Agricultural Commodities
Content
News & Market Highlights Chana Sugar Oilseed Complex Spices Complex Mentha Potato
Research Team
Vedika Narvekar - Sr. Research Analyst vedika.narveker@angelbroking.com (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Associate anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132
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Agricultural Commodities
News in brief
US corn harvest slows with rains; farmers maintain record pace
The U.S. corn harvest inched forward during the past week, government data showed on Monday, as farmers gave crops more time to dry down to save them the cost of machine drying. Farmers were still on a record fast harvest pace but the choice to slow their combines left corn vulnerable to diseases such as aflatoxin. Much of the corn, which had poorly developed stalks due to the summer-long drought, also was at risk of being knocked down if high winds arrive with Tropical Storm Isaac. A U.S. Agriculture Department report showed that the corn harvest was 6 percent complete as of Aug. 26, up just 2 percentage points from a week earlier, and below analyst expectations for 10 percent. The five-year average for late August is 2 percent complete. A year ago, farmers had harvested 2 percent of the corn crop. USDA also said that corn was rated 22 percent good to excellent, down 1 percentage point from a week earlier and still the lowest rated crop since 1988. Good-to-excellent ratings for soybeans also fell 1 percentage point, to 30 percent. (Source:
Reuters)
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
Source: Reuters
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Agricultural Commodities
Chana
Chana Futures declined sharply on account of improved rains that has raised hopes of better chana sowing. Fears the government may take certain measures to curb rising prices also led to the correction. The Spot as well as the Futures settled 0.91% and 3.18% lower w-o-w. As per the IMD, Monsoon has recovered in the month of August in Northwest and Central India. This has aided kharif sowing in the last one week. Also this may prove beneficial for the chana sowing. However, overall weak rainfall would have a significant impact on yield of kharif pulses. The Cabinet Committee on Economic Affairs approved the Minimum Support Prices (MSP) for Arhar (Tur) and Moong for 2012-13 season. The MSP for Arhar has been fixed at Rs.3850 per quintal and of Moong at Rs.4400 per quintal marking an increase of Rs.650 per quintal and Rs.900 per quintal respectively. Government released fourth advance estimates wherein it revised upward Chana output at 7.58 mn tn from 7.4 mn tonnes estimated in the third advance estimates and 8.22 mn tn in 2010-11.
Market Highlights
Unit Rs/qtl Rs/qtl Last 4811 4595 Prev day -0.91 -3.18
as on Aug 27, 2012 % change WoW MoM -2.31 0.15 -6.98 -2.07 YoY 34.75 30.95
Source: Reuters
Technical Outlook
Contract Chana Sept Futures Unit Rs./qtl
Outlook
Improved rains may continue to keep chana prices under downside pressure. In the medium term to long term, the trend remains positive as supplies may not be sufficient to meet the rising demand of the commodity. Also lower sowing of kharif pulses may support chana prices.
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Agricultural Commodities
Sugar
Sugar spot prices declined on account of sufficient supplies in the domestic markets. The Spot as well as the futures settled 2.13% and 0.03% lower respectively on Monday. Reports that 25 mn tn of the cane is diverted towards fodder so far in the drought hit districts of Maharashtra have raised concerns over sugar output in Maharashtra. 25mn tn cane diversion would result into 3 mn tn drop in sugar output. However, with the latest forecast of good rains in the month of September may ease these concerns and help improve yield. With chances of El Nino weather pattern receding, the Agriculture Ministry hopes that rainfall in September would be better than earlier forecast, helping in bridging the shortfalls in sowing area to some extent. Apart from the 45 lakh tonnes quota released during the start of the quarter Jul-Sept, government released additional 2.66 lac tn to be sold off by 31st August. Sugar mills have been directed to sell at least 70% of July-September quota (45 lakh tonnes) by August. Another additional quota of 4 lac tn has also been released on 7th August, 2012 to be sold off by 31stAugust. The quota is sufficient to meet the festive season demand and thus helped contain prices. In the international markets ICE sugar closed marginally low by 0.1% while Liffe Sugar remained closed. Raw sugar futures on ICE hovered around an 11-week low on Friday, as Brazil's cane harvest accelerated, making up for some of the time lost due to wet weather.
