Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities

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

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

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Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities
News in brief
Commodity Transaction Tax from June 1?
Indias booming futures trade in commodities is likely to be tested soon, when the Government puts the proposed Commodities Transaction Tax (CTT) into effect. CTT will be levied on gold, silver and other nonagricultural commodities traded through commodities exchanges, once the Finance Ministry formally notifies the tax. The detailed notification is under preparation. While Ministry sources indicated that the new tax could be levied from June 1, the trade is expecting the tax to be imposed from July 1. (Source: Business Line)

Market Highlights (% change)

Last Prev. day

as on May 20, 2013

WoW MoM YoY

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

20224 6157 55.04 96.71 1384

-0.31 -0.49 0.26 0.72 1.42

2.70 2.95 0.37 1.62 -3.50

6.35 6.46 1.87 10.24 -0.55

25.20 25.87 1.13 5.72 -13.02

.Source: Reuters

Inclement weather likely to hit wheat output in Punjab, Haryana

Wheat production in Punjab and Haryana will be lower as the crop was hit at the fag end of maturity stage due to inclement weather conditions. As per reports from fields, wheat production in Punjab and Haryana has been adversely affected due to unfavourable weather conditions prevailed at the fag end of maturity stage which will have bearing on crop production. Inclement weather conditions including untimely rain accompanied by hailstorm prevailed during the month of March this year which raised fear of crop damage in Punjab and Haryana. The production level in Punjab and Haryana will drop because of exceptionally high output achieved last year. During last season, Punjab had recorded an alltime high wheat yield of 179.82 lakh tonnes on the back of favourable weather conditions, while Haryana had an output of 130.69 lakh tonnes. For current season, Punjab and Haryana has projected wheat output of 162 lakh tonne and 124 lakh tonne respectively in this season on the back of prolonged winter and absence of major attack of fungal disease on wheat crop. (Source: Business Line)

Lower wheat procurement benefits all

Procurement of wheat in the central pool estimated earlier at 44 million tonnes (mt) by the Government is reportedly in the range of 30-33 mt, down by about 30 per cent. The Agriculture Ministry has not revised its production estimates below 93 mt, despite indications of lower yields in some areas, which, however, might have been made up by better productivity elsewhere. Private estimates (after reports of lesser procurement) are 85-90 mt and declining on a daily basis on reports of lower yields. A reduction in FCI procurement by 14 mt will instantly provide a budgeted financial relief of Rs 28,000 crore ($5billion) to the Centre. Considering that FCI is obliged to procure almost all arrivals in the market, FCI and its agencies cannot be faulted. Procurement from Uttar Pradesh (UP) till date is insignificant compared to last years 5 million tonnes. UP is the largest producer State with an output of 32-33 mt of wheat per annum. The reasons for this unexpected shortfall of 14 mt remain hazy. The central pool will still have much in excess stock about 48 to 51 mt, against the mandate of 20 mt by endJune 2013. Since the Government is also saddled with compulsions under the Food Security Bill, the overriding priority for export from the central pool under FCI may be downgraded. Wheat export by FCI and CPSUs could be considerably reduced. (Source: Business Line)

Sellers offer pepper at discount

Pepper prices fell sharply on selling pressure on Monday due to the maturity of May contract in futures. Added to this, need for growers to have some cash on hand for their childrens education prompted them to liquidate creating an upsurge in arrivals. The turnover moved up marginally. Activities were limited. Buyers were quoting lower rates. Sellers were also seen ready to discount their price because of high moisture content caused by the recent summer rains in the growing areas of Kerala, market sources told Business Line. May contracts on the NCDEX decreased by Rs 940 to Rs 34,480 a quintal. (Source: Business Line)

Lesser area under paddy this year

The district agriculture department has claimed that lesser area will be brought under paddy this year and around 8,000 hectares will be shifted from paddy to some other crops. This is owing to the marketing factors as well as compulsion of the farmers. So far, farmers have not got any viable options for diversification. The most popular crops among the farmers -- cotton and basmati -- have uncertain procurement prices. Last year, Faridkot had 99,426 hectares under paddy and a only 2,885 hectares under basmati while 15,110 hectares under cotton. The low rates of basmati in 2011 had led to a decrease in the area under basmati to nearly half last year. But owing to the lack of rain and the worst draught in Faridkot district in the past 10 years, some farmers who wanted to grow paddy had to shift to basmati out of sheer compulsion of the non-availability of water, adding a few acreage to the basmati. (Source:
Hindustan Times)

