Commodities & Currencies Weekly...

Commodities & Currencies

Weekly Tracker

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Commodities Weekly Tracker

ContentsReturns

• Non Agri Commodities

• Currencies

• Agri Commodities

Non-Agri Commodities

• Gold

• Silver

• Copper

• Crude Oil

Monday | March 26 2012

Currencies – DX, Euro, INR

Agri Commodities

• Chana

• Black Pepper

• Turmeric

• Jeera

• Mentha

• Soybean

• Refine Soy Oil & CPO

• Sugar

• Potato

• Kapas


Commodities Weekly TrackerMonday | March 26 2012

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Non-Agri Commodities Weekly Performance


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Monday | March 26 2012

Commodities Weekly Tracker

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Currencies Weekly Performance


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*Weekly Performance for April contract

GoldWeekly Price Performance

• On a weekly basis, Spot gold prices increased marginally by 0.1 percent.

• MCX Gold April contract rose around 1 percent on account of a weaker

Rupee and hit a high of Rs28,145/10 gms in the last week.

Factors which influenced gold prices

• Weakness in the US dollar.

• However, sharp gains were capped due to weak sentiments in the global

markets.

• Additionally, fall in crude oil prices also affected the inflation-led demand for

gold last week.

ETF Performance


1,530

1,560

1,590

1,620

1,650

1,680

1,710

1,740

1,770

1,800

26,700

27,000

27,300

27,600

27,900

28,200

28,500

28,800

29,100

29,400

MCX and Comex Gold Price Performance

MCX- Near Month Gold Futures (1 kg)- Rs/10 gms Comex Gold Futures - $/oz

• Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-

traded fund, declined by 0.8 percent to 1,282.69 tonnes on 23rd March 2012

from the previous 1,293.26 tonnes on 16th March 2012.

Outlook

• Gold is expected to trade lower during the week, taking cues from expected

strength in the US dollar coupled with poor market sentiments on account of

deepening worries over global economy.

• However, depreciation in the Indian Rupee may cushion sharp downside on

the domestic bourses.

Weekly Technical Levels

• MCX Gold April: Support 27851/27595 Resistance 28255/28410 CMP:

28,208)

• Spot Gold : Support 1653/1611 Resistance 1678/1695. (CMP: 1664.40)


78.0

78.5

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1,530

1,550

1,570

1,590

1,610

1,630

1,650

1,670

1,690

1,710

1,730

1,750

1,770

1,790

Spot Gold Vs US Dollar Index

Spot Gold -$/oz US Dollar Index

SilverWeekly Price Performance

• Spot silver prices declined sharply by more than 1 percent in the last

week.

• The white metal touched a low of $31.06/oz during the week and ended

its trading session at the level of $32.18/oz on Friday.

• On the MCX, Silver May contract slipped around 0.1 percent and

touched a low of Rs55,901/kg last week.

Factors that influenced silver prices

• Downside in base metal complex.

• However, further decline was cushioned on account of a weaker dollar.

ETF performance


26.0

28.0

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49,500

50,500

51,500

52,500

53,500

54,500

55,500

56,500

57,500

58,500

59,500

60,500

61,500

MCX and Comex Silver Price Performance

• Holdings in the iShares Silver Trust, the world's largest silver-backed

exchange-traded fund, declined around 0.4 percent to 9,716.42 tonnes

on 23rd March 2012 from the previous 9,752.67 tonnes on 16th March

2012.

Outlook

• We expect silver to trade with a negative bias in this week, taking cues

from fall in gold prices coupled with a stronger dollar. Silver being an

industrial metal will also take cues from movement in base metals pack.


• MCX Silver May: Support 56550/55600 Resistance 57950/58780 (CMP:

57,324)

• Spot Silver: Support 31.60/30.70 Resistance 33.15/34.12 (CMP: 32.21)


MCX- Near Month Silver Futures (30 kg)- Rs/ kg Comex Silver Futures - $/oz

78.0

78.5

79.0

79.5

80.0

80.5

81.0

81.5

82.0

26.5

28.0

29.5

31.0

32.5

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37.0

Spot Silver Vs US Dollar Index

Spot Silver -$/oz US Dollar Index

CopperWeekly Price Performance

• On a weekly basis, copper prices declined around 1.7 percent on the LME.

