Commodities Weekly Tracker, 29th July 2013

Commodities & Currencies
Weekly Tracker
Commodities Weekly Tracker

Monday | July 29, 2013
Contents
Returns Global Equities Currencies Non Agri Commodities Agri Commodities Global Manufacturing Economic Data Non-Agri Commodities Gold Silver Copper Crude Oil Currencies DX, Euro, INR Agri Commodities Chana Black Pepper Turmeric Jeera Soybean Refine Soy Oil & CPO Sugar Kapas

Global Equities Performance (%)

3.0 2.5 2.0 1.5 1.0 0.5 0.0 (0.5) (1.0) (1.5) (2.0) (2.5) (3.0) (3.5) 2.84 2.11 1.84 1.11 0.10 (0.03) (1.04) (1.99) (2.37) (3.15)

Non-Agri Commodities Weekly Performance

3.0 2.0 1.0 0.0 (1.0) (2.0) (3.0) (4.0) (5.0) (6.0)
2.9 2.5
0.5
(0.8)
(0.9)
(1.6) (2.4) (3.1)
(5.9)

2.0
1.5 1.0 0.5 0.0 (0.5) (1.0) (1.5) (2.0) (2.5)
1.9 1.0
Currencies Weekly Performance

0.7
0.5 0.2
(0.5)
(1.2)
(2.4)

*Weekly Performance for August contract *Soybean, Cotton October contract *Kapas- April Contract

US Economic Data
Existing Home Sales
US Existing Home Sales declined to 5.08 million in June as against a rise of 5.14 million a month ago. New Home Sales rose by 38,000 to 497,000 in June which is at highest level in five years from 459,000 in May.
US New Home Sales
495000 475000 455000 435000 415000 395000 375000 355000 335000
330000 320000 390000 380000
Unemployment Claims
US Unemployment Claims increased by 7,000 to 343,000 for the week ending on 19th July as against a rise of 336,000 in prior week.
New Home Sales
US Unemployment Claims
370000
360000 350000 340000
US Existing Home Sales

5200000 5100000 5000000
4900000
4800000 4700000 4600000 4500000 4400000

Global Manufacturing Economic Data

Manufacturing Growth - July'13
54 53 52 51 50 49 48 47 46 45 Euro Zone June'13 US July'13 China 48.8 48.2 47.7 50.1 51.9 53.2
European Manufacturing PMI

French Flash Manufacturing Purchasing Managers' Index (PMI) increased by 1.4 points to 49.8-mark in July as against a rise of 48.4-level in June. German Flash Manufacturing PMI gained by 1.7 points to 50.3-mark in July as compared to 48.6-level in June. European Flash Manufacturing PMI increase by 1.3 points to 50.1-mark in July as compared to 48.8-level in previous month.
Chinas HSBC Manufacturing PMI Chinas HSBC Flash Manufacturing Purchasing Managers' Index (PMI) declined by 0.5 points to 47.7-mark in July from previous 48.2-level in June.
US Manufacturing PMI US Flash Manufacturing Purchasing Managers' Index (PMI) increased by 1.3 points to 53.2-mark in July as against a rise of 51.9-level in June.

Gold
Weekly Price Performance
Week-on-week, Spot Gold prices have increased around 3 percent. In the last week, Spot Gold had tested a high of $1347.69/oz. In the Indian markets, prices on the MCX gained 2.7 percent over the week, testing a high of Rs27716/10gm
MCX and Comex Gold Price Performance