FMC proposes evening trading in agri commodities

The commodity futures market regulator is considering allowing evening trading in agri commodities. At present, non agri commodities like metals, bullion & energy products are traded in the evening session. Since prices of all these commodities are linked to global markets, which are active all the time, these are allowed in globally linked commodities trading in the evening session on Indian bourses. Evening trading in globally linked agri commodities was allowed earlier, but was discontinued 6-7 years ago. This, since it served little purpose for price hedging, as hedgers were hardly active and evening trading promoted dubba trading or illegal trading in northern & western parts of India.(Source: Business Standard)

U.S. mulls sugar import swap to mitigate cost of huge surplus

The U.S. government may try to boost low sugar prices by giving away part of its surplus sugar to nations that agree not to ship the sweetener to the glutted U.S. market. Agriculture Secretary Tom Vilsack referred to the possible step, calling it a swap of sugar for import access, during an interview with Reuters in Mexico City last week. "We are currently working on a process in which sugar could be swapped for import access in an effort to try to minimize the consequence of an oversupply," Vilsack told Reuters. U.S. sugar subsidies could soar into the hundreds of millions of dollars this year if low prices prompt refiners to forfeit sugar pledged as collateral for price-support loans. New York sugar futures SBc1 are well below the 20.49 cents per pound promised through the loans. (Source:
Reuters)

Hill states grapple with logistical challenges in buying PDS sugar

India's north-eastern and hill states, including Jammu & Kashmir, have expressed concerns over logistics for undertaking sugar procurement from the open market for PDS purpose while big states like Andhra Pradesh have already issued tenders for the same. The Centre has partially decontrolled the sugar sector and mills are no longer obligated to supply sweetener to the Centre for the Public Distribution System (PDS). States are asked to start procurement of sugar from the open market to meet the PDS demand from next month onwards. The states have also argued that a subsidy of Rs. 18.5 would not be sufficient as prices of sugar are rs.45/kg in hilly areas. (Source: Financial Express)

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Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities
Chana
Chana opened higher on account of short coverings. However, the gains were shortlived and prices declined from higher levels as higher supplies and record output expectations of the new crop kept prices under check. However, emergence of demand at lower levels cushioned the downside in the prices. The Spot settled 0.5% lower while the June Futures settled marginally higher by 0.03% on Monday. Higher supplies of the new crop from the major producing states such as Madhya Pradesh, Rajasthan and Maharashtra was a major reason attributed to recent fall in chana prices. 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 3375 3341 Prev day -0.50 -0.24

as on May 20, 2013 % change WoW MoM 1.18 -5.56 0.54 -7.07 YoY -20.59 -22.01

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

Source: Reuters

Technical Chart - Chana

NCDEX June 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. 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. 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 May Futures Unit Rs./qtl Support

valid for May 21, 2013 Resistance 3405-3455

3300-3335

Trade Scenario
According to IBIS, imports of chana in the month of February declined to 0.46 lakh metric tonnes compared to 2.31 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 is expected to remain on the downside today as higher supplies are expected to keep prices under the grip of the bears. However, demand from stockists may limit downside and support prices at lower levels. Seasonal pattern in chana indicates that prices may generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. On the downside, we dont expect chana prices to go below Rs 3200 per qtl levels as this being the MSP levels farmers may hold back their stock. Considering the record output expectatations and seasonal patterns and demand side fundamentals, we expect chana prices to trade in the range of Rs 3200- Rs 3800 per qtl over the medium term (3 months).

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Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities
Sugar
After some profit booking towards the end of week on Saturday, prices again gained yesterday on the back of demand from the bulk consumers and settled 0.33% higher. The sentiments have turned positive after the government notified partial sugar decontrol. However, higher supplies are seen offsetting summer season demand. Prices 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. According to this, 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 40.74 lakh ha as compared to 45.74 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 May '13 Futures Rs/qtl Last 3061

as on May 20, 2013 % Change Prev. day WoW 0.31 -0.21 MoM 0.71 YoY 3.23

Rs/qtl

2962

-2.98

-2.85

0.78

2.74

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 474.4 373.56

as on May 20, 2013 % Change Prev day WoW -0.65 -0.47 -2.21 -2.55 MoM -6.76 -6.46 YoY -16.82 -17.88

.Source: Reuters

Technical Chart - Sugar

NCDEX June 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 last week. With the opening stocks of 6.5 mn tn, domestic Sugar supplies are estimated at higher against the domestic consumption of around 22. 5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly.

