Commodities Daily Report

Saturday| June 8, 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

Saturday| June 8, 2013

Agricultural Commodities
News in brief
Monsoon enters North-East after some delay
South-West monsoon has entered the north-eastern States after some delay even as the Arabian Sea arm braced for the expected push along the West Coast. Normally, the onset in the North-East happens either just ahead or along with that along the Kerala coast. Conditions were favourable for further advance into more parts of Konkan; Madhya Maharashtra, Marathawada; parts of Vidarbha; South Chhattisgarh; South Odisha; and remaining Andhra Pradesh. Cumulative seasonal rainfall for the country as a whole during the first week of monsoon was estimated to be one per cent below long period average. Out of 36 meteorological subdivisions, rainfall was excess in 15; normal in six; deficient in six; and scanty in nine. Peninsular India (except Konkan and Goa where the monsoon has not reached); West Madhya Pradesh, East Uttar Pradesh; Bihar; Jharkhand; sub-Himalayan West Bengal; Sikkim; and Lakshadweep received normal to excess rainfall. (Source: Business Line)

Market Highlights (% change)

Last Prev. day

as on June 7, 2013
WoW MoM YoY

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

19429 5881 57.07 96.03 1383

-0.46 -0.68 0.24 1.34 -2.31

-1.68 -1.75 0.86 4.41 -0.69

-2.81 -3.10 5.51 -0.61 -6.17

21.28 20.93 2.73 13.93 -14.38

.Source: Reuters

GMO wheat find weighs on U.S. Pacific Northwest white wheat

Demand from overseas buyers remained quiet in the U.S. white wheat market in the Pacific Northwest this week, after the discovery of a genetically modified (GMO) wheat strain in Oregon was reported May 29, grain merchants said on Friday. Japan, the U.S. largest white wheat customer, declined for the second straight week to bid at its weekly white wheat tender due to concerns about importing the unapproved type of wheat. South Korea has formally suspended U.S. wheat purchases, while the European Union said it would step up testing. The U.S. Department of Agriculture is still investigating the origin of the GMO wheat. USDA Market News reported this week that Pacific Northwest grain merchants pulled their bids for soft white wheat to be delivered in June to Portland, Oregon, a key export terminal in the Pacific Northwest, the largest U.S. export gateway for wheat. (Source: Factiva)

Postponement of launch of Futures Contract Maize Feed/ Industrial grade (MAIZEKHRF)

According to a circular by NCDEX dated 8 June, 2013, the launch of October 2013 expiry contract in Maize Feed/Industrial grade (Symbol: MAIZEKHRF) which is scheduled on June 10, 2013, has been postponed till further notice. The revised launch date will be announced in due course. (Source: NCDEX)
th

Kharif sowing set to gather pace as monsoon advances

The planting of kharif crops such as rice and oilseeds is expected to gain momentum with the advancement of the South West Monsoon to parts of Central India after covering the peninsular region . Total kharif acreage, till June 5, stood at 67.60 lakh hectares (ha) against last years 73.60 lakh ha. The Indian Metrological Department has predicted a normal monsoon this year and the country is expected to receive 98 per cent of the rainfall. According to agency reports, the monsoon is expected to hit Mumbai in the next 48 hours and enter Rajasthan, about three to four days ahead of schedule. (Source: Business Line)

Farmers challenged to sow tail end of U.S. corn and soy crops
Rain showers over the next week will present a challenge to U.S. farmers trying to finish up planting this season's corn and soybean crops, an agricultural meteorologist said on Friday. "There will be three separate systems bringing from 0.3 inch to 0.8 inch of rain each over the next week. They will be faster moving systems than we've been seeing, so it won't be raining for a long time," said John Dee, meteorologist for Global Weather Monitoring. Rains kept farmers out of the fields for most of last week, limiting their ability to finish planting corn or catch up on soybeans. (Source: Reuters)

Monsoon to enter Rajasthan 3-4 days ahead of schedule: IMD

The southwest monsoon would touch Mumbai during next 48 hours and will enter Rajasthan three-four days ahead of schedule, IMD said here today. The normal timing of the arrival of monsoon in Rajasthan is third week of June but this year, it is expected to hit three-four days in advance, DG of Indian Meteorological Department, Laxma n Singh Rathor said here today. Due to adequate humidity, the speed of the monsoon is normal, he said. IMD had predicted in April normal monsoon with overall 98 per cent rainfall in the country this year. A detailed prediction will be made next week. (Source: Business Line)