• MCX Copper April contract ended on a flat note at Rs432.10/kg in the last

week.

Copper Inventories

• Weekly copper inventories at warehouses monitored by the Shanghai

Futures Exchange decreased sharply by 1.6 to 223,632 tonnes on 23rd

March 2012.

• The red metal inventories on the LME warehouses decreased sharply by

3.3 percent to 255,175 tonnes on 23rd March 2012 from the previous

level of 263,825tonnes on 16th March 2012.

Factors that influenced copper prices


385

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7,100

7,300

7,500

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7,900

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LME and MCX Copper Price Performance

LME Copper Future ($/tonne) MCX Near Month Copper Contract (Rs/kg)• Escalating tensions with respect to rising worries over global economy .

• Weak sentiments in the global markets.

• However, fall in copper LME as well as Shanghai inventories resisted

further decline in prices.

Outlook

• Rising uncertainty with respect to global economic growth may affect

demand for industrial metals. Additionally, strength in the US dollar will

also exert further downside pressure on copper prices. However, fall in

the red metal inventories may cushion sharp decline in prices.

• Weakness in the Indian currency may provide support to the metal prices

on the domestic platform.


• MCX Copper Support 428.20/424.10 Resistance 436/440(CMP: 434.10).

• LME Copper: Support 8330/8120 Resistance 8540/8720. (CMP: 8397)


LME Copper Future ($/tonne) MCX Near Month Copper Contract (Rs/kg)

7,100

7,300

7,500

7,700

7,900

8,100

8,300

8,500

8,700

8,900

260,000270,000280,000290,000300,000310,000320,000330,000340,000350,000360,000370,000380,000390,000400,000

LME Copper Price Movement Vs Inventory

Copper LME Inventory (tonnes) LME Copper Future ($/tonne)

Crude OilWeekly Price Performance

• On a weekly basis, Nymex crude oil prices declined by 0.2 percent.

• MCX Crude Oil April contract gained by more than 3 percent on account of depreciation

in the Indian Rupee and closed at Rs5499/bbl last week.

US Energy Department Inventory

• As per the US Energy Department (EIA) report released last week, US crude oil

inventories unexpectedly declined by 1.2 million barrels to 346.3 million barrels for the

week ending on 16th March, 2012.

• Gasoline stocks fell by 1.2 million barrels to 226.9 million barrels and whereas distillate

stockpiles rose by 1.8 million barrels to 136.6 million barrels for the last week.

Factors that influenced crude oil prices

• Saudi Arabia pledged that it will make up for any shortfall in production from Iran.

• Unfavorable manufacturing data from Euro Zone and China indicated a slowdown in


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4800

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5000

5100

5200

5300

5400

5500

Nymex and MCX Crude Oil Price Performance

• Unfavorable manufacturing data from Euro Zone and China indicated a slowdown in

global economic growth which may affect the fuel demand.

News

• As per the International Energy Agency, world crude oil market is well balanced as even

if, on one hand, the exports of Iranian crude oil will decline by 300,000 million barrels in

current month on account of sanctions from European Union and US, but on the other

hand Saudi Arabia will produce more than its current capacity which is below 10 million

barrels per day. Saudi Arabia has a production capacity of 12.5 million barrels a day.

Outlook

• Mounting uncertainty over global economy may increase concerns for global oil

demand. This coupled with expected strength in the dollar will act as a negative factor

for oil prices during the week.


• MCX Crude April : Support 5418/5295 Resistance 5554/5685. (CMP: 5492)

• Nymex Crude Oil: Support 105.60/103.20 Resistance 108.25/110.80 (CMP: 106.38)


MCX crude oil (Rs/bbl) NYMEX Crude Oil ($/bbl)

320

330

340

350

360

370

380Crude Oil Inventories (mn barrels)

DX/ INRWeekly Price Performance

• The US Dollar Index (DX) traded slightly lower by 0.2 percent in the last week.

