Commodity Research Report Ways2Capital 29 May 2017

Gold demand in Asia tapered off this week as buyers took to the sidelines in India to await a new national tax policy and as China entered a seasonal slowdown.

Gold demand in Asia tapered off this week as buyers took to the sidelines in India to await a new national tax policy and as China entered a seasonal slowdown. Spot gold XAU= , trading on Friday at just below $1,270 an ounce, has gained 4 percent since hitting an eight-week low of $1,213.81 on May 9. Prior to the rise in spot prices due to the uncertain political situation in the United States, bullion buyers in India had been building stocks ahead of a national sales tax that takes effect on July 1. week, though, gold demand in India slumped as jewellers became more cautious."Retail demand is weak ... Jewellers are now waiting for a clear price trend and the new tax system," said Harshad Ajmera, president of the Indian Association of Hallmarking Centres. The new goods and services tax will replace a slew of federal and state levies from July 1, but the government has yet to fix a tax rate for gold under the GST. The government is likely to finalise the tax rate for gold on June 3. higher tax rates, many jewellers have been buying gold the last few months, and this could mean India's imports are set to plunge during the usual period of peak demand in the second half of the year. in India were charging a premium of up to $1 an ounce this week over official domestic prices, unchanged from last week. The domestic price includes a 10 percent import tax. "From the next week, gold could start trading in discount. In the last few months, banks have imported much more gold than demand," said a Mumbai-based bank dealer with a private bank. In China, the world's top consumer of gold, demand for the yellow metal has weakened as May-June is usually a quiet period for jewellers. But traders said they expect festive buying will boost demand in August and September. "There is not too much demand with prices hovering between $1,250-$1,260," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. Premiums in China were seen at $7 an ounce, down from $10 last week, traders said. In Hong Kong, premiums were priced in at 60 cents to $1 an ounce, unchanged from the week before. Prices in Tokyo were quoted at a discount of 50 cents, also unchanged from last week. Premiums in Singapore were almost unchanged at $1 as against $1-$1.20 the previous

Gold prices moved higher on Friday, but gains were expected to remain limited as the greenback recovered from recent losses posted after the release of the minutes of the Federal Reserve’s meeting. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were up 0.43% at $ 1,261.83.
The June contract ended Thursday’s session 0.26% higher at $1,256.40 an ounce. Futures were likely to find support at $1,247.60, the low of May 24 and resistance at $1,263.80, the high of May 23. The greenback regained some ground thanks to Thursday’s better than expected U.S. initial jobless claims data.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.09% at 97.24. A stronger U.S. dollar usually weighs on gold, as it weakens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The data came a day after the minutes of the Fed’s May meeting showed that the central bank plans to unwind its balance sheet towards the end of the year, possibly using a system where cap limits are implemented on how much the Fed would roll off every month without reinvesting. The Fed also signaled that interest rates could be raised soon, but added that "it would be prudent" to wait for more U.S. economic data. Market participants were looking ahead to U.S. data on durable goods orders, first-quarter economic growth and consumer sentiment due later in the day. Elsewhere in metals trading, silver futures for July delivery rose 0.23% to $17.233 a troy ounce, while copper futures for July delivery were steady at $2.598 a pound.
Gold prices were higher in European trade on Thursday, staying near the strongest level in around three weeks as the U.S. dollar slipped after the Federal Reserve signaled a cautious approach to future rate hikes and the reduction of its $4.5 trillion balance sheet. Comex gold futures rose $ 5.00, or around 0.4%, to $ 1,258.07 a troy ounce by 2:35AM ET. Meanwhile, spot gold was at $ 1,258.24, not far from a three-week peak of $1,263.80 touched on Tuesday. Also on the Comex, silver futures tacked on 12.6 cents, or about 0.7%, to $17.24 a troy ounce, just shy of a one-month high of $17.30 scaled earlier this week.
Minutes from the Fed's last policy meeting showed policymakers agreed they should hold off on raising interest rates until it was clear a recent U.S. economic slowdown was temporary, though most said a hike was coming soon. The minutes also showed that policymakers favored a gradual reduction in its massive balance sheet. Fed staff proposed that the central bank set a cap on the amount of bonds that would be allowed to run off each month, initially setting it at a low level and raising it every three months. The somewhat dovish minutes prompted traders to scale back bets on two more rate increases by the end of the year. Futures traders are currently pricing in around an 77% chance of a hike at the Fed's June meeting,while odds for a second rate hike by December were at about 40%. The median Fed policymaker forecast is for two more rate increases by year-end. But a recent run of disappointing U.S. economic data combined with signs of deepening political turmoil in the White House raised doubts over the Fed's ability to raise rates as much as it would like before the end of the year.

