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Commodities Buzz March 18

Commodities Buzz March 18

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Published by RajeshKumar

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Published by: RajeshKumar on Mar 24, 2008
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March 18, 2008Visit us atwww.sharekhan.com
Guar weakness only temporary
Guar: Weakness only temporary
Although European Union (EU) has made pentachlorophenyltest mandatory for guar gum shipments from India, exporterssaid this test to check presence of toxic substances will havelittle impact on exports or prices. Of the total guar gumshipped from India, only 10-15% is used by the EU in thefood industry. As such, it would not largely affect exports.Traders are expecting a rise in export demand by the month-end as worldwide demand for guar gum and its by-productshave been increasing significantly.
Chana: Demand absent in spot
Chana futures on National Commodity and DerivativesExchange (NCDEX) ended down on higher arrivals coupledwith subdued demand in spot market. Arrivals in Delhi havegone up to 35 trucks (18-20 tonne each), mostly from MadhyaPradesh, compared with 25 trucks a day last week. Very lowoff-take of chana dal has kept millers and traders away fromthe market, which is reflected in 1% fall in price amid subduedtrade. Bikaner chana opened firm but declined subsequentlyby 1% to close at 2,660 rupees per 100 kg on lack of enquiriesfrom north India. Katawala chana at Indore was down by 60rupees at Rs2,580-2,590 on rise in arrivals and expectationof a further increase in arrivals. The counter is likely to seesome more selling at higher levels.
Soy oil: Global sell off 
The edible oil complex ended down on NCDEX amid higherimports and weak closing in Malaysian palm oil prices. India'shigher edible oil imports during the first four months of thecurrent oil year kept the market sentiment down. Domesticedible oil prices reflected the weak sentiments in Malaysianpalm prices where funds went for short positions taking cuesfrom THE weakness in soy oil prices in the 24-hour onlinetrade on Chicago Board of Trade (CBOT). This morning tooboth CBOT soy oil and Malaysian palm oil were trading indeep red. Local prices should remain subdued today too.
Jeera: Buying opportunity expected at dips
Jeera is likely to trade range-bound with weak undertone inshort term on the back of increasing arrivals of fresh crop inthe market yards amid higher production outlook. Higheryield and good acreage in Gujarat is likely to yield around2.11 lakh tonne in 2008 against 1.67 lakh tonne last year.Arrivals are reported at 18,000-20,000 bags of 70 kg asagainst 7,000-10,000 bags a fortnight ago. Buyers are
Sharekhan Commodities Pvt. Ltd.
A-206, Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai - 400013, India.
For Private Circulation onlywaiting for further decline in prices. Therefore, expectedincrease in domestic as well export demand is expected tosupport the market at lower levels and would resist againstmajor falls. Jeera export in April-January period is lower by10% as against that of the last year.
Turmeric: Prices unlikely to dip sharply
Turmeric prices are unlikely to sustain at further lower sideon lower production amid good demand at lower price level.Turmeric output during the current season is expected todecline around 7.5 lakh tonne, against 8.9 lakh tonne lastyear. However, daily inflows of turmeric in the physicalmarket at Nizamabad mandi are around 15,000 bags (1bag=70kg) as against 7,000 bags last week and are stillresisting the uptrend. Stockists are keeping themselves atsidelines at higher price level. However, price is notexpected to see major dips, as the output is lower this yearamid good global demand. Further, buying support by APMarkfed at Rs3,000 per quintal from local market is likelyto support the market. Turmeric export in the period ofApril-January is still lower by 6% as against that of the lastyear.
Chilli: Tone still weak on increasing arrivals
Chilli prices are extending its southwards journey owing toweak fundamental. Increasing arrivals of good quality cropcombined with good carry over stock are underpinning themarket tone. Increasing arrival of fresh crop are weighingthe prices. Guntur spot market has seen arrival of around1,00,000 bags (1 bag=40-45kg) for last couple of days ascompared with the daily average arrivals of 70,000-80,000bags during the last week. Chilli sanam spot prices alsoquoted almost steady at Rs3,200-3,400 per quintal. Chilliproduction this year is expected to be higher around 13lakh tonne as against 11.5 lakh tonne last year. Carry overstock from previous year is estimated around 1.5 lakh tonne.In this scenario, farmers and stockiest are offloading theirexisting stocks. With the absence of firm fundamental inshort term, most of the buyers in the spot markets arekeeping themselves at sidelines on the speculation of furtherdecline in prices. However, good export opportunity maysupport the market from dips, as the green chilli crop inPakistan was hit by severe cold that affected the supply.Karachi wholesale market green chilli price has shot up to arecord Rs180 [US $3] per kg.
