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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Agricultural Commodities
News in brief
Food Bill may be tabled in House today
The National Food Security Bill is expected to be tabled in Parliament today, after being cleared by the Cabinet earlier this week. The Bill has said that it will be responsibility of the central government to provide assistance to the states in meeting the expenditure incurred by the latter in intra- state movement of grains, handling of foodgrains and margins paid to fair price shop dealers. The Bill lays down that the National Food Security Act wont stop any state government from formulating or continuing with other food- based welfare schemes. The sale price of Rs. 3 per kg for rice, Rs. 2 for wheat and Rs. 1 for coarse cereals will be revised every three years, but it would not be more than the then prevailing Minimum Support Price of wheat and coarse cereals and derived minimum support price for rice. In a move towards womens empowerment, the Bill lays down that eldest woman of a household, who is not less than 18 years, would considered as head of the family for the purpose of issue of ration cards. Officials said the Bill has made provision that state governments would have to pay an allowance to the beneficiaries in case they fail to provide foodgrains under the law. (Source:
Business Standard)
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
.Source: Reuters
Governmentt can save Rs 1,000 cr in subsidy by shifting rice area to east India
The government could save at least Rs 1,000 crore in subsidy if 1 million hectare of rice area is shifted from Punjab to eastern states, the Commission for Agricultural Costs and Prices (CACP) said today. It suggested focusing on cultivation of maize and soyabean in Punjab and pitched for stable trade policy for agricultural crops to ensure adequate farm income. "At least Rs 1,000 crore subsidy can be saved if one million hectare of rice area in Punjab is shifted to eastern states which has plenty of water," CACP Chairman Ashok Gulati said. It is estimated that Rs 12,000/hectare is given as subsidy to provide cheaper electricity and farm inputs to Punjab farmers, he said. "This subsidy can be saved if the state seriously takes up crop diversification and start focusing on growing maize and soyabean," said Gulati of CACP, which advises the government on pricing policy for major farm produce. Expressing concern about depleting groundwater level in the state, he said: "To grow one kg of rice, as much as 5400 litres of water is required in Punjab, whereas it is only 2700 litres in West Bengal. It is better to grow other crops." He also suggested that the country's maize production can rise from the current 20-21 million tonnes level if the same subsidy is given to maize growers in the state. (Source: Economic Times)
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Agricultural Commodities
Chana
After witnessing significant gains on Wednesday, Chana prices witnessed profit taking and settled 0.32% lower on Thursday. Prices have witnessed an uptrend in the last one week mainly on the back of buying by the stockiest at lower levels coupled with concerns over the yield from Madhya Pradesh due to erratic weather conditions. Arrivals have gained momentum in MP, the largest chana producing state and shall soon commence in Rajasthan, the second largest producer. Thus, sharp upside is capped in the chana spot prices.
Market Highlights
Unit Rs/qtl Rs/qtl Last 3450 3423 Prev day 0.00 -0.32
as on March 21, 2013 % change WoW MoM -1.08 -4.98 1.09 -1.30 YoY -6.76 -12.03
Source: Reuters
Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. The Centre has hiked the MSP by 14 per cent to Rs 3,200 a quintal for chana and as part of its strategy to encourage farmers to grow more pulses to reduce import dependence.
Source: Telequote
Technical Outlook
Contract Chana Apr Futures Unit Rs./qtl Support
3395-3410
Trade Scenario
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 tons in 2011-12. In Canada chickpea output is estimated at 1.58 lakh tonnes compared with 86000 tn in 2011-12.
Outlook
Chana prices may witness profit booking in the initial part of the trading session. However, prices may bounce back towards the end on account of good demand from stockists. Yield concerns from MP may also support prices.
