Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities

Content
News & Market Highlights Chana Sugar Oilseed Complex Spices Complex Kapas/Cotton

Research Team
Vedika Narvekar - Sr. Research Analyst vedika.narvekar@angelbroking.com (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Analyst anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132

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Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities
News in brief
Recent initiatives impart resilience to Indian farming, lead to record food grain production. Production in 2012-13 over 255 million tonne despite deficient rains
Now that the Indian Metrological Department has declared onset of monsoon over Kerala and has predicted nearly normal monsoon this year, the country is poised for another bumper harvest. The foodgrain production reached record 259.32 million tonne in 2011-12 and the country was able to achieve foodgrain production of 255.36 million tonne despite deficient and erratic rains in 2012-13. Considering the rising investment in agriculture, new initiative taken by the Government, constant rise in minimum support prices of major foodgrains and likely good monsoon this year, there is no reason the country should not surpass the foodgrain production level reached in 2012-13. (Source: PIB, GOI)

Market Highlights (% change)

Last Prev. day

as on June 3, 2013
WoW MoM YoY

Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz

19610 5939 56.68 93.45 1412

-0.76 -0.78 0.17 1.61 1.37

-2.10 -2.36 1.98 -0.74 1.80

0.18 -0.08 5.32 -2.26 -3.59

22.83 22.67 2.03 12.28 -12.88

.Source: Reuters

Japan, S. Korea suspend US wheat imports over GMO find in Oregon

Japan and South Korea have partially suspended US wheat imports after genetically modified crops that have never been approved for growing were discovered in Oregon, officials and wheat industry representatives said Friday. Both Asian countries temporarily suspended imports of soft white US wheat, which is used mainly to make baked goods and noodles, but did not cancel other wheat imports from the United States, industry groups U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) said. Japan is the largest importer of American wheat, followed by Nigeria, Mexico, South Korea, the Philippines and the European Union. Authorities in the Philippines have said they are monitoring the situation, while the European Union said it will test US wheat imports and block any shipments found to contain genetically modified organisms (GMO). US officials announced this week that the rogue experimental wheat had been found in an 80-acre (32.4 hectares) field in Oregon. (Source: Factiva)

Pepper on its way up on limited supplies

The pepper market on Monday moved up on good demand amid limited supply and all the active contracts ended much above the previous days closing. Arrivals continued to fall because of the rains in many growing areas in Kerala. Dispatches from Karnataka have also shown a decline. Domestic demand has slowed down due to heat wave conditions prevailing in the Northern India. Due to the summer showers in the pepper growing regions of Kerala, the pepper arriving at present has high moisture content of up to 13.5 per cent, traders claimed. (Source: Business
Line)

Erratic warming of Indian Ocean could derail monsoon

The raucous start to monsoon along the West Coast is too good to sustain, according to Japanese scientists. Erratic warming of the Indian Ocean will soon catch up with and even run it down, says Swadhin Behera at the Tokyo-based Research Institute for Global Change. Ocean warmth in the Indian Ocean and where it is concentrated is of crucial significance for South-West monsoon. But given proximity to the region, Indian Ocean warming pattern has a more direct and immediate impact on weather. The warm south-east Indian Ocean will hinder the northward migration of monsoon rain bands. Hence, prolonged breaks in the monsoon could be seen. (Source: Business Line)

Slack demand keeps sugar subdued

Prices of sugar on domestic futures markets jumped by Rs 28 for July on expectation of higher festival demand in the coming days. Moral was positive ahead of the monsoon. despite the start of the new month, local demand remained less than expected. Prices in other main production centres continued to rule on par with Maharashtra, forcing upcountry buyers to source the commodity from nearby States. Buying from neighbouring States has been missing in Maharashtra since Diwali. Higher production this year made State-level mills offload sugar in local markets, which resulted in ample supply, while local demand remained the same. (Source: Business Line)

Commodity hedging lower in India, more awareness needed

Even 10 years after futures trading was reintroduced in agri commodities, hedging activities are yet to attract momentum. Lack of efficiency among elite traders and deficiency of awareness, coupled with fear of frequent regulatory actions in essential commodities, kept a number of serious traders away from active participation. While individual farmers and traders stayed away from burning their fingers in futures trading, corporate participation also remained almost negligible. While FMC has intensified organising awareness programmes in both rural and urban India to make all classes of people aware of the benefits of hedging, the sub-committee of the advisory panel, appointed by the regulator, feels these programmes are insufficient and hence, need to be organised more frequently. A more pro-active role is required by all classes of people to expand hedging in India, said a member of the committee. (Source: Business Standard)