Source: Telequote

Global Sugar Updates

Liffe sugar as well as Raw sugar remained under pressure and settled 0.65% and 0.47% on account of the ongoing crushing in Brazil, which is going at a strong pace. Market participants expect a record sugar cane crop in Brazil. The prices are trading at the lowest levels sing July 2010. 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. Sugar production in Brazil's main cane belt surged in April, outpacing last year's early harvest by 210 percent, as rains cleared in the middle of last month to allow crushing.

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

valid for May 21, 2013 Resistance 3085-3100

3020-3045

Outlook
Sugar is expected to continue to gain as overall sentiments for domestic sugar remain positive on account good demand from bulk manufacturers at such low levels. Also, government has notified cabinets decision to remove two key controls on sugar sector, which may keep sentiments upbeat. Wedding season demand may also support prices. However, higher supplies and weak international markets may cap sharp upside.

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Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean traded on a positive note as poor supplies of the
bean supported prices. However, weak meal exports coupled with IMDs prediction of a normal monsoon pressured prices. The spot as well as the Futures settled 0.3% and 0.49% higher on Monday. Indias soy meal exports for the month of April 2013 were 99.451 tonnes, lower by 68.31 percent from 313,832 tonnes a year ago. According to the 3rd advance estimates, Soybean output is pegged at 14.14 mn tonnes. IMDs forecasts of normal monsoon have raised hopes of better output next season too.

Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX May '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX May '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 4054 4038 725.3 727.1 Prev day 0.30 -0.06 -0.15 0.15

as on May 20, 2013

WoW -0.02 -1.43 -0.07 0.70

MoM 1.40 5.72 -0.15 3.03

YoY 19.13 18.31 0.84 -0.16

International Markets
CBOT Soybean traded on a positive note and settled 1.1% higher on Monday drawing strength from tight U.S. stocks and good demand for the US soymeal. Soybean planting has gathered momentum and is reported at 24% as against 6% last week. However, it is much lower as against 71% last year and five year average of 42%. There are delays in planting in the Midwest. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. NOPA reported that the soybean crush fell to 120.11 million bushels in April, from 137.08 million in March. China is forecast to import a record 66 mn tn of soy in 2013/14, 11% higher than the estimates of current season, driven by robust domestic demand and low stocks.

Source: Reuters

as on May 20, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1465 49.2 Prev day 1.10 -0.65 WoW -3.71 -0.83 MoM 2.54 0.08
Source: Reuters

YoY 4.23 -2.23

Crude Palm Oil

as on May 20, 2013 % Change Prev day WoW -0.17 0.04 2.15 0.23

Refined Soy Oil: Ref soy oil as well as CPO settled higher by 0.06%
and 0.04% on Monday tracking positive edible oil prices in the in the global markets. Palm stocks in Malaysia and Indonesia are expected to decline and demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products from May 1 to 20 declined 9.4 percent to 799,405 tonnes from 882,469 tonnes shipped during April 1 to 20. But, 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- May '13 Futures

Last 2330 470.9

MoM 3.37 2.08

YoY -24.94 -16.95

MYR/Tonne Rs/10 kg

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX May '13 Futures Rs/100 kgs Rs/100 kgs Last 3510 3475 Prev day -0.87 -0.52 WoW 0.65 -0.46

as on May 20, 2013 MoM -0.55 -0.57

Source: Reuters

YoY -8.77 -8.72

Technical Chart Soybean

NCDEX June contract

Rape/mustard Seed: Mustard Futures continued to decline for

the third day on supply pressure and settled 0.4% lower on Monday. Prices have gained from lower levels due to value buying. Higher supplies of the new crop coupled with higher output expectations led to a sharp decline in the prices since April. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.

Outlook
Soybean prices may trade sideways with upward bias as poor supplies in the domestic markets and firm international markets may support prices. However, weak meal exports coupled with forecast of a normal monsoon may cap sharp gains. Soy oil as well as CPO may gain due to higher international prices as well as lower yield period. However, comfortable stock levels may cap the upside.