Market Highlights
Unit Sugar Spot- NCDEX (Kolkata) Sugar M- NCDEX Sept '12 Futures Rs/qtl Last 3670
as on Aug 27, 2012 % Change Prev. day WoW -2.13 0.00 MoM 3.38 YoY 24.41
Rs/qtl
3419
-0.03
-1.58
1.06
22.54
Source: Reuters
International Prices
Unit Sugar No 5- LiffeOct'12 Futures Sugar No 11-ICE Oct '12 Futures $/tonne $/tonne Last 549.4 434.67
as on Aug 27, 2012 % Change Prev day WoW 0.42 -0.10 -1.81 -4.59 MoM -13.89 -13.14 YoY -29.02 -33.96
Source: Reuters
Source: Telequote
Technical Outlook
Contract Sugar Sept NCDEX Futures Unit Rs./qtl
Outlook
Forecast of good rains in the month of September might ease concerns over next years output. These alnongwith sufficient supplies may keep sugar prices under downside pressure during the intraday.
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Agricultural Commodities
Oilseeds Soybean:
Soybean Spot as well as Futures remained firm last week on account of supply tightness in the domestic as well as global markets till the arrival of fresh crop in mid September. The Spot as well as Futures settled 0.13% and 0.6% higher respectively on Monday. CBOT Soybean settled lower by 0.45% on Monday on account of profit booking at higher levels. According to the newsletter, Pro farmer, Soybean production was seen at 2.60 bn bushels on a yield of 34.8 bushels/ acre. lower compared to the USDAs soybean output estimates of 2.692 billion bushels and yield at 36.1 bushels/ acre. Brazils grain Association expects the number 2 producers of soybean to produce record 81.3 mn tn in 2012-13. Planting in Brazil would commence from Sept. 15 & exports may soar to 37.5 mn tn, beating the 33.8-mn tn record in 2010/11 crop. According to weekly crop progress report, the condition of U.S soybeans declined to 30% during last week from 31% in good to excellent condition due to weather concerns in the US Midwest. th USDA released its monthly crop report on 10 August wherein its cut U.S. 2012/13 soybean production forecast to 2.692 billion bushels, from 3.05 billion in July. India's oil meal exports fell to 2.75 lakh tn in July from 2.82 lakh tn a year earlier led by a sharp drop in the overseas sales of rapeseed meal. Soy meal exports rose to 1.68 lakh tn in July, from 1.39 tn a year ago. th In the domestic markets, as on 24 August Oilseeds have been sown in 164.29 lakh hectares so far, compared with 169.94 lakh hectares same period last year. Soybean area is higher at 106.4 lakh hectares. In 2011-12 season, soybean was sown under 102.9 lakh hectares area and recorded 12.28 million tonne output, down from 12.73 mn tn in 2010-11 season. Refined Soy Oil: NCDEX Soy Oil witnessed profit booking on Monday after gaining sharply during the past few sessions. However, MCX CPO continued to traded on a positive note on global oilseed supply fears and rising export demand. As per Intertek Testing Services, Malaysian palm oil product exports during Aug 1-25 rose 5.7 percent to 1,084,343 compared to 1,026,153 tonnes shipped in July 1-25. India imported 112,611 tonnes of refined palm oil in July, down 9.28 percent from June. Total vegetable oil imports in July were 870,328 tonnes, up from 783,315 tonnes in the previous month (Source: Sea of India). Although, Malaysia's July palm oil stocks rose 17.6 percent to 1,998,870 tn from a revised 1,699,117 tn in June, the export demand is expected to regain momentum amid supply shortage of edible oil globally. Indonesia, the world's top palm oil producer, has lowered its earlier output forecast by 8 percent to 23.6 million tonnes this year Rape/mustard Seed: Mustard seed settled lower by 0.6% on Monday on profit taking. Mustard output this season has declined significantly and deficient rains in Rajasthan would not provide proper moisture for mustard sowing next season. According to a circular issued by NCDEX, existing Special Cash Margin of 5% on the Long side shall be increased to 15% on all the running and yet to be launched contracts w.e.f beginning of 18/07/2012.
Market Highlights
Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX Oct '12 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soyoil- NCDEX Aug '12 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 4595 4008 797.1 801.3
as on Aug 27, 2012 % Change Prev day 0.13 0.26 0.55 -0.53 WoW 2.16 1.79 2.18 1.60 MoM 2.87 -8.29 2.53 2.09 YoY 96.96 71.54 19.19 19.93
Source: Reuters
as on Aug 27, 2012 International Prices Soybean- CBOTSept'12 Futures Soybean Oil - CBOTSept '12 Futures Unit USc/ Bushel USc/lbs Last 1730 55.91 Prev day -0.45 -0.59 WoW 1.53 3.75 MoM 4.47 8.18
Source: Reuters
MYR/Tonne Rs/10 kg
Source: Reuters
RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX Sept '12 Futures Rs/100 kgs Rs/100 kgs Last 4385 4470 Prev day -0.57 -0.51
Source: Telequote
Technical Outlook
Contract Soy Oil Sept NCDEX Futures Soybean NCDEX Oct Futures RM Seed NCDEX Sept Futures CPO MCX Sept Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl
valid for Aug 28, 2012 Support 792-796 3940-3973 4440-4465 562-565 Resistance 806-810 4050-4083 4538-4565 572-575
Outlook
Oilseed may trade sideways with a negative bias tracking the international prices. Good rains in Madhya Pradesh and other parts of india may also lead to a downside movement in the prices in the coming days.
