Commodities & Currencies Weekly Tracker 2 January...

Commodities & Currencies

Weekly Tracker

2 January 2017

Commodities Weekly Tracker Monday, January 02, 2017

1.45 1.23

0.99 0.73

0.01

-0.03

-0.47 -0.58 -0.65

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

NIF

TY

SEN

SEX

HA

NG

SEN

G

FTSE

10

0

DA

X

CA

C 4

0

KO

SPI

DJI

A

S&P

50

0

Global Equities Performance (%)

Source: Reuters; Angel Currencies

0.89

0.56 0.55 0.37

-0.17 -0.38

-0.58 -0.78 -1.00

-0.50

0.00

0.50

1.00

EUR

INR

EUR

USD

GB

PIN

R

GB

PU

SD

INR

USD

JPY

JPYI

NR

DX

Currencies Weekly Performance (%)

Source: Reuters; Angel Currencies

Commodities Weekly Tracker

Monday, January 02, 2017

Source: Reuters

(3.6)

(2.5)

(1.6)

(0.3)

0.9 1.2 1.3

1.6 1.7

-4

-3

-2

-1

0

1

2

Source: Reuters

Non Agri commodities weekly performance

5.7

3.7 3.4 3.1 3.0 2.7 2.7

1.5 1.2 1.1 1.0 0.8

(1.6) (2.4)

(5.1) (6.0)

(4.0)

(2.0)

0.0

2.0

4.0

6.0

8.0

Jee

ra

Gu

argu

m

Suga

r

RM

Se

ed

Kap

as

CP

O

Gu

ar S

ee

d

Car

dam

om

Soyb

ean

Re

f So

yoil

Mai

ze

Co

tto

n

Turm

eri

c

Co

rian

de

r

Wh

eat

Agri-Commodities Weekly Performance (%)


Gold Last week, spot gold prices rose by 1.6 percent to close at $1151.5 per ounce although expectations

remain that the U.S. Federal Reserve will further raise interest rates, while MCX gold prices also rose by around 1.7 percent in the same time frame.

Bullion bounced back on Thursday after hitting a 10-month low on Dec. 15 as solid U.S. economic data gave the U.S. Federal Reserve the confidence to raise interest rates for the first time in a year.

Spot prices ended the year up about 8 percent despite an 8 percent drop in November, as U.S. Treasury yields rose after Donald Trump's election led to speculation his commitment to infrastructure spending would spur growth.

Recent upbeat U.S. data has helped underscore expectations the Fed will raise interest rates more quickly next year, which would lower demand for non-yielding assets such as bullion, while boosting the dollar in which it is priced.

From a week perspective, we expect gold prices to trade lower towards $1130 mark while MCX gold prices will trade lower towards Rs.27,000mark.



Crude Oil

• Last week, oil prices rose by 1.3 percent to close at $53.7 per barrel, while MCX oil prices rose by around 2 percent in the same time frame.

• Strong U.S. economic data and optimism that crude producers would abide by an agreement to limit output acted as a positive factor.

• U.S. crude stocks unexpectedly rose for the second straight week, data from the U.S. Energy Information Administration showed, gaining 614,000 barrels versus analysts' forecasts of a decline of 2.1 million barrels.

• Traded volumes were thin, with many investors away for year-end holidays.

• Both crude benchmarks have made big gains last month, touching year-to-date highs after the Organization of the Petroleum Exporting Countries and other producers agreed to curb production in an attempt to balance an over-supplied fuel market.

From a weekly perspective, we expect oil prices to trade higher towards $55 while MCX crude oil prices can inch higher towards Rs.3750 mark.



Copper

• Last week, LME Copper prices rose by 0.9 percent to $5516/t as decline in LME inventories for the seventh day in a row pulled the stocks down by around 4 percent to 322,225 tonnes.

• Also, the US consumer confidence index climbed to 113.7 in December, up from 109.4 in November and the highest since it reached 114 in August 2001.

• In a major development, City and regional governments last Friday shut thousands of plants in China’s Hebei province that surrounds Beijing to Shandong southeast of the capital, to combat smog.

• MCX copper prices traded higher by 1 percent to close at Rs.376.8 per kg.

From a week perspective, we expect LME Copper prices to trade higher towards $5650/t while MCX Copper prices to surge towards Rs.383/kg mark.



Rupee • The Indian Rupee depreciated by 0.1 percent in the last week as investors indulged in profit

booking owing to persisting worries about the impact from the ban on higher value banknotes on the economy and corporate profits.

• Moreover, persistent buying of American currency by importers/banks amid higher US Dollar in the overseas market added to the woes.

• India’s Finance Minister recently underlined the need to have globally compatible tax rates to broad-base the economy which boosted the market confidence.

• Domestic markets i.e. Sensex and Nifty ended on a lower note as investors book year-end profits due to the monthly futures and options (F&O) contract expiry amid a mixed trend overseas.

From a weekly perspective, USDINR is expected to depreciate towards 69.35 mark as investors remain cautious ahead of the FOMC meeting minutes that is to be released later in the week. This is high probability that the American currency will bounce back from its recent lows which will keep the Indian Rupee pressurized.



Euro

• The Euro currency traded higher by 0.56 percent in the last week no major economic datasets from the US on account of Christmas holidays kept the American currency weak which boosted the demand for the shared currency.

