12  Commodities Etc

THE ECONOMIC TIMES | BENGALURU | WEDNESDAY | 13 JANUARY 2016

WRITING ON THE WALL Hedge funds are positioning themselves to take more losses,
China is slowing & the yuan devaluation will cast its shadow on commodities in 2016

Worst Jan in 24 Years

Bloomberg

Tweet of the Day

Jim Cramer
@jimcramer
There is way too much
rancor here about the
notion of what it will
take to get a real bottom.
Commodities must stabilize.

Quarts & Ounces

Brass Chadripital Desi - Delhi
(In ` per 1 kg)
375
350
325
300
275

Jan 12, 2016

Index
COMMODITIES

Bullion
PREV DAYS

LAST WEEK

3803.7

3976.7

3984.6

Reuters

PREV DAYS

LAST WEEK

1488.3

1608.3

1488.3
-120

%CHANGE

Chemicals
DAYS INDEX

PREV DAYS

LAST WEEK

2218.0

2056.4

2224.7
161.6

%CHANGE

Edible Oil
DAYS INDEX

PREV DAYS

LAST WEEK

1306.8

1331.3

1300.8

%CHANGE

0.00
-2.00
-4.00

1995-1999

2000-2004

2005-2009

2010-2014
VASU

STANCHART TAKE

ANIMISHA

idea that the economic background in China is worse off

than people thought. Theres
a lot of questions about what
will happen with demand,
and markets do not like uncertainty.
The Bloomberg Commodity
Index dropped on Monday for
the fourth time in six ses-

Prices could fall as

low as $10/bbl before
most money managers in the market
conceded that matters had gone too far
sions, touching 74.89, the lowest since 1999. The gauge is
trading close to its record low
of 74.2411 reached that year.
Crude oil dropped to a 12-year
low on Monday, and copper
fell to its cheapest since 2009.
The decline for prices is
dragging down commodity
companies.

Investors Buy Gold-Backed ETFs

London: Crude oil steadied

near $32 per barrel on Tuesday, recovering slightly as investors booked profits after it
fell to a near-12-year low on
concerns over oversupply
and low demand from China.
Prices are down around 15%
since the start of the year,
dragged lower by a glut, Chinas weakening economy and
stock market turmoil, as well
as the strong dollar, which
makes it more expensive for
those using other currencies
to buy oil. Benchmark Brent

Cement
DAYS INDEX

2.00

Farmland values are down

from all-time highs in the
US. Global surpluses left
corn and soybean prices
below the cost of production. And the amount of
agricultural debt relative to
income ballooned to the
highest in three decades,
just as the Federal Reserve
has begun raising interest
rates for the first time since
2006. Bloomberg

Cocoa Erases
2015 Gains
Better-than-expected
supplies from West Africa,
prospects for sluggish
chocolate demand and a
broader commoditymarket sell-off helped send
cocoa down 11% since the
start of the year on ICE
Futures. It wiped out last
years 10% increase in
cocoa, which was the best
performance among all raw
materials on the S & Ps GSCI
Spot Index. Bloomberg

Crude has fallen 15% this year dragged down by glut, China slowdown & strong dollar

-173

%CHANGE

4.00

HOLDINGS IN GOLD-BACKED ETFS

1700
1650

ETFs climbed in
past three days,
most since
Jan 2015

Assets rose on
concern over
US growth,
Greek debt

1600
1550
1500

Jan Feb Mar Apr May Jun Jul Aug Sep

2015
SOURCE: BLOOMBERG

Oct Nov Dec

Jan
2016

1450

GURURAJ

crude fell to a low of $30.43 per

barrel, a level last seen in
April 2004, before recovering
to $31.75, up 20 cents or 0.5%.
Every time you hit new
lows theres the potential for

profit taking, and as people

try to pick the bottom of the
market, said Richard Mallinson, geopolitical analyst at
Energy Aspects.
US crude West Texas Inter-

mediate (WTI) fell to a low of

$30.41 per barrel, a level last
seen in December 2003, before
crawling back to $31.06, down
35 cents or 1.11%.
The overall tenor of the market remained bearish, analysts said. Trading data showed that managed short positions in WTI crude contracts,
which would profit from a
further fall in prices, are at a
record high, indicating that
many traders expect further
falls. Chinas slowing economy has also weighed on oil,
which has shed more than
70% of its value since
mid-2004.

