Commodity Research Report Ways2Capital 13 June 2016

Gold rebounded to a fresh three-week high on Friday, as investor risk aversion lifted appetite for the metal, putting it on track for a second straight weekly rise. Often perceived as an insurance against economic and financial concerns,

Gold rebounded to a fresh three-week high on Friday, as investor risk aversion lifted appetite for the metal, putting it on track for a second straight weekly rise. Often perceived as an insurance against economic and financial concerns, gold has risen more than 2 percent this week after weaker than expected U.S. payrolls data dented expectations of an imminent rise in U.S. interest rates. Prices are likely to be bolstered in the next two weeks by nervousness over Britain's June 23 referendum on its EU membership, analysts said. Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.Investors have almost priced out the chance of a rate increase at the Fed's June 14-15 policy review and reduced the likelihood of a July increase to about 26 percent. Besides, weak non farm payrolls data and comments from Janet Yellen about gradual rate hike will also act as a positive factor for the yellow metal.Gold prices spurted by Rs 118 to Rs 29,964 per 10 gram in futures trade as speculators widened their bets taking positive cues from the global market. At Multi Commodity Exchange, gold for delivery in far-month October was trading Rs 118 or 0.40% higher at Rs 29,964 per 10 gram in a business turnover of 12 lots. The metal for delivery in August also moved up by Rs 102 or 0.34% to trade at Rs 29,731 per 10 gram in a turnover of 553 lots. Analysts said fresh positions created by participants following a better trend in global market where the precious metal climbed to a three-week high as the dollar retreated on bets the Federal Reserve will keep interest rates on hold in the coming months, supported the upside in gold futures here. Meanwhile, gold traded 1.55% higher at $1,262.50 an ounce in New York in yesterday's trade. Silver prices were sharply up by Rs 441 to Rs 41,415 per kg in futures trade today after participants raised their bets amid firming global trends. At the Multi Commodity Exchange, silver for delivery in far-month September was trading notably higher by Rs 441 or 1.08% to Rs 41,415 per kg in a business turnover of 48 lots Similarly, the white metal for delivery in July traded higher by Rs 428 or 1.06% to Rs 40,682 per kg in a business volume of 758 lots. Analysts attributed the rise in silver prices at futures trade to a firming trend in the precious metals overseas as dollar's safe-haven appeal weakened on bets the Federal Reserve will keep interest rates on hold in the coming months. Globally, silver zoomed 4.07% higher at $17.01 an ounce in New York yesterday.

Crude Oil prices declined by 1.7 percent to close at Rs.3253 per barrel. Crude prices dipped further in Asia on Friday on a stronger dollar, dampening a rally that saw the commodity hitting 11-months high earlier in the week. The losses were in line with a sell-off on equities markets from Asia to the Americas fuelled by worries about the state of the global economy. The greenback was boosted by better than expected US unemployment numbers, making oil more expensive and dampening demand. Traders, however, expect a fresh boost for oil futures if there are new signs of tightening supplies. "If the positive developments we are seeing like the tightening supply (and) increasing demand in the oil sector continue to develop for the next couple of months, then maybe the strengthening US dollar might not have that great an impact," said IG Markets' analyst Bernard Aw. At around 0400 GMT, US benchmark West Texas Intermediate was 15 cents, or 0.30%, down at $50.41 while Brent North Sea crude was 13 cents, or 0.25%, lower at $51.82. Prices have almost doubled since hitting near 13-year lows at the start of the year as US supplies slowly shrink, while production in Nigeria is hit by rebel unrest and Canada's key oil region is ravaged by wildfires.Continuous threats by militants against Nigeria's oil industry and fear of more security incidents that could hit supplies worldwide, however, limited losses in crude. Crude futures have almost doubled since the 13- year lows of $27 for Brent and $26 for WTI in the first quarter. Worries about sabotage of oil facilities in Nigeria, although a build in U.S. gasoline stocks amid peak summer demand could pressure prices. Prices were also supported by data showing China's May crude oil imports at over six-year highs. Natural gas futures on Friday stalled on forecasts the power sector will use a little less gas and more coal over the next two weeks to meet rising air conditioning demand. Traders noted it becomes profitable for some generators to burn coal instead of gas once the gas premium rises over $1 due to coal's higher environmental and transport costs. Despite Friday's decline, the front-month ended up 7 percent for the week, its third straight week of gains. That was the longest weekly winning streak since January. That kept the contract in overbought territory with a Relative Strength Index above 70 for a ninth consecutive day for the first time since December 2013