As investors looked ahead to minutes of the Federal Reserve’s latest policy meeting due later in the global day for further hints on the timing of the next U.S. rate hike. Comex gold futures shed $6.20, or around 0.5%, to $ 1,249.21 a troy ounce by 3:25AM ET. Meanwhile, spot gold was at $ 1,249.52. Prices of the yellow metal lost around $ 6.00 on Tuesday, as the U.S. dollar pulled away from recent six-and-a-half-month lows.
The Fed will release minutes of its most recent policy meeting at 2:00PM ET, as traders seek further insight into the likelihood of higher interest rates in the months ahead. The U.S. central bank left interest rates unchanged following its meeting on May 3 and gave a positive assessment of the U.S. economy, suggesting it was still on track for two more rate hikes this year.But a recent run of disappointing U.S. economic data combined with signs of deepening political turmoil in the White House saw investors temper expectations for higher interest rates in the months ahead.
Futures traders are currently pricing in around an 80% chance of a hike at the Fed's June meeting as per analyst expectation while odds for a second rate hike by December were at about 40%.

India's gold imports could plunge in 2017 during the traditional period of peak demand in the second half of the year, after jewellers have aggressively restocked inventory ahead of a national sales tax that takes effect on July 1. Lower imports from the world's second-biggest consumer during its high-demand season could drag on global gold prices XAU= that have gained nearly 10 percent this year as political turmoil in the United States has raised expectations of a slower pace of interest rate hikes this year. Gold imports typically strengthen in the second half of a year as the precious metal is considered an auspicious gift at weddings and festivals such as Diwali and Dussehra.
But the timing of strong purchases looks backwards this year, as the implementation of a Goods and Services Tax that will replace a slew of federal and state levies has buyers cramming their major activity into the first half of 2017. This (strong buying) trend will not continue in the coming months," said James Jose, secretary of the Association of Gold Refineries and Mints, referring to the tripling in the value of gold imports in April. of GST, some people are stocking up fearing higher tax, but demand has been falling (more recently)," he said. India's gold imports could hit 450 tonnes in the first half of the year, more than double from the same period in 2016, Imports could then fall to 250 tonnes in the second half, about 40 percent lower than a five-year average for the period of 403 tonnes. Gold imports in the second half of 2016 were 313.8 tonnes, up 60 percent compared with the first half of that year. "Aggressive Indian buying is unlikely to be there in the second half like every year. Global prices need to find support from other sources like exchanged traded funds or have to correct. Another reason for the first-half buying surge is that cash many jewellers deposited in banks because of demonetization last year has been routed back through official channels, allowing for the restocking of gold, Nambiath added. In November, Prime Minister Narendra Modi scrapped 500- and 1,000-rupee banknotes - 86 percent of the value of cash in circulation - as part of a crackdown on corruption, tax evasion and militant financing. gold could start trading at discounts in India in the next few weeks as jewellers "are carrying far higher inventory than required. "They have to bring imports down in coming months, "Gold imports in May could drop to around 50 tonnes, Jose of the refiners' association said, from 85 tonnes in April. Lower gold imports could help Asia's third-biggest economy in containing a swelling trade deficit that hit its highest level in 29 months in April. GOLD Imports of unrefined gold will also fall sharply in the second half as new rules allow only refineries accredited by the Bureau of Indian Standards to import gold from June 1, said Jose of refiners' association. "It will take at least six months for refiners to secure BIS accreditation. Many small refiners may fail to get accreditation. India imported 142 tonnes of unrefined gold in 2016, according to data compiled by the World Gold Council. The data Showed for Indian Gold Import by World Gold Council.

Gold prices held near their strongest level in around three weeks in European trade on Tuesday, as investor sentiment skewed toward safe-haven assets after a suspected terrorist attack at a concert in Britain's city of Manchester. Comex gold futures firmed at $ 1,261.43 a troy ounce by 3:10AM ET. Meanwhile, spot gold was at $ 1,261.60. Prices of the yellow metal rose to an overnight peak of $ 1,263.80, just shy of a three-week high of $ 1,265.00. Police said an explosion at the end of a concert by U.S. singer Ariana Grande in the English city of Manchester on Monday killed at least 19 people and injured more than 50. Two U.S. officials said a suicide bomber was suspected, while Prime Minister Theresa May said the incident was being treated as a terrorist attack. If confirmed, it would be the deadliest militant assault in Britain since four British Muslims killed 52 people in suicide bombings on London's transport system in July 2005. Gold has been well-supported in recent sessions as political uncertainty surrounding the Trump administration pressured the dollar lower. Investor sentiment has been hit by fears that the U.S. political system could become engulfed by crisis, preventing lawmakers from pushing through tax or spending reforms. The dollar index, which tracks the greenback against a basket of six major rivals, was at 96.83 in London morning trade. It fell to a six-month low of 96.70 on Monday, having given up all the gains it had made following the election in November. Also on the Comex, silver futures shed 7.1 cents, or about 0.4%, to $ 17.12 a troy ounce, after hitting its highest since May 1 at $17.21 a day earlier.