Low Acreage, Output Help

Traders to Bet on Wheat

-24.5

19545 Tonnes

Madhvi.Sally@timesgroup.com

RESERVES OF CASSITERITE,
THE ORE FROM WHICH TIN
IS EXTRACTED, IN INDIA

Did You Know?

Canary Seed
No Longer
Just for Birds
Canary seed, a grain
cultivated exclusively for feeding
birds may soon find
its way into bread, cookies and
pasta for gluten-free consumers. The US Food & Drug Administration and Health Canada
have approved canary seed for
use in human food, the Canaryseed Development Commission of Saskatchewan said in a
statement on Tuesday. Canada
is the worlds largest exporter.
Whole seeds can be used in nutrition bars and sprinkled on
hamburger buns in place of sesame seed, while the flour can
be used to make bread, cookies, cereals and pasta.

New Delhi: The wheat market is

likely to remain bullish this year
due to lower acreage and output
along with higher than normal
temperature. While this may impact farmers adversely, for traders wheat will offer a more attractive valuation than other
commodities such as coriander,
pulses and soyabean.
Wheat is a good investment
buy as it is the cheapest commodity in the agro market. Investors and stockists will go for it;
they can make 20-30% in the next
six months, said Biren Vakil,
chief executive of Paradigm
Commodity Advisors, an Ahmedabad-based commodity derivative specialised firm.

VIEW

Wheat
Sown

this last
year year

Wheat Production
this year 78-80 m tonnes
last year 88.95 m tonnes

Reasons for low

production
WHEAT
O Lower acreage
STOCK
and output
WITH FCI
O Higher than
normal temperature

24 m t

WEATHER PLAYS A HAND

Awarm winter this year is expected to impact

wheat production and
lead to low procurement by FCI
As on January 8, wheat has been planted on 28.2 million hectares, 6% lower than the 29.9 million hectares sown by this time
last year, according to the agriculture ministry.
Further, a warm winter this year is expected to impact wheat
production and lead to low procurement by the Food Corpora-

tion of India.
The government should buy
wheat in Chicago futures now
and sell later in September as
they did in 2005-06, thereby hedging their position, said Tejinder Narang, former director of
PEC, a state-run international
trading company that has expertise in agricultural trade.
In 2005-06, wheat production
was 68 million tonnes.
Narang said that in that year
the government had even prevented and threatened traders

First, Ascertain
Targets & Stocks
The government must
undertake a proper assessment of the wheat production target at the earliest. It
should also assess its food
stocks to determine how
much wheat will have to be
imported. A proper import
timetable will have to set
up to ensure that prices in
the domestic market don't
shoot up, and that stocks
can be imported at best
price.

from buying from the local market. Traders and analysts said
wheat production is likely to be
78-80 million tonnes, compared
to 88.95 million tonnes in the previous year. In 2013-14, wheat production was 95.85 million tonnes. A 10 million tonne decline
in production will naturally lead
to a spike in prices, not only in
the domestic market but also in
the international market, said
Narang. This will lead to a higher dependence on imports for
quality grain, he said.

Kochi: The sharp fall in crude oil prices

has not made synthetic rubber cheaper,
much to the frustration of the rubber products industry, which is struggling to come out of a persistent downturn in demand. Synthetic rubber (SR), a derivative
of crude oil, is used extensively in the tyre
and other rubber goods industry.
The suppliers of SR, which India mostly
imports, are yet to reduce the prices, given the increasing demand for the products world over. The radialisation of tyres has increased the usage of SR in the
tyre industry. The percentage of SR used
in car radials is more than in the ordinary
tyres.
While the raw materials for synthetic rubber
Synthetic
are based on crude derirubber
vatives, they have their
production
own demand and supply
was up 35%
position, which influenand
ces their pricing. This, in
consumption
addition to the continued
5% in the five
weakening of rupee agamonths to
inst dollar, has resulted in
August 2015
SR producers maintaifrom a year
ning their costs. Hence,
earlier
not much has changed in
terms of our cost of production, said
Gaurav Kumar, CFO of Apollo Tyres.
Both the production and consumption of
synthetic rubber has been going up in the
country. At the same time, natural rubber
production has been showing a consistent drop in the last one year. As per Rubber Board data, SR production was up by
35% and the consumption by 5% in the five months to August 2015 from a year ago.
Both the NR production and consumption fell during the period.
The non-tyre industry comprising footwear, bicycle tyre tubes, conveyor belts,
hoses and tread rubber, is a significant
consumer of SR. The main SR used is styrene butadiene. Others like EPDM, chloroprene and silicone are imported.

