Commodity Research Report Ways2Capital 30 May 2016

Greece has agreed a deal to unlock a further 10.3bn euros ($11.5bn; £7.8bn) in loans from its international creditors, after talks in Brussels. Eurozone finance ministers also agreed on debt relief for Greece, extending the repayment period and capping interest rates. Greece needed this tranche of cash to meet debt repayments due in July


Greece has agreed a deal to unlock a further 10.3bn euros ($11.5bn; £7.8bn) in loans from its international creditors, after talks in Brussels. Eurozone finance ministers also agreed on debt relief for Greece, extending the repayment period and capping interest rates. Greece needed this tranche of cash to meet debt repayments due in July. The Greek government owes its creditors more than €300bn - about 180% of its annual economic output (GDP).

Federal Reserve Chair Janet Yellen said Friday an interest rate hike is "probably" appropriate in the coming months if economic data improve. "It's appropriate, and I've said this in the past, I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably in the coming months, such a move would be appropriate," she said in response to a question at Harvard's Radcliffe Institute for Advanced Study. Her remarks comes as colleagues on the Fed's policy making committee have pointed to an increase in the federal funds rate target sooner rather than later. Yellen has expressed caution this year on rates, as inflation lags below the Fed's 2 percent target and global risks persist

The American currency traded higher by 0.2 percent in the last week. The week started with a positive note with the robust release of durable goods, pending home sales and unemployment claims data from the nation. From macro-view, America’s Prelim GDP data lacks lackluster however, it came better than the previous month which prompted the tracers to place fresh bets.

Asian markets are trading mixed owing to strength seen in the DX after the US Fed Chairwoman hinted towards a rate hike in the coming months. Moreover, a local newspaper reported the potential postponement of the sales tax increase which boosted the Japanese share prices.

? Gold
Last week spot gold prices declined by 3.2 percent to close at $1212.2 per ounce. Prices fell to a seven-week low after upbeat U.S. home sales data in the previous session boosted expectations that the Federal Reserve will press ahead with interest rate hikes in the near term.The recent flow of gold from Britain via Switzerland to Asia went into reverse in March and April after a shift in expectations for U.S. interest rate hikes boosted investment in London, Swiss customs data shows. Gold output in Australia, the world's second biggest producer, slipped 2 percent in the first quarter, due in part to mining of lesser grade ores during a period of higher bullion prices, a survey released on Sunday showed. Preliminary first quarter US GDP was in-line with projections at 0.8 percent expansion, while preliminary GDP price index over the same period ticked up 0.6 percent, slightly below the 0.7 percent forecast. The net-long position in gold futures and options fell 26 percent to 169,491 contracts in the week ended May 24, according to U.S. Commodity Futures Trading Commission data released three days later
Last week spot silver prices declined by 1.7 percent to close at $16.2 per barrel. The fall in silver prices is in line with declined in gold prices and fall in Nickel prices. ON the MCX, silver prices declined by 2.4 percent to close at Rs.38866 per kg. Revised University of Michigan Consumer Sentiment for May was at 94.7, below the economic consensus of 95.7. Inflation expectations over the same period ticked up 2.4 percent. Gold- Silver ratio looks to have met a resistance around 75 and is expected to come down lower towards 72-70 levels. The COT report showed that CFTC net long positions in silver trimmed by 9973 for the week ended on May 24.

? Energy
On Friday Crude oil declined by around 0.50%, registering at Rs.3310/bbl.Crude oil prices last week showed some gains despite of having huge confusion seeing upcoming OPEC meeting and anticipated interest rate hikes in near month.On weekly basis, July contract WTI International posted gains around 2% whereas gains in August contract Brent crude oil was around 1.40% ? June contract MCX crude oil tried showing gains around a percent last week.As per Friday’s closing, WTI International moved down by around 0.30%, registering at $49.33/bbl, whereas Brent crude oil by 0.50%, registering $49.32/bbl. Actually, prices in near term completely raised seeing declining shale oil productions from the US and rising products side demand.This year AAA has predicted for highest volume of motorists since 2005 which could actually help in surging gasoline demand. If the demand for gasoline in US market continues rising at current pace,International crude oil prices can have further support. CDD levels are also mild as of now, which means the motorists would be observing better weather conditions for drive. Jobs data on the other hand are improving in the US which means the participants for drive can pay well as the gasoline prices re lowest since 2005 driving season. The U.S. government reported a larger-than-expected drop in crude inventories, but profit booking after the data kept prices below the $50 a barrel level. Besides, the U.S. Memorial Day weekend also led the investors to take the profit off the table which capped the rally.

? Copper
Copper prices jumped 2.6 percent to close at $4695 per tonne as oil prices touched seven-month highs after the U.S. government reported a larger-than-expected drop in crude inventories. Along with that, a report written by the People's Bank of China monetary policy analysis team cited the central bank will keep policy slightly loose to support the economy, which still faces downward pressure. However, sharp gains were capped owing to hawkish comments from Fed officials, adding to bets of June rate hike. Also, the International Copper Study Group (ICSG) said in its latest monthly bulletin that global world refined copper market showed a 24,000-tonne surplus in February, compared with a 51,000-tonne surplus in January.


Monsoon may set in over Kerala during June 3 to 9, says agro-met advisory Meteorological subdivision-level rainfall forecast indicates rainfall activity over South India during June 3 to 9, which can bring the onset of the South-West monsoon. Normal date for onset over Kerala is June 1. The June 3-9 window has been projected in the national agro-met advisory service bulletin based on extended range weather forecast valid for the period May 27 to June 9. It is issued by the India Met Department in association with the Indian Council of Agricultural Research, All India Coordinated Research Project on Agricultural Meteorology and the Central Research Institute for Dryland Agriculture, Hyderabad. According to the bulletin, extreme parts of South India and North-East India are likely to receive witness a wet spell rain during May 27 to June 2. Over the West Coast, the rainfall belt will gradually extend northward, which will drive the rains over the rest of South India during June 3 to June 9. This, according to the bulletin, could likely precipitate onset of the monsoon over Kerala followed by other parts of South India.