ENERGY
Oil seesawed Friday as it struggled to recover from a slump overnight as an OPEC-led deal on extending output cuts disappointed. U.S. crude was off 32 cents, or 0.65%, at $ 48.58 at 08:00 ET. Brent shed 37 cents, or 0.72%, to $ 51.09. The market had already priced in the nine-month extension to output cuts to March of next year agreed Thursday by OPEC and non-OPEC producers. The scale back remains at the 1.8 million barrels a day agreed for the first half of this year. Investors are questioning to what extent the deal will encourage a further rise in U.S. shale activity and what happens after the deal expires next year.
U.S. production has increased by over 10% since mid-2016 to some 9.3 million barrels a day. Baker Hughes rig count data are due out later in the session.
U.S. oil prices moved higher on Friday, but the commodity still remained under pressure as the Organization of Petrolium Exporting Countries’s decision to extend production cuts disappointed traders. U.S. crude futures for July delivery were up 0.47% at $ 49.12 a barrel, off a one-week trough of $ 48.27 hit overnight. On the ICE Futures Exchange in London, the July Brent contract climbed 0.52% to $ 51.74 a barrel, after hitting a two-week low of $ 50.89 earlier in the day. Crude prices tumbled after OPEC agreed on Thursday to extend its production cuts for nine extra months, citing delegates at a highly anticipated meeting in Vienna. However, the move disappointed some traders who had hoped for longer or deeper cuts. In December last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30 in what was the first joint accord in 15 years. Saudi Arabia’s energy minister Khalid al-Falih had indicated that the major oil producers were likely to agree on extending production cuts for nine months to March 2018 as widely expected, but also stated that the consensus among members was that deeper cuts are not needed now.Among OPEC members, Nigeria and Libya will continue to be exempt from an output cap while Iran’s output would remain at 3.8 million barrels per day. In any case, commodity strategists from ING questioned why they were bothering to extend the agreement.

The OPEC-led decision to extend a production cut to March 2018 disappointed financial investors, prompting an exit from oil futures markets, while refiners in Asia were mostly concerned with whether it meant they would need to go hunting for crude. In Vienna, the Organization of the Petroleum Exporting Countries and some non-OPEC producers on Thursday extended a pledge to cut 1.8 million barrels per day of output until the end of the first quarter of 2018. traders did not like what they heard, thinking it meant an ongoing oil glut. "The market voted with its feet", dragging crude futures CLc1 LCOc1 down 5 percent to near $50 a barrel. In physical markets, however, where tankers can take weeks or months to deliver up to $100 million in crude oil, refiners want to know if they will be forced to search for new suppliers. "This is a declaration of a strong will of OPEC as well as non-OPEC producers to tighten overall supply-demand," said Yasushi Kimura, president of the Petroleum Association of Japan, and chairman of petroleum conglomerate JXTG Holdings 5020.T . To ensure crude supplies, "we need to carefully monitor OPEC's production cut adherence," Kimura said.Crude is by far the biggest cost for refiners and the petrochemical industry, shaking margins DUB-SIN-REF whenever benchmark prices take broad swings.Kimura said the extended cuts could mean demand may exceed supply in 2017, which would be the first time in years. This would force refiners to start using up reserves, pushing up prices at least until production catches back up with consumption.
"In 2017, global demand is likely to exceed supply ... and crude prices are likely to ... rise towards $60 by the end of the year.


REAL SUPPLY CUTS?

So far, though, the cuts that started in January have barely dented supply in Asia, home to three of the world's four biggest oil consumers. Exporters were keen to maintain global market share, and they cut domestic supplies or shipments to marginal buyers. As a result, inventories in the big consumer markets have remained bloated, and prices low. have not had any impact in terms of any cut from any of these sources into India," said B. Ashok, chairman of Indian Oil Corp IOC.NS , the country's biggest petroleum company. OPEC sources said that will change as top exporter Saudi Arabia especially is keen to see a visibly tighter market. Many refiners, however, are still not expecting a real crude shortage, largely due to ample alternative supplies. "Crudes that can be processed in our refineries include crudes from the U.S. We have procured some crude even from Canada. We have been procuring crude from Latin America ... Africa, Russia," Ashok said.

ALTERNATIVES AT A PRICE

U.S. producers have become a key alternative source of supply as their output - largely due to shale oil - has soared by 10 percent since mid-2016 to 9.3 million bpd C-OUT-T-EIA , close to Saudi Arabia's and Russia's levels. These producers have been fast to fill OPEC's gap, with an average of 374,000 bpd of crude from the United States coming to Asia in the first four months of 2017, according to data compiled by Thomson Reuters Oil Research and Forecasts. That compares with an average of just 48,000 bpd in 2016. "The cut in OPEC supplies will be offset by higher U.S. crude production," said KY Lin, spokesman for Formosa Petrochemical Corp. 6505.TW , one of Asia's biggest refiners and petrochemical producers.
Still, expect prices to gradually rise towards the beginning of 2018 as the market tightens. consumers may have to live with higher prices as OPEC and its allies hold back output, the longer the policy lasts, the more the cartel risks losing permanent market share.
"In response to ... OPEC production cuts we are working on diversification of crude oil import sources and looking beyond the Middle East.