Expected rains to boost Ukraine maize yield

Heavy rains are likely to spread across Ukraine's arid eastern and southern regions in the next few days, boosting the yields of late grains, including maize, a senior weather forecaster said on Monday. "We had a serious shortage of moisture in the eastern and southern regions but rains in the next few days will improve the condition of late grains," said Anatoly Prokopenko, deputy head of Ukraine's state weather forecasting centre. Rains are likely to come to the regions around June 6-9, he said. Agriculture analysts have said that Ukraine is likely to raise maize output to up to 22 million tonnes from 18.8 million tonnes in 2012, but added that excessive heat and a lack of rains could affect the harvest. Severe drought in 2012 reduced the yield of Ukrainian maize to 4.79 tonnes per hectare from 6.44 tonnes per hectare in 2011. This year, analysts say, the maize yield could average 5.0 tonnes per hectare. Ukraine, the world's fourth-largest maize exporter in 2011/12, consumes about 7 million tonnes of maize per season. In the 2012/13 season Ukraine may export 13 million to 14 million tonnes of the commodity, the Agriculture Ministry said. (Source: Reuters)

Brazil exports record amount of soybeans in May

Brazil exported a record 7.95 million tonnes of soybeans in May compared with 7.15 million tonnes in April, data from the trade ministry showed on Monday. Brazil is the world's top exporter of sugar, coffee, and orange juice and may surpass the U.S. as top soybean producer this season. The country posted a trade surplus of $760 million in May. (Source:
Reuters)

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Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities
Chana
Chana recovered from lower levels yesterday on account of buying and settled 1.24% higher. However, prices declined last week and touched a fresh contract low of Rs. 3105. Higher supplies in the domestic markets have pressurized prices over the last few weeks. Peak arrival period this season has been extended on account of record high production and delayed start to harvesting. Supplies are at its peak as new crop from the major producing states such as Madhya Pradesh and Rajasthan have increased significantly. However, supplies are expected to slow down towards the end of the month. Also, stockists are building inventories at lower levels to meet the demand for the entire season. Thus, tracking seasonality pattern, chana prices may start recovering gradually from June onwards.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3254 3188 Prev day -1.80 1.24

as on June 3, 2013 % change WoW MoM -1.39 -5.20 -2.89 -7.46 YoY -22.52 -22.53

Chana Spot - NCDEX (Delhi) Chana- NCDEX June'13 Futures

Source: Reuters

Technical Chart - Chana

NCDEX July contract

Demand supply scenario

Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. Chana sowing in the current season is 5.65% higher at 95.17 lakh ha compared to previous year. Acreage is up in Rajasthan, Maharashtra, MP and AP at 15.7 lakh ha, 12.53 lakh ha, 32.99 lakh ha and 7.33 lakh ha respectively. According to third advance Estimates released on 3 May 2013, Total pulses output for 2012-13 season has been pegged at 18 mn tn, up 5.76% compared to previous year. The target for 2012-13 pulses crop output was set at 18.24 million tonne during the year. Out of the total pulses output, kharif output is estimated at 4.03% lower at 5.95 mn tn while rabi pulses output is pegged 9.25% higher at 12.05 mn tn compared with the final estimates of 2011-12. Chana output is pegged marginally lower to 8.49 mn tn compared with its second advance estimates of 8.57 million tonnes. However, chana output is expected to breach its 2010-11 record output of 8.2 mn tn in 2012-13. Erratic weather in M.P. lowered the yield.
rd

Source: Telequote

Technical Outlook
Contract Chana July Futures Unit Rs./qtl Support

valid for June 4, 2013 Resistance 3300-3330

3160-3200

Trade Scenario
According to IBIS, imports of chana in the month of April 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.

Outlook
Chana may trade on a mixed note today. Bargain/ lower level buying may support prices. Demand from stockists at lower levels may also provide some support to the prices. However, higher supplies coupled with higher output estimates cap the upside and mount pressure at higher levels. Seasonal pattern in chana indicates that prices generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. Thus, going forward downside seems to be limited as prices are nearing its MSP levels.