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Agricultural Commodities
Sugar
Sugar futures continued to decline yesterday as the government deferred discussion on the partial decontrol of the sugar sector. Higher supplies coupled with failure in the pickup of demand from bulk consumers also added to the downside pressure. The spot as well as the Futures settled 0.2% and 0.84% lower on Thursday. Agriculture Minister Sharad Pawar said that the sugar output in 2013-14 may fall to around 24 mn tn against current years output of 24.5 mn tn. There are reports that some mills in Maharashtra have stopped crushing due to non availability of cane.
India, the world biggest sugar consumer, could consider easing curbs on the tightly controlled industry this week. Decontrolling the sugar sector would, involve abolition of regulated release mechanism, removal of levy sugar obligation from industry, freer export-import policy, removal of sugar from compulsory packing in jute bags only and a transparent policy linking cane price with sugar price. The government has decided not to increase import duty on sugar though industry bodies and manufacturers had demanded a hike in the duty to 60% from the current 10% to curb shipment of the sweetener. India's sugar production in the 2013/14 season is set to fall below consumption for the first time in four years as a water shortage trims acreage in three key states.
Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX Apr '13 Futures Rs/qtl Last 3099
as on March 21, 2013 % Change Prev. day WoW -0.20 -0.97 MoM -3.70 YoY 8.02
Rs/qtl
2964
0.30
-1.95
-5.15
5.56
Source: Reuters
International Prices
Unit Sugar No 5- LiffeMay'13 Futures Sugar No 11-ICE May '13 Futures $/tonne $/tonne Last 528.4 404.67
as on March 21, 2013 % Change Prev day WoW -0.41 -0.76 -1.64 -3.34 MoM 6.62 -0.05 YoY -20.30 -29.72
.Source: Reuters
Source: Telequote
Technical Outlook
Contract Sugar Apr NCDEX Futures Unit Rs./qtl Support
2935-2950
Outlook
Sugar is expected to continue to decline due to higher supplies in the domestic markets. However, prices may recover as demand will now reemerge to meet the summer season requirement. Markets are also awaiting a further announcement from the government on decontrol may also guide the prices. Further, crushing will now start declining amid lower cane availability this season.
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Agricultural Commodities
Oilseeds
Soybean: Soybean Futures traded on a positive note on account of
lower supplies in the domestic markets coupled with positive international markets. The spot settled as well as the April futures settled 0.17% and 1.09% higher on Thursday. Exports of Soybean meal during February, 2013 was 5,77,589 tones as compared to 3,70,524 tonnes in February, 2012 showing an increase by 55.88% over the last year. On a financial year basis, the export during April 2012 to February 2013 is 31,13,651 tonnes as compared to 34,52,791 tonnes in the same period of previous year showing a decrease of 9.82%. According to the second advance estimates, 2012-13 oilseed output is pegged at 29.4 mn tn, down by 1.1%, while soybean output is pegged higher at 12.9 mn tn, up 3.2%.
Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX Apr '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX Apr '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3623 3528 686.9 676.5 Prev day 0.17 -2.64 0.12 -1.38
Source: Reuters
as on March 21, 2013 International Prices Soybean- CBOTMay'13 Futures Soybean Oil - CBOTMay'13 Futures Unit USc/ Bushel USc/lbs Last 1449 50.42 Prev day 2.06 1.16 WoW -0.57 2.71 MoM -2.28 -3.17
Source: Reuters
International Markets
Soybean Futures on CBOT traded on a bullish note and settled 2.06% higher on Thursday due to tight supplies of the old crop. Advancement of the South American crop has led to a decline in the prices over the last few sessions. Brazil port workers have called off their strike for next week. There are reports that China may cancel upto 2 mn tn of Brazil Soybean to due shipment delay. Farmers in Argentina are holding back their crop anticipating higher prices. The USDA monthly crop report has kept the Brazil output unchanged at 83.5 mn tn while, it reduced Argentinas crop forecast from 53 mn tn to 51.5 mn tn. German oilseeds analyst Oil World cut its forecast of the 2013 soybean harvest in Argentina by 2 mn tn to 50 mn tn from its Jan estimates because of dry weather, but has raised its forecast of Brazil's soybean crop by 0.5 mn tn. Argentina soybean acreage is estimated at 19.35 mn ha. U.S. farmers will harvest record soybean crops in 2013, ending three years of falling production and rebuilding nearly depleted stockpiles. U.S. soybean processors say they have been pleasantly surprised by the high oil content of the latest U.S. soybean harvest, a factor that has contributed to strong profit margins and should pad year-end soy oil inventories.