31,000 30,000 29,000 28,000 27,000
26,000
1,800
1,700
Factors that supported a bounce back in prices
1,600 1,500 1,400 1,300 1,200
Fed Chairman Ben Bernanke said last week that the central bank would begin the tapering only once the unemployment and job market scenario stabilizes. Peoples Bank of China ended floor on lending rates which will offer consumer more spending power. Weakness in the Dollar Index, thus supporting prices in dollar terms. Further, upbeat global market sentiments acted as a positive factor for prices. The SPDR Gold Trust holdings have declined more than 31 percent this year. Holdings have slipped to 927.35 tonnes and declined around 0.5 percent in the last week.
Gold imports into India are tightened further as the RBI moved further by tying gold imports to export volumes. The RBI said that 20 percent of imports should be used for overseas sales, thereby assuring gold exporters a scenario of guaranteed supplies It is now mandatory for importers to retain 20 percent of the gold imported in custom-bonded warehouses and further purchases of the metal will be allowed only after exports equivalent to 75 percent.
25,000
SPDR Gold Holdings
MCX- Near Month Gold Futures - Rs/10 gms Comex Gold Futures - $/oz
RBI links gold imports to export volumes
1,650
Spot Gold Vs Dollar Index

85.0
84.0
1,550 83.0 1,450
82.0
1,350
81.0
Central Banks Buying
1,250
Gold futures have rose around 8 percent in July biggest gains since January 2012 on account of attractive lower prices.
Russia and Kazakhstan increased their bullion for ninth straight month in June.
80.0
1,150
79.0
As per the World Gold Council (WGC), central banks over the globe will buy around 400 metric tons in 2013 after adding 535 tons in 2012 which was highest since 1964.
Spot Gold -$/oz
US Dollar Index

Gold
Indian gold imports fall 80 percent in June13
Gold Demand
Japan's biggest gold retailer Tanaka Kikinzoku Kogyo K.K sales increased by three times in 1st quarter of 2013 as compared to previous quarter. As per the World Gold Council (WGC) forecasts imports from India may rise to 900 metric tons in 2013 from 860 tons in 2012. Chinas purchases might also shoot up to 1000 tons in current year with respect to 817 tones in 2012 as per WGC. According to the World Gold Council, Gold supply from recycled materials may fall by 25 percent this year as lower prices prevent holders from selling the metal at times when physical demand is rising. It is estimated that supply from bullion scrap may fall by 300 to 400 metric tons in 2013 from 1,600 tons in last year. Over the week, gold prices in dollar terms are expected to trade higher on the back of expectations of purchasing of the metal from central banks. Further, expectations that US Federal Reserve will not pullback its stimulus measures and announcement regarding the same in Federal Reserve meeting during the week will exert downside pressure on DX. This factor will support an upside in dollar denominated commodities. Appreciation in the Rupee will cap sharp gains in prices on the MCX. Spot Gold : Support 1,325/1,303 $1327.60) Resistance 1,356/1,378. (CMP:
Aggressive and stringent measures applied by the RBI and the government led to a sharp fall in gold imports
For the month of June13, gold imports fell sharply by 80 percent to just 32 tonnes as against 162 tonnes seen in May13 When compared to imports in June12, the decline was 36 percent Fall in gold imports will help to curb the CAD and in effect also have a positive impact on the Rupee Gold is Indias second-largest import after crude oil and for the month of April13, golds import bill touched $7.5 billion During April-May13, gold and silver imports accounted for $15.8 billion in the import bill Combined Indian gold-silver imports in June13 were $2.5 billion
Gold Scrap Supply
Gold ETFs in India also witness correction

Value of gold ETFs in India fell for the third straight month in June13 Holdings fell to Rs96.1 billion ($1.6 billion), marking a fall of more than 9 percent In terms of value, assets have declined 20 percent Global gold ETF holdings have fallen below 2000 metric tonnes to 1993.8 metric tonnes for the first time since May 2010. Over the year, assets have slumped 24 percent, falling by 638.2 tonnes and are headed for the first annual drop since introduction in 2003 Data by the mutual funds association in India showed that for the month of June13, net redemptions from gold ETFs were Rs2.06 billion
Outlook
Weekly Technical Levels
Buy MCX Gold October between 27,420-27,380, SL-27,100, Target 27,850/28,200 (CMP : Rs.27720)