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Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities
Sugar
Sugar traded on a positive note and settled 0.66% higher on the back of higher buying by stockists coupled with concerns about the cane output this season due to drought conditions in Maharashtra. However, comfortable supplies capped the gained. Weak international markets, which may lead to higher imports, have also kept prices under check. Prices have recovered from lower levels after the government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector. Improving demand from bulk consumers and expected lower output next season in Maharashtra also supported an upside in the prices. The Minimum Initial Margin has been revised to 5% of the value of the contract or VaR based margin whichever is higher and will be imposed on all running contracts and yet to be launched contracts w.e.f beginning of trading day Monday, May 13, 2013. The Government has cleared the partial decontrol of sugar on April 4, 2013, however, notified the same after almost a month. The government will now have to buy sugar from the mills at open market prices. Also the release mechanism will be done away with, after September 2013. According to the Ministry of Agriculture, Sugarcane has been planted in 41.24 lakh ha as compared to 46 lakh ha at this time last year. Less area is reported mainly in Karnataka, Maharashtra and Tamil Nadu.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX June '13 Futures Rs/qtl Last 3056

as on June 3, 2013 % Change Prev. day WoW 0.17 0.03 MoM 0.48 YoY 4.70

Rs/qtl

3040

0.66

0.66

3.75

#N/A

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 476.1 365.11

as on June 3, 2013 % Change Prev day WoW -0.25 -0.73 -0.06 -2.43 MoM -4.17 -6.27 YoY -13.98 -13.93

.Source: Reuters

Technical Chart - Sugar

NCDEX July contract

Domestic Production and Exports

According to ISMA, Indias Sugar production between October -April stood at 24.52 mn tn, lower by 3% during the same period last year. Maharashtras production dipped 10% to 8 mn tn while production in Uttar Pradesh increased by 7% to 7.43 mn tn. India is likely to produce 24.6 mn tn of sugar in 2012-13 year ending on Sept. 30, higher than the previous estimate of 24.3 mn tn, the Indian Sugar Mills Association (ISMA) said. With the opening stocks of 6.5 mn tn, domestic Sugar supplies are estimated at higher against the domestic consumption of around 22. 5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly.

Source: Telequote

Global Sugar Updates

LIFFE sugar as well as Raw sugar on the ICE continued to decline and settled 0.25% and 0.73% lower on Monday. Unica reported Brazils sugar production at 3.76 mn tn, higher by 140% by mid-May. Ethanol output has also increased by 146%. Raw Sugar open interest has climbed to a 5 year high. Prices have declined sharply on the back of third consecutive year of sugar surplus and are trading at the lowest levels since July 2010. The ISO forecast sugar surplus of atleast 3.5 mn tonnes for 2013-14 season. Reports that China may curb imports as their stocks have more than doubled last season have also added to the downside. However, there are reports that demand from Brazil's resurgent biofuels industry will cut burgeoning global sugar surplus, helping cushion prices that fell below 17 cents per lb for the first time in almost three years. According to Unica, South-Central Brazil cane crush projected at 589.60 million tons for 2013/2014. Main center-south sugar cane crop will produce a record 35.5 mn tn of sugar in the 2013/14 season, higher by 4.1% compared to 34.1 mn tn last year.

Technical Outlook
Contract Sugar July NCDEX Futures Unit Rs./qtl Support

valid for June 4, 2013 Resistance 3110-3130

3035-3060

Outlook
Sugar futures may trade on a mixed note today. Demand from stockists and coupled with output concerns this season and the governments partial decontrol of sugar sector may support prices. However, higher supplies and lower than expected demand may pressurize prices. Weak international markets may also keep prices under check.

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Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean recovered from lower levels yesterday on
account of short coverings coupled with poor supplies as well as positive international markets. However, weak meal export demand and forecast of a normal monsoon capped sharp upside and settled 2.15% higher. India may also resume oil meal exports to China. Indias soy meal exports for the month of April 2013 were 99.451 tonnes, lower by 68.31 percent from 313,832 tonnes a year ago. 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.

Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX June '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX June '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3824 3793 715 708.8 Prev day -0.18 2.15 -0.47 0.21

as on June 3, 2013

WoW -3.14 -0.22 -1.64 0.33

MoM -4.54 -3.99 -2.62 -1.43

YoY 11.58 14.20 -1.09 -0.63

International Markets
CBOT Soybean traded on a positive note and settled 1.49% higher on Monday on account of planting delay coupled with tight soybean stocks and good demand for US soymeal. Soybean planting has been delayed due to heavy rains in the US Midwest and is reported at 57% as against 44% last week. However, it is much lower as against 93% last year and five year average of 74%. It is said to be the slowest in 17 years. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. Argentinas agriculture ministry has cut its 2012/13 forecast to 50.6 mn tn from its April forecast of 51.3 mn tn. NOPA reported that the soybean crush fell to 120.11 million bushels in April, from 137.08 million in March. China is forecast to import a record 66 mn tn of soy in 2013/14, 11% higher than the estimates of current season, driven by robust domestic demand and low stocks.