Palladium Drops
to 5-year Low as
China Demand
Concerns Mount
Palladium slumped to a five-year
low as Chinese car sales increased
at the slowest pace in three years,
adding to concerns about weaker
demand in one of the worlds biggest buyers of the metal. Gold was
little changed.
Platinum, which is mainly used
in catalytic converters that cut
harmful emissions, fell near the
lowest in seven
years. With a faltering economy and
turmoil in the stock
market
hurting
consumer
confidence, Chinas vehiChinas
vehicle sales cle sales rose 4.7%
rose 4.7% last last year, the smallest gain since 2012,
year, the
smallest gain China Association
of Automobile Mansince 2012
ufacturers
data
show. The country accounts for
more than a fifth of global palladium demand and the recent market
tumult is a further worry for investors already concerned by Chinas slowest economic expansion
in a generation. Equities in Shanghai were little changed on Tuesday as policy makers intensified
efforts to stabilise the yuan.
The markets for platinum and
palladium are nervous about
whats going on in China, despite
that it has been calming down,
Georgette Boele, an analyst at
ABN Amro Bank , said. Jewellery
demand from China is likely to be
lower, and thats also affecting
the price of metals, she said.

Bajra Weakens Palmolein Slips Gur Stays Down Masoor, Malka

on Reduced
as Stock Supply Down on Slow
on Reduced
Demand
Offtake
Adequate
Offtake

NEW DELHI Sesame oil prices fell

by `. 200 per quintal
in an otherwise
steady wholesale oils and oilseeds market on Tuesday on
subdued demand. However,
other edible and non-edible oils
continued to trade in a tight
range in the wholesale market in
limited deals and settled around
the previous levels. Traders at
the wholesale market said low
demand from retailers and
vanaspati millers mainly led to
the decline in the sesame oil
prices.

NEW DELHI Prices

of masoor and
malka declined up
to `. 100 per quintal
at the wholesale pulses market in
the national capital on Tuesday
on sluggish demand from retailers. Traders said low demand
from retailers against sufficient
stocks on higher supplies from
producing belts mainly led to
decline in masoor and malka
prices. In the national capital,
masoor small and bold declined
by `. 50 each to `. 5,200-6,200 and
`. 5,250-6,250 per quintal, respectively.

MUMBAI Refined
palmolein prices
slipped slightly at
the Vashi oils and
oilseeds wholesale market on
Tuesday on reduced retail offtake. Groundnut oil and linseed
oil held steady in the absence
any worthwhile buying activity.
In non-edibles section, castorseeds bold, castor oil commercial fell on lower demand
from shippers and soap industries. In the edible segment, refined
palmolein softened by a Re per
10 kg to `. 461. While groundnut
oil closed unchanged at `. 970.

NEW DELHI Gur

prices fell further up
to `. 200 per quintal
at the wholesale gur
market on Tuesday on adequate
stocks against low demand. A
similar trend was extended to
Muzzafarnagar and Muradnagar
markets. Traders said fall in
demand from local parties and
stockists against adequate
stocks on higher supplies from
producing areas kept the pressure on gur prices. At Delhi, gur
pedi fell by `. 200 to `. 2,7002,800 per quintal. Shakkar also
eased to `. 2,900-3,000/ quintal.

Rice Procurement

Krishnakumar.PK@timesgroup.com

Sesame Oil
Slides on Slow
Demand

NEW DELHI In a
restricted activity
day, bajra prices
shed `. 5 per quintal
at the wholesale grains market
on Tuesday due to reduced
offtake by consuming industries. However, other grains in the
market held steady in thin trade.
Traders attributed the weakness in bajra prices to muted
demand from the consuming
industries as against the adequate stocks position. In the
national capital, bajra traded
lower by `. 5 to `. 1,390-1,395 per
quintal.