Oil markets remained weak on Friday after tumbling in the previous session when OPEC and allied producers extended output cuts but disappointed investors betting on longer or larger supply curbs.
At Thursday's meeting in Vienna, the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day until the end of the first quarter of 2018. The initial agreement would have expired in June this year. oil plunged 5 percent following the announcement, and held its losses early on Friday. Brent crude futures LCOc1 were trading at $51.47 per barrel at 0125 GMT, up just 1 cent from their last close. U.S. West Texas Intermediate crude futures CLc1 were back below $50, at $48.88, down 2 cents from their previous close.Britain's Barclays bank said the price falls were a result of some expectations ahead the meeting for longer or deeper production cuts. "Some market participants may have expected either a deeper cut, a longer one, inclusion of more countries, or other such icing on the cake. Barclays said the ongoing production cut would result in a drawdown of bloated fuel inventories, but added that OPEC's goal of bringing stocks down to their five-year average would not be reached within the timeframe of the production cut. Other analysts, including at Goldman Sachs and Jefferies bank said a normalization of oil inventories would occur in early 2018.
Analysts also said that the OPEC-led production cuts would support a further rise in U.S. output.
Ann-Louise Hittle, vice president at energy consultancy Wood Mackenzie said that the "decision in Vienna sends a signal of continued support for oil prices from OPEC which helps U.S. onshore drillers make plans" to further increase their production.U.S. oil production has already risen by 10 percent since mid-2016 to over 9.3 million bpd, close to the output of top producers Russia and Saudi Arabia."
Oil sank Thursday as it shed early gains of about 1% as OPEC signaled a nine-month extension of output cuts of the same magnitude. U.S. crude was off 80 cents, or 1.56% at $50.56 at 08:00 ET. Brent lost 70 cents, or 1.30%, to $53.26. Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC producers are likely to agree to a nine-month extension. However, he also said deeper cuts are not needed for the meanwhile.
An official OPEC statement is due out later in the session. OPEC and non-OPEC producers are cutting output by 1.8 million barrels a day in the first half. The expected decision to extend the time frame for the cuts comes after a further increase in U.S. shale activity. U.S. production has risen by over 10% since mid-2016 to some 9.3 million barrels a day.

Oil shed gains of about 1% Thursday as OPEC signals 9-month extension of output cuts of the same size. U.S. crude was off 14 cents, or 0.27%, at $51.22 at 05:30 ET. Brent lost 4 cents, or 0.07%, to $53.92.
Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC producers are likely to agree to a nine-month extension. However, he said deeper cuts are not needed now. OPEC and non-OPEC producers are cutting output by 1.8 million barrels a day in the first half.

Oil prices were higher in European trading on Thursday, touching a fresh five-week high ahead of an OPEC meeting later in the global day. The U.S. West Texas Intermediate crude July contract hit its strongest since April 19 at $ 51.93 a barrel in overnight trade. It was last at $ 51.73 by 3:20AM ET, up 37 cents, or around 0.7%. Elsewhere, Brent oil for July delivery on the ICE Futures Exchange in London tacked on 43 cents to $54.38 a barrel, after climbing to its highest since April 19 at $ 54.62 a day earlier.
Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a June 30-deadline. In November last year, OPEC and 11 other non-OPEC producers, including Russia, agreed to cut output by about 1.8 million barrels per day between January 1 and June 30.
Most market analysts expect the oil cartel to extend output cuts for a further nine months until March 2018, instead of six months as previously expected. There is also talk that OPEC is looking at the option of deepening current production cuts, but it is not clear whether there would be support for that.
So far, the production-cut agreement has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya, and a relentless increase in U.S. shale oil output. The U.S. rig count rose for the 18th week in a row to the highest level since April 2015 last week, implying that further gains in domestic production are ahead. Elsewhere on Nymex, gasoline futures for June inched up 0.9 cents, or 0.5%, to $1.661 a gallon, while June heating oil advanced 1.2 cents to $1.618 a gallon. Natural gas futures for July delivery climbed 1.1 cents to $3.311 per million British thermal units, as traders looked ahead to weekly storage data due later in the global day.

