36 1.33 0.20
Unit Soybean Spot- NCDEX Soybean- NCDEX July '13 Fut Soybean- CBOT July'13 Fut RM Seed Spot- NCDEX RM Seed- NCDEX July '13 Fut
`/qtl `/qtl
USc/Bsh
`/qtl `/qtl
Source: Reuters
as on July 4, 2013 20-Nov-13 -596.5 -523.5 3 0 as on July 4, 2013 20-Aug-13 -26 47 0 20-Sep-13 21 94 47 0 as on July 3, 2013 Qty in Process 363 0 0 363 as on July 3, 2013 Qty in Process 0 294 70 0 906 40 0 1310 NCDEX October contract
Outlook
Soybean may trade on a mixed note today. Tight supplies in the near term in both the domestic as well as international markets may support soybean prices firm in the domestic markets. However, higher sowing and improved crop prospects may keep the far month contracts under downside pressure. Also, Rupee may appreciate today which may cap the upside.
Rape/mustard Seed
Mustard seed August futures corrected yesterday on account of profit taking after prices had gained significantly in the preceding session and settled 0.49% lower. Prices have declined as higher supplies in the domestic markets and increase in sowing area under kharif oilseeds exerted downside pressure on the prices. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.
Outlook
Declining arrivals at lower prices levels and good demand may support prices in the near term. However, overall trend in mustard seed remain bearish amidst higher production this season.
Technical Levels
Contract Soybean NCDEX Oct Futures RM Seed NCDEX Aug Futures Unit `/qtl `/qtl
valid for July 05, 2013 Support 3090-3115 3430-3453 Resistance 3160-3182 3498-3520
Source: Telequote
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Agricultural Commodities
Refined Soy Oil
Refine soy oil continued to trade higher extending previous days gains. The spot as well as the Futures settled 0.41% and 0.42% higher respectively on Thursday. As per a circular by NCDEX dated July 01, 2013, the Minimum Initial Margin has been reduced to 5% of the value of the contract or VaR based margin whichever is higher on all running contracts of Refined Soy oil w.e.f Wednesday, July 3, 2013. Soy Oil prices had declined sharply in the last one week amidst good sowing prospects of oilseeds in the domestic markets coupled with appreciation in the Indian rupee in the last two trading session. India meet 50-55 percent of its edible consumption through imports and thus rupee factor is a major determinant of edible oil prices. As per the data released by the Solvent Extractors' Association of India, imports of vegetable oils, including non-edible oils, rose 40.2% to 917,964 tn in May, after dropping for 3 months, mainly due to surge in palm oil imports. Monthly soy oil imports rose 2.7% as local supplies are almost exhausted before the new planting season for soybean.
Market Highlights
% Change Unit `/10 kg `/10 kg USc/ Bushel MYR/Tonne `/10 kg Last 688.25 684.90 47.22 2365 505.10 Prev day 0.41 0.42 0.00 0.25 0.26
as on July 4, 2013
Ref Soy oil SpotNCDEX Ref Soy oil- NCDEX July '13 Fut Soybean Oil- CBOTJuly'13 Fut
CPO-Bursa Malaysia July '13 Fut CPO-MCX- July '13 Futures
Source: Reuters
Outlook
Soy oil may continue to trade higher tracking higher bean prices. However, rupee movement would drive prices in the intraday.
Outlook
CPO prices are expected to trade higher today as increase in export tax by Indonesia may support an upside in the prices. Also, Ramadan demand may support prices. However, expectations of an appreciation in the Rupee may cap sharp gains.
Technical Outlook
Contract Soy Oil Aug NCDEX Futures CPO MCX July Futures Unit `/qtl `/qtl
valid for July 05, 2013 Support 670-675 499-503 Resistance 683-688 509-512
Source: Telequote
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Agricultural Commodities
Spices
Jeera
Jeera Futures which traded on a flat note during most part of the day, corrected towards the end of the day and settled 0.9% lower on Thursday due to good supplies as well as ample rains in the main jeera growing regions. However, fresh overseas demand has supported prices in the spot market which settled marginally higher by 0.03%. Currently, about 70% of total arrivals have been traded in the mandis. Exports have been reported mainly to Singapore, Europe and Dubai. In the global markets, there is a supply crunch due to the ongoing geopolitical tensions in Syria and Turkey, which has raised supply concerns from these two major exporting countries. Export orders are diverted to India. Production is also expected to decline in Syria and Turkey. Jeera of Indian origin is being offered in the international market at $2,625 tn (FOB Mumbai).