China considers changing cotton stockpiling as mills suffer

China, the world's largest cotton importer, is considering changes to its aggressive stockpiling program, which has driven up global prices and forced the country's textile mills that buy fiber to make shirts and pants into heavy losses, industry official said on Friday. In a bid to protect the rural economy, Beijing has bought some 10 million tonnes of cotton from local farmers at above-market prices under the stockpiling programme, keeping domestic cotton prices as much as 40 percent higher than the global benchmark. But the government, along with the country's cotton association, has acknowledged the policy has hit domestic textile firms hard, with expensive cotton at home pushing up costs and eroding their competitiveness with exporters in other countries, causing some firms to cut production or shut down. (Source: Reuters)

Sugar may gain as States need to buy for PDS

Sugar prices increased by Rs 10-15 a quintal on the Vashi wholesale spot market on Friday following positive outlook for demand in the coming months. On the other hand, futures ruled weak on profit booking. Expectation of higher demand from retailers before monsoon intensifies lifted the sentiments in the physical market, said sources. Sources said that as producers are not willing to sell at lower rates on expectations that the State Governments will buy sugar for public distribution system from the open market. Further talk of increase in import duty supported the morale. Till now, millers were continuously selling on routine local demand. Demand from retailers generally slows down when the monsoon sets in. Inventories with producers and traders are more than sufficient and this could prevent any sharp surge in prices. In Vashi market, arrivals continued at about 65-66 truck loads (each 100 bags) and local dispatches were around 64-65 loads. Market inventory was about 110-120 loads. (Source: Business Line)

India corn seen up on export demand, thin stocks

Corn futures in India are seen trading higher next week on fresh export demand, depleting stocks and thin supplies from Bihar due to an unfavorable weather, though the timely progress of the monsoon could restrict the upside. Maize is cultivated twice a year, during summer and winter, in India, Asia's largest exporter of the grain, with the major contribution coming from the summer crop. Sowing has started in few places but it would gain momentum with a pick-up in monsoon rains, traders said. India's monsoon rains recorded higher than average levels in the first week of the four-month rainy season, weather office sources told Reuters on Thursday, reflecting a timely onset and progress so far over southern states. (Source: Reuters)

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Commodities Daily Report

Saturday| June 8, 2013

Agricultural Commodities
Chana
Chana July futures corrected from higher levels on account of profit taking and settled 0.92% lower on Friday. Abundant supplies coupled with higher output also pressurized prices. However, demand from stockists at lower levels supported prices at lower levels. 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 3300 3188 Prev day 0.68 -0.34

as on June 7, 2013 % change WoW MoM -0.27 -2.22 -1.45 -3.77 YoY -22.16 -24.78

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 8, 2013 Resistance 3280-3320

3170-3210

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. Prices may gain on account of demand from the stockists at lower levels. However, higher supplies coupled with higher output estimates may cap the gains and pressurize prices 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

Saturday| June 8, 2013

Agricultural Commodities
Sugar
Sugar corrected from higher levels on account of profit taking and settled 0.16% lower on Friday. Prices have gained over the past few days as good demand from the stockists coupled with concerns about cane output this season due to drought conditions in Maharashtra have supported prices. However, recent rains in the drought affected sugarcane areas in the Southern and Western part of the country coupled with higher supplies have capped the upside. 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 42.09 lakh ha as compared to 46.78 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 3059

as on June 7, 2013 % Change Prev. day WoW -0.22 0.24 MoM -0.18 YoY 2.23

Rs/qtl

3060

-0.46

1.36

0.39

5.52

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 481.4 365.11

as on June 7, 2013 % Change Prev day WoW -0.23 -0.30 1.11 0.00 MoM -2.55 -6.86 YoY -18.06 -19.74

.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 while Raw sugar on the ICE settled 0.23% and 0.3% lower on Friday due to higher supplies from Brazil. Prices have declined on account of third back to back years of sugar surplus and trading at 34 month low. Unica reported Brazils sugar production at 3.76 mn tn, higher by 140% by mid-May. Raw Sugar open interest has climbed to a 5 year high. The ISO has 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 8, 2013 Resistance 3140-3160

3080-3100

Outlook
Sugar futures are expected to trade higher today. Demand from stockists coupled with output concerns this season and the governments partial decontrol of sugar sector may support prices. However, higher supplies may pressurize prices. Weak global markets may also check prices.

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Commodities Daily Report

Saturday| June 8, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean July futures witnessed short coverings on Friday
on account of arrival of monsoon in the western parts of Maharashtra raising prospects of sowing. July contract settled 0.6% lower while June settled 0.9% lower. Indias soy meal exports for the month of May 2013 were 0.97 lakh tonnes, lower by 29.74 percent from 1.39 lakh 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. International Markets CBOT Soybean settled 0.07% higher on account of tight supplies, planting delays as well as weather concerns. 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. 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.