Oil prices rose ahead of an OPEC meeting on Thursday that is expected to extend output cuts into 2018, adding at least nine months to an initial six-month curb in the first half of this year.
Brent crude futures LCOc1 were trading at $ 54.41 per barrel at 0539 GMT, up 45 cents, or 0.8 percent from their last close. U.S. West Texas Intermediate crude futures CLc1 were up 40 cents, or 0.8 percent, at $ 51.76. Both benchmarks have climbed over 16 percent from their May lows. Prices have risen on a consensus that a pledge by the OPEC Countries and other producers, including Russia, to cut supplies by 1.8 million barrels per day would be extended into 2018, instead of covering only the first half of 2017. was rife that the cuts may be extended by nine and possibly 12 months. The production cut, introduced in January, was initially only to cover the first half of 2017, but an ongoing glut has put pressure on OPEC and its allies to extend at a meeting in Vienna on Thursday. is widely expected the cartel will, at a minimum, extend its production quota for another nine months. An extended production cut was already "factored into the price of oil", adding that is was unlikely that a deeper cut would be announced at this stage.
"OPEC officials prefer ... to wait and see the impact of an extension in helping rebalance the market prior to taking any more drastic actions. Energy consultancy Wood Mackenzie said a nine-month extension "would have little impact on our price forecast for 2017, which is for an annual average of $55 per barrel for Brent". It estimated that a nine-month extension would result in a 950,000 bpd production increase in the United States, undermining OPEC's efforts. U.S. oil production C-OUT-T-EIA has already risen by more than 10 percent since mid-2016 to over 9.3 million bpd as its drillers take advantage of higher prices and the supply gap left by OPEC and its allies. Should the meeting in Vienna result in a cut extension to cover all of 2018, Wood Mackenzie said the tighter market could push average 2018 Brent prices up to $63 per barrel. Brent has averaged $53.90 per barrel so far this year. If the meeting fails to agree an extended cut, traders expect oil prices to fall as this would result in ongoing oversupply.
Oil prices rose ahead of an OPEC meeting on Thursday that is expected to extend a production cut aimed at tightening the market well into 2018, adding at least nine months to an initial six-month cut in the first half of this year. Brent crude futures LCOc1 were trading at $ 54.40 per barrel at 0118 GMT, up 44 cents, or 0.82 percent from their last close. U.S. WTI crude futures CLc1 were at $51.76, up 40 cents, or 0.78 percent. Both benchmarks have risen more than 16 percent from their May lows.
Prices have risen on a consensus that a pledge by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut supplies by 1.8 million barrels per day would be extended into 2018, instead of just covering the first half of this year. production cut, introduced in January, was initially only to cover the first half of 2017, but an ongoing glut has meant that OPEC and its allies who are meeting in Vienna on Thursday are expected to extend the cut by nine or potentially even 12 months. strong consensus has developed that producer supply cuts will be extended. The only question is the choice of the duration. "This (extension) has been highly factored into the price of oil, and at this stage it is unlikely that we will see a deepening in the level of production cuts, with OPEC officials preferring to wait and see the impact of an extension in helping rebalance the market prior to taking any more drastic actions," Energy consultancy Wood Mackenzie said "a nine-month extension would have little impact on our price forecast for 2017, which is for an annual average of $55 per barrel for Brent." Wood Mackenzie estimated that a nine-month extension would result in a 950,000 bpd production increase in the United States, undermining OPEC. U.S. oil production C-OUT-T-EIA has already risen by more than 10 percent since mid-2016 to over 9.3 million bpd as its drillers take advantage of higher prices and the supply gap left by OPEC and its allies.
Should the meeting in Vienna result in a cut extension to cover all of 2018, Wood Mackenzie said the tighter market could push average 2018 Brent prices up to $63 per barrel. Brent has averaged $53.90 per barrel so far this year. Should the meeting in Vienna fail to agree an extended cut, traders expect oil prices to fall as this would result in ongoing oversupply.Oil was flat Wednesday amid confidence major producers will agree to extended an output cut deal.U.S. crude was up 3 cents, or 0.06%, at $ 51.50 at 08:15 ET. Brent added 5 cents, or 0.09%, to $ 54.20.OPEC and non-OPEC have agreed to cut output by 1.8 million barrels a day in the first half. The adherents to the deal are due to meet Thursday to decide on an extension of the deal for another nine months. Goldman Sachs said the proposal to sell off half of the U.S. strategic petroleum reserves over 10 years would have little impact. The American Petroleum Institute Tuesday reported a fall of 1.5 million barrels in U.S. crude stocks in the latest week. The Energy Information Administration is forecast to report Wednesday a fall of 2.42 million barrels in U.S. crude inventories.


BASE METAL’S OUTLOOK :

Trading Ideas:

Nickel -
Nickel trading range for the day is 575.5-591.1.
Nickel gained on short covering tracking LME prices after trade data showed that the Philippines is ramping up ore exports to China.
BHP Billiton is seeking environmental approval to dig two new mines to extend the life of its Nickel West unit in the state of Western Australia.
U.S. orders for long lasting manufactured goods fell less than forecast in April, although the core reading unexpectedly dipped.

Zinc -
Zinc trading range for the day is 167.6-172.2.
Zinc gained as support seen after Shanghai zinc inventories fell to their lowest in more than two years at 91,749 tonnes.
Zinc spot premiums in Guangdong contracted rapidly due to increased supplies.
The National Bureau of Statistics data show China’s zinc production fell 5.6% year-on-year to 474,000 tonnes in April.

Copper -
Copper trading range for the day is 361.3-375.7.
Copper dropped as momentum sparked by a strike at copper mines, Indonesia's Grasberg, eased ahead of the long weekend break in China, the U.S. and Britain.
Freeport McMoRan Inc said that mining and milling rates at its Grasberg mine in Papua, Indonesia have been affected by an extended strike.
China bonded copper premiums jumped $10 to $75, off the year's lows to the highest since March amid draw downs from Chinese exchange inventories.


BASE METAL

? NICKEL ( 25th - May - 2017 )
Amid a weak trend in global market and subdued domestic demand, nickel traded 0.15 per cent lower at Rs 588.90 per kg in futures trade today as speculators reduced their bets. In futures trading at the Multi Commodity Exchange, nickel for delivery in current month was trading down by 90 paise, or 0.15 per cent, at Rs 588.90 per kg, in a business turnover of 256 lots. The metal for delivery in June was also down by a similar margin to trade at Rs. 594.90 per kg, in a business turnover of 66 lots.
Analysts said the fall in nickel prices was mostly in line with a weakening trend in select base metals at the London Metal Exchange after Moody's Investors Service downgraded China's credit rating and warned that the country's debt position will worsen as its economic expansion slows.