Silver
Last week, Spot Silver prices increased sharply around 4 percent and touched a high of $20.60/oz mark On the MCX, prices witnessed gains of 2.7 percent as Rupee appreciation impacted sharp gains in Indian prices
58,500
MCX and Comex Silver Price Performance
32 30
53,500
28 26
ETF Performance
48,500 24 22 20 38,500 18
Holdings in the iShares Silver Trust rose around 1.3 percent last week to 10419.04 tonnes. Month-to-date, iShares Silver Trust Holdings gained around 5.2 percent and year-to-date are increased about 3.3 percent.
Upside in gold prices. Positive movement in base metals complex. Weakness in the DX. Favorable economic data from US, Euro Zone and rise in UKs GDP.
43,500
Factor affecting the silver prices

MCX- Near Month Silver Futures - Rs/ kg Comex Silver Futures - $/oz
Spot Silver Vs US Dollar Index

85.0 84.0
83.0 82.0
Outlook
A bullish trend is expected in silver prices over the week, taking cues from fall in gold prices. Further, weakness in the DX will support an upside in prices. However, sharp upside in prices will be capped as a result of downside in base metals group. In the Indian markets, appreciation in the Rupee will cap sharp gains in prices on the MCX. Spot Silver: Support 19.72/19.45 Resistance 20.28/21.08. (CMP:$19.83) Buy MCX Silver March Between 40,700-40,650, SL-40,100, Target -41,700. (CMP: Rs.40,867)
32.0 30.0 28.0 26.0 24.0
81.0 22.0 20.0 18.0 80.0 79.0

Spot Silver -$/oz
US Dollar Index

Copper
Copper prices gained almost 1.3 percent on the LME last week and touched a high of $/tonne for the week ending on 26th July,2013. 8,300 On the MCX increased only around 0.8 percent as Rupee appreciation capped gains. 8,100
7,900 7,700 7,500 7,300 7,100 6,900 6,700
LME and MCX Copper Price Performance

455 445 435 425 415
Copper Inventories
On the LME inventories declined around 2.7 percent to 621,175 tonnes. SHFE inventories fell 3.5 percent to 161,564 tonnes respectively.
405
395 385 375 365
Factors affecting the upside in copper prices

Rise in New Home Sales data from US which is ay highest level in last five years. Peoples Bank of China ended a floor on borrowing costs previously set at 30 percent below the benchmark in a move to boost growth in the long run. Statement from Chinese Premier that it wont allow economy to grow below 7 percent and necessary steps will be taken to boost the economic growth. Favorable manufacturing data from the Euro Zone and US indicating an industrial growth thereby leading to expectations of rise in demand for the metal in future. However, sharp upside in prices was capped on account of contraction in Chinese manufacturing activity. China which is the major consumer of base metals saw a decline which indicated a slow economic growth in China. Further, statement from International Monetary Fund (IMF) that Chinese economy will not be able to meet its target of 7.5 percent growth in current year.
LME Copper Future ($/tonne) MCX Near Month Copper Contract (Rs/kg)
LME Copper v/s LME Inventory

668,000 618,000 568,000 518,000 468,000 7,300 418,000 368,000 318,000 7,100 6,900 6,700 8,300 8,100 7,900 7,700
7,500
Surplus Production As per the report from Goldman, Copper is forecasted to be at a surplus of 500,000 tons in 2015 from 257,000 tons in current year.
Copper LME Inventory (tonnes)
LME Copper Future ($/tonne)

Copper
Net position in Copper
CFTC data showed that net positions in copper rose in last week, after signs of slow economic growth in China. Copper net position of short holding was at 12,974 contracts from 15,673 contract a week earlier.
Outlook
Copper prices during the week expected to trade lower on the back of slow economic growth in Chinese economy thereby affecting the demand for the metal. Further, expectations of decline in advance GDP and consumer confidence from US will exert downside pressure on prices. Additionally, forecast of surplus production will add more downside pressure on prices. However, estimates that US Federal Reserve will not pullback its stimulus measures and announcement regarding the same in Federal Reserve meeting during the week will exert downside pressure on DX. This factor will cushion fall in prices. In the Indian markets, appreciation in the Rupee will act as a negative factor for prices on the MCX.

