Commodities Daily Report

Thursday| May 30, 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

Thursday| May 30, 2013

Agricultural Commodities
News in brief
Onset of monsoon in Kerala in the next 4 days, says Met
Conditions are becoming favourable for the onset of South-West monsoon over Kerala over the next three to four days, the Met Department said on Wednesday. South Arabian Sea, Maldives and the Comorin region, the last three pit-stops on the home stretch, would be covered in that order over the next two days. The rains are expected to gather strength after onset, since a Madden-Julian Oscillation (MJO) wave is set to arrive into South Arabian Sea. (Source: Business Line)

Market Highlights (% change)

Last Prev. day

as on May 29, 2013

WoW MoM YoY

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

20148 6104 56.31 93.13 1391

-0.07 -0.11 0.34 -1.98 0.88

0.43 0.16 1.16 -1.22 1.73

3.92 3.39 3.89 -1.45 -5.19

22.56 22.33 1.23 2.61 -10.16

.Source: Reuters

Fresh storm in Bay to cross Bangladesh coast by this evening

As expected, the Bay of Bengal has thrown up a fresh storm, with yesterdays low-pressure area rapidly intensifying into a depression. It is the second storm to form in the Bay after a much stronger cyclone Mahasen churned up the waters to precipitate monsoon onset over Andaman and Nicobar (Bay arm of monsoon). The prevailing depression, which is weaker by two degrees to be classified a cyclone, is expected to do the same with the Arabian Sea arm of the monsoon. It will help the monsoon flows across Sri Lanka and South India gather strength, setting the stage for monsoon onset over Kerala coast over the next couple of days. The depression lay 200 km Southeast of Kolkata this morning, and is forecast to cross Bangladesh coast, yet again, in the evening. Kolkata and neighbourhood, as also East India and Northeast India, are expected to witness moderate to heavy rain and high winds during the rest of the day today. (Source: Business Line)

Less wheat obtained this year won't impact public distribution

The food ministry estimates wheat procurement in the crop marketing season beginning April 2013 to be 28-30 million tonnes (mt), 8-10 million tonnes less than last year's procurement, owing to brisk purchases by private traders. Just 24.99 mt of wheat has been procured from farmers, with the procurement season in major states such as Punjab, Haryana, Madhya Pradesh and Uttar Pradesh nearly over. During the corresponding period last year, central agencies had procured 33.55 mt. "We are hopeful we will manage to procure 28-30 mt of wheat from farmers, which is less than last year. This means our efforts to encourage private traders by not accepting their demand to lower the price of wheat sold through the open market scheme has borne fruit," Food Minister K V Thomas told reporters. He added the lower wheat procurement wouldn't have any impact on the Public Distribution System or any other government programme, including the Food Security Bill, as the Centre had ample stocks in its warehouses. (Source: Business Standard)

Higher ethanol prices a relief for sugar mills

In a significant move that could mark a turnaround in the fortunes of sugar mills, Indias public-sector oil marketing companies (OMCs) have started placing orders for ethanol procurement at an average ex-factory price of Rs 36-37 a litre. Until last year, OMCs had fixed the ethanol price at Rs 27. OMCs need the green fuel to blend it directly with petrol. However, in response to tenders floated by the OMCs in January to procure 1,050 million litres of ethanol, mills have offered to supply 550 million litres. While many domestic suppliers could not participate in the tenders due to strict norms, some were left out because of a delay in the selection of bidders, which would have stretched commencement of supply beyond the current crushing season. Placement of orders at a substantially higher price assumes significance as additional revenue would rescue sugar mills and partly compensate their loss from the core activity: sugar. The cost of ethanol production currently works out to Rs 34 a litre. (Source: Business Standard)