Source: Reuters

as on June 3, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1533 48.66 Prev day 1.49 0.58 WoW 3.81 -1.18 MoM 5.33 -1.02 YoY 14.00 0.14

Source: Reuters

Crude Palm Oil

as on June 3, 2013 % Change Prev day WoW 0.00 0.77 -0.21 1.87

Unit
CPO-Bursa Malaysia June '13 Contract CPO-MCX- June '13 Futures

Last 2360 484.1

MoM 5.78 6.47

YoY -20.62 -12.66

Refined Soy Oil: Ref soy oil as well as CPO settled 0.21% and
0.77% higher on Monday tracking positive international markets. Palm stocks in Malaysia and Indonesia are expected to decline & demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products in May declined 3.4 percent to 1,248,014 tonnes from 1,292,371 tonnes shipped during April. It is expected that output in Malaysia, the world's second largest producer, to slow this month and help to further ease stocks that have dipped below the psychological 2 million tonne mark to 1.93 million tonnes in April. Stocks data from industry regulator the Malaysian Palm Oil Board showed inventory levels at the end of April down 11.3 percent against the previous month's 2.17 mn tn. India's palm oil imports declined for a third straight month in April. But India, the world's largest importer of edible oils, is still on track to surpass last year's record purchases of 10 million tonnes of cooking oil as demand rises.

MYR/Tonne Rs/10 kg

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX June '13 Futures Rs/100 kgs Rs/100 kgs Last 3500 3483 Prev day -0.02 0.40 WoW 0.24 0.72

as on June 3, 2013 MoM 2.94 1.99 YoY -9.09 -5.35

Source: Reuters

Technical Chart Soybean

NCDEX July contract

Rape/mustard Seed: Mustard Futures gained by 0.4% on account

of short coverings. Prices declined last week on account of weak meal export demand coupled with the arrival pressure. Huge supplies of the new crop coupled with higher output estimates led to a sharp decline in the prices. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.

Outlook
Soybean prices may trade with a positive bias today on the back of poor supplies as well as positive international markets. However, weak meal export demand coupled with forecast of a normal monsoon may cap the upside. Mustard may also gain tracking positive edible oil pack. Soy oil as well as CPO may continue to gain due to lower yield period. However, comfortable stock levels may cap the upside.

Source: Telequote

Technical Outlook
Contract Soy Oil July NCDEX Futures Soybean NCDEX July Futures RM Seed NCDEX July Futures CPO MCX June Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl

valid for June 4, 2013 Support 686-690 3610-3675 3450-3515 479-482 Resistance 698-703 3780-3820 3540-3555 486-489

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Commodities Daily Report

Tuesday| June 4, 2013

Jeera Agricultural Commodities

Jeera prices gained yesterday on reports of some fresh export enquiries and settled 1.08% higher on Monday. However, good arrivals capped the upside. Currently, about 25-30% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices had declined sharply over the last few months on the back of higher production estimates. According to Gujarat State Agri Dept. sowing in Gujarat is reported at 3.352 lakh ha in 2013 compared with 3.719 lakh ha last year. Due to the ongoing geo-political tensions in Syria and Turkey, supply concerns from these two major exporting countries still exist. Export orders may still continue to be diverted to India due to lack of supplies from Syria on back of the ongoing civil war. Production in Syria and Turkey is being reported around 17,000 tonnes and around 4,0005,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,450 tn (FOB Mumbai) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 8-9 lakh bags.

Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX June '13 Futures Rs/qtl Rs/qtl Last 13403 13150 Prev day -0.43 1.08

as on June 3, 2013 % Change WoW -0.67 -0.40 MoM -0.12 2.24 YoY 0.05 4.76

Source: Reuters

Technical Chart Jeera

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 13,000 bags on Monday. Production of Jeera in 2012-13 is expected around 40-42 lakh bags (55 kgs each), marginally higher than last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)

Outlook
Jeera may trade on a mixed note with a positive bias today. Prices may find support at lower levels on improvement in overseas as well as domestic demand. However, higher arrivals may cap sharp upside. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.