LME Copper: Support 6755/6655 Resistance 6935/7045. (CMP: $6837.75) Sell MCX Copper August between 412-413, SL-419.50, Target -402.50/397. (CMP: Rs 407.45)

Crude Oil
Weekly Price Performance Nymex crude oil prices declined around 2.4 percent in the last week. Crude prices drop will be biggest fall in this month. Oil prices touched a weekly low of $105.39/bbl on Wednesday. On the domestic bourses, prices slipped 3.2 percent as a result of appreciation in the Indian Rupee and touched a low of Rs.6174/bbl in the last week. Inventories As per the US Energy Department (EIA) report, US crude oil inventories decline more than expectations by 2.8 million barrels to 364.20 million barrels for the week ending on 19th July 2013. The American Petroleum Institute (API) reported, US crude oil inventories declined by 1.4 million barrels to 369.66 million barrels for the week ending on 19th July 2013 Difference between WTI and Brent widens The spread between WTI and Brent crude oil prices increased by more than $2 during the week on account of decline in WTI prices as a result of rise in US crude oil output. Further, decline in Chinas manufacturing activity also lead to expectations of fall in demand for the fuel. On the hand, positive manufacturing data from Euro Zone increased the Brent prices and thereby widen the spread. US Crude Output As per the EIA reports, US Crude output rose around 1 percent for week ending on 19th July 2013 which is at highest level in 22 years. US crude production shoot up due to the combination of horizontal drilling and hydraulic fracturing, or fracking, which unlocked supplies trapped in shale formations. Crude stockpiles fell 29.9 million barrels for week of 19th July 2013 which is the biggest four week drop in data from 1982 as per the EIA report. US consumer around 21 percent of oil in 2012 which was followed by China around 11 percent as per the IEA report.
Nymex and MCX Crude Oil Price Performance

6,500 6,300 6,100 5,900 5,700 5,500 5,300 5,100 4,900 4,700 114.0 110.0 106.0
102.0
98.0 94.0 90.0 86.0
MCX crude oil (Rs/bbl)
NYMEX Crude Oil ($/bbl)
Crude Oil Inventories (mn barrels)

400
395.3 395.5 393.8 388.6 384
381.4 397.6
395 390 385 380 375 370 365 360

363.1 361.3 360.3 369.1 376.4
371.7
394.1
388.9 387.6
394.9 388.6
394.6 391.3
394.1
385.9 382.7 377.53
383.8
372.2
373.9 367 364.2

Crude Oil
Net Position in Crude Oil
As pet the CFTC data, net-long positions in crude oil rose around 9.8 percent to 334,094 contract which is at highest level since June 2006.
Outlook
Crude oil prices in the coming week expected to fall on account of rise in the US crude oil output as a result of invention of new technology of fracking and cracking. Further, slow economic growth in China will affect the demand for the fuel also exerted downside pressure on prices. Additionally, expectations of decline in advance GDP and consumer confidence from US will add downside pressure on prices. However, estimates that US Federal Reserve will not pullback its stimulus measures and announcement regarding the same in Federal Reserve meeting during the week will exert downside pressure on DX. This factor will cushion fall in prices In the Indian markets, appreciation in the Rupee will act as a negative factor for prices on the MCX.