Cotton trade, ginners come under data net

With the lack of proper information on cotton hampering policymaking, the office of the textile commissioner has started to register ginning and pressing units, cotton traders and surgical cotton makers for data collection. They have to submit data on cotton used by them on a monthly basis to the office of the textile commissioner. "We dont have a proper assessment about the cotton situation. The difficulty in assessing the crop is affecting policymaking," Joint Textile Commissioner (Cotton), O M Prabhakaran, said. The office is developing a software, which would be ready by the end of June. All the stakeholders can upload data pertaining to cotton by using it. Lack of proper information and data on the crop size was creating confusion among the stakeholders in the cotton-based textile industry, Prabhakaran said. (Source: The Times of India)

Brazil to boost lending to farming sector by a fifth

Brazil will boost subsidized credit lines to farmers by a fifth to 140 billion reais ($67 billion) in the upcoming 2013/14 season, a senior government official confirmed to Reuters on Wednesday, as the government seeks relief for stubbornly high inflation in the country. The annually revised budget for agricultural finance will be announced officially on June 4 and will feature a reduction in the benchmark interest rate to 4.5 percent from 5.5 percent under the existing plan, the source said, declining to be named as he was not authorized to divulge the information. Brazil is the world's top grower of coffee, sugar and orange juice and is expected to become the No. 1 soy producer this year. It is also a top exporter of poultry and beef. Many loans are taken out and repaid within a year once harvests are sold. Critics say smaller farms that produce fruit and vegetables consumed locally by a population of nearly 200 million are shortchanged on access to credit as the government prioritizes loans to producers of export crops, making domestic food needlessly expensive. More support for small-scale producers could help boost output and lower prices. (Source: Reuters)

Japan cancels US wheat tender after GMO strain found

Japan canceled an offer to buy U.S. western white wheat in a food wheat tender due to close on Thursday, after a strain of genetically engineered wheat not approved for sale or consumption was found in the U.S. state of Oregon. The U.S. Department of Agriculture on Wednesday reported the discovery of a wheat variety developed years ago by biotechnology giant Monsanto Co MON.N, which was never put into use because of worldwide opposition to genetically engineered wheat. "We will refrain from buying western white and feed wheat effective today," Toru Hisadome, a Japanese farm ministry official in charge of wheat trading, told Reuters. Most wheat grown in Oregon was soft white and some was shipped as western white grade for milling use and as feed wheat in Japan, Hisadome added. Japan is the world's sixth-biggest wheat importer and the ministry keeps a tight grip on imports of the secondmost important grain after rice to protect against price volatility and to maintain local production, which accounts for about 10 percent of domestic demand. USDA officials said on Wednesday there was no sign that genetically engineered wheat had entered the commercial market, but grain traders warned that the discovery could hurt export prospects for U.S. wheat. (Source: Reuters)

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Commodities Daily Report

Thursday| May 30, 2013

Agricultural Commodities
Chana
Chana futures traded on a negative note in the first half yesterday hitting a new contract low of Rs 3105 per qtl on account of higher supplies in the domestic markets. However, prices recovered sharply towards the end on account of short coverings coupled with value buying emerging at lower levels and settled 0.6% lower on Wednesday. Peak arrival period this season has been extended on account of record high production and delayed start to harvesting. Supplies are at its peak as new crop from the major producing states such as Madhya Pradesh and Rajasthan have increased significantly. However, supplies are expected to slow down towards the end of the month. Also, stockists are building inventories at lower levels to meet the demand for the entire season. Thus, tracking seasonality pattern, chana prices may start recovering gradually from June onwards.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3225 3183 Prev day -0.63 0.60

as on May 29, 2013 % change WoW MoM -4.79 -5.15 -5.88 -6.63 YoY -25.86 -25.63

Chana Spot - NCDEX (Delhi) Chana- NCDEX June'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. 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 June Futures Unit Rs./qtl Support

valid for May 30, 2013 Resistance 3220-3250

3070-3130

Trade Scenario
According to IBIS, imports of chana in the month of April declined to 0.04 lakh metric tonnes compared to 0.11 lakh metric tonnes during the previous month. India imports Chana mainly from Australia and Canada and higher availability in these countries at comparatively cheaper rates is seen boosting imports of Chana to meet the domestic shortfall. In Australia, total chickpea production in 201213 is estimated to have increased to a record 713000 tones as compared with 485000.