Copper prices plunged the most among base metals by 3.8 percent last week to close at $4510 per tonne as 39 percent surge in LME inventories over the past week to above 213,225 tonnes mainly into Asian warehouses, acted as a negative factor. Also, number of Americans filing new applications for jobless benefits declined by 4,000 last week, sign lay-offs remains in check despite a recent slowdown in hiring. Further, European Central Bank President Mario Draghi warned that a lack of economic reforms is making the ECB’s job harder and urged European governments to play a supporting role.
Nickel prices moved up by Rs 4.80 to Rs 603.70 per kg in futures market as speculators raised their bets amid a firming trend overseas and spot demand. At the Multi Commodity Exchange, nickel for delivery in June gained Rs 4.80 or 0.80% to Rs 603.70 per kg in a business turnover of 1,077 lots. The metal for delivery in July rose by Rs 4.80 or 0.79% to trade at Rs 609.70 per kg in 5 lots. Analysts said apart from increased domestic demand from alloy-makers, firmness in the base metals at the London Metal Exchange (LME), influenced nickel prices at futures trade. Globally, nickel added 1.6% to trade at one-month high of $9,050 per tonne at the LME.
Zinc futures was marginally up by 0.22% to Rs 138.80 per kg as participants enlarged positions amid a firming trend at the spot markets today on better domestic demand. At the Multi Commodity Exchange, zinc for delivery in July rose by 30 paise, or 0.22%, to Rs 138.80 per kg, with a business turnover of 14 lots. According to marketmen, a firming trend at at the domestic spot markets following better demand from consuming industries, supported the upside in zinc prices in futures trade but metal's weakness overseas, avoided any major fall in prices. Also, metal for delivery in current month edged up by 25 paise, or 0.18% to Rs 138.35 per kg in business volume of 284 lots.
Aluminium prices edged up by Rs 1.10 to Rs 107.20 per kg in futures trade as participants enlarged their positions, supported by a strong spot demand in the physical market. In futures trading at the Multi Commodity Exchange, aluminium for delivery this month inched up by Rs 1.10 or 1.04% to Rs 107.20 per kg in a business turnover of 316 lots. Likewise, the metal for delivery in July traded higher by Rs 1.10 or 1.10% to Rs 107.95 per kg in 17 lots. Traders said strength in the base metals pack at the London Metal Exchange (LME), spurred by an improving trade outlook in China and monetary stimulus by the European Central Bank and increased domestic demand from consuming industries at the spot markets, helped aluminium futures to trade higher. At the LME, aluminium for delivery in three-month rose 0.7% to $1,614.50 per tonne.


The monsoon may have been in circulation for only three days after a delayed onset but it has already delivered rain equivalent to, if not more than what the first 10 days of June normally generate. As on Friday, the seasonal rains have covered Kerala, Tamil Nadu, most parts of Karnataka, parts of Rayalaseema and South Coastal Andhra Pradesh. It has delivered normal rain in Kerala and South interior Karnataka but dumped excess rain over Tamil Nadu, Rayalaseema, and coastal Andhra Pradesh. Conditions are favorable for its progress mainly over the peninsular seas over the next three to four days, an India Met Department update said. The Met has forecast heavy to very heavy rain at a few places over coastal Karnataka, South interior Karnataka, Konkan-Goa, and Kerala later today.