Nymex Crude Oil: Support: 102.75/100.95 Resistance 105.65/107.45. (CMP:$104.22) Sell MCX Crude August between 6280-6300, SL-6402, Target -6090. (CMP:Rs. 6198)

Rupee
Weekly Price Performance The Indian Rupee appreciated around 0.6 percent in the last week.The currency touched a weekly high of 58.725 on Thursday. Capital Flows For the month of July 2013, FII outflows totaled at Rs.6393.60 crores ($1066.90 million) as on 26th July 2013. Year to date basis, net capital inflows stood at Rs.65,8784.70 crores ($12,433.90 million) till 26th July 2013. Factors that affected currency movement Measures taken by RBI. Expectations of foreign inflows after government hoping to sale bonds to NRI investors or allowing companies to raise debt in foreign markets. Rise in risk appetite in domestic market sentiments coupled with weakness in the DX. However, sharp upside in currency was cap as result of dollar demand from importers and outflow of foreign funds along with failure of bond auction. Reserve Bank of India Moves RBI issued a statement that importers need to retain 20 percent of the gold they import in customs-bonded warehouses, and will only be able to buy more only after exports equivalent to 75 percent of the retained amount have been shipped. The central bank last month had ruled out any credit transactions for imports unless they were intended for making jewelry for exports purposes was eased in this week. The RBI bisect the daily funds available from it to banks and raised the cash reserve requirement (CRR). Governor Duvvuri Subbarao cut the funds RBI lends to individual banks under the Liquidity Adjustment Facility (LAF) to 0.5 percent of the deposits of a bank. This compared with 1 percent or Rs 75,000 crore, available for the entire financial system that has now been brought down to Rs 37500 crore . RBI also raised the minimum daily average holding of the mandated 4 percent cash reserve requirement to 99 percent from previous 70 percent. The government ruled out selling of sovereign bonds to offshore investors dampening hopes for dollar inflows.
$/INR - Spot
61.0
60.0 59.0 58.0 57.0 56.0
55.0 54.0 53.0

Rupee
Outlook During the week we expect Rupee to trade on a mixed note on account of weakness in the DX. Additionally, any measures taken by RBI in its monetary policy meeting in this week to be held on 30th July 2013 will support an upside in the currency. However, sharp upside in the currency will be capped as a result of month end dollar demand from importers. Weekly Technical Levels USD/INR MCX August Support 58.80/58.0 Resistance 60.20/61.0. (CMP: 59.52)

Dollar Index
Weekly Price Performance US Dollar Index (DX) depreciated around 0.8 percent in the previous week. The currency touched a low of 81.71-mark in the last week. Factors that affected currency movement Rise in risk appetite in the global market sentiments led to fall in demand for the currency. Further, favorable new home sales data which is at highest level in five years showed signs of economic growth adding downside pressure on currency. Additionally, increase in manufacturing data from US also lead to economic expansion in the country. However, sharp downside in the currency was cushioned as a result of favorable economic data lead to expectations of pullback in stimulus measures from the Federal Reserve. Also, US jobless claims data rose for the week ending on 19th July thereby providing some respite to fall in the currency. Outlook In the coming week, we expect the currency to weaken on account of estimates that US Federal Reserve will not pullback its stimulus measures and any announcement regarding the same in Federal Reserve meeting will act as a negative factor. However, sharp downside in currency will be cushioned on account of expectations of unfavorable economic data from the country. Weekly Technical Levels US Dollar Index: Support 81.10/80.60 Resistance 82.40/83.10. (CMP: 81.59)
US Dollar Index
85.0 84.0 83.0 82.0 81.0
80.0
79.0

Euro
Weekly Price Performance The currency appreciated around 1 percent in the last week. The Euro touched a weekly high of 1.3295 on Thursday.
Euro/$ - Spot
1.365
1.355
Economic data impressed

More than expected rise in the manufacturing data from the region showing signs of progress in the debt ridden Zone. Further, decline in Spanish unemployment rate ease concerns of Euro Zone debt crisis. Additionally, weakness in the DX and upbeat global market sentiments supported an upside in the currency. Also German Business climate data came on a favorable note acting as a positive factor.
1.345
1.335
1.325 1.315 1.305 1.295

1.285
1.275
EURO/INR - Spot
Outlook Over the week, a weaker Dollar Index will continue to support upside in the Euro Further, expectations of favorable economic data from the region will support an upside in the currency. Additionally, ECB press conference during the week and any major announcement will act as a positive factor.
79.0 78.0 77.0 76.0 75.0 74.0 73.0 72.0 71.0