Source: Telequote

Market Highlights
Prev day -2.74 -1.84

as on June 3, 2013 % Change

Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX June '13 Futures Rs/qtl Rs/qtl

Last 5838 5652

WoW -2.55 -3.84

MoM -6.96 -10.20

YoY 62.62 #N/A

Turmeric
Turmeric futures continued to decline and the July contract hit a new low of Rs. 5696 and settled 1.74% on Monday as lack of fresh overseas demand coupled with huge carryover stocks pressurized prices. NCDEX issued a circular whereby the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. The regulator also withdrew special margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. Special Margin of 10% on the Long Side on all the running contracts in Turmeric have been withdrawn w.e.f Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 5,000 bags and 2,000 bags on Friday. Exports of Turmeric between Apr 2012- Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Expectations are that production may be lower by 40-50%. There are reports of some crop damage in Erode region. Turmeric production in 2012-13 is expected around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 is projected at historical high of 10.62 lakh tn. It is estimated that current years carryover stocks would be around 10 lakh bags. (1 bag= 75 kgs) Outlook Turmeric is expected to remain under pressure as higher stocks with farmers coupled with huge carryover stocks may pressurize prices. However, withdrawal of margins coupled with declining arrivals and expected improvement in export demand may support prices. Output concerns may also support prices at lower levels.

Source: Telequote

Technical Outlook
Unit Jeera NCDEX July Futures Turmeric NCDEX July Futures Rs/qtl Rs/qtl

Valid for June 4, 2013

Support 13100-13220 5630-5690 Resistance 13430-13530 5820-5880

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Commodities Daily Report

Tuesday| June 4, 2013

Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton traded on a positive note and settled 0.55% and 0.91% higher on Monday onaccount of pickup in the yarn demand coupled with lower arrivals. However, prices corrected from higher levels towards the end of the week on account of profit booking. Active selling by the CCI in the open markets has capped the th upside in the prices. CCI has offered 38,100 bales on Monday (27 May, 2013) through e-auction of which 6,000 bales have been sold. Emergence of fresh demand at lower price levels is also supporting an upside in the prices. India's imports of cotton this year could reach 1.5 mn bales, missing earlier estimates of more than 2 mn as the govt may to start selling its stockpiles. Cotton supplies since the beginning of the year in October 2012 until February 10, 2013 were down at 183.4 lakh bales, down from 189.27 lakh bales a year earlier.

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1096 18770

as on June 3, 2013 % Change Prev. day WoW 0.55 6.15 0.91 4.16 MoM YoY 4.88 17.29 4.16 20.55

NCDEX Kapas Apr Futures MCX Cotton June Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 82.36 88.8

as on June 3, 2013 % Change Prev day WoW 3.78 1.07 -0.67 -1.44 MoM -2.79 -5.03 YoY 20.08 8.56

Sowing Progress
Cotton planting has been reported at 11.86 lakh ha as against 10.4 lakh ha during the same period last year. Higher sowing is report from Punjab and Haryana while a decline has been reported in Rajasthan.

Source: Reuters

Technical Chart - Kapas

NCDEX April contract

Domestic Production and Consumption

CAB in its latest meet has projected cotton crop at 34 mn bales for 201213 season compared to the previous estimates of 33 mn bales. Mill consumption is expected to go up from 22.3 million bales last year to 23.5 million bales. Exports are estimated at 8.1 mn bales while imports are estimated 2.5 mn bales.

Global Cotton Updates

ICE Cotton futures witnessed a sharp recovery after declining for the nine consecutive sessions and settled 3.78% higher on Monday due to tight supplies from US. Prices declined on worries of a potential slowdown in China, the largest consumer of the fibre. Improved weather in the US has also eased concerns over delayed plantings. Cotton prices have closed in the negative in 8 of the last 10 days. Cotton Plantings were reported at 82% v/s 59% last week, but lower against 5 year avg of 83%. China cotton imports declined 18.5% in April compared to March. The USDA monthly crop report forecast a sharp rise in the in the cotton stockpiles by almost 10%. The U.S. Department of Agriculture has forecast global cotton stockpiles will rise almost 10 percent to a record high in 2013/14, pushing prices lower and reinforcing concerns about stagnating demand in China, the world's No. 1 textile market. According to the USDA report, planting intentions for the 2013-14 season are said to be at a 4 year low. Also, there are expectations of good export demand from China. Reports of India and China releasing stocks from the state reserve led to a decline in the prices.
Source: Telequote Source: Telequote

Technical Chart - Cotton

MCX June contract

Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX June Futures Unit Rs/20 kgs Rs/bale

valid for June 4, 2013 Support 1078-1088 18400-18620 Resistance 1103-1110 18940-19050

Outlook
Cotton is expected to continue to trade with a positive bias as good yarn demand may support further upside in the prices. Sharp recovery in the international markets coupled with lower sowing in the US and expectatations that cotton may lose acreage to more remunerative crops like soybean and grains in India may also support an upside in the prices over the medium term. However, the governments selling of cotton stocks in the open market may cap sharp upside.

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