• On a weekly basis, the Indian Rupee (INR) depreciated sharply by more than 2

percent and crossed the crucial 51-mark to touch a low of 51.29.

Factors that influenced movement in the DX

• However, weak sentiments in the global markets resisted sharp decline in the

dollar.

• On a week-on-week basis, Dow Jones and S&P declined sharply by 1.1 percent

and 0.5 percent each.

• The index ended its trading session below the crucial 80-mark on Friday.

Factors that influenced movement in the Rupee

• Poor sentiments in the domestic markets coupled with month-end dollar


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79.0

79.5

80.0

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US Dollar Index

• Poor sentiments in the domestic markets coupled with month-end dollar

demand from the oil importers acted as a negative factor for the currency.

• Nifty and Sensex declined more than 0.5 percent each last week.

• However, further depreciation was resisted on the back of weakness in the US

dollar.

• The Indian currency closed its trading session at the level of 51.17 on Friday.

Outlook

• The Indian Rupee is expected to largely trade with a depreciation bias on the

back of choppy sentiments in the global markets which will also hurt the

domestic equities. Additionally, month-end dollar demand from oil importers

and a stronger dollar will also act as a negative factor for the currency .


• USD/INR MCX Mar: Support 50.90/50.50 Resistance 51.65/ 52.10 (CMP: 51.33)

• US Dollar Index: Support 78.75/78.0 Resistance 79.80/ 80.25 (CMP: 79.50)


48.0

49.0

50.0

51.0

52.0

53.0

54.0

$/INR - Spot

Euro

Weekly Price Performance

• On a week-on-week basis, the Euro appreciated by 0.7 percent on the

back of a weaker dollar.

• However, sharp gains were capped due to mixed economic data from

the region and rise in risk aversion in the global markets.

• The Euro hit a high of 1.3293 in the last week and closed its trading

session at the level of 1.3271 on Friday.

News and Developments

• Italy’s Prime Minister Mario Monti warned that Spain could increase

the Europe’s debt crisis as Euro-Area ministers arrange an agreement

to support the region’s financial firewall in this week.


1.26

1.27

1.28

1.29

1.30

1.31

1.32

1.33

1.34

1.35

Euro/$ - Spot

to support the region’s financial firewall in this week.

• Finance ministers meeting is scheduled in Copenhagen starting on

30th March and officials will look for an agreement to increase a 500

billion-Euro ($664 billion) ceiling on bailout funding.

Outlook

• During the week, the Euro is expected to trade lower on account of

worries with respect to Euro Zone debt concerns along with poor

sentiments in the markets. However, any positive news or

developments from the Euro Zone front may lead to reversal in the

markets.


• EURO/USD SPOT : Support 1.3165/1.3060 Resistance 1.3330/1.340

(CMP: 1.3236)


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64.5

65.5

66.5

67.5

68.5

69.5

70.5

EURO/INR - Spot

Chana



• Chana futures remained firm in the early part of the week and made new high of

Rs 9348 per qtl owing to slow pace of arrivals amidst lower output, however, prices

fell during the later part of the week after imposition of 5% special margin & fears

govt may intervene to curb rising prices. w-o-w prices settled 2.3% higher

FMC imposes additional margin of 5% on Chana

• FMC imposed additional margin of 5% (in cash) on both long and short side on all

running & forthcoming Chana (Symbol: CHARDDEL)contracts wef 24th Mar, 2012.

Harvesting commenced in MP

• Harvesting has started in MP and is currently at its peak. 8-9 thousand bags are

arriving daily in MP. Arrival pressure would built up further with commencement

of harvesting in Rajasthan during the next week .

2,900

3,000

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FuturesSpotPrice Trend: Chana Spot vis-a-vis Futures

Lower domestic output and costlier imports

• Decline in area by 4.3% and unfavorable climate has led to a fall in Chana output

by 6.8 at 7.6 mn tn compared to 8.2 mn tn in 2010-11. However, the trade

participants Chana output to fall much below government's expectations.