70.0

EURO/USD SPOT: Support 1.3174/1.3071 Resistance 1.3340/1.3403. (CMP: 1.3278)
69.0

Chana
Chana Futures declined sharply and hit contract lows for four consecutive sessions last week on account of abundant supplies and lack of buying interest. However, prices recovered sharply towards the end as an impact of the margin imposed on the selling side by the market regulator. Chana August futures settled 1% lower w-o-w. Considering a significant drop in Chana prices, FMC imposed special margin of 5% on short positions on in all running and yet to be launched contract with effect from Saturday, 27th July, 2013. Ministry of Agriculture released its fourth Advance estimates of Food grain production last week wherein it pegged Chana significantly higher at record 8.8 mn tn in the current season 2012-13. compared with 7.5 mn tn. According to estimates released on 22nd July 2013, Total pulses output for 2012-13 season has been pegged at record 18.45 mn tn compared to the third advance estimates of 18 mn tn and 17.09 mn tn produced in 2011-12 season. As per the data released by the ministry of Agriculture, area under kharif Pulses stood at 73.62 lakh ha as on 26th July 2013, up by 86 percent compared to the corresponding period last year. Although recovery in the prices may be seen in the initial part of current week as a result of imposition of special margin on short positions and expectations of demand to emerge at lower levels ahead of festivals, but, higher supplies would keep the upside capped.
Imposition of special margin on short Positions
Chana output estimated at record high Fourth Advance Estimates
Kharif Pulses sowing up 86 percent yoy
Outlook
Weekly Strategy
NCDEX CHANA Aug S1 - 2550, S2 -2430, R1 -2820, R2 - 2930 (CMP 2680)

Turmeric

Turmeric Futures traded on a bearish note last week as huge carryover stocks mounted downside pressure on the prices. Good sowing as well as rains in the Turmeric growing regions have also pressurized prices. Demand from the upcountry markets is also reported to be weak. The spot as well as the Futures settled sharply lower by 2.48% and 11.2% w-o-w. Turmeric exports in 2012-13 stood at 80,050 tn as against 79,500 tn in 2011-12. The area covered under Turmeric in A.P. as on 24/07/2013 is reported at 0.35 lakh ha against 0.31 lakh ha last year and a normal sowing of 0.41 lakh ha. Sowing last year commenced late due to drought conditions. Normal sowing for the season is 0.68 lakh hectares. Turmeric production in 2012-13 was around 50% lower compared to 2011-12 and is expected around 45-50 lakh bags. Production in 2011-12 is reported at historical high of 90 lakh bags/ 10.62 lakh tns. Turmeric is expected to continue to trade lower this week extending previous weeks losses on the back of huge carryover stocks as well as good sowing of turmeric this season. Good rains are also expected to increase the yield in the coming season. However, prices may recover from lower levels on account of overseas demand for the spice. Overseas demand for turmeric is usually good around Ramadan. Also, expectations of improvement in the domestic demand in the coming days ahead of the upcoming festive season ma support prices. The progress of monsoon needs to be watched carefully as this may affect the acreage as well as the yield of the crop. Sell NCDEX Turmeric Aug between 5330 5350, SL 5600, Target 5000/4950 .
Source: Agriwatch & Reuters Source: Reuters & Angel Research.
Better than expected exports Pickup in sowing of Turmeric for the 2013-14 season
Lower production in the 2012-2013 season
Outlook
Weekly Strategy


Jeera futures traded with a negative bias last week as higher than expected arrivals coupled with good rains in the main jeera sowing belt pressurized prices. However, good export demand for Indian Jeera support prices at lower levels. The spot as well as the July Futures settled 0.62% and 2.62% lower w-o-w.
Jeera
Second consecutive year of higher output