Government rice
procurement may
surpass last years
level despite prospect
of lower production
due to deficient
monsoon

ANIMISHA

Bloomberg

Wheat Catches
Investors' Eye

Procurement
of Rice may
Cross 15 Mark

US Farm
Boom Fizzles

Oil Stops at $32 as Investors Book Profit

(2003=1000)

DAYS INDEX

Percent Change
in BCOM Index
through Jan 11

29.9 m hectares

Jan 12, 2015

Bloomberg Commodity Index has its worst start to a year ever

28.2 m hectares

250

Commodity Carnage

Sure, 2015 was a bad year for

commodities. So far, 2016 is
even worse.
The Bloomberg Commodity
Index, a measure of returns
for 22 raw materials, has tumbled more than 4% in 2016.
Thats the worst start to a year since the comparable data
begins in 1992. Hedge funds
are positioning for more losses, holding the biggest netshort bet across raw materials since at least 2006.
Chinas slowing economy is
partly to blame. The Asian country unexpectedly devalued
its currency, fanning concern
that growth will be worse
than expected. The yuan move sparked global market turmoil and sent investors to the
haven of the dollar, cutting
the appeal of raw materials as
a store of value. With most
energy, agriculture and metal
products plagued by excess
supplies, prices retreated in
2015 for a record fifth straight
year. Were in a vicious cycle
for commodities, said Quincy M Krosby, market strategist at Prudential Financial,
which oversees about $1.2 trillion, said. With the yuan depreciation, youve seen more
dollar strength, which is negative for commodities. And
underpinning all that is the

Oil Fall Fails

to Drag Down
Rubber with it

15.29
million
tonne

20
million
tonne

Oct 14Jan 15

Oct 15Jan 16

31 %
Increase in rice
procurement so far

9.34 MT
Rice procurement
in Punjab this year

2.85

MT

Rice procurement in
Haryana this year

REASONS FOR
INCREASE IN
PROCUREMENT
Fall in prices of
common variety
Sharp decline
in basmati
rice rates

MCX FUTURE PRICES

PRODUCT
EXPIRY DATE

OPEN

HIGH

LOW

ALUMINI-1KGS (Lot-1 MT)

29-Jan-16
98.60
98.75
97.75
29-Feb-16
99.45
99.65
98.70
31-Mar-16
99.80
99.80
99.80
ALUMINIUM-1KGS (Lot-5 MT)
29-Jan-16
98.55
98.75
97.75
29-Feb-16
99.60
99.70
98.75
CARDAMOM-1KGS (Lot-100 KGS)
15-Jan-16
830.00
830.00
820.00
15-Feb-16
804.60
811.00
798.00
15-Mar-16
803.00
811.90
801.80
COPPER-1KGS (Lot-1 MT)
29-Feb-16
294.25
295.20
292.05
29-Apr-16
300.35
300.50
297.20
30-Jun-16
304.25
304.25
302.50
COPPERM-1KGS (Lot-250 KGS)
29-Feb-16
294.35
295.25
292.10
29-Apr-16
299.95
300.50
297.20
30-Jun-16
304.45
304.45
302.55
COTTON-1BALES (Lot-25 BALES)
29-Jan-16
16200.00 16210.00 16090.00
29-Feb-16
16360.00 16370.00 16240.00
31-Mar-16
16550.00 16550.00 16410.00
CPO-10KGS (Lot-10 MT)
29-Jan-16
414.70
418.40
411.50
29-Feb-16
422.90
426.70
419.60
31-Mar-16
433.00
435.00
429.10
CRUDEOIL-1BBL (Lot-100 BBL)
19-Jan-16
2077.00
2118.00
2047.00
19-Feb-16
2175.00
2218.00
2146.00
18-Mar-16
2276.00
2317.00
2245.00
CRUDEOILM-1BBL (Lot-10 BBL)
19-Jan-16
2076.00
2118.00
2048.00
19-Feb-16
2170.00
2218.00
2146.00
18-Mar-16
2280.00
2315.00
2245.00
GOLD-10GRMS (Lot-1 KGS)
05-Feb-16
25883.00 25966.00 25770.00
05-Apr-16
25978.00 26061.00 25885.00
03-Jun-16
26202.00 26202.00 26114.00
GOLDGUINEA-8GRMS (Lot-8 GRMS)
20670.00 20718.00 20610.00
29-Jan-16
29-Feb-16
20820.00 20820.00 20715.00
31-Mar-16
20788.00 20836.00 20788.00
GOLDM-10GRMS (Lot-100 GRMS)
05-Feb-16
25876.00 25966.00 25780.00
04-Mar-16
25948.00 26017.00 25841.00
05-Apr-16
26029.00 26039.00 25908.00
GOLDPETAL-1GRMS (Lot-1 GRMS)
29-Jan-16
2552.00
2561.00
2548.00
29-Feb-16
2570.00
2572.00
2561.00
31-Mar-16
2582.00
2587.00
2580.00
LEAD-1KGS (Lot-5 MT)
29-Jan-16
107.45
107.95
106.70
29-Feb-16
108.35
108.50
107.25
LEADMINI-1KGS (Lot-1 MT)
29-Jan-16
107.45
107.95
106.65
29-Feb-16
108.10
108.45
107.25
31-Mar-16
109.00
109.00
108.10
MENTHAOIL-1KGS (Lot-360 KGS)
29-Jan-16
869.10
878.00
867.00
29-Feb-16
886.00
889.40
879.70
31-Mar-16
898.40
898.40
898.40
NATURALGAS-1mmBtu (Lot-1250 mmBtu)
25-Jan-16
158.70
158.70
155.40
24-Feb-16
159.10
159.10
156.30
28-Mar-16
160.70
161.70
160.30
NICKEL-1KGS (Lot-250 KGS)
29-Jan-16
554.00
556.80
545.10
29-Feb-16
560.30
562.50
551.30
563.10
563.10
558.00
31-Mar-16
NICKELM-1KGS (Lot-100 KGS)
29-Jan-16
554.00
557.00
545.50
29-Feb-16
560.30
562.70
551.40
31-Mar-16
566.70
566.90
558.10
SILVER-1KGS (Lot-30 KGS)
04-Mar-16
33583.00 33650.00 33453.00
05-May-16
34040.00 34065.00 33891.00
05-Jul-16
34482.00 34509.00 34482.00
SILVERM-1KGS (Lot-5 KGS)
29-Feb-16
33680.00 33680.00 33456.00
29-Apr-16
34085.00 34111.00 33908.00
30-Jun-16
34798.00 34798.00 34400.00
ZINC-1KGS (Lot-5 MT)
29-Jan-16
98.05
98.60
96.65
29-Feb-16
99.05
99.55
97.65
31-Mar-16
99.20
99.60
99.20
ZINCMINI-1KGS (Lot-1 MT)
29-Jan-16
98.20
98.60
96.65
29-Feb-16
98.20
99.65
97.60
100.45
100.45
98.50
31-Mar-16