• Debt-ridden nation Greece had planned to pay out a Christmas bonus for pensioners and keep lower value added tax on some islands which did not go down well with the international creditors who in turn suspended short-term debt relief deal.

• However, now the Euro-zone finance ministers have agreed to unblock the now suspended short-term debt relief measures for Greece in January’17 after Athens reassured Euro-zone lenders it would honour its bailout commitments.

From a weekly perspective, EURINR is expected to trade higher towards 73.25 mark as this week’s economic data releases is expected to come better than the previous month which will boost the market sentiments and infuse demand for the shared currency.


Soybean


Last week, soybean futures closed higher by 1.2 percent to close at Rs.3,029 per quintal. Anticipation

of good demand from the bulk buyers and oil millers and improving soy oil prices in the domestic as

well as international markets helped the rally.

The oil mills are buying soybean at current levels as the soy oil prices have increased by about 20%

compared to last year while the prices of soybean declined by the same percentage, which makes

crushing quite profitable. The tariff prices of soy oil too is at higher levels in 2016, making the imports

little expensive.

Soybean Processors Association of India (SOPA) estimated production of soybean in 2016/17 at more

than 110 lakh tonnes, which was about 65 lakh tonnes last year. The arrivals of soybean in the highest

producing states –Maharashtra, Madhya Pradesh and Rajasthan has been improving significantly.

USDA has increase the soybean crush for India in 2016/17 due to abundant harvest this season. Due

to higher crushing, the soy meal production in 2016/17 will increased to 68 lt from 45 lt estimated

last year.


Soybean


CBOT soybean gained last week after closing lower in two consecutive weeks earlier, on concerns

over Argentina drought as rains missed key areas which will affect record world soybean output

forecast. As per USDA report, world soybean production raised by 1.9 mt this month to 338 mt

compared to 336.1mt last month on higher projected yields for India and Canada.

Heavy rains that pelted parts of Argentina over the weekend did not reach the south eastern part of

the bread-basket province of Buenos Aires, where dryness is threatening to dent soybean

production.

For Dec 16-22, US exporters have reported net sales of 974,100 MT for 2016/2017 which were down

46% from the previous week and 40% from the prior 4-week average.

U.S. CFTC's weekly commitments report showed money managed lowered their net long position in

CBOT soybean in the week to Dec. 27 by nearly 4,367 contracts, to 1,07,075.

We expect Soybean prices for January delivery to trade higher towards 3,350 (CMP: 3,082) due to

higher demand from the oil mills as the crushing demand is higher amid lower soybean prices and

higher soy oil price.


Cotton


Cotton complex traded higher last week on reports that the cotton corporation goes for purchase of the

cotton to ensure supplies for the textile mills during the off-season. The arrival volumes has been

declined by close to 40 per cent resulting in a short-term rally in prices.

Lower than estimated production prospects coupled with the cash crunch and hoarding by farmers has

pulled down cotton arrivals in market yards across the mandi in the country.

Due to shortage in cotton in the country, the cotton mills has already started Cotton imports. Usually

this process starts around April-May when domestic prices start moving up but the scenario is different

during the current season in the country.

As per the latest press release by Cotton Corporation of India (CCI), the arrivals of Cotton in the market

during Oct to Dec 2016 so far has reached 7.5 million bales (mb) a drop compared to the 10 mb in 2015.

Daily arrivals of Cotton in the country is still below normal levels and there is good scope for more

imports to the country. During October and November 2016, India imports about 510,000 bales of

cotton compared to 152,059 bales last year same period.

Similarly, exports of cotton from the country also affected due to supply crunch. In the month of Nov

2016, only 525,000 bales exports compared to 13,01,412 bales last year same month.


Cotton


ICE Cotton futures gain last week supported by a helped by robust weekly US export sales data amid a

weaker dollar, and ended 2016 by marking their best year since 2013.

Export data from the US Department of Agriculture showed net upland sales of 343,200 RB for

2016/2017 which were up 24 % from the previous week and 15 percent from the prior 4-week average

for the week Dec 16-22, 2016.

The data from the Commodity Futures Trading Commission (CFTC) showed that managed money

increase their bullish positions marginally in cotton contracts in the week to Dec 27.

According to the National Bureau of Statistics, cotton production in China declined by 4.6 per cent in

2016 to 5.34 million tons compare to the previous year. Moreover, China cotton imports fall 35% y/y in

November as it imported.

We expect cotton prices for January delivery to trade higher towards Rs. 19,800 / 19,900 (CMP:

19,430 / bale) on expectation of improved demand for new season crop from ginners and a stockist as

arrivals have been little limited.


Thank You!

Angel Commodities Broking Pvt. Ltd. Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 3083 7700 Corporate Office: 6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 2921 2000 MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302 Disclaimer: The information and opinions contained in the document have been compiled from sources believed to be reliable. The company does not warrant its accuracy, completeness and correctness. The document is not, and should not be construed as an offer to sell or solicitation to buy any commodities. This document may not be reproduced, distributed or published, in whole or in part, by any recipient hereof for any purpose without prior permission from “Angel Commodities Broking (P) Ltd”. Your feedback is appreciated on [email protected]

Commodities Weekly Tracker Monday, January 02, 2017

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