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Agricultural Commodities
Black Pepper
Pepper Futures traded sideways with a poisitive bias yesterday due to very low arrivals in the domestic markets. Farmers are unwilling to sell the produce at lower levels. However, lower demand for Indian pepper in the international markets due to huge price parity resisted any sharp gains. Good supplies from Indonesia have also pressurized the prices. The Spot as well as the Futures settled 0.06% and 0.42% higher on Monday. th According to the circular released on June 13 2012 the existing Special margin of 10% (cash) on the long side stands withdrawn on all running contracts and yet to be launched contracts in Pepper from beginning of day Friday June 15, 2012. Pepper prices in the international market are being quoted at $8,0008,100/tonne(C&F) while Vietnam was offering its produce at $6,000/tonne for 500 GL. Brazil was offering its pepper at $6,150/tonne for the B-Asta grade. As per circular dt. 29/06/2012 issued by NCDEX, Hassan will be available as an additional delivery centre for all the yet to be launched contracts. (not applicable to the currently available contracts-till Dec 2012 expiry).
Market Highlights
% Change Unit Pepper SpotNCDEX (Kochi) Pepper- NCDEX Sept '12 Futures Rs/qtl Rs/qtl Last 41088 41795 Prev day 0.06 0.42
as on Aug 27, 2012 WoW -1.77 -1.26 MoM -2.74 -2.56 YoY 22.37 20.31
Source: Reuters
Exports
According to Spices Board of India, exports of pepper in April 2012 fell by 47% and stood at 1,200 tonnes as compared to 2,266 tonnes in April 2011. India imported 1,848 tonnes of pepper till March 2012 and has become the third country to import such large quantity after UAE and Singapore. (Source: Agriwatch) According to Vietnam Ministry of Agriculture and Rural Development (MARD) exports of black pepper in 2012 are forecasted at around 1,25,000 tonnes. Exports of Pepper from Vietnam during January till June 2012 is estimated around 73000 mt 73,000 mt, higher by 4.3% in volume and 31.7% in value compared to corresponding year last year. Exports of Pepper from Brazil during January till May 2012 are estimated around 13369 mt. (Source: Peppertradeboard). Pepper imports by U.S. the largest consumer of the spice declined 14.8% in the first 2 months of the year (2012) to 8810 tn as compared to 10344 tn in the same period previous year. Imports of Pepper in the month of February declined by 16.8% to 3999 tn as compared to 4811 tn in the month of January 2012. Exports from Indonesia posted significant decrease of 42% as compared to previous year. Exports stood at 36,500 tonnes as compared to 62,599 tonnes in the last year. During May 2012 Brazil exported 1,705 tonnes of pepper as against 1600 tn in May 2011.
Source: Telequote
Technical Outlook
Contract Black Pepper NCDEX Sept Futures Unit Rs/qtl
Outlook
Pepper prices are expected to trade sideways today. Lack of supplies may support prices at lower levels. The spot markets will remain closed due to the Onam festival. However, prices may correct due to lower demand at higher levels in the domestic as well as international markets.
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Agricultural Commodities
Jeera
Jeera Futures corrected sharply yesterday due to good rains in northern part of Gujarat, the main Jeera growing region. Good rains are expected improve moisture levels which may increase prospects of better yield next season. Exporters are also avoiding buying at higher levels. However, Supply concerns from Syria and Turkey still exists. The Spot as well as the Futures settled 1.73% and 3.43% lower on Monday. Expectations are that large export orders may be diverted to India from the international markets due to the ongoing civil war in Syria which is hampering supplies. There are reports that there has been an increase in demand from Bangladesh for Indian Jeera. Production in Syria and Turkey is being reported around 17,000 tonnes and around 5,000 tonnes, lesser than expectations. Jeera prices in the international market of Indian origin are being offered at $2,950 tn (c&f) while Syria and Turkey are not offering their produce. Carryover stocks of jeera in the domestic market is expected to be around 7-8 lakh bags as compared to 4-5 lakh bags in the last year.
