Agro Commodity Futures rise on lower rainfall & production, Food Inflation to Rise sharply.
Almost all Agro Commodity Futures traded at the NCDEX witnessed sharp rises, mostly on the back of weak & delayed rainfall & decreased acreages. All Agricultural commodities seem to be on the uptrend in line with the forecast regarding heavy rises in Food prices. Turmeric, Cotton Seed, Soybeans, Refined Soy Oil, Coriander (Dhaniya), Pepper, Mustard Seed, Wheat, Chilies, Jeera & Castor Seed were among the highest gainers at NCDEX & Cardamom, Cotton, Palm Oil & Mentha Oil were among the gainers at the MCX.
NCDEX Soybean Futures closed higher on Monday on the back of lower sowing due to delayed monsoon amid firm spot demand. China is again expected to dominate the global soymeal demand for the 6th consecutive year in 2012-13. According to USDA, China is estimated to consume a record 49.86 million tons of soymeal in 2012-13 up 7.3% compared to last year & World soybean inventories may drop to 53.36 million tons at the end of this crop year, 24% lower than last year. In line with the expected rise in Inflation across the world, Refined Soy Oil Futures have shot up sharply along with Soybeans in the last 4 to 5 weeks.
Indian Oil seeds complex ended the last day up on weak sowing in the ongoing Kharif season amid bargain buying support. The most active August RSO on NCDEX ended the last day up by 0.38% or Rs 2.95 at Rs 782.70 after moving in the range of Rs 783.60-776.10 per 10 kg. Oilseeds complex is likely to continue the gains on strong global cues amid weak sowing. The most active September CPO future on BMD traded with smart gains with the counter currently quoting higher at MYR 3155, up MYR 25 per tonne. The counter moved in the range of MYR 3160-3145 per tonne. The December Soya Oil contract is currently trading up at $54.86, up 0.63 cents per pound.
NCDEX Futures for Turmeric hit upper circuit on all contracts on rising demand from North India. Firm export demand along with lower sowing due to delayed monsoon also supported the futures to trade higher. Prices have already seen a significant down slide last year due to a massive Demand – Supply mismatch. Sowing is likely to remain lower as farmers had faced severe losses last year when acreage was hiked after gigantic price rises in Turmeric were seen in 2010. Traders mentioned that fragile sowing progress in major producing states such as Andhra Pradesh, Maharashtra and Karnataka prompted strong gains in turmeric market. The total sowing acreage of these states are likely to decline by almost 40-50% due to poor rainfall situation. Therefore, traders are expecting the total production in the range of 45-50 lakh bags in the current year against 80-82 lakh bags that was reported last year. Moreover, strong demand of stockiest and exporters at lower levels also added strong gains in turmeric market. Currently, most of the traders and stockiest are busy in procuring the turmeric from physical market as prices were shrugged off by almost 50% in the last one year on the account of bumper production in the last year. Consequently, the NCDEX August Commodity futures for Turmeric spurted by almost Rs 300 per quintal in the last one week to trade at Rs 4650 per quintal.
NCDEX Futures Coriander (Dhaniya) futures gained due to falling arrivals along with steady demand. Lower sowing in the major producing areas due to decline in rainfall also supported the uptrend. Cardamom futures spurted for the fourth day on bargain buying and weather concern in the major growing belts. MCX Futures for Cardamom July delivery ended the last day up by 1.33% at Rs 1,391.50 after moving in the range of Rs 1404-1365 per 1 kg. Despite record cardamom exports and high domestic demand, the inventory has still not been emptied. Traders say cardamom auctions will continue without a break this year despite a delay in the next harvest to clear out the high production in 2011-12. The MCX July cardamom contract is likely to gain further if prices sustain above Rs 1410 and next resistance is at Rs 1427, Rs 1450 and support is at Rs 1380, Rs 1368 per 1 kg.
Pepper futures gained for the fourth day on bargain buying amid tight supply position in the local markets. In India, pepper prices have increased due to buying support at the weekend. Since the price is increasing, the investors and processors were actively buying pepper. During the last two weeks, local price of Malabar black at Kochi fluctuated in the range between INR 38,400 – 38,800 per quintal. In dollar terms, average price this week increased by 3% due to strengthening of Indian Rupees against US dollar. The NCDEX Pepper for the August delivery ended the last week up by 3.13% at Rs 42305 after hitting the high of Rs 42680 per quintal. The open interest added 4% to 3,392 tonnes. Technically, the counter is likely to find next resistance at Rs 42700, Rs 43300 and support is at Rs 41870, Rs 41500 per quintal.
NCDEX Futures for Wheat rose on short covering by the traders on the back of firm domestic demand along with rising overseas inquiries. India, the world’s second-biggest Wheat producer, is struggling to trim bulging stockpiles that have filled up its storage facilities after the bumper harvests of recent years. Grain stocks in Indian government warehouses stood at a record 82.4 million tonnes on June 1 although there was storage space only for 63 million tonnes.
The International Grains Council has slashed its estimate for world grain stocks at the close of 2012-13 to a five-year low, citing reduced expectations for wheat production. The recent surge in global wheat prices and a weakness in currency have raised hopes of higher exports after a four-year-old ban on shipment of wheat in September was lifted.
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