Supported by strong demand at domestic spot market and restricted supplies from producing regions, chana prices surged by 1.68% to Rs 6,840 per quintal in futures trade on Friday as participants raised bets.Besides, expectations of lower output fuelled the uptrend.At the National Commodity and Derivatives Exchange, chana for delivery in June month jumped up by Rs 113, or 1.68% to Rs 6,840 per quintal with an open interest of 1,020 lots.On similar lines, the commodity for delivery in far-month July contracts traded higher by Rs 63 or 0.93% to Rs 6,859 per quintal in 14,430 lots.Widening of positions by traders, driven by strong demand in the spot market against fall in supplies from producing regions, mainly pushed up chana prices at futures trade.All the government initiatives to reign in spiraling prices of pulses and pulse seeds appear to have gone haywire amid continuing rally in pulses and pulse seeds.Weak arrival and improved buying lifted the prices of pulses. State-run MMTC is looking to import 5,000 tonnes of pulses to keep the domestic prices under control by increasing the availability of lentils. The gap in demand and supply of pulses has widened in the last two years due to drought. Pulse production is around 17 million tonnes while demand is for 23.6 million tonnes (MT)

Soybean futures closed lower on Friday, as physical demand seems to be lower in coming sowing season. Soybean Jul’16 contract closed 0.20% lower to settle at Rs. 3,895/quintal. Soybean at physical market ruled flat at around 4,000 a quintal on steady physical demand and lower soymeal export. Oil meal exports during May 2016 are reported at only 7,737 tons compared to 121,339 tons in May 2015 - down by 94% according to data compiled by Solvent Extractors' Association of India.
Refined soya oil prices were up by 0.36% to Rs 655.70 per 10 kg in futures trade on Wednesday as speculators raised their bets amid uptick in demand in the spot market.At the National Commodity and Derivatives Exchange, refined soya oil for delivery in far-month July moved up by Rs 2.35 or 0.36 per cent to Rs 655.70 per 10 kg with an open interest of 1,04,630 lots.Similarly, the oil for delivery in June contracts traded higher by Rs 2.20 or 0.34% to Rs 642.40 per 10 kg in 44,340 lots.Enlarging of positions by participants on the back of pick up in demand in the spot market against tight stocks position on restricted supplies from producing regions mainly led to the rise in refined soya oil prices at futures trade.

Guar seed traded on mixed note throughout the day on account of mixed sentiments of spot markets where active buying interest of traders amid adequate availability of stocks was featured. At the end on the day, the most active futures contract for July delivery closed unchanged at Rs. 3,159/quintal, against its previous day close. Guar gum traded on higher note for most part of the day as speculators expand their position amid firm trend at spot market. Similarly, positive overseas cues also supported prices to move higher. The futures contract for July month expiry ended at Rs. 5,720/quintal, surged by 2.51%. On spot front, recovery of prices lead to rise in arrivals at spot market where total arrivals were reported around 410 MT at key trading centers in Haryana, whereas guar seed price was quoted at Rs. 2,900/quintal in Sirsa physical market. At NCDEX approved warehouses, stock position of guar seed and gum were reported 30,666 MT and 37,380 MT whereas 360 MT and 199 MT were in process as on 12 June 2016

jeera futures traded up on revival of active buying at spot market front. Thus, jeera futures prices ended the day on marginally positive note at Rs.16775 per quintal up, with 0.8%gains. The total arrivals reported at Unjha market were 5000 bags. The average spot prices at Unjha market were hovered in the range of Rs.16700-16900/quintal. Stock positions at the NCDEX accredited warehouses are 3436 tonnes and 30 MT are in process as on 09 June 2016. According to Dept of Commerce data, the export of jeera during 2015-16 (Apr-Feb) surged to 93,539 tonnes compared to 1.56 lt exported last year same period. The exports for 2015-16 declined 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. 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.

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