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Thursday| 8 Aug, 2013 2013
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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 HIGHLIGHTS
Centre plans to give freedom to states to hike PDS sugar price
Food Minister K V Thomas on Wednesday said his ministry has moved a cabinet proposal to give freedom to state governments to hike the retail price of sugar sold in ration shops. At present, sugar is being sold at Rs 13.50 per kg in the public distribution system (PDS). This price has not been revised since 2002 despite increase in open market price to Rs 3540 per kg. After the decontrol of the sugar sector in May, the states have been asked to procure sugar from the open market to meet the ration shop demand from this month onwards. The difference of only upto Rs 18.50/kg is paid as subsidy to states. A proposal to allow state governments to increase the retail price of sugar sold at ration shops has been prepared for cabinet's consideration. Sources said that the Food Ministry's proposal is to allow state governments to hike sugar price maximum by Rs one per kg. This will reduce the subsidy burden. (Source:
www.zeenews.com)
as on August 7, 2013
WoW MoM YoY
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
.Source: Reuters
USDA says it will stop cotton payments to Brazil as part of dispute over subsidies
The United States will cease paying a $147 million annual settlement to Brazil that is part of a long-running trade dispute over cotton subsidies, Agriculture Secretary Tom Vilsack said Wednesday. The United States agreed to pay the money to Brazil in 2010, just before the South American country was set to raise tariffs on hundreds of millions of dollars in American goods, including autos, pharmaceuticals and electronics. Stopping the payments could prompt Brazil to threaten retaliation again. The World Trade Organization said in 2009 that Brazil could raise the tariffs on American goods because the United States had failed to get rid of subsidies the WTO said are illegal. A farm bill pending in Congress would attempt to bring those cotton subsidies into compliance, but it is now stalled amid disputes between the House and Senate. (Source: Factiva)
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Agricultural Commodities
Chana
Chana Futures weakened on Wednesday due to sluggish demand and adequate stock positions in the country. Also, higher sowing estimates of kharif pulses have weighed on to the prices. The spot as well as the Futures settled 0.83% and 1.08% lower respectively on Wednesday. Higher chana production in 2012-13 coupled with a higher sowing of the kharif pulses have pressurized prices over the past few weeks. As per a circular by NCDEX dated July 25 2013, Special Margin of 5% on the Short side will be imposed in all running contracts and yet to be launched contract in Chana (SYMBOL :CHARJDDEL) with effect from beginning of day Saturday, July 27, 2013. Ministry of Agriculture released its fourth Advance estimates of Food grain production on Monday wherein it pegged Chana signifincalty higher at record 8.8 mn tn in the current season 2012-13. With a significant hike in MSP of kharif Pulses for 2013-14 season, area under cultivation is expected to increase in the coming season too. Further good monsoon may not only support good yield of kharif pulses, but also ensure favorable soil condition for sowing of Rabi pulses vizChana and Moong. As per the data released by the ministry of Agriculture, area under kharif nd Pulses stood at 79.50 lakh ha as on 2 August 2013, up by 26.2 percent compared to the corresponding period last year.
Market Highlights
Unit Chana Spot - NCDEX Chana- NCDEX Aug'13 Fut
`/qtl `/qtl
as on Aug 7, 2013 % change Last 2896 2741 Prev day -0.83 -1.08 WoW 4.00 4.06 MoM -6.64 -9.33
Source: Reuters
Spread Matrix
Closing 2895.85 2741 2789 2884 20-Aug-13 -154.85 0 -
as on Aug 7, 2013 20-Sep-13 -106.85 48 0 18-Oct-13 -11.85 143 95 0 as on Aug 6, 2013 Stocks as on 5 Aug 76008 58853 11957 146818
th
309
111
938
Total
1358
Outlook
Heavy rains in states like Madhya Pradesh and Maharashtra are likely to affect pulses output this season. The extent of the damage will be clear in the coming weeks. (Source: Agriwatch) This factor is expected to support prices in the near term. Also, an increase in the margins on the short side may support prices. However, higher sowing of kharif pulses and estimated higher output may cap sharp gains during the intraday.