? ALUMINIUM - ( 25th - May - 2017 )
Aluminium prices were down by 0.28 per cent to Rs 125.75 per kg in futures market today as speculators cut down their holdings, tracking a weak trend in base metals overseas and subdued demand at domestic spot markets. At the Multi Commodity Exchange, aluminium for delivery in May fell by 35 paise, or 0.28 per cent to Rs 125.75 per kg in business turnover of 95 lots. Similarly, the metal for delivery in June contracts traded lower by 25 paise, or 0.20 per cent to Rs 125.75 per kg in 15 lots.
Analysts said apart from a weak trend in the base metals pack at the London Metal Exchange after Moody's Investors Service downgraded China's credit rating and warned the country's debt position will worsen as its economic expansion slows, low demand at the domestic markets, led to fall in aluminium prices at futures trade here.

? ZINC ( 25th - May - 2017 )
Falling for the second day, zinc prices eased further by 0.70 per cent to Rs 170.10 per kg in futures trade today as speculators engaged in trimming their positions, tracking a weak trend at spot market on muted demand. Besides, slump in copper and other industrial metals at the London Metal Exchange too weighed on sentiments in futures trade. At the Multi Commodity Exchange, zinc for delivery in May declined by Rs 1.20, or 0.70 per cent, to Rs 170.10 per kg, in a business turnover of 391 lots. Likewise, the metal for delivery in far-month June traded lower by a similar margin to Rs 170.60 per kg in 17 lots.

? NICKEL ( 26- May - 2017 )
Nickel prices rose 0.60 per cent to Rs 585.50 per kg in futures trading today as participants raised their bets amid pick up in industrial demand at the domestic spot markets. At the Multi Commodity Exchange, nickel for delivery in May month went up by Rs 3.50, or 0.60 per cent to Rs 585.50 per kg in business turnover of 947 lots. Similarly, the metal for delivery in June month contracts traded higher by Rs 3.10, or 0.53 per cent to Rs 591.20 per kg in 593 lots. Analysts said widening of positions by traders on the back of pick up in demand from alloy-makers in the spot market supported nickel prices at futures trade.


? ALUMINIUM ( 24- May - 2017 )
Amid pick up in demand at domestic spot market, aluminium prices were up by 0.24 per cent to Rs 126.60 per kg in futures trade today as speculators built up fresh positions. At the Multi Commodity Exchange, aluminium for delivery in May edged up by 30 paise, or 0.24 per cent, to Rs 126.60 per kg, in a business turnover of 209 lots. Likewise, the metal for delivery in June traded higher by 25 paise, or 0.20 per cent, to Rs 126.60 per kg in 53 lots. Analysts said fresh positions created by participants after uptick in demand from consuming industries in the spot market mainly led to the rise in aluminium prices at futures trade.


? ZINC ( 24- May - 2017 )
Supported by an upsurge in demand from consuming industries at domestic spot market, zinc prices moved up by 0.21 per cent to Rs 169.90 per kg in futures market today as participants created fresh positions. At the Multi Commodity Exchange, zinc for delivery in May edged up by 35 paise, or 0.21 per cent, to Rs 169.90 per kg, in a business turnover of 472 lots. Likewise, the metal for delivery in June traded higher by 15 paise, or 0.09 per cent, to Rs 170.30 per kg in 35 lots. Analysts said fresh positions built up by participants, tracking a firm at the domestic spot market on pick up in demand from consuming industries, mainly influenced zinc prices at futures trade

? LEAD ( 24- May - 2017 )
Lead prices edged higher 0.41 per cent to Rs 134.80 per kg in futures trading today as speculators built up fresh positions amid pick up in domestic demand. At the Multi Commodity Exchange, lead for delivery in May traded higher by 55 paise, or 0.41 per cent, to Rs 134.80 per kg, in a business turnover of 396 lots. On similar lines, the metal for delivery in June was trading up by 50 paise, or 0.37 per cent, to Rs 135.90 per kg in 40 lots. Analysts attributed the rise in lead futures to fresh positions created by traders due to pick up in demand from battery-makers at the spot market.


? ZINC ( 22 - May - 2017 )
China is likely to step up imports of refined zinc from this month, industry sources said on Friday, as dwindling global supplies of concentrate hit local output of the metal, used to galvanise steel. China's refined zinc output marked its lowest in more than two years in April as the impact from the closure of major mines in places such as Australia and Ireland stifled the concentrate supplies China relies on to churn out finished metal.


Nickel futures fall 0.40% on global cues, profit-booking. - ( 19 - May - 2017 )
Nickel futures traded 0.40 per cent lower at Rs 597.50 per kg today as participants reduced exposure amid weak global cues and profit-booking. At the Multi Commodity Exchange, nickel for delivery in June fell Rs 2.40, or 0.40 per cent, to Rs 597.50 per kg, in a business turnover of 128 lots. Also, the metal for delivery in May was trading down Rs 2.30, or 0.39 per cent lower, at Rs 591.90 per kg in 907 lots. Market analysts said, apart from profit-booking by participants, a weak trend in select base metals overseas, weighed on nickel futures.