Market Highlights
Unit `/qtl `/qtl `/qtl `/qtl Last 13649 13150 5702 5796 Prev day 0.03 -0.90 -0.42 0.21
as on July 4, 2013 % Change WoW -0.44 -2.01 -1.99 -4.20 MoM 1.18 0.42 -2.74 2.01 YoY -2.52 -2.90 52.90 41.09
Jeera Spot- NCDEX Jeera- NCDEX July '13 Fut Turmeric Spot- NCDEX Turmeric- NCDEX July '13 Fut
Source: Reuters
as on July 4, 2013 20-Sep-13 191.2 690 315 0 as on July 4, 2013 19-Jul-13 94 0 20-Aug-13 208 114 0 20-Sep-13 336 242 128 0 as on July 3, 2013 Stocks as on Qty in 2nd July Process 1124 7517 8641 5378 NCDEX August contract 89 369 485 586
Production of Jeera in 2012-13 is expected around 40-45 lakh bags (55 kgs each), marginally higher than 40 lakh bags last year. Carryover stocks from 2011-12 harvest were around 8-9 lakh bags.
Outlook
Jeera may trade on a mixed note in the intraday. Good overseas is expected to support prices. However, good supplies may cap upside. Overall trend remains positive for Jeera due to overseas demand, as Syria & Turkey are not supplying which may keep the prices firm.
Turmeric
Turmeric futures recovered from lower levels on account of short coverings and settled 0.21% higher on Thursday. Prices declined sharply as sowing has picked up in Andhra Pradesh. Also, weak upcountry demand, poor quality arrivals and rains have pressurized prices further. However, overseas demand is expected to remain firm.
Technical Outlook
Jeera NCDEX Aug Futures Turmeric NCDEX Aug Futures Unit `/qtl `/qtl
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Agricultural Commodities
Sugar
Sugar Futures recovered sharply on Thursday and settled 1.22% higher in the August contract after the government decided to increase the import duty on sugar to 15% from 10%. The date of imposition of duty is yet to be decided by the Finance Ministry. Reports of fresh export deals also supported the prices. However, lackluster demand from the bulk consumers and sufficient supplies capped sharp gains. Demand from the bulk consumers such as Ice cream and beverage manufacturers generally decline during the monsoon as rainfall brings down temperature. Indian traders have signed deals to export 75,000 tonnes of white sugar in July, reversing an import trend after the rupee's depreciation and with strong demand in Gulf and African states due to the Islamic fasting month of Ramadan. (Source: Reuters dated 1st July, 2013) According to the Ministry of Agriculture, Sugarcane has been planted in 44.55 lakh ha as compared to 46.78 lakh ha as drought affected Maharashtra and Karnataka have reported lower area.
Market Highlights
Unit Sugar SpotNCDEX Sugar M- NCDEX July '13 Fut Sugar No 5- LiffeAug'13 Fut Sugar No 11-ICE July '13 Fut `/qtl 3006 `/qtl 496.3 $/tonne 364.89 $/tonne 0.00 -0.22 1.04 Last 3062
as on July 4, 2013 % Change Prev. day WoW 0.17 0.20 -0.46 -2.26 -0.30 MoM 0.19 -1.18 4.07 0.24 YoY 0.12 2.31 -21.56 -25.30
Source: Reuters
Source: Telequote
Outlook
Sugar prices are expected to trade higher today extending yesterdays gains as the governments decision to increase import duty may support prices. Also expectations of export demand may support prices. However, upside will also be capped as good monsoon is raising hopes of good yields.