Outlook
Chana may trade on a mixed note today. Prices may continue to decline as higher supplies coupled with higher output estimates may keep prices under the grip of the bears. However, lower value buying coupled with demand from stockists at lower levels may support prices. Seasonal pattern in chana indicates that prices generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. Thus, going forward downside seems to be limited as prices are nearing its MSP levels.

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Commodities Daily Report

Thursday| May 30, 2013

Agricultural Commodities
Sugar
Sugar prices recovered from lower levels yesterday on account of short coverings and settled 0.3% higher. Prices have declined sharply over the last few sessions on the back of comfortable supplies along with weak international markets. Prices had gained significantly over the last couple of weeks after the government notified partial sugar decontrol. Prices have recovered from lower levels after the government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector. Improving demand from bulk consumers and expected lower output next season in Maharashtra also supported an upside in the prices. The Minimum Initial Margin has been revised to 5% of the value of the contract or VaR based margin whichever is higher and will be imposed on all running contracts and yet to be launched contracts w.e.f beginning of trading day Monday, May 13, 2013. The Government has cleared the partial decontrol of sugar on April 4, 2013, however, notified the same after almost a month. The government will now have to buy sugar from the mills at open market prices. Also the release mechanism will be done away with, after September 2013. According to the Ministry of Agriculture, Sugarcane has been planted in 41.24 lakh ha as compared to 45.98 lakh ha at this time last year. Less area is reported mainly in Karnataka, Maharashtra and Tamil Nadu.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX June '13 Futures Rs/qtl Last 3072

as on May 29, 2013 % Change Prev. day WoW 0.48 -0.34 MoM 1.60 YoY 4.98

Rs/qtl

3019

0.30

-1.88

2.76

7.13

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 475.4 370.44

as on May 29, 2013 % Change Prev day WoW -0.25 -0.30 0.53 0.12 MoM -5.24 -4.69 YoY -14.57 -14.64

.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. 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 on the ICE settled 0.25% and 0.3% lower on Wednesday as Unica reported Brazils sugar production at 3.76 mn tn, higher by 140% by mid-May. Ethanol output has also increased by 146%. According to the ICE, Raw Sugar open interest has climbed to a 5 year high. Prices have declined sharply on the back of third consecutive year of sugar surplus. The ISO forecast sugar surplus of atleast 3.5 mn tonnes for 2013-14 season. Reports that China may curb imports as their stocks have more than doubled last season have also added to the downside. The prices are trading at the lowest levels since 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.

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

valid for May 30, 2013 Resistance 3030-3040

2990-3010

Outlook
Sugar may trade on a mixed note today with a negative bias as higher supplies and lower than expected demand may pressurize prices. Weak international markets may also pressurize prices. However, improvement in demand from bulk manufacturers coupled with governments decontrol of sugar sector may support prices at lower levels.

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Commodities Daily Report

Thursday| May 30, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean futures opened higher tracking positive
international markets. However, prices corrected from higher levels and settled 0.05% lower on account of weak oil meal export demand coupled with a forecast of a normal monsoon. Poor supplies in the domestic markets have supported prices at lower levels. India may also resume oil meal exports to China. 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 June '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX June '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3943 3829 729.2 713.1 Prev day 0.59 -0.05 0.32 0.23

as on May 29, 2013

WoW -2.74 -0.30 0.37 1.62

MoM -1.99 -1.24 -1.50 -1.16

YoY 15.16 13.81 0.39 -3.25

International Markets
CBOT Soybean declined by 0.5% on reports of cancellations of 1.47 lakh tn of soybean export orders from China. Prices gained earlier this week due to delayed planting coupled with tight soybean stocks and good demand for US soymeal. Soybean planting has been delayed due to heavy rains in the US Midwest and is reported at 44% as against 04% last week. However, it is much lower as against 87% last year and five year average of 61%. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. Argentinas agriculture ministry has cut its 2012/13 forecast to 50.6 mn tn from its April forecast of 51.3 mn tn. 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 29, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1502 48.63 Prev day -0.50 -1.84 WoW 0.50 -2.03 MoM 2.04 -1.68
Source: Reuters