• Further, despite increase in Australian Chickpeas production in 2011-12, lower

carryover stocks and increasing domestic use may lead to 18% fall in chickpeas

exports from Australia in 2011-12. This may turn import costlier.

Outlook

• Chana prices are expected to remain under downside pressure on fears of

government intervention to curb rising prices which had gained more than 30%

since the commencement of arrivals from mid January.

• Further, improvement in arrivals from MP will also pressurize prices till the peak

arrival period.

Weekly Strategy

• Sell NCDEX April Chana between 3740-3750, SL-3835, target 3600/3550


Spot Price (Rs/qtl) Futures Price (Rs/qtl

Black Pepper Weekly Price Performance

• Lacklustre trades at the domestic market led Spot prices to settle 1.03% down w-

o-w while Futures traced the Spot prices and ended the week 0.67% lower w-o-w.

• Improved arrivals in the domestic market amidst lower offtakes led prices to

remain bearish in the last week.

49% rise in the exports of Pepper from India during Apr 2011-Jan- 2012

• Exports of Pepper from India during Apr 2011- Jan 2012 rose by 49 percent to

22300 tonnes as compared to 14950 tonnes in the same period previous year.

• Target set by the Spices board of 20,000 tonnes have already been met. Also,

month on month exports of Pepper rose by 12 percent.

Domestic Scenario

• Production in India is expected to decline by 10.4% to 43000 tonnes in 2012 from


• Production in India is expected to decline by 10.4% to 43000 tonnes in 2012 from

48000 tonnes in 2011. Output of Pepper in India is lowest in a decade .

• Average arrivals in the domestic markets since the beginning of the month have

improved but are still lower to cater the demand. Arrivals from 1st -24th March

are around 18.05 MT while offtakes are around 30.25 MT.

Global Scenario

• Exports of Pepper from Vietnam during January 01, 2012 to February 15, 2012

stood at 6736 tonnes up 16.3 percent as compared to corresponding period last

year. Exports of Pepper from Brazil in the first two months of 2012 stood at 4,222

tn a fall of 16 percent as compared to corresponding period last year.

Outlook

• Lacklustre demand from the domestic buyers is expected to keep Pepper prices

bearish in the coming week. Sharp down side in the prices is however expected

to be cushioned on account of lower stocks in the domestic market.

Weekly Strategy

• Sell NCDEX April Pepper between 42500-43000, SL-45150, Target 39000/38000Source :Spices Board of India

Turmeric Weekly Price Performance

• Turmeric Futures continued their bearish movement and settled 0.74% w-o-w

lower on account of peak arrival season. Spot market remained closed for most of

the week owing to labor and power problems in the mandis.

• Demand from the overseas and domestic buyers remained lower lending support

to the bears in the market.

Peak arrivals in all the major mandis

• Arrivals in Erode mandi are already witnessing high arrivals of 29000 bags daily .

This figure is expected to soar further in the coming weeks owing to bumper

production of the spice this season.

• Arrivals in other major centres particularly Duggiralla, Warangal & Sangli are also

witnessing fresh arrivals . Arrivals are around 20,000 tonnes in the above regions.

Turmeric production to touch historical high in 2012


Turmeric production to touch historical high in 2012

• Production of Turmeric is expected to touch historical level of 82 lakh bags in

2011-12 season. Production of turmeric in Erode in 2011-12 is expected to rise

29% to 45 lakh bags as compared to 35 lakh bags in 2010-11.

Exports of Turmeric at historical high of 67,000 tonnes

• Exports of turmeric during April 2011 to January 2012 rose 69% to 67,000 tonnes

as compared to 39,600 tonnes in the same period previous year.

• The target set by the Spices board have already been achieved and has touched

new historical high of 67,000 tonnes during Apr 2011 to Jan 2012.

Outlook

• With domestic markets set to close from Wednesday 28th March 2012 due to

financial year ending and thereby lower availability in the domestic is expected to

keep Turmeric prices sideways to up in the coming week.