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 3856 3755 702.9 700.2 Prev day -0.10 -0.90 -0.64 -0.41

as on June 7, 2013

WoW -0.77 -1.44 -2.97 -2.08

MoM -4.17 -6.53 -3.01 -2.53

YoY 4.50 0.24 -5.68 -7.45

Source: Reuters

as on June 7, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1528 48.53 Prev day 0.07 0.77 WoW 1.21 0.31 MoM 4.42 -1.14 YoY 7.02 -3.69

Source: Reuters

Crude Palm Oil

as on June 7, 2013 % Change Prev day WoW 1.17 0.88 2.42 2.62

Refined Soy Oil: Ref soy oil July contract traded on weak note and
settled 0.7% lower on account of profit booking while CPO settled 0.84% higher tracking positive international prices coupled with a weak Rupee. 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.

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

Last 2417 493.1

MoM 8.00 4.45

YoY -18.18 -12.46

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 3510 3509 Prev day 0.08 0.49 WoW 0.50 1.24

as on June 7, 2013 MoM 2.28 0.98 YoY -9.99 -9.00

Source: Reuters

Technical Chart Soybean

NCDEX July contract

Rape/mustard Seed: Mustard July Futures settled 0.48% higher

on account of good buying at lower levels. 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 Good progress of monsoon along with weak meal export demand may keep soybean under downside pressure. Mustard may remain form on account of lower level buying and declining arrival pressure. Soy oil as well as CPO may continue to gain due to lower yield period. Higher international prices may also support prices.
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 7, 2013 Support 682-684 3680-3710 3480-3520 486-490 Resistance 692-696 3780-3810 3580-3610 498-502

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Commodities Daily Report

Saturday| June 8, 2013

Jeera Agricultural Commodities

Jeera prices continued to trade higher on the back of fresh export enquiries and settled 0.49% higher on Friday. However, good arrivals coupled with higher output have capped the upside. Currently, about 25-30% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices have 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 13473 13163 Prev day 0.45 1.04

as on June 7, 2013 % Change WoW 0.02 -0.15 MoM 0.09 1.70 YoY -1.48 -2.36

Source: Reuters

Technical Chart Jeera

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 7,000 bags on Friday. 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 higher today on account of fresh export demand. However, higher output and good arrivals may pressurize prices at higher levels. 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 -1.02 -1.21

as on June 7, 2013 % Change

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

Last 5667 5556

WoW -5.59 -6.34

MoM -6.48 -4.77

YoY 60.81 38.90

Turmeric
Turmeric July futures continued to decline as huge carryover stocks coupled with weak demand and good monsoon prospects have pressurized prices and settled 1.3% lower on Friday. 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 4,000 bags and 4,000 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 may recover from lower levels due to short coverings. However, prices may decline from higher levels as higher stocks with farmers coupled with huge carryover stocks may pressurize prices. Lower arrivals coupled with expectations of improvement in export demand may support prices.
Source: Telequote

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

Valid for June 8, 2013

Support 13050-13200 5520-5580 Resistance 13550-13700 5700-5780

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Commodities Daily Report

Saturday| June 8, 2013

Agricultural Commodities
Kapas
NCDEX Kapas corrected from higher levels on account of profit booking and settled 1.42% lower while MCX Cotton gained 0.42% on Friday. Prices have risen over the past two weeks on account of good yarn demand coupled with lower arrivals. However, higher sowing of cotton this season has capped sharp upside. Active selling by the CCI in the open markets has also capped the upside in the prices. CCI has offered 38,100 bales earlier last week 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 1073 19000

as on June 7, 2013 % Change Prev. day WoW -1.42 -2.50 0.42 3.04 MoM YoY 3.67 6.35 3.04 19.57

NCDEX Kapas Apr Futures MCX Cotton June Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 84.86 93.2

as on June 7, 2013 % Change Prev day WoW -0.01 3.04 0.54 4.95 MoM -1.34 -1.69 YoY 13.01 12.76

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 corrected from higher levels on reports that China may review its import policy and settled 0.01% lower on Friday. An increase in the weekly export sales coupled with a weaker Dollar have supported prices. Tight supplies from US have also supported prices. 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

Technical Chart - Cotton

MCX June contract

Source: Telequote

Outlook
Cotton may trade with upward bias due to good yarn demand. A 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.

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

valid for June 8, 2013 Support 1040-1060 18600-18800 Resistance 1090-1110 19200-19500

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