YoY 8.29 -3.07

Crude Palm Oil

as on May 29, 2013 % Change Prev day WoW -0.55 0.58 1.33 2.23

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

Last 2359 482.2

MoM 2.12 3.77

YoY -24.87 -17.90

MYR/Tonne Rs/10 kg

Refined Soy Oil: Ref soy oil as well as CPO settled 0.23% and
0.58% higher on Wednesday on the back of weak Rupee despite weak international prices. Palm stocks in Malaysia and Indonesia are expected to decline & demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products from May 1 to 25 declined 5.2 percent to 1,064,925 tonnes from 1,123,129 tonnes shipped during April 1 to 25. However, 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.

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX June '13 Futures Rs/100 kgs Rs/100 kgs Last 3480 3462 Prev day 0.36 0.70 WoW -1.85 -1.45

as on May 29, 2013 MoM 0.24 0.29

Source: Reuters

YoY -10.53 -9.80

Technical Chart Soybean

NCDEX June contract

Rape/mustard Seed: Mustard Futures recovered from lower

levels on account of short coverings and settled 0.7% higher price have decline due to arrival pressure. Huge supplies of the new crop coupled with higher output estimates led to a sharp decline in the prices. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.

Source: Telequote

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

valid for May 30, 2013 Support 707-710 3790-3810 3420-3440 475-478 Resistance 716-720 3860-3910 3480-3500 485-489

Outlook
Soybean prices may trade on a mixed note today. Weak meal export demand coupled with forecast of a normal monsoon may pressurize prices. However, poor supplies may support prices. Soy oil as well as CPO may continue to gain due to lower yield period. However, comfortable stock levels may cap the upside.

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Commodities Daily Report

Thursday| May 30, 2013

Jeera Agricultural Commodities

Jeera prices recovered from lower levels on account of short coverings coupled with value buying and settled 0.5% higher on Wednesday. However, an increase in the arrivals over the few days capped the upside. Prices gained last week on account of thin supplies coupled with expectations of improvement in the export demand in the coming weeks. 25-30% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices had declined sharply over the last few months on the back of higher production estimates. According to Gujarat State Agri Dept. sowing in Gujarat is reported at 3.352 lakh ha in 2013 compared with 3.719 lakh ha last year. Due to the ongoing geo-political tensions in Syria and Turkey, supply concerns from these two major exporting countries still exist. Export orders may still continue to be diverted to India due to lack of supplies from Syria on back of the ongoing civil war. Production in Syria and Turkey is being reported around 17,000 tonnes and around 4,0005,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,425 tn (FOB Mumbai) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 8-9 lakh bags.

Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX June '13 Futures Rs/qtl Rs/qtl Last 13480 13050 Prev day -0.53 0.50

as on May 29, 2013 % Change WoW -1.04 -1.16 MoM 1.21 1.89 YoY 0.06 2.11

Source: Reuters

Technical Chart Jeera

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 18,000 bags on Wednesday. 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 0.97 2.12

as on May 29, 2013 % Change

Outlook
Jeera may trade lower today due to higher arrivals. However, prices may find support at lower levels on improvement in overseas as well as domestic demand. 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 June '13 Futures Rs/qtl Rs/qtl Last 6034 5968

