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COMMODITY MARKET (SEM IV

)
A Supplement to Overview the Facts With Accompanying Text for Financial Studies Spring 2012

By Maneesha R. Punjabi S.Y.F.M. Roll No.: 35 V.E.S. College of Arts, Science & Commerce

. black pepper cannot be a bad commodity to buy. Guar seeds commodity therefore is not a bad option to invest in. and Tamil Nadu. Although it faces the trouble of water logging in more or less areas of Karnataka and the risk of it being strangled. Individuals that have short-term scenes can invest into this commodity. Therefore. which spilled over the farms leading in hampering of the crop. the cost of Tur Dal is going to depress. the rainfall experienced is controlled. TUR DAL Supposedly. SOYABEAN Omitting Gujarat. The cause behind the unfluctuating prices of this trade good is that the output has been haltered because of the monsoon and the weather being murky and mingled. One of the other reasons for not inducting in this crop for them is due to heavy rainfall received in the states of Orissa and Gujarat. the monetary value of Soyabean is hoped-for to be horse barn. coast of Karnataka. it is not advisable for the individuals having a scene of long-run prospects to go for this commodity. The commodity is by and large produced in South India and in most parts of Kerala.WHETHER TO BUY OR WHETHER TO SELL Source: Mint Paper August 13. Hence. So. 2008 Interpretation: BLACK PEPPER With the anticipation of the costs being hiked. but overall black pepper seems to be satisfactory commodity to make good pounds. Soyabean gets a “green signal” for the investors to induct. it would be a wise decision not to opt for Tur Dal commodity. with almost no impingement on the overall necessity. But owing to belated rains in the parts of the state of Maharashtra and peninsula where the crop is planted. GUAR SEEDS It looks like the prices of guar seeds will be left unfluctuating.

The Coffee Board chief said that export-value for the last quarter of 2008 had also diminished due to global components like the turmoil in fiscal markets. . based on per-tonne realizations of Rs 109.583 tonnes as versus 220.346 in the corresponding period of 2007).000 previously.763 (Rs 89.421 tonnes from 152. The previous highest byway of India’s coffee exports was $469 million or Rs 1. Mr. the total value realized for this year’s coffee exports had touched $575 million or Rs 2.935 tonnes in the corresponding period of 2007.V. The saving grace.583 tonnes as against 220. rupees or realizations per tonne. whether in dollars.946. He said that India’s coffee exporters had cashed in on the more high-pitched costs to sell as much as they could. they do not see a substantial deterioration in export-volumes for fiscal 2008-09. The Coffee Board chief said that export-value for the last quarter of 2008 had also fallen due to global factors like the turmoil in financial markets. Mr. despite volumes falling to 149. the total value realized for this year’s coffee exports had pertained $575 million or Rs 2.946. the last quarter of 2008 saw a setback. G. the total value of exports was 19% higher at $395 million ($332 million). Interpretation: The schedule 2008 cracked all the former puts down of India’s coffee exports in terms of value. Rau added. we do not see a significant drop in exportvolumes for fiscal 2008-09. Despite all that. Krishna Rau. The record for this year was due to a peak performance in the first three quarters when. 2009 India’s coffee exports for calendar 2008 broke all previous records in terms of value.400 crore. Volumes in the last quarter fell by 18% to touch 37. Coffee Board chairman GV Krishna Rau told ET here on Tuesday that despite a marginal fall in volume to 219.535 tonnes from 45. whether in dollars. he added to ET. Rau said India’s coffee exporters had cashed in on the higher prices to sell as much as they could.178 in the corresponding period of the previous year.” Mr. Rau also contributed that the old-crop sales had almost been discharged and the new-crop arrivals delayed because of heavy rains in the coffee-growing areas in OctoberNovember. based on per-tonne realizations of Rs 109. ET was been told by the Coffee Board chairman. This was because the unit-value realized per tonne in the first nine months of 2008 was 27% higher at Rs 113. The previous highest by way of India’s coffee Exports was $469 million or Rs 1.000 previously.931 crore in 2006.931 crore in 2006. However. was that the old-crop sales had almost been exhausted and the new-crop arrivals delayed because of heavy rains in the coffeegrowing areas in October-November.COFFEE EXPORTS HIT A FRESH RECORD Source: Economic Times January 1. a credit squeeze for buyers and the fear of recession. Mr. “Despite all that. rupees or realizations per tonne. Rau added. that despite a borderline come down in bulk to 219.400 crore.