as on March 21, 2013 % Change Prev day WoW 0.41 0.73 3.75 0.82
Unit
CPO-Bursa Malaysia Apr '13 Contract CPO-MCX- Mar '13 Futures
MYR/Tonne Rs/10 kg
Source: Reuters
RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX Apr'13 Futures Rs/100 kgs Rs/100 kgs Last 3450 3449 Prev day 1.10 0.82 WoW -1.19 -0.46
Refined Soy Oil: Ref soy oil as well as CPO gained 0.73% each due
to higher international prices. Lead speakers in the Palm Oil Conference have forecasted lower prices due to rising supplies. Higher global production estimates of palm oil by oil world have pressurized prices at higher levels. Global palm oil output is estimated at 55.3 mn tn in 2012-13, up by 3.4 mn tn. India's vegetable oil imports declined 17 percent from a month ago in February due to higher taxes. To curb imports, the tariff value of crude palm oil, the edible oil India imports most, has been raised from $ 815 a tonne to $ 848 a tonne, a rise of 4.04%.
Source: Telequote
Outlook
Soybean may trade on a positive note. Low supplies may support prices. Mustard seed may trade on a positive note due to positive oil prices. However, higher output expectations may restrict the upside. Soy oil and CPO may trade higher due to higher international markets. Prices may find support on expectations that output may fall due to seasonally lower yield.
Technical Outlook
Contract Soy Oil Apr NCDEX Futures Soybean NCDEX Apr Futures RM Seed NCDEX Apr Futures CPO MCX Mar Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl
valid for Mar 22, 2013 Support 669-672 3495-3515 3400-3425 450-453 Resistance 680-683 3545-3555 3475-3495 457-459
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Agricultural Commodities h
Black Pepper
Pepper Futures traded on a mixed note yesterday. Prices have declined due to long liquidation. Also, Karnataka crop is trading at lower levels due inferior quality. However, Low stocks in the warehouses coupled with thin supplies and delayed harvesting on back of to lack of skilled laborers have supported the prices. There is good domestic demand for Kerala Pepper. Food Safety and Standards Authority of India sealed the entire quantity of pepper stored in six warehouses in Kerala of about 8,000 tonnes. There are also reports of some exports of Karnataka pepper from Mangalore port. Exports demand for Indian pepper in the international markets is weak due to price parity. The Spot as well as the Futures settled 0.12% and 0.24% higher on Thursday. According to a circular issued by NCDEX on 09/02/2013, launch of June 2013 expiry contract in Pepper which is scheduled on February 11, 2013, has been postponed till further notice. The revised launch date will be announced in due course. Spices Board has announced plans to import high yielding Madagascar variety that was behind the record productivity in Vietnam. It could raise productivity of Indian pepper from 2,000 kg/ha to 7,000 kg/ha. Pepper prices in the international market are being quoted at $6,900/tn (C&F, New York). Vietnams Asta is quoted at $6,925-6,975/tn, Indonesia GM-1 is quoted at $6,900/tn and Brazil Asta is quoted at $6,600/tn.
Market Highlights
Unit Pepper SpotNCDEX (Kochi) Pepper- NCDEX Apr '13 Futures Rs/qtl Rs/qtl Last 36600 35530 % Change Prev day 0.12 -1.31
as on March 21, 2013 WoW -1.37 -4.37 MoM -10.65 -14.86 YoY -11.41 -16.00
Source: Reuters
Technical Outlook
Contract Black Pepper NCDEX Apr Futures Unit Rs/qtl
Outlook
Pepper is expected to trade on a mixed note today. Prices may recover from lower levels as low stocks coupled with good demand from the upcountry markets may support prices at lower levels. Reports that farmers are holding back stocks may also support prices at lower levels. However, improvement in arrivals may pressurize prices at higher levels.