Weekly Strategy• Buy NCDEX April Turmeric between 4200-4230, SL-4040, Target 4500/4630


Source: Spot market sources

Jeera Weekly Price Performance

• Improved fresh arrivals in the Unjha market amidst fragile demand led Spot prices

to settle 5.8% down w-o-w. Futures traced the Spot prices and settled 6.1% lower

w-o-w. Firm exports of Jeera during April 2011 to January 2012 controlled prices

from falling sharply.

• Average daily arrivals in the domestic market during 19th – 24th March 2012 stood

at 34,000 bags as compared to 30,666 bags in 12th -17th March 2012.

• Prices in the Futures touched new contract low of Rs.11,850/qtl.

Jeera production to touch 35 lakh bags in 2012

• Production of jeera this season is expected to touch 35 lakh bags according to the

spot market sources as compared to 29 lakh bags in 2011 (each bag weighs

55kgs).

• Domestic consumption of jeera however hovers around 22-25 lakh bags.


• Domestic consumption of jeera however hovers around 22-25 lakh bags.

Exports of Jeera rose by around 54% during April 2011 to January 2012

• Exports of Jeera during April 2011 to January 2012 rose by 54% to 34,500 tonnes

as compared to 22,450 tonnes in the same period previous year. Exports for the

month of January 2012 however witnessed a decline of 40% month and month to

3,000 tonnes.

Outlook

• With fresh arrivals in the domestic market to gain momentum prices may witness

further selling pressure in the coming week.

• Lacklustre export and domestic buying will also keep prices down .

Weekly Strategy

• Sell NCDEX April Jeera between 12000-12100, SL-12835, Target 11000/10500.


Source: Agri Watch & Reuters , Note: arrivals in bags (each

bag weighs 55 kgs)

Mentha OilWeekly Price Performance

• Anticipation of better area covered under Mentha this season led Spot prices and

Futures to witness sharp fall and settled 11.6 % and 9.17% down respectively w-o-

w.

• The other reason for the long liquidation is attributed to imposition of additional

margin on the buy side.

Mentha production is expected to remain high this season too

• Sowing of Mentha in chief growing areas have commenced and are 50 percent

complete.

• According to market sources, sowing may increase by 20% in the coming season.

• Production of Mentha is expected to cross last year’s figure of 36,000 tonnes.

Exports of Mentha declined by 6% during Apr 2011 to Jan 2012

• Exports of Mentha during April 2011 to January 2012 witnessed a decline of 6%


• Exports of Mentha during April 2011 to January 2012 witnessed a decline of 6%

to 12,850 tonnes as compared to 13,550 tonnes in the same period last year.

• Month on month exports also declined by 40 percent to 950 tonnes in January

2012 as compared to 1,600 tonnes in the month of December 2011.

Outlook

• Mentha prices are expected to witness selling pressure on account of bearish

market sentiments resulting from better area and possibility of improved output

this season.

• Weak exports during April 2011 to January 2012 is indicating fragile demand at

higher levels. This is likely to keep prices bearish in the coming week.

Weekly Strategy• Sell MCX April Mentha between 2270-2300, SL-2500 Target 2070/1950


Source: Spices Board of India

Soybean


Weekly price performance

• NCDEX Soybean prices extended the gains for the 7th consecutive week owing to

supply tightness of oil crops in domestic as well as global markets. NCDEX

Soybean settled 2% higher, while CBOT settled marginally down on profit taking.

Lower availability of oil crops support domestic prices

• total nine oilseed output is estimated to decline by 6% to 305.2 lakh tn

(agriculture ministry). Drop in oilseed crop may increase imports of costlier vegoil.

Weekly Export sales down 42% for week ending 15th March 2012

• US Weekly export sales were down for the 3rd straight week with Net sales of

356,700 MT, down 42 %from previous week and 56% from prior 4-week average.

Demand from China remain upbeat while south American crop worries

• Although last 3 weeks witnessed slow exports of US Soybean, in February, U.S.• Although last 3 weeks witnessed slow exports of US Soybean, in February, U.S.

farmers had sold 2.923 mn tn of the oilseed to China in the biggest one-day deal

on record. China, the largest soybean consumer is expected to account for nearly

60% of global trade of the grain in the 2011-12 season, according to the USDA.