MCX prices as on 12 Jan 2016, 5PM IST

CLOSE

VALUE
(LAKH)

VOLUME
(LOTS)

OPEN INT.
(LOTS)

98.10
99.00
99.80

5314.88
441.92
1.00

5412
446
1

5540
601
24

98.10
99.00

16216.69
1358.19

3303
274

3922
982

825.50
804.70
806.70

70.11
899.29
34.64

85
1118
43

544
1521
408

293.90
299.10
303.10

65188.18
1730.61
18.19

22201
579
6

26376
622
21

293.90
299.25
303.45

11921.25
525.09
2.28

16241
703
3

19059
1055
58

16200.00
16350.00
16530.00

6067.70
5704.73
1766.25

1503
1401
429

5570
10045
2143

416.80
425.00
434.50

8096.65
5915.57
1138.74

1951
1400
264

5457
4231
1079

2108.00
2206.00
2309.00

233786.73
19747.88
1090.40

112518
9079
480

52018
10813
783

2108.00
2207.00
2305.00

23109.77
2874.41
280.31

111229
13213
1235

70232
16882
1700

25803.00
25917.00
26155.00

222714.16
5118.45
78.47

8611
197
3

6459
1305
23

20644.00
20728.00
20824.00

73.79
15.16
0.83

357
73
4

1478
414
35

25816.00
25869.00
25960.00

25626.49
977.35
109.17

9905
377
42

7903
1264
144

2551.00
2563.00
2581.00

48.23
14.22
0.77

1888
554
30

16000
4390
446

107.20
107.90

47808.37
1044.74

8923
194

3862
275

107.20
107.80
108.55

11665.65
480.51
3.26

10884
446
3

4736
641
23

876.00
888.40
898.40

4711.12
837.36
3.23

1499
263
1

9901
883
33

156.80
157.70
160.80

31596.05
1328.83
136.67

16186
677
68

6590
981
174

548.60
554.40
558.80

21557.07
1033.24
159.33

15672
744
114

23836
3063
232

548.60
554.60
560.10

6282.54
587.35
21.89

11417
1056
39

15709
2112
109

33532.00
33983.00
34496.00

77705.21
1947.33
20.70

7720
191
2

14504
1065
22

33546.00
33984.00
34500.00

15274.72
710.82
12.08

9101
418
7

18834
1343
99

97.70
98.65
99.40

56586.31
2439.90
9.94

11611
496
2

6599
443
14

97.70
98.65
98.80

14016.57
926.57
14.87

14371
942
15

9387
1218
34