sharekhancommodities buzz
Commodities BuzzMarch 18, 2008
For Private Circulation onlyNext
Pepper: Prices unlikely to sustain at lower side
Pepper prices are not expected to stay at lower side forlonger time due to tight demand-supply scenario in domesticas well as global markets. Indian parity of pepper iscompetitive at present and declined further to $3,900-3,950a tonne (c&f) as against the earlier quotation of $4,000 atonne (c&f). Brazil and Indonesia is reportedly offering thecommodity above the Indian levels. Asta grade pepper inVietnam is reportedly quoted higher around $4,100 a tonne(fob). Around 30-40% of the crop is already harvested inVietnam. However, export performance is still weak in thecountry, the total export volume in entire Februaryreportedly declined by 39% to 2,560 tonne as against thatof the corresponding period last year. Pepper export tillJanuary has already achieved 98% of the target (30,000tonne) set in the year and the export data is expected torise further. The dip in the Indian parity has provided somefurther export opportunity. Meanwhile weakening of theRupee against the Dollar is likely to widen the scope offurther export. Supply position in the major pepperproducing area is poor, as the majority of the crop hasgone towards north Indian market.
Base metals: Down sharply on long liquidation trig-gered by Bear Stearns sale
Fire sale of Bear Stearns (BS) has raised the hackles of thetraders, as the traders think that more institutions are tofollow suit.Market is keeping a close watch on the development atLehman Brothers (LB) as the market suspects that LB, inthe line of Bear Stearns, is badly hurt in the ongoing creditfiasco.LB shares plunged by around 40%. MF Global shares weredown 80% on the speculation that the investors are fleeingthe commodities as the US economic scenario worsens witheach passing day. Thus, the sentiments got badly hurt onthe BS sale and the impact spilled over to commodities aswell.There was a wide across-the-board sell-off in thecommodities yesterday. Crude oil plunged 7.67% in its intra-day swing, gold lost 3.73%, copper fell 6%, nickel lost 10.36%,natural gas fell 10.28%, silver dropped 6.89% etc. Sameintensity of sell-off was witnessed in agriculturalcommodities as well.Given the sharp gains in the commodities in the last sixweeks, the sell off is not surprising. Further losses incommodities are quite possible, however the factors thatwere instrumental in the stunning rallies are still very muchin force. More over, a lot would hinge on the FOMC ratedecision to be out tonight. Amid mounting credit troubles,market expects a cut of 100-125 basis points, howeverextremely weak Dollar and high inflationary pressure in theUS could prompt the US Federal Reserve (Fed) to go for a75 bps cut. A rate cut 75 bps would not be so supportive forcommodities as it could prop up the US Dollar for sometime.China's premier has called for "forceful'' measures to meetthe inflation target of 4.8 percent this year. China's centralbank governor said that there is still room to raise interestrates and increase reserve ratios for commercial lenders.This development is negative for the commodities.
closed with a loss of $309 at $8,051. It rose to$8,521 in the Asian trading hours on the US Dollar weakness,however the long liquidation by the US traders triggered amassive slide. The red metal could finally find a supportaround $8,000. A build-up of 275 tonne in the LME stockpilesadded to the liquidation pressure. Despite the sell-off LMEcash-to-3 month spread tightened by $5 to $129 (b).This issupportive for the metal. The red metal is expected to findsome support around $8,000, however a lot would dependon LME stocks, currencies, and equities movements. Weexpect that looking at the strong demand season of ChinaQ2, drop in prices would be limited.Support is seen at Rs326.50/Rs324.50/Rs316. Resistancewould come at Rs335.
closed with a steep loss of $3,150 at $29,400.Stainless steel demand is yet to pick-up. Thus, the metalfell sharper than its peers. LME stockpiles remain at multi-year high level. Nickel is expected to find support around$28,000 in case further liquidation occurs.Support is seen at Rs1,218/Rs1,201/Rs1,188. Resistancewould come at Rs1,248/Rs1,255.
closed with a loss of $120 at $2,968. Afterfalling below $3,000 the light metal could witness somemore selling, though the long-term prospects are bullish.Support lies at Rs118.15/Rs114.90. Resistance lies atRs121.35.
closed with a loss of $185 at $2,900. LME stockpilesrose by 200 tonne. The metal is seen trading in line withcopper.Support is at Rs117.40/Rs113. Resistance would come atRs119.80.
closed with a loss of $123 at $2,477. A drop of 950tonne in the LME stockpiles couldn't help the metal. Themetal would take its clues from copper for its direction.Support lies at Rs98.95/Rs97.10/Rs95.70. Resistance liesat Rs102.

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