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Agricultural Commodities
Jeera
Jeera Futures recovered from lower levels on account of short coverings. Prices have declined sharply due to arrivals pressure of the new crop. The arrivals of new crop are averaging around 25,000 bags/ day and are expected to improve in the coming days. New crop from Rajasthan is expected to enter the markets from April. Higher sowing as well as conducive weather in Gujarat, the main jeera growing region has increased output expectations. 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. According to the Rajasthan State Budget 2013-14, it has exempted jeera from VAT. The spot as well as the April Futures settled 0.41% and 0.48% higher on Thursday. According to markets sources the exports target has already been achieved due to a supply crunch in the global markets. Supply concerns from Syria and Turkey still exists. Expectations are that export orders may still be diverted to India from the international markets 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 4,000-5,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,375 tn (c&f Europe) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 5-6 lakh bags.
Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX Apr '13 Futures Rs/qtl Rs/qtl Last 13398 13128 Prev day 0.41 1.37
as on March 21, 2013 % Change WoW -0.33 -0.61 MoM -3.21 -1.02 YoY 4.99 8.76
Source: Reuters
Source: Telequote
Market Highlights
Prev day 1.87 3.84
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX Apr '13 Futures Rs/qtl Rs/qtl
Outlook
Jeera Futures may decline from higher levels today. Higher arrivals may pressurize prices further. However, export as well as domestic demand may cushion the downside. In the medium term, prices are likely to stay firm as Syria and Turkey have stopped shipments.
Turmeric
Turmeric Futures traded on a bullish note yesterday due to good export demand coupled with output concerns. Traders have received fresh orders from Bihar, Maharashtra, Delhi, Kolkata and some other places. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes. Higher supplies of the new crop have capped sharp gains in the spot. NCDEX imposed special margin of 10% on the long side from 14/03/2013. The Spot as well as the Futures settled 1.87% and 3.84% higher on Thursday.
Technical Outlook
Unit Jeera NCDEX Apr Futures Turmeric NCDEX April Futures Rs/qtl Rs/qtl
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Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton declined sharply by 1.63% and 1.32% respectively on Thursday after the Commerce Minister said that Cotton Corporation Of India would offload stocks in the open market.. Low demand from domestic millers has also pressurized prices over the last few days. The government has decided to continue with the current cotton exports policy. Traders expect exports to cross governments estimates of 8 mn bales. Finance Minister announced various incentives and policies in the Union Budget to support the ailing textile industry. 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 964 18730
as on March 21, 2013 % Change Prev. day WoW -1.63 -1.23 -1.32 -0.27 MoM 0.36 -0.27 YoY #N/A 13.17
Source: Reuters
International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 88.2 81.35
as on March 21, 2013 % Change Prev day WoW -1.01 -2.93 0.00 0.00 MoM 7.33 0.00 YoY -1.54 -29.20
Source: Reuters
Source: Telequote
Source: Telequote
Technical Outlook
Contract Kapas NCDEX April Futures Cotton MCX March Futures Unit Rs/20 kgs Rs/bale
valid for Mar 22, 2013 Support 940-950 18540-18630 Resistance 970-985 18830-18940
Outlook
Cotton prices may trade on a negative note today. Prices may decline if CCI offloads stocks in the open market. Low demand from mills may also pressurize prices. However, expectations of good exports may support prices. Also, the prices may take cues from the international markets. Expectations that China may release higher import quota which might boost imports also supported an upside in the cotton prices. Also, expected lower US cotton acreage and output in 2013-14 may also support prices at lower levels.
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