Copper futures rise on spot demand - ( 19 - May - 2017 )
Copper futures traded 0.21 per cent higher at Rs 365.30 per kg today as speculators enlarged positions amid firming trend at the domestic spot markets. However, weakness in metal overseas, capped the gains. In futures trade, copper for delivery in June was trading higher by 75 paise, or 0.21 per cent, at Rs 365.30 per kg in a business turnover of 710 lots at Multi Commodity Exchange. Similarly, the metal for delivery in far-month August edged up by 25 paise, or 0.07 per cent, at Rs 368.80 per kg in 2 lots.

Lead futures down 0.66 per cent hurt by muted demand ( 18 - May - 2017 ) -
Lead prices were trading down 0.66 per cent to Rs 134.55 per kg amid muted domestic demand in futures trading today as participants trimmed exposure. Lead for delivery in May declined by 90 paise, or 0.66 per cent, to Rs 134.55 per kg in a business turnover of 190 lots. Similarly, the metal for delivery in June shed 85 paise, or 0.63 per cent, to Rs 135.10 per kg in six lots. Marketmen said the fall in lead futures was due to a weak trend at the domestic markets owing to muted demand from consuming industries, particularly, battery-makers.

NCDEX - WEEKLY MARKET REVIEW
FUNDAMENTAL UPDATES OF NCDEX MARKET -

? REFINED SOYA ( 26- May - 2017 )
Refined soya oil prices drifted lower by 1.05 per cent to Rs 626.50 per 10 kg in futures trade today as participants booked profits amid easing demand in the spot market against adequate stocks position. At the National Commodity and Derivatives Exchange, refined soya oil for delivery in far-month July fell by Rs 6.65, or 1.05 per cent, to Rs 626.50 per 10 kg, with an open interest of 33,160 lots. Similarly, the oil for delivery in June traded lower by Rs 6.10, or 0.97 per cent, to Rs 625.60 per 10 kg in 42,510 lots. Analysts said besides profit booking by traders at prevailing levels, fall in demand in the spot market against sufficient stocks position, mainly led to the decline in refined soya oil prices at futures trade.

? WHEAT ( 26- May - 2017)
Wheat prices eased by 0.25 per cent to Rs 1,597 per quintal in futures market today as speculators cut down their positions, triggered by adequate stocks position on increased supplies from growing regions at spot markets. At the National Commodity and Derivatives Exchange, wheat for delivery in June declined by Rs 4, or 0.25 per cent, to Rs 1,597 per quintal, with an open interest of 19,330 lots. On similar lines, the wheat for delivery in July traded lower by a similar margin to Rs 1,620 per quintal in 8,830 lots. Analysts said offloading of positions by traders, driven by sufficient stocks positions on increased arrivals from producing belts in the physical market mainly kept wheat prices lower at futures trade.


? PALM OIL ( 26- May - 2017 )
Crude palm oil prices were down by Rs 4.90 to Rs 505 per 10 kg in futures trade today as traders offloaded positions due to subdued demand in spot markets. Furthermore, higher supplies from major producing areas and weak trend at overseas markets weighed on crude palm oil prices at futures trade, analysts said. At the Multi Commodity Exchange, crude palm oil for delivery in June eased by Rs 4.90, or 0.96 per cent, to Rs 505 per 10 kg, in a business turnover of 368 lots. The oil for delivery in current month traded lower by Rs 3, or 0.58 per cent, to Rs 517 per 10 kg in 81 lots.


? MENTHA OIL ( 26- May - 2017 )
Mentha oil prices were up by 1.95 per cent to Rs 982.20 per kg in futures trade today as investors extended their positions amid rising demand from consuming industries in the domestic spot market.
Further, tight stocks position following restricted arrivals from Chandausi in Uttar Pradesh in the physical market supported the upside in mentha oil prices. At the Multi Commodity Exchange, mentha oil for delivery in current month gained Rs 18.80, or 1.95 per cent, to Rs 982.20 per kg, with a trading volume of 116 lots. Similarly, the oil for delivery in June edged up by Rs 6, or 0.66 per cent, to Rs 914 per kg, with a business turnover of 35 lots. Marketmen said a firming trend at the spot markets amid restricted supplies from Chandausi in Uttar Pradesh, mainly influenced mentha oil prices at the futures trade.