Indias 2013 Jeera output is estimated at 40-45 lakh bags (of 55kgs each), higher than 40 lakh bags in 2012. However, increase in the exports due to supply concerns in the global markets offset the impact of higher supplies on the prices and thus, medium term fundamentals remain supportive for the upside.
Jeera exports in 2012-13 stood at 79,900 tn, as against 45,500 tn last year. The ongoing tensions in Syria and Turkey, coupled with output concerns has led to supply concerns, and thus, exports have been diverted to India.
Source: Reuters & Angel Research.
Global supply concerns boost Jeera exports

International Scenario
According to reports, production in Turkey is reported around 8,000-10,000 tonnes while production in Syria is expected to be lower, raising supply concerns in the international markets. Currently, 1% Jeera of Indian origin is being offered for Singapore at $2,3502,400/tn (FOB Mumbai) while for Europe at $2,750-2,850/tn (FOB Mumbai).. Jeera is expected to trade on a mixed note with a negative bias this week. Higher than expected arrivals, coupled with higher production this year and good rains in the jeera sowing belt may continue to pressurize prices. However, sustained overseas demand may support prices at lower levels as other exporting nations are not supplying.
Outlook
Weekly Levels
NCDEX Jeera Aug Trend Sideways- S1 - 12620, S2 - 12900, R1 - 13380, R2 - 13650.
Source: Ministry of Agriculture, Gujarat.

Soybean
Weekly price performance
Favorable crop conditions in the soy growing belts of central India and a sharp fall in the international markets led domestic soybean prices to settle 6.13% lower w-o-w. After hitting a 10 month high on CBOT last week, CBOT soybean declined sharply on the back of improvement in weather conditions in top growing belt.
Sharp decline in the International Markets

Soybean Futures on the CBOT declined sharply by 9.46% last week as cash bids collapsed in US Midwest and lack of buying interest. Selling of the old crop by farmer also added to the downside pressure.
Ministry of Agriculture released its fourth Advance estimates of Food grain production on Monday wherein it pegged Soybean output signifincalty higher at record 14.6 mn tn in the current season 2012-13 compared with 12.2 mn tn in 201112. Total nine Oilseeds production is pegged at 31 MT in 2012-13, slightly higher than 29.79 MT achieved in the previous year. Monsoon which slowed its pace and was flat to below average in the previous two weeks, recovered significantly during the week ending 24th July 2013. As per the IMD, Cumulative rainfall as on 28th July in the central India (major soy belt), were 45 percent above the LPA, while in the week ending 24th July they rains were recorded up by 43% in Central India. According to the ministry of agriculture, as on 26th July 2013, oilseeds were planted on 167.15 lakh ha, an increase of 20.9 percent compared to last year.
Soybean 2012-13 output revised up Fourth Advance Estimates
Oilseeds sowing up at 135.99 lakh hectares
Outlook
Soybean may trade with negative bias this week on expectations of good yield and early start to harvesting. However, short covering may be witnessed in the later part. Prolonged excessive rains may damage the crops, thus supporting the prices. Sell NCDEX Soybean Oct between 2980 - 3000, SL - 3150, Target 2800/2750
Strategy

Refine Soy Oil and Crude Palm Oil

Weekly price performance
Soy oil declined as well as MCX traded on a negative note last week and settled 3.39% and 1.26% lower on the back of comfortable imported edible oil coupled with an appreciation in the Rupee. Weak oilseeds prices also added to the downside pressure. However, lower levels buying as well as festive demand limited the downside and supported prices at lower levels Exports of Malaysian palm oil products from July 1 to 25 fell 7 percent to 1,085,392 tonnes from 1,167,266 tonnes shipped during June 1 to 25. Exports of Malaysian palm oil products in June rose 7% to 1,350,311 tonnes from 1,262,281 tonnes shipped during May. Malaysia, the world's No.2 palm oil producer, has set its crude palm oil export tax for July at 4.5 %.
Global Scenario