• According to USDA, lower Brazilian & Argentina crop may reduce world end

stocks to 57.3 mn tn compared to 60.28 mn last month & 63.43 mn in Jan 2012.

US Planting intentions data awaited

• Prospective US Soybean planting report is due on 30th Mar, 2012 which is

expected to show lower planting figures.

Outlook

• Demand supply fundamentals remain supportive for the prices to remain firm in

the current week. However, prices may also take cues from China Oils and Oilseed

Conference in Beijing to be held today and tomorrow and the US planting data to

be released on Friday this week.

Strategy

• Buy NCDEX April Soybean between 2940-2950, SL-2845, target 3100/3150.


Source: USDA

Refine Soy Oil and Crude Palm Oil


Weekly price performance

• Reports of rise in the export tax in the Indonesian Crude Palm Oil led BMD Palm Oil

prices to settle 2.24% higher w-o-w. MCX CPO Futures traced the international

prices and settled 2.21% higher w-o-w. However, CBOT Soybean Oil witnessed

mixed trades and settled 1.15 % lower w-o-w. NCDEX Refine Soy Oil futures settled

1.48% higher owing to firmness in the Spot prices of edible oil.

Global Scenario

• Indonesia raises its export tax for the month of April 2012 to 18 % from 16.5 % in the

month of March 2012 an effort to secure domestic supplies, boost downstream

industries and reduce volatility in the cooking oil prices.

• According to Malaysian Palm Oil Board February 2012 palm oil stocks stood at 2.006

mln tn an increase of 2% from revised 2.02 mln tn in January 2012.

• Exports of Malaysian palm oil products for March 1-25 rose 7.7percent to 10.69• Exports of Malaysian palm oil products for March 1-25 rose 7.7percent to 10.69

tonnes from 9.92 tonnes shipped during February 1-25.

• Indonesian Crude palm Oil output is expected to rise by 8 % to 4.5 million tonnes in

Quarter 1 2012.

Domestic Scenario

• The import of vegetable oils during February 2012 stood at 8.76 lakh tn as compared

to 5.51 lakh tn in February 2011, consisting of 8.72 tons of edible oils and 3,356 tons

on non-edible oils i.e. up by 58.95%. The overall import of vegetable oils during

November 2011 to February 2012 is reported at 30.6 lakh tons compared to 26.94

lakh tons a rise of 13.63%.

• India’s Palm oil imports are expected to rise to 7 mn tn from 6.5 mn imported last

year due to drop in rape seed output.

Strategy: Refine Soy Oil

• Buy NCDEX April Refined Soy Oil between 740-742, SL-729, target 760/765.

Strategy : Crude palm Oil (CPO)

• Buy MCX April CPO between 586-588, SL-570, target 620/625.


Sugar



• NCDEX Sugar futures declined for the straight 3rd week and settled 0.7% lower w-

o-w on account of ample supplies in the domestic markets coupled with lower

than expected demand. Liffe Sugar touched 3 weeks high of 26.20 cents /pound

and settled higher % w-o-w on slight downward revision in Brazil Sugar output

Demand to improve from Bulk manufacturers

• Extended winters which had cut the demand from bulk ice cream manufacturers

in the current season is expected to pick up with temperature rising gradually

across India.

Ministers may allow 1 mn tn more exports in meeting to be held today

• Sugar output during Oct 01 till Mar 15 2012 is up 14% at 21.16 mn tn. Considering

domestic production at 25 .2 mn tn, consumption at 23 mn tn and opening stocks

as on Oct 01, 2011 at 6.8 mn tn (Source: ISMA figs from Reuters) Indian ministersas on Oct 01, 2011 at 6.8 mn tn (Source: ISMA figs from Reuters) Indian ministers

could allow more 1 mn tn sugar exports in the meeting to be held today.

Brazilian Sugar output revised marginally lower,

• According to Kingsman, 2012-13 centre south brazil crop is seen at 32.8 mn tn.

However, slight revision and thereby higher prices may switch producers to

change the mix between sugar and Ethanol like last year, when conversion

towards sugar was more.