after a plentiful crop of 26. The Economic Times put forward that the main reason for sugar prices having gone up this month to over Rs 40 a kilo.39-lakh tonne) in the January FSQ from the same period a year ago.7 MT last year. a couple of alternatives are available with the government for placing a hat on the coiling cost of sugar. “Sugar mills have to offload 50% of the FSQ amount in the first 15 days of Bitter Taste a month and sensing the shortage of free sale to the market this month. for which it has come under sharp criticism from the opposition. Apart from the FSQ. who is closely watching developments at the Centre. One is to increase the amount of nonlevy or free sale quota (FSQ) sugar that it prescribes for release by mills in the market at the beginning of each month.” said the industry official. it can ensure a greater flow of sugar to the market and a consequent reduction of prices. led to the cancellation of the Cabinet-level meeting on the same topic. each sugar mill has to supply 20% of its annual output for release to the public distribution system.4 MT in 2007-08 season. The main reason for sugar prices having risen this month to over Rs 40 a kilo. speculators have driven up the price. and that if the government increases the FSQ and reduces the limitation on offloading the quota to seven from the present 15 days. Ram Narsinghdev Sahgal submitted that the production in the sugar year (October 2009-September 2010) was figured out to be 15. but the meeting was cancelled due to the illness of CPM’s ailing leader Jyoti Basu. is because of a 2. for which it has been brought underneath a dangled sword from its foes. it can assure a greater flow of sugar to the market accompanying decrease of prices. The malady of Jyoti Basu. is because of a 2. . CPM’s ailing leader.39 lakh tonne) in the January FSQ from the same period a year ago. against 14.5 million tonne.” Interpretation: Perhaps. up almost twofold from a year ago. said an industry source from Delhi. and the other is to reduce the restriction period on selling 50% of the FSQ from 15 days to seven days. 2010 A few options may be available with the government for putting a lid on the spiraling price of sugar. The issues were to be discussed at the Cabinet level on Thursday. The industry official said that the sugar mills have to offload 50% of the FSQ quantity in the first 15 days of a month.GOVT LEFT WITH LIMITED OPTIONS TO CONTROL SURGING SUGAR PRICE Source: Economic Times January 12.17-lakh tonne decrease (16.17 lakh tonne decrease (16. “If the government increases the FSQ and reduces the restriction on offloading the quota to seven from the present 15 days. plungers have approached the price. and smelling the dearth of free sale to the market this month. up almost double from a year ago. under which the government provides sugar at a subsidized rate to ration card holders.

“Kandla port in Gujarat is a favorite destination for silver shipments into the country since transport by containers is the cheapest route. “We have seen a drop in imports since January and expect the trend to continue this month too with prices having breached 50. Apart from jewellery and gift items.23 tonne. Unlike gold.” said an official from MMTC. comes as no surprise as silver has risen 24% from 44. according to market experts.5 tonne in the corresponding period of FY10 as prices surged beyond 50. importers. silver is used mainly as plating in electrical and electronic applications. particularly precious metals like gold and silver. it’s possible overall imports could be lower this year. The price in the financial year to March 22 has doubled from the previous financial year as overseas funds pumped money available at close to 0% interest rates into commodities. Silver imports from April 2010 to February 2011 dropped to 343 tonne from 451. During the same period in 2008-09. 000.SILVER IMPORT DROPS 24% ON HIGHER PRICES Source: Economic Times March 24. trading agents or indenters. .77 tonne in January.000 tonne in FY10 and 4. this disparity shrinks and local rates arrive at parity with international price. While the state imported the highest quantity of 161.” he added. “There has been a significant decline in silver imports this year. imports plunged over 70% to 47 tonne last month and the figure up to March 18 was an abysmal 6 kg. 2011 Imports of silver into the country could be lower this financial year with figures from Gujarat. director of GSECL.000 a kg to the bank rate towards expiry of the contract. showing a 24% reduction in imports in the eleven months of FY11due to skyrocketing prices. silver imports into the state were ruling at 1418. requesting anonymity. but imports were pegged by some industry sources at around 3. the silver hub of India.000 tonne in the previous fiscal. A disparity in bullion rates occurs when there is a sudden spike in international rates. This results in local market prices lagging the overseas rate. Over time. resulting in people taking delivery on the bourse instead of opting to buy from banks whose rates were higher. Experts like Ketan Shroff. there is no organized compilation of silver imports and consumption trends in India. show.175 a kg (excluding 1% VAT) since the beginning of February to 54. explained that the spike in the international market led to a disparity between local and bank rates. GSECL is a government-recognized exim house extending services to exporters.715 on March 22. If figures from Gujarat show imports have dipped. The fall. one of the largest suppliers of gold and silver in the country.” said Samir Mankad.000 a kg over the past two months. India is a major importer of both gold and silver. which facilitates import of precious metals to Gujarat via its air cargo complex at Ahmedabad. a leading bullion dealer with an office in Ahmedabad. data from Gujarat State Export Corporation (GSECL). Silver for March delivery on local commodity bourse MCX traded at a discount of 1.