Source: Telequote
Technical Levels
Contract Chana Sept Futures Unit `/qtl Support
2740-2765
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Agricultural Commodities
Soybean
Soybean futures opened lower as overall higher sowing and expectations of a record crop have kept prices under downside pressure. However, the weather departments forecast of rains in the soybean growing regions in the next few days coupled with a weak Rupee supported prices at lower levels and settled 0.05% lower. According to the fourth Advance estimates of Food grain production released by the Ministry of Agriculture Soybean output is pegged significantly higher at record 14.6 mn tn in the current season 2012-13 compared with 12.2 mn tn in 2011-12. Total nine Oilseeds production is pegged at 31 MT in 2012-13, slightly higher than 29.79 MT achieved in the previous year. Southwest monsoon which slowed its pace and was flat to below average in the previous two weeks, recovered significantly during the week ending 24th July 2013. As per the IMD, Cumulative rainfall as on 28th July in the central India (major soy belt), were 45 percent above th the LPA, while in the week ending 24 July they rains were recorded up by 43 percent in Central India. As per data released by the ministry of Agriculture, area under oilseeds nd was recorded at 173.21 la ha on 2 Aug, 2013, an increase of 19.56 percent as compared to the corresponding period last year. International Markets CBOT Soybean futures traded on a mixed note. The near month contract settled 0.26% higher on tight supplies while the new crop November contract declined 0.1% on prospects of a bumper crop. Favorable weather in US for soybean have kept prices under check. The USDA Crop Progress report rated the U.S. crop at 64% good-toexcellent, against 63% last week on favorable weather in the Midwest. USDA reported that 39% of the crop is setting pods vs. 69% a year ago. Also, 79% of the soybean crop is blooming vs. 93% a year ago. Old-crop soybean inventories are expected to drop to a nine-year low by Aug. 31, 2013 due to last year's drought-reduced harvest and strong demand from China and domestic buyers.
Spot 20-Aug-13 20-Sep-13 18-Oct-13
Market Highlights
as on Aug 7, 2013 % Change Prev day WoW -0.09 2.85 -0.05 0.26 -1.06 -0.94 -1.33 -3.37 1.84 0.92
Unit Soybean Spot- NCDEX Soybean- NCDEX Oct '13 Fut Soybean- CBOT Aug'13 Fut RM Seed Spot- NCDEX RM Seed- NCDEX Aug '13 Fut
`/qtl `/qtl
USc/Bsh
`/qtl `/qtl
Source: Reuters
as on Aug 7, 2013 20-Dec-13 -450 39.5 27.5 0 as on Aug 7, 2013 20-Sep-13 -211.75 27 0 18-Oct-13 -182.75 56 29 0 as on Aug 6, 2013 Qty in Process 0 0 0 0 as on Aug 6, 2013 Qty in Process 0 0 0 0 81 0 40 121 NCDEX October contract
Outlook
Soybean may trade on a mixed note. Higher output expectations may keep prices under check. However, tight supplies coupled with forecast of rains in MP in the next few days may support prices at lower levels. If rainfall activity moderates in the coming weeks then we may see prices consolidating at current levels amid higher sowing.
Rape/mustard Seed
Mustard seed futures traded with a negative bias yesterday and settled 0.94% lower due to a weak demand and comfortable supplies in the spot markets coupled with higher sowing of kharif oilseeds which have mounted downside pressure. However, fears of damage of the soybean crop supported prices at lower levels. Agriculture ministry in its fourth advance estimates, pegged mustard output at 7.82 mn tn, up by 18.4% compared to 2011-12 season.
Outlook
Mustard seed may trade with a negative bias as higher production and sufficient supplies this season may pressurize prices. However, soybean crop damage fears may support prices at lower levels.
Technical Levels
Contract Soybean NCDEX Oct Futures RM Seed NCDEX Sept Futures Unit `/qtl `/qtl
valid for Aug 8, 2013 Support 2880-2905 3148-3176 Resistance 2955-2975 3233-3262
Source: Telequote
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Agricultural Commodities
Refined Soy Oil
Ref soy oil futures traded on a mixed note. Weak international edible oil prices have pressurized prices. However, festive demand coupled with weakness in the Rupee supported prices at lower levels and settled 0.19% lower on Wednesday. Agri Ministrys proposed to increase the import duty on refined oil coupled with fears of soybean crop damage also supported prices at lower levels. 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 3.2% to 947591 tn in June, supported by sunflower and soy oil imports ahead of Ramadan. Monthly soy oil imports rose 2.7% as local supplies are almost exhausted before the new planting season for soybean. Stockpiles of edible oil at ports on July 1 stood at 690,000 tn, the trade body said, higher than 675,000 tn on June 1. Stocks were still on the higher side despite the decline in monthly imports.
Market Highlights
% Change Unit `/10 kg `/10 kg USc/ Bushel MYR/Tonne `/10 kg Last 672.30 664.40 41.64 2278 498.70 Prev day -0.14 -0.19 -1.12 -1.51 -0.99
as on Aug 7, 2013
Ref Soy oil SpotNCDEX Ref Soy oil- NCDEX Aug '13 Fut Soybean Oil- CBOTAugust'13 Fut
CPO-Bursa Malaysia August '13 Fut CPO-MCX- July '13 Futures
Source: Reuters
Outlook
Ref soy oil may trade on a mixed note today. Festive demand coupled with a weakness in the Rupee may support prices. However, weak international markets coupled with comfortable stock position of imported edible oil coupled may pressurize prices at higher levels.