Domestic Scenario
As per the data released by the Solvent Extractors' Association of India Imports of vegetable oils, including non-edible oils, rose 3.2% to 947591 tn in June, supported by sunflower and soy oil imports ahead of Ramadan. India's refined palm oil imports declined 20.7 per cent in June to 296, 230 tn, from a record high 373,837 tonnes in May as overall weakness in the Rupee made imports expensive. Monthly soy oil imports rose 2.7% as local supplies are almost exhausted before the new planting season for soybean. Stockpiles of edible oil at ports on July 1 stood at 690,000 tn, the trade body said, higher than 675,000 tn on June 1.. Sell NCDEX Ref Soya Oil Aug between 650 655, SL 675, Target 625/620 . Sell MCX CPO Aug between 485 490, SL 505, Target 465/460.
Strategy


Sugar

Sugar prices traded on a mixed note with a negative bias last week as ample supplies in the domestic markets coupled with good rains in the major sugarcane belts have eased cane output concerns. However, export demand as well as an increase in the import duty on sugar supported prices at lower levels. ICE as well as LIFFE Sugar recovered from lower levels last week and settled 1.1% and 2.57% on account of short coverings on the back of rains in Brazil. Demand for ethanol in Brazil has increased, leading to diversion of cane towards ethanol. According to the Ministry of Agriculture, Sugarcane has been planted in 48.48 lakh ha as compared to 50.04 lakh ha last year. The Government has notified its decision to raise the import duty on the sweetener to 15 percent from 10 percent currently, to discourage overseas buying amid a drop in local prices due to ample supplies.
Sugarcane acreage down 3.17 percent as on 26th July
Government notifies increase in import duty on Sugar to 15 percent
Increase in Sugar output in Brazil

According to UNICA, due to dry weather, production in Brazil increased in the first half of July by 60% to 2.4 mn tn as against 1.5 mn tn in second half of June.
According to fuel distributors, Brazils Ethanol demand increased by 24 percent in June, leading to diversion of more cane towards production of Ethanol. Sugar may trade in a range bound manner with a negative bias as higher supplies in the domestic markets coupled with an increase in the estimate of sugar production may pressurize prices. However, export orders, festive demand as well as an increase in the duty on imports may support prices at lower levels. Sell NCDEX Sugar Aug between 3035 - 3040, SL - 3065, Target 3000/2990
Increase in demand for Ethanol
Outlook
Strategy

Cotton
Above average rains in central India during the last week and higher sowing led to a fall in Cotton prices last week. Weak international markets also exerted downside pressure on the markets. NCDEX April Kapas as well as MCX Oct Cotton settled 1.57% and 2.93 lower w-o-w. ICE Cotton contract settled 1.32% lower w-o-w as signs of slowing economic growth in China stirred worry of reduced demand from world's top textile market. Cotton sowing is nearing its end and almost 90 percent of sowing is completed till last week. As per the ministry of agriculture, cotton is covered under 105 lakh ha area as on 26th July, up 8 percent compared to the same period last year. China's cotton stockpiling policy & lower U.S. inventories will underpin 2013-14 ICE cotton futures, though prices could fall some 10% later in the season as supplies increase. 2013-14 prices will likely trade in a range of 75 to 92 cents/ lb. Prices will fall as new global supplies are harvested, but price declines below about 72 cents will likely spur even higher Chinese demand. The ICAC lowered its production estimates by 5.4% to 24.95 mn tn for 2013-14 season (Aug-July). Consumption will continue to rise in 2013-14 season and is pegged at 24.3 mn tn. Despite of increase in consumption by 2.3% and drop in production, inventories are forecast up by 3.5% at 18.51 mn tn by end of July 2014. Cotton prices may remain under pressure due to higher cotton planting in the domestic markets coupled with good progress of monsoon. Further, expectations of drop in international prices may also turn domestic sentiments weak.
Kharif Cotton Planting up at 8 percent yoy
U.S. cotton prices seen likely to fall in late 2013-14- Reuters
World Cotton stocks continue to soar
Outlook
Strategy
Sell MCX Cotton Oct between 19700-19750, SL -20100, Target 19200/19100

Thank You!
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