one of the largest suppliers of gold and silver in the country. the silver hub of India. imports of silver into the country could not be higher this financial year with computes. . but imports were stabilized by some industry sources at around 3. 000. demonstrating a 24% reduction in imports in the 11 months of financial year 2011 due to skyrocketing prices. Ram Sahgal & Madhvi Sally also stated the fact that unlike gold.000 a kg to the bank rate towards expiry of the contract.000 tonne in FY 2010 and 4. there is no coordinated compilation of silver imports and consumption trends in India.Interpretation: With Gujarat. during the period in 2008-09. According to the Economic Times.000 tonne in the previous financial year. stated that they have seen a cut down in imports since January and expect the trend to continue this month too with costs having gapped 50. silver imports into the state were dominating at 1418. ensuing in people taking delivery on the Bourse instead of choosing to purchase from banks whose rates were higher.23 tonne. It further stated that silver for March delivery on local commodity Bourse MCX traded at a discount of 1. An official from MMTC.

the US Department of Agriculture said. Futures still dropped 18% this year. Ukraine’s winter-wheat crop is in “poor condition” after persistent dry weather.S. that’s sure helping our exports.2% to settle at $6. Telvent DTN said. Hedge funds and other speculators have cut net-short positions by 17 percent since Nov. Commodity Futures Trading commission data show. and the lack of snow cover may leave crops vulnerable to damaging cold. 19% more than a week earlier. U. . Wheat also may have gotten a boost from speculators buying contracts to close out bearish short positions. UkrAgroConsult said. and now all of a sudden.S. Britt said. capping the biggest annual slump since 2008.” Wheat futures for March delivery rose 1. The country’s grain exports fell 9. and that the lack of snow cover may leave crops in a dangerous state to damaging cold. “With the corn and bean markets doing what they’re doing. A lack of sufficient rain also may hurt developing corn and soybean plants in Argentina. or bets prices will fall. DTN said.3 percent in December from November. 2012 Wheat futures rose for the ninth time in 10 sessions on speculation that dry weather from Ukraine to Argentina will limit global grain supplies. 22. they’ve scaled their exports back.5275 a bushel on the Chicago Board of Trade.WHEAT RESUMES RALLY ON DRY WEATHER WOES Source: Economic times January 2. 19% more than a week earlier. Wheat can be used as an alternative to corn and soybeans in livestock feed. Thus. we all thought we were going to drown in wheat from Ukraine. US exporters sold 431. “A month ago. Interpretation: Oh darn! Wheat futures rose for the ninth time in 10 sessions on a guess that dry weather from Ukraine to Argentina will limit global grain supplies. on increasing world output. U.” Jason Britt. Hedge funds and other speculators have cut net-short positions by 17 percent since November 22. The price is up 13% since midDecember. said by telephone from Kansas City. when funds were the most bearish since at least 2006. Bloomberg Chicago states that the Telvent DTN aforementioned that Ukraine’s winter-wheat crop is in an inadequate circumstance after recurring dry weather. Commodity Futures Trading Commission data show.213 tonne of wheat in the week ended December 22. the president of brokerage Central States Commodities.213tonne of wheat in the week ended December 22. when funds were the most negative since at least 2006. The US Department of Agriculture proposed that the US exporters sold 431. Missouri.