Indian farmers are set to reduce the area given over to soybeans by up to 10 per cent this year in response to falling prices, pushing up likely imports of edible oils such as palm oil and soyoil.
Soybean is the main summer-sown oil-seed crop for the world's biggest importer of edible oil, but prices have dropped 10 per cent in the past two years, while the prices of pulses such as red gram have nearly tripled over the same period.Lower soybean output will force the country to increase imports of edible oils, supporting their prices. It could also limit India's soymeal exports, given prices for its Genetically Modified Organisms (GMO)-free produce are already above international prices.The further price rise due to lower supply could even make imports of soymeal viable for local consumers.This year, since pulses prices are ruling near record high levels, farmers will be inclined to shift towards pulses. We could see five to 10 percent reduction in soybean area.Soybean production plunged 20 per cent in 2015-16 to its lowest in more than a decade after drought and pests hit output.India exports soymeal mainly to Asian buyers, but the drop in production has forced it to import soymeal and soybean in small quantities for the first time in many years.

? Jeera
Jeera prices closed higher by 1 per cent on Thursday at the National Commodity & Derivatives Exchange Limited (NCDEX) as the investors increased their holdings in the commodity in the midst limited arrivals from growing regions. At the NCDEX, jeera futures for June 2016 contract closed at Rs. 16,095 per quintal, up by 1 per cent, after opening at Rs. 15,935 against the previous closing price of Rs. 15,935. It touched the intra-day high of Rs. 16,200. Sentiment improved further as a result of reduced domestic supplies in the physical markets and some export enquiries. As per third advance estimate of Gujarat State for 2015-16, production is pegged at 2.13 lt higher by about 7% forecasted in revised fourth advance estimate of 1.97 lt. In 2013-14, production was 3.46 lt. According to Dept of Commerce data, the export of jeera during first 11 month of 2015-16 (Apr-Feb) is 78,965 tonnes compared to 1.46 lt exported last year same period. The exports for 2015-16 shows a declining trend compared to last year. Devaluation of currencies in the buying countries and appreciation of Indian currency combined with high prices have led to a steep decline in jeera exports in 2015-16

? Turmeric
Turmeric futures closed lower on Friday on reports of forecast of good rains in turmeric growing area in south India. The Jun delivery contract on NCDEX closed 1.18% lower to settle at Rs 8,006 per quintal. The price trend is looking mostly sideways to lower as market participants anticipating good sowing in next season on forecast of good rains. Turmeric supplies have been slowing down and demand from stockists and upcountry buyers also going down the prices may trade in range bound manner. Turmeric arrivals have been higher in Feb and March compared to last year but the arrivals have slowed in April as per agmarknet data. Producers are releasing their lower or medium grade Turmeric and holding premium quality in the anticipation of better return ahead on anticipation of some weather disturbances in the coming monsoon. As per dept of commerce data, turmeric exports for the period April 2015- Feb 2016 is pegged at 77,081 tonnes while the export for the 2014-15 was 83,713 tonnes for the same period.

? RM Seed
Mustard seed prices closed higher by 0.69 per cent on Thursday at the National Commodity & Derivatives Exchange Limited (NCDEX) as a result of the decline in the supply for the commodity in the major markets. At the NCDEX, mustard seed futures for June 2016 contract closed at Rs. 4,392 per quintal, up by 0.69 per cent, after opening at Rs. 4,371 against the previous closing price of Rs. 4,362. It touched the intra-day high of Rs. 4,409. The prices are moving in a range on forecast of above normal monsoon and higher edible oil imports. Market participants’ are active at lower prices due to steady demand from stockists as arrivals may dwindle in coming weeks. In Canada, farmers were expected to cut sowings of the rapeseed variant by 4% this year to a five-year low of 7.8m hectares due to attack of disease and pests. The EU’s rapeseed harvest will fall this summer after frost hit crops in Poland while insect damage is causing concern in France and Britain. According to latest Apr’16 USDA report, global rapeseed production is forecast to decline in 2016/17 to 66.15 mt. In 2015-16, the production is pegged at 68.23 mt.

? Chana
Chana prices closed higher 1.36 per cent on Thursday at the National Commodity & Derivatives Exchange Limited (NCDEX) as the traders enlarged their holdings in the commodity on account of the good demand in the market. At the NCDEX, chana futures for June 2016 contract closed at Rs. 6,105 per quintal, up by 1.36 per cent, after opening at Rs. 5,992 against the previous closing price of Rs. 6,023. It touched the intra-day high of Rs. 6,109. Moreover, the restricted arrivals of the commodity in the physical market due to lower estimated output also influenced the chana prices. Chana production is revised downwards to 7.5 mt from 8 mt forecasted in 2nd estimate (Feb 2016), in the third advance estimates (May 2016. In Feb 2016, country imported over 79,000 lt of chana higher than 38,000 tones imports last year in Feb. Chana imports into the country touched about 9.93 lt of until February in the current financial year (Apr 2015- Feb 2016). To boost supply and bring down rates centre asked state governments not to levy local taxes like VAT and mandi fees on dals, and take stern action against hoarders. Earlier, agri-commodity bourse NCDEX hiked the cash margin to 45% on chana (gram) buyers and 10% on sellers to curb speculation

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