Source: Telequote

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

valid for May 21, 2013 Support 694-697 3865-3895 3475-3490 465-468 Resistance 702-705 3935-3955 3520-3540 473-475

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Commodities Daily Report

Tuesday| May 21, 2013

Jeera Agricultural Commodities

Jeera prices corrected yesterday extending Saturdays losses on account of long liquidation. However, declining arrivals limited the downside in the prices. Reports of overseas enquiries supported prices last week. Demand from stockists and exporters also emerged at lower levels. The spot as well as the June Futures settled 0.14% and 0.69% lower on Monday. Over the last few months, prices have declined sharply 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. Expectations are that export orders may continue to 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 $2,450 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 May '13 Futures Rs/qtl Rs/qtl Last 13544 13020 Prev day -0.14 -1.12

as on May 20, 2013 % Change WoW 0.28 -1.75 MoM 0.33 -0.55 YoY -0.65 -3.56

Source: Reuters

Technical Chart Jeera

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 11,000 lakh bags on Monday. Production of Jeera in 2012-13 is expected around 38-40 lakh bags (55 kgs each), same as last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)
Source: Telequote

Market Highlights
Prev day -1.28 -1.60

as on May 20, 2013 % Change

Outlook
Jeera Futures may trade on a mixed note today. Improvement in overseas as well as domestic demand may support prices. However, higher output may pressurize prices. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX May '13 Futures Rs/qtl Rs/qtl Last 6014 5900

WoW 0.45 1.76

MoM -11.29 -10.23

YoY 61.12 45.54

Turmeric
Turmeric June Futures declined for the second consecutive day after NCDEX issued a circular saying that the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. Prices recovered from lower levels as the regulator withdrew margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Prices have declined sharply on account of weak demand coupled with huge carryover stocks. 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 beginning of day Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 3,000 and 8,000 bags respectively on Monday. Exports of Turmeric between Apr 2012- Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Expectations are that production may be lower by 40-50%. There are reports of some crop damage in Erode region. Turmeric production in 2012-13 is expected around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 is projected at historical high of 10.62 lakh tn. It is estimated that current years carryover stocks would be around 10 lakh bags. (1 bag= 75 kgs) Outlook Turmeric is expected to trade with a negative bias as the modification in the tick size and lot size has been put on hold. However, withdrawal of margins coupled with declining arrivals and expectations of improvement in demand in the coming weeks may support prices. However, huge carryover stocks may pressurize prices. Crop damage and output concerns may also support prices at lower
Source: Telequote

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

Valid for May 21, 2013

Support 12900-12990 5700-5830 Resistance 13130-13200 6030-6130

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Commodities Daily Report

Tuesday| May 21, 2013

Agricultural Commodities
Kapas
NCDEX Kapas settled unchanged while MCX Cotton settled marginally higher by 0.34% on account of short coverings. Prices have declined as offloading of stocks by the CCI in the open markets and weak global markets is seen pressurizing prices. However, emergence of fresh demand at lower price levels is restricting sharp downside in the domestic markets. The Cotton Corporation of India (CCI) and the National Agricultural Cooperative Marketing Federation of India (NAFED) are expected to offload over 8 lakh cotton bales (a bale weighs 170 kg) in the domestic market this month and the asking price may be lower by Rs 1,000 per candy than the previous price. In April, the government had offered a price of Rs 39,500 per candy, which received lukewarm response from the textile industry. (Source:
Economic Times dated 6th May 2013)

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1029 17910

as on May 20, 2013 % Change Prev. day WoW 0.00 0.44 0.34 0.06 MoM YoY 23.62 4.42 0.06 8.48

NCDEX Kapas Apr Futures MCX Cotton May Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 85.78 93.9

as on May 20, 2013 % Change Prev day WoW -0.73 -0.30 0.54 0.27 MoM 2.76 2.34 YoY 9.99 9.95

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.

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 Import are estimated 2.5 mn bales.

Global Cotton Updates

ICE Cotton futures declined 0.73% on Monday as improved weather in the US eased concerns over delayed plantings. Plantings were reported at 39% v/s 23% last week, but lower against 5 year avg of 52%. Weak export sales data last week also pressurized prices. Net Upland sales of 74,000 running bales for 2012/2013 were down 37 percent from the previous week and 66 percent from the prior 4-week average. 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 May contract

Source: Telequote

Outlook
Prices may remain under downside pressure in the near term on account of weak international markets coupled with offloading of stocks in the domestic markets from the state reserves. However, improving demand at lower levels may cushion sharp fall in the prices. US cotton planting intentions at a 4 year low coupled with China continuing with its stockpiling policy, may also support an upside in the prices over the medium term.

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

valid for May 21, 2013 Support 1010-1022 17780-17860 Resistance 1035-1045 17970-18010

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