• Except Brazil, other major producers and exporters have very strong

fundamentals which would cap major upside in intl sugar prices.

Outlook

• With pick up in summer season demand coupled recovery seen in the

international markets, we expect Sugar prices to start recovering in the coming

weeks.

Strategy

• Buy NCDEX April Sugar between 2795-2805, SL-2758, target 2870/2900.


Potato


Weekly Price performance

• NCDEX potato futures settled 2.7% lower owing to arrival pressure and reports

cold storages have stocked almost 90% of their capacity.

Cold storages stocked almost 90% of their capacity- Market Sources

• Cold storages are full to the extent of 90% of their capacity. Last year around 21

mn tn of Potato (420 mn packets of 50 kgs each) were stocked in the cold

storages which is expected to increase marginally to around 21.5-22 22 mn tn in

the current season due to increased capacity.

Demand supply scenario point towards higher supplies

• According to National Horticultural Research and Development Foundation

(NHRDF), Potato output in the season 2011-12, is estimated higher at 43.6 mn tn

compared to 40 mn tn last year. However, there are reports of late blight disease

which may hamper output to the extent of 10-15% and thus revised output maywhich may hamper output to the extent of 10-15% and thus revised output may

be around 36 mn tn.

• However, even if output is lower by 10-15% it is compare to last year’s bumper

output of 40 mn tn. Thus revised 36 mn tn output is sufficient to cater the

domestic consumption demand.

Output in UP and west Bengal may be revised downward

• In UP output in 2011-12 is estimated at 12.8 mn tn , less than last years 13.6 mn

tn. While in West Bengal output is lower by 10-15% from last year’s 13.3 mn tn

Outlook

• With sufficient supplies of Potato amidst peak arrivals period, we expect potato

prices to trade sideways with downward bias.

Strategy

• MCX April Potato Support 887/850 and Resistance 1050/1100

• NCDEX April Potato Support 935/900 and Resistance 1075/1120


Kapas/Cotton



• NCDEX Kapas consolidated in a narrow range and settled lower 2.4% w-o-w as

government has hold further exports of cotton as of now. However, ICE Cotton

futures settled 2.4% higher w-o-w as US export sales data which is up 30% from

4 weeks average buoyed markets.

Cotton export update

• India on Friday, 23rd march allowed exports already registered to neighboring

countries, including Pakistan and Bangladesh, via land route after scrutinizing the

orders issued before the government imposed a ban on March 5.

• The commerce department is expected to continue a ban on fresh registration of

cotton consignments for exports. However, final decision will be taken by a group

of ministers, headed by finance minister.

Demand Supply ScenarioDemand Supply Scenario

• The government has directed Cotton Corporation of India (CCI) to resort to higher

buying to support the falling Cotton prices after ban. This is supportive for prices.

• With higher carry over stocks coupled with record output of 43.5 mn bales in,

supplies are sufficient to meet the increased domestic demand of 26 mn bales,

however, India's cotton exporters have shipped out 9.4 mn bales since the start of

the marketing year in October till 29th march.

• Thus, at the current pace arrivals, closing stocks at the end of the season are seen

below the 5-mln-bale (1 bale = 170 kg) industry norm at around 2.5-3.0 mln bales.

Outlook

• Kapas prices may trade range bound during the week as traders may remain

cautious till no further decision on exports is being announced. However, long

term fundamentals remain firm as India has exported record Cotton in the current

season and thus carry over stocks would be much below the industry norm.

Strategy

• NCDEX/MCX April Kapas Support 790/765 and Resistance 880/900

• MCX April Cotton Support 16800/16500 and Resistance 17600/17800


Column1 2011-12(P) 2010-11 % Chg

Opening stock 48.3 40.5 19.3

Production 345 339 1.8

Imports 6 5 20.0

Total Supply 399.3 384.5 3.8

Consumption 260 267.4 (2.8)

Exports 115 68.8 67.2

Total Demand 375 336.2 11.5

End Stocks 24.3 48.3 (49.7)

Cotton Balance sheet

Source: CCI P- Provisional Figs in Lakh bales of 170 kgs as on 24th jan 2012

Thank You!


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