Technical Outlook
Contract Sugar Aug NCDEX Futures Unit `/qtl
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Agricultural Commodities
Kapas
MCX Cotton continued to remain firm and settled 0.36% higher on Thursday on account of strong demand for cotton from yarn manufacturers. However, NCDEX Kapas corrected by 0.51% tracking higher cotton planting in India. The regulator has reduced position limit in cotton futures to 1.95 lk bales for member levels and 65,000 bales at th client level wef 5 July 2013. The CCEA has increased the MSP of Cotton by `100 to `3,700/qtl for medium staple and `4,000/qtl for long staple. With the cotton season nearing its end, arrivals have declined considerably. According to CCI, Cotton arrivals since the beginning of the seaosn (Oct 2012- Sep 2013) is reported at 318.62, down 2.2 percent compared to same period last year.
Market Highlights
Unit `20 kgs `/Bale USc/Lbs Last 1064 19770 84.39 93
as on July 4, 2013 % Change Prev. day WoW -0.51 -1.34 0.36 1.70 0.00 1.52 1.09 2.09 MoM YoY -1.34 #N/A 4.71 18.88 -0.20 16.00 1.64 10.78
Source: Reuters
NCDEX Kapas Apr Fut MCX Cotton July Fut ICE Cotton Cot look A Index
Sowing Progress
Cotton planting has been reported at 55.76 lakh ha as against 31.38 lakh ha during the same period last year. Cotton acreage has seen a significant jump over last year in Gujarat, Maharashtra and Madhya Pradesh, while the planting is over in the Northern States of Punjab and Haryana.
as on July 3, 2013 Stocks as on July 2 12300 5900 117900 24300 900 100 161400
Outlook
Cotton may trade with a positive bias today supported by good yarn demand coupled with ICACs estimates of lower global production. Higher MSP may also support prices. Expectations of import demand from China may also support prices. However, higher planting in India and weak international prices may pressurize prices at higher levels.
Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX July Futures Unit `/20 kgs `/bale
valid for July 05, 2013 Support 1056-1061 19540-19670 Resistance 1071-1075 19920-20030
Source: Telequote
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Agricultural Commodities
Guar Complex Guar Complex
Guar seed as well as Guar gum July Futures settled 2.43% and 1.9% higher respectively on Thursday on account of extending short coverings. Prices have declined significantly due to higher sowing of the guar crop. Since the resumption of Guarseed and Guar gum contracts on the futures platform, prices are on a downward trend on account of host of factors like bumper summer harvest in Gujarat, smooth monsoon progress and expected higher sowing.
Guar Seed SpotNCDEX Guar Seed- NCDEX July 13 Fut Guar Gum SpotNCDEX Guar Gum- NCDEX July13 Fut
Market Highlights
Unit `/qtl 7160 `/qtl 20488 `/qtl 20380 `/qtl 1.90 2.12 2.43 Last Prev day 7250 2.21
as on July 4, 2013 % change WoW 0.22 2.73 -0.64 1.14 MoM -12.30 -10.72 -15.99 -15.99 YoY #N/A #N/A #N/A #N/A
Source: Reuters
as on July 4, 2013 20-Sep-13 -1620 -1530 -70 0 as on July 4, 2013 20-Aug-13 -3627.65 -3520 0 20-Sep-13 -3687.65 -3580 -60 0 as on July 3, 2013 Stocks as on 2 July 59 81
nd
Guarseed area increased significantly Last year. With favorable monsoon and higher returns acreage may remain higher in the coming season too.
Qty in Process 0 0
Outlook
Early monsoon and higher sowing so far has raised hopes of timely harvesting. This may keep prices under downside pressure. However, sharp downside may be restricted as farmers might hold back their stocks at lower prices.
Technical Outlook
Contract Guar Seed Oct (NCDEX) Guar Seed Oct (MCX) Guar Gum Oct (NCDEX) Guar Gum Oct (MCX) Unit `/qtl `/qtl `/qtl `/qtl
valid for July 05, 2013 Support 5480-5570 5470-5560 16300-16530 16370-16600 Resistance 5770-5880 5750-5850 17050-17350 17100-17370
Source: Telequote
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