Outlook
CPO futures are expected to trade higher today due to lower level demand coupled with festive buying. Overall weakness Rupee may also support prices. However, comfortable supplies may cap sharp upside in the prices.
Technical Outlook
Contract Soy Oil Sept NCDEX Futures CPO MCX Aug Futures Unit `/qtl `/qtl
valid for Aug 8, 2013 Support 639-642 492-496 Resistance 648-651 502-505
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Agricultural Commodities
Spices
Jeera
Jeera Futures continued to trade higher overseas as well as improved domestic demand supported prices. However, higher arrivals and good rains in Gujarat capped sharp gains and settled 0.99% higher on Wednesday. Good rains in the main jeera growing regions have increased the moisture content of the soil, improving prospects of a better sowing in the coming season. Currently, about 70% of total arrivals have been traded in the mandis. According to IBIS, India exported 9462.64 tn of jeera in June. The major destinations were UAE, Nepal, Vietnam & USA. 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. 1% Jeera of Indian origin is being offered for Singapore at $2,3502,400/tn (FOB Mum) while for Europe at $2,750-2,850/tn (FOB Mum).
Market Highlights
Unit `/qtl `/qtl `/qtl `/qtl Last 13578 13243 5038 4798 Prev day 0.31 0.99 -4.95 4.03
as on Aug 7, 2013 % Change WoW 0.51 2.02 -7.99 -5.92 MoM -0.13 -0.75 -11.00 -16.87 YoY -17.45 -15.50 -9.37 -15.94
Jeera Spot- NCDEX Jeera- NCDEX July '13 Aug Turmeric Spot- NCDEX Turmeric- NCDEX Aug '13 Fut
Source: Reuters
as on Aug 7, 2013 18-Oct-13 7 342.5 167.5 0 as on Aug 7, 2013 20-Aug-13 -239.5 0 20-Sep-13 -171.5 68 0 18-Oct-13 -77.5 162 94 0 as on Aug 6, 2013 Stocks as on Qty in 5th Aug Process 1430 3996 5426 8595 NCDEX Sept contract 0 0 6 0
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 with a positive bias as overseas as well as domestic demand may support. However, higher supplies and good rains in the jeera sowing regions may cap gains. Overall trend remains positive for Jeera due to overseas demand, as Syria & Turkey are not shipping.
Turmeric
Turmeric futures recovered sharply from lower levels and hit the upper circuit breaker on account of short coverings after prices touched a contract low of `4556 in the previous session prices have declined sharply on account of huge carryover stocks as well as good sowing progress. The regulator imposed 10% special margin on short side in Turmeric w.e.f 06/08/2013.
Technical Outlook
Jeera NCDEX Sept Futures Turmeric NCDEX Sept Futures Unit `/qtl `/qtl
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Agricultural Commodities
Sugar
Sugar futures traded with a positive bias after the Food Minsiter said that his ministry has moved a cabinet proposal to allow state governments to hike prices of sugar for PDS. Expectations of improvement in demand ahead of the upcoming festive season also supported prices at lower levels. An increase in the import duty as well as export demand also supported prices while ample supplies capped sharp gains. Good monsoon conditions in Maharashtra and Karnataka has led to expectations of recovery in the cane yield, keeping prices under pressure. Indian traders have signed deals to export 75,000 tonnes of white sugar in July, reversing an import trend after the rupee's depreciation. However, the same didnt reflect in the market as supplies are significantly higher. According to the Ministry of Agriculture, Sugarcane has been planted in nd 48.53 lk ha as on 2 Aug 2013 as compared to 50.06 lk ha last year as drought affected Maharashtra and Karnataka have reported lower area. Based on satellite images for June and field surveys carried out by ISMA (Indian Sugar Mills Association), total sugarcane acreage available for crushing in the sugar season 2013-14 will be about 51.50 lakh hectares, which is about 1.52% less than 52.30 lakh hectares last year. (Source: ET)
Market Highlights
Unit Sugar SpotNCDEX Sugar M- NCDEX Aug '13 Fut Sugar No 5- LiffeAug'13 Fut Sugar No 11-ICE October '13 Fut `/qtl 3013 `/qtl 494.3 $/tonne 372.89 $/tonne 1.39 1.23 0.20 Last 3056
as on Aug 7, 2013 % Change Prev. day WoW -0.29 0.48 -0.40 0.73 -1.12 MoM YoY -0.28 -14.25 0.80 -0.34 2.76 -13.22 -16.11 -20.44
Source: Reuters
as on Aug 6, 2013 Stocks as on 5th Aug 1698 5532 0 923 8153 NCDEX Sept contract Qty in Process 0 0 0 0 0
Outlook
Sugar Futures are expected to trade on a positive note as festive demand coupled with higher duties and food ministrys proposal to allow higher prices for PDS may support prices. However, ample supplies and expectations of improvement in the cane output may cap upside.