Market Highlights
Unit Jeera SpotNCDEX(Unjha) Jeera- NCDEX Sept '12 Futures Rs/qtl Rs/qtl Last 15736 14550 Prev day -1.73 -3.43
as on Aug 27, 2012 % Change WoW -3.68 -10.24 MoM -1.49 -5.21 YoY 2.18 -4.15
Source: Reuters
Source: Telequote
Outlook
Jeera prices are expected to correct further today. Good rains in Gujarat may pressurize the prices. However, revival of export demand at lower levels may support prices at lower levels. In the medium to long term (Aug-September 2012) prices are likely to witness a bounce back as there are limited stocks with Syria and Turkey and crop there is 30% short as compared to last year.
Market Highlights
Prev day 1.46 1.53
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX Sept '12 Futures Rs/qtl Rs/qtl
Turmeric
Turmeric Futures traded on a positive note yesterday as exporters were active in the markets due to export demand from Pakistan. Exporters also expect orders to increase in the coming days. Sowing is also reported 30-35% lower during the sowing period. Turmeric has th been sown in 0.49 lakh hectares in A.P as on 22 August 2012. The Spot as well as the Futures settled 0.56% and 1.67% lower respectively w-o-w. The pre expiry margin on Turmeric has been increased to 5% for last 7 trading days increased on a daily basis on both buy and sell side from the existing 3% on daily basis for last 5 days.
Source: Telequote
Technical Outlook
Unit Jeera NCDEX Sept Futures Turmeric NCDEX Sept Futures Rs/qtl Rs/qtl
valid for Aug 28, 2012 Support 14250-14370 5850-5920 Resistance 14700-14850 6054-6120
Outlook
Turmeric prices are expected to continue to trade sideways with a positive bias in the intraday due to lower sowing figures as well as reports of export demand from Pakistan. Traders also expect fresh export orders in the coming days. However, improving weather conditions may cap sharp gains. In the medium term (Aug to September) prices may take cues from the sowing figures.
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Agricultural Commodities
Mentha Oil
Mentha oil Futures traded on a negative note tracking correction in all agri commodities. Lower demand due to ban on Gutkha and Pan Masala also corrected the prices. However, the spot remained positive anticipating buying to emerge at lower levels. The spot settled 0.14% higher while the Futures settled 0.6% lower on Monday. Total Special Cash margin of 25% on the long side of Mentha Oil has been reduced to 10% in the May contract and 5% in June contract onwards from May 5, 2012. For detailed reference please refer to the Circular No: MCX/T&S/180/2012 dated 03/05/2012.
Market Highlights
Unit Mentha Oil- MCX Spot (Chandausi) Mentha Oil MCX Aug Futures Rs/qtl Rs/qtl Last 1521 1314 Prev day 0.14 -0.60
as on Aug 27, 2012 % Change WoW 0.54 1.23 MoM 2.82 0.44 YoY 20.36 4.02
Source: Reuters
Outlook
In the intraday trading session Mentha oil is expected to trade sideways in the intraday. Buying at lower levels may emerge from stockists anticipating good demand from pharmaceutical companies in the coming days. However, lower demand due to ban on Gutkha and Pan Masala may cap any sharp upside. In long to medium term (July-September) prices are likely to remain under pressure due to peak arrival period.
Source: Telequote
Market Highlights
Prev day -0.59 -3.99
Potato
Potato futures extended further losses and settled 4% lower on Monday due to lack of buying interest in the domestic market. Commodity market regulator Forward Markets Commission (FMC) has banned launch of new Tarkeshwar potato contracts. Also From 01-08-2012 no fresh positions shall be allowed during the Staggered Delivery period in all running contracts of Potato in MCX and NCDEX. Only squaring off of existing positions will be allowed during the Staggered Delivery period.
Unit Potato SpotNCDEX (Agra) Potato- NCDEX Sept '12 Futures Rs/qtl Rs/qtl Last 1147 1082
Source: Telequote
Technical Outlook
Unit Mentha Oil Aug Futures Potato NCDEX Sept Futures Potato MCX Sept Futures Rs/kg Rs/qtl Rs/qtl
valid for Aug 28, 2012 Support 1308-1320 1057-1068 1126-1138 Resistance 1344-1355 1095-1106 1163-1176
Outlook
Potato futures in intraday might trade sideways to down as West Bengal government has decided to curb its decision to restrict interstate transfer of potato after October that might provide resistance to the prices in short term. Though Upcoming festive season might provide support to the prices from falling sharply in Medium term.
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