WoW -0.57 -0.47

MoM -5.95 -6.31

YoY 67.39 59.32

Turmeric
Turmeric futures recovered yesterday on account of short coverings and settled 2.12% higher. Lack of fresh overseas demand as well as huge carryover stocks capped sharp upside. NCDEX issued a circular whereby the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. The regulator also withdrew special margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. Special Margin of 10% on the Long Side on all the running contracts in Turmeric have been withdrawn w.e.f Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 3,000 bags and 3,000 bags on Wednesday. Exports of Turmeric between Apr 2012- Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Expectations are that production may be lower by 40-50%. There are reports of some crop damage in Erode region. Turmeric production in 2012-13 is expected around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 is projected at historical high of 10.62 lakh tn. It is estimated that current years carryover stocks would be around 10 lakh bags. (1 bag= 75 kgs) Outlook Turmeric may trade on a mixed note today. Higher stocks with farmers; especially in Erode coupled with huge carryover stocks may pressurize prices. However, withdrawal of margins coupled with declining arrivals and expected improvement in export demand may support prices. Output concerns may also support prices at lower levels.
Source: Telequote

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

Valid for May 30, 2013

Support 12780-12910 5750-5860 Resistance 13140-13230 6050-6130

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Commodities Daily Report

Thursday| May 30, 2013

Agricultural Commodities
Kapas
NCDEX Kapas settled 0.81% higher while MCX Cotton settled unchanged on Wednesday as a pickup in the yarn demand coupled with lower arrivals due to extreme hot weather has supported prices. However, active selling by the CCI in the open markets has kept prices under check. CCI has offered 38,100 bales on Monday through e-auction of which 6,000 bales have been sold. Emergence of fresh demand at lower price levels is also 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. India's imports of cotton this year could reach 1.5 mn bales, missing earlier estimates of more than 2 mn as the govt may to start selling its stockpiles. Cotton supplies since the beginning of the year in October 2012 until February 10, 2013 were down at 183.4 lakh bales, down from 189.27 lakh bales a year earlier.

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1053 18180

as on May 29, 2013 % Change Prev. day WoW 0.81 1.59 0.00 0.78 MoM YoY 24.03 8.17 0.78 13.34

NCDEX Kapas Apr Futures MCX Cotton May Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 80.7 90.1

as on May 29, 2013 % Change Prev day WoW -0.88 -3.26 0.00 -1.96 MoM -3.47 -1.85 YoY 10.85 8.42

Source: Reuters

Sowing Progress
Cotton planting has been reported at 9.35 lakh ha as against 9.13 lakh ha during the same period last year. Higher sowing is report from Punjab and Haryana while a decline has been reported in Rajasthan.

Technical Chart - Kapas

NCDEX April contract

Domestic Production and Consumption

CAB in its latest meet has projected cotton crop at 34 mn bales for 201213 season compared to the previous estimates of 33 mn bales. Mill consumption is expected to go up from 22.3 million bales last year to 23.5 million bales. Exports are estimated at 8.1 mn bales while imports are estimated 2.5 mn bales.

Global Cotton Updates

ICE Cotton futures traded downwards for the 7 consecutive session on Wednesday and settled 0.88% lower on account of long liquidation led by weaker financial and commodities markets. Prices declined sharply last week on account of worries of a potential slowdown in China, the largest consumer of the fibre. Improved weather in the US has also eased concerns over delayed plantings. Cotton prices have closed in the negative in 8 of the last 10 days. Cotton Plantings were reported at 59% v/s 39% last week, but lower against 5 year avg of 69%. Export sales data has remained mixed. 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.

th

Source: Telequote

Technical Chart - Cotton

MCX May contract

Source: Telequote

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

valid for May 30, 2013 Support 1033-1048 18330-18390 Resistance 1070-1080 18550--18720

Outlook
Prices may remain trade with a positive bias today as good yarn demand may support prices. Improving demand at lower levels may also support prices at lower levels. Lower sowing in the US coupled with China continuing with its stockpiling policy, may also support an upside in the prices over the medium term. However, weak international markets coupled with offloading of stocks in the domestic markets from the state reserves may pressurize prices.

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