? CRUDE PALM OIL ( 25 - May - 2017 )
Crude palm oil prices were up by 0.52 per cent to Rs 514.10 per 10 kg in futures trade today as traders created fresh positions, supported by pick up in demand at the spot market. Besides, tight stocks position on fall in supplies from producing belts too fuelled the uptrend. At the Multi Commodity Exchange, crude palm oil for delivery in June month rose by Rs 2.70, or 0.52 per cent, to Rs 514.10 per 10 kg, in a business turnover of 381 lots. Similarly, the oil for delivery this month went up by Rs 1.30, or 0.25 per cent, to Rs 521.50 per 10 kg in 100 lots. Analysts said widening of positions by participants driven by pick up in demand in the spot market against tight stocks position on restricted supplies from producing regions mainly kept crude palm oil prices higher at futures trade


? MENTHA OIL ( 25- May - 2017 )
Mentha oil prices were up 1.01 per cent to Rs 967.90 per kg in futures market today as participants raised their holdings on the back of pick up in spot demand from consuming industries. Besides, tight stocks position following restricted arrivals from major producing belts of Chandausi in Uttar Pradesh also provided support to mentha oil prices. At the Multi Commodity Exchange, mentha oil for delivery this month rose Rs 9.70, or 1.01 per cent, to Rs 967.90 per kg, clocking a business volume of 72 lots. The oil for June traded higher by Rs 5, or 0.55 per cent, to Rs 912.30 per kg, with a trading volume of 53 lots. Analysts said raising of bets by speculators, driven by rising demand from consuming industries in the spot markets against restricted supplies from Chandausi led to the rise in mentha oil prices in futures trade.

? CASTOR SEED  ( 24- May - 2017 )
Castor seed prices recovered sharply by Rs 42 to Rs 4,528 per quintal in futures trading after speculators accumulated positions at prevailing existing levels amid a firm trend at the domestic spot markets. Marketmen said fresh positions created by participants at current levels amid a firm trend in spot markets on the back of revived demand from paint and lubricant industries, mostly supported the rally in castor seed prices in futures trade. Besides, emergence of export demand too boosted sentiments, they added. At the National Commodity and Derivatives Exchange, castor seed for July delivery recovered by Rs 42, or 0.94 per cent, to Rs 4,528 per quintal, with an open interest of 24,240 lots. On a similar line, castor seed for delivery in most- active June was trading higher by Rs 40, or 0.91 per cent, to Rs 4,459 per quintal, in an open interest of 90,470 lots


22 - May - 2017 -

US wheat rose nearly 1 percent on Monday as forecasts for heavy rains across a key US growing region pushed the grain to a two-week high.

FUNDAMENTALS

The most active wheat futures on the Chicago Board Of Trade rose 0.9 per cent to $ 4.39 a bushel by 0105 GM, near the session high of $ 4.39-1/4 a bushel - the highest since May 8. Wheat closed up 2.2 per cent on Friday. The most active soybean futures rose 0.4 per cent to $9.57 a bushel, having firmed 0.9 per cent on Friday. The most active corn futures rose 0.3 per cent to $3.73-1/2 a bushel, having gained 1.8 per cent in the previous session. Wheat draws support as forecasts for rains across the United States stoke fears of production losses.
Heavy rains also support corn, which has edged higher amid fears of further planting delays. Soybeans and corn were under pressure last week amid a slump in the Brazilian real, which saw farmers rush to sell their record supplies.

Ample stocks drag down wheat futures by 0.48% ( 19 - May - 2017 )

Wheat prices fell 0.48 per cent to Rs 1,651 per quintal in futures trade today as speculators cut down their positions, triggered by ample stocks on increased supplies from growing regions at spot markets. At the National Commodity and Derivatives Exchange, wheat for delivery in July declined by Rs 8, or 0.48 per cent to Rs 1,651 per quintal with an open interest of 4,720 lots. Likewise, the wheat for delivery in June contracts traded lower by Rs 7, or 0.43 per cent to Rs 1,624 per quintal in 20,250 lots. Analysts said offloading of positions by traders, triggered by sufficient stocks positions on increased arrivals from producing belts in the physical market mainly attributed the fall in wheat prices at futures trade.

? CARDAMOM 19 - May - 2017 -
Cardamom remained weak and prices fell by another 1.12 per cent to Rs 1,004 per kg in futures trade today as speculators engaged in reducing bets, taking negative cues from spot market on fall in demand. Besides, ample stocks position on increased arrivals from producing regions fuelled the downtrend. At the Multi Commodity Exchange, cardamom for delivery in June eased by Rs 11.40, or 1.12 per cent, to Rs 1,004 per kg in a business turnover of 29 lots.

Mentha oil futures maintain downtrend on sluggish demand - ( 19- May - 2017 )

Extending a falling streak for the fourth straight day, mentha oil prices fell further by 0.62 per cent to Rs 917.10 per kg in futures trading today as speculators engaged in reducing positions, driven by easing demand in the spot market. Besides, adequate stocks position on increased arrivals from producing belts put pressure on mentha oil prices. At the Multi Commodity Exchange, mentha oil for delivery in June declined by Rs 5.70, or 0.62 per cent, to Rs 917.10 per kg in a business turnover of 67 lots.


? PALM OIL ( 19- May - 2017 ) -
Malaysian palm oil futures fell on Thursday evening, tracking weaker soya oil on the Chicago Board of Trade and other related edible oils on China’s Dalian Commodity Exchange. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 0.6% at 2,626 ringgit ($607.03) a tonne by the close. Most commodities, including US soya oil, were dragged down by a negative US Dow Jones index, said a Kuala Lumpur-based futures trader. The Dow recorded its biggest one-day fall since September on reports that US President Trump tried to interfere with a federal investigation.


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