Technical Outlook
Contract Sugar Sept NCDEX Futures Unit `/qtl
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Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton Futures traded on a positive note as the government has allowed the Cotton Corporation of India to export more cotton in the current season coupled with a weak Rupee and settled 1.27% and 1.33% higher on Wednesday. However, higher sowing and above average rains so far in the country have capped sharp gains. Ministry of Agriculture, in its fourth Advance estimates of Food grain production wherein it pegged Cotton output at 34 million bales (1 bale= 170 kg) in 2012-13, lower than the record 35.2 million bales in the previous year. With the cotton season nearing its end, arrivals have declined considerably. According to CCI, Cotton arrivals since the beginning of the th season (Oct 2012- Sep 2013) till 14 July is reported at 331.15, down 1.48 percent compared to same period last year.
Market Highlights
Unit `20 kgs `/Bale USc/Lbs Last 995 20500 88.53 91.15
as on Aug 7, 2013 % Change Prev. day WoW 1.27 2.05 1.33 4.33 3.16 3.39 0.39 -1.46 MoM YoY 2.05 #N/A 2.14 13.95 5.61 17.26 -1.19 6.73
Source: Reuters
NCDEX Kapas Apr Fut MCX Cotton July Fut ICE Cotton Oct 13 Cot look A Index
Sowing Progress
Cotton sowing is nearing its end and almost 90% of sowing is completed till last week. As per the ministry of agriculture, cotton sowing was done nd on 108.52 la ha on 2 Aug 2013 as against 144.87 la ha last year. In Gujarat, cotton was sown on 26.13 la ha as on 29 July 2013 as against 21.92 la ha during the same period last year. In Rajasthan, it was done on th 2.94 la ha as on 30 July 2013 as against 4.47 la ha last year. In AP, st cotton sowing was undertaken on 18.65 la ha as on 31 July 2013 as against 18.14 la ha last year.
th
as on Aug 6, 2013
Stocks as on 5th Aug 4900 200 95200 15500 0 0 115800 NCDEX April contract
Outlook
Cotton prices are expected to trade higher due to higher export permission coupled with domestic demand. Also, bullish international markets may support prices. However, higher sowing as well as a good monsoon may cap sharp gains.
Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX Oct Futures Unit `/20 kgs `/bale
valid for Aug 8, 2013 Support 980-987 20200-20360 Resistance 1002-1010 20630-20770
Source: Telequote
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Agricultural Commodities
Guar Complex
Guar complex continued to trade lower and touched a fresh contract low of `3980 in Guar seed as abundant supplies and expectations of higher production amid ample rains have mounted downside pressure on the prices. Early sowing this season will also ensure early harvesting of guar crop thereby leading to smooth supplies in the physical markets. However, prices recovered marginally from lower levels on account of short coverings. Traders are not ready to sell their stocks at such low levels and are ready to hold their stocks for better realization. Guar seed as well as Guar gum October Futures settled 1.21% and 1.47% lower on Wednesday. Overall trend in guar, since the relaunch of the futures contract, remained bearish. Higher production last year and comparatively lower exports have resulted into higher supplies this year. With early and above normal monsoon so far, prospects for next years crop are also strong.
Market Highlights
Unit Guar Seed SpotNCDEX Guar Seed- NCDEX Oct 13 Fut Guar Gum SpotNCDEX Guar Gum- NCDEX Oct 13 Fut `/qtl 4090 `/qtl 13630 `/qtl 11430 `/qtl -1.47 -3.02 -1.21 Last Prev day 4982 -2.02
as on Aug 7, 2013 % change WoW -2.47 -2.62 -5.00 -3.71 MoM -31.07 -42.72 -33.01 -43.97 YoY #N/A #N/A #N/A #N/A
Source: Reuters
as on Aug 7, 2013 20-Dec-13 -892.35 0 20 0 as on Aug 7, 2013 20-Nov-13 -2229.55 -30 0 20-Dec-13 -2249.55 -50 -20 0 as on Aug 6, 2013 Stocks as on 5th Aug 69 131 20 Qty in Process 0 0 0
Outlook
Guar seed and guar gum may continue to trade with a negative note as overall trend remains bearish due to higher sowing. If the current pace of rains continues and sowing increase significantly, we may see further downside over the short term. However, farmers may hold back their stocks expecting better realization in the coming days.
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 Aug 8, 2013 Support 3960-4020 3950-4010 11120-11280 11060-11220 Resistance 4150-4220 4150-4220 11600-11750 11540-11700
Source: Telequote
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