Ritesh Kumar Sahu Analyst (022) (Ext 6165)

Transcription

1 Content News in Brief Chana Sugar Oilseeds Edible Oils Spices Cotton Prepared by Anuj Gupta A.V.P - Research Anuj.gupta@angelbroking.com (011) Ritesh Kumar Sahu Analyst riteshkumar.sahu@angelbroking.com (022) (Ext 6165) Angel Commodities Broking Pvt. Ltd. Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai Corporate Office: 6th Floor, Ackruti Star, MIDC, Andheri (E), Mumbai Tel: (022) MCX Member ID: / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX: Member ID / 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 commodities@angelbroking.com

2 News in brief Monsoon in Kerala: Two to three days still to go, says IMD Conditions are favorable for onset of the southwest monsoon over Kerala over the next two to three days, according to the Indian Meteorological Department (IMD). Making the announcement in its mid-sunday press release, the IMD pointed out that rain/thundershowers have occurred at many places over West Bengal, Sikkim, coastal Andhra Pradesh and at a few places in Chhattisgarh, Assam, Meghalaya and Kerala. It has been raining in Kerala for the past few days and the weather officials are analysing the data recorded at the 14 weather stations located at the Lakshadweep, Kerala and in Mangalore in Karnataka. (Source: FE) Main monsoon rain belt will cover South, North-East from June 3-9 The South-West monsoon has advanced into more parts of the Bay of Bengal even as heavy piloting showers continued to lash Kerala, Karnataka, Lakshadweep and Coastal Andhra Pradesh. An India Meteorological Department outlook said that conditions are favourable for the onset of the monsoon over the Kerala coast during the next three to four days. The European Centre for Medium-Range Weather Forecasts assesses that this could happen on June 7 or 8. An extended range weather forecast, as per the National Agromet Advisory Service Bulletin, said the main rainfall belt will sit over extreme South India and parts of North-East India from June 3 to 9. The bulletin is issued jointly by the India Meteorological Department, Indian Council of Agriculture Research, and the Central Research Institute for Dryland Agriculture. The week that follows (June 10 to 16) will witness an increase in rainfall over the Northeastern States and parts of eastern states and a northward extension of the rain belt along the West Coast. This would mean that there will be an improvement in rainfall in the second fortnight of June compared to the first. (Source: HBL) Zero probability of deficit monsoon: IMD Forecasting good news for the country s economy and farmers, the India Meteorological Department (IMD) has reiterated its initial prediction of above normal rainfall in this year s South-West monsoon season. The conditions are congenial for the onset of monsoon in the next four-five days and the rainfall quantity will pick up in the second half of June, IMD Director-General LS Rathore said at a press conference, while releasing an update for the long-range monsoon forecast (June-September) on Thursday. The icing on the cake is the IMD ruling out a deficient monsoon. There is a zero per cent probability that the rainfall will be deficient, Rathore said. A deficient monsoon, which means less than 90 per cent of the long-period average (LPA) rainfall, could cause severe distress to farmers, crop loss and drought. This year s projected plentiful rainfall will bring to an end to two consecutive years of drought. Last year, the country suffered a rainfall deficit of 14 per cent, while in the previous year, the shortfall was 12 per cent. (Source: HBL) Palm oil prices to remain steady Crude palm oil (CPO) is in the news as prices have rallied from a sevenyear low of 1,800 ringgits/tonne in August 2015 to 2,793 ringgits/tonne in March. This rally was on account of the foreseen El Nino impact on palm oil production and rise in biodiesel demand in Indonesia. El Nino caused a reduction in South-East Asian palm oil yield to 3.26 tonnes/hectare in 2016 compared to 3.62 tonnes/hectare in As a result, the world s palm oil output shrank for the first time in two decades. Despite this short-term setback, palm oil remains the world s top produced vegetable oil.. Indonesia and Malaysia together account for 85 per cent of the global production. Besides its use as edible oil, palm oil is also used by bio-fuel sector for blending. Palm oil prices usually move in tandem with crude oil prices. This relationship, however, didn t hold in the September 2015-February 2016 period when Brent crude touched its 12-year low at $26.04/barrel in February This was due to the drop in supply in this period. (Source: HBL) Sugar output to decline 11% to 25.2 mt this crop year: ICRA Domestic sugar production is expected to decline 11 per cent to around 25.2 million tonnes in sugar year 2016 (SY) beginning October 1, while prices are likely to remain steady in the near term, rating agency ICRA said. Lower production, along with exports of around 1.6 million tonnes (MT), is likely to bring down the closing stocks to around 7.6 MT in SY16 from around 9.5 MT in SY15, it added. Sugar output is likely to drop 11 per cent to 25.2 MT in SY16 over the previous year and will slip further next year, it said. While it is too early to estimate the sugar production for SY17, based on the cane plantation and monsoon levels, ICRA said it expects production to drop further between 4-8 per cent to MT. The stock correction has resulted in an improvement in sugar prices which have seen a rising trend since August (Source: PTI) U.S. soybeans climb to two-year high on Argentina rains U.S. soybean futures climbed to a two-year high on Friday as renewed rain in Argentina heightened concerns about crop losses in the world's number three producer. Rains this week in Argentina's top agricultural province, which was previously unaffected by recent wet weather, may further damage the 2015/16 soybean harvest, the Buenos Aires Grain Exchange said on Thursday. There is possibility of further upside potential in soybeans as there is big dent in South American production and if the United States has below average crop conditions," said Phin Ziebell, agribusiness economist at National Australia Bank. Having said that millers would be looking to replace soymeal with other sources of protein." Chicago soybean futures are on track for an eighth consecutive week of gains and concerns are emerging that the run-up may have been overdone. (Source : Reuters) April price rise hints at further increase in next four months Pulses may be the pulse of inflation next year, this paper wrote in November last year. The country s wholesale price-based inflation bucked the last 17 months trend and turned positive at 0.34 per cent in April. One of the factors attributed to the rise is pulses turning dearer. Among food items, pulses were seen rising sharply by per cent in the wholesale market. It s a worry because from April new crop of chana starts arriving in the market and that normally cools prices of other crops, as they supplement the availability of pulses. The price rise during April indicates that the rate may further rise in the next four months, as the kharif crop will be harvested only in October. (Source: DFC) Chana Futures Hit Record High as Physical Shortage Looms Indian households' woes with respect to rising food prices show no signs of abating. After urad and tur, whose retail prices shot up to over Rs. 200kg late last year, it's chana's turn to burn a hole in the common man's pocket. Chana futures, the only listed pulse on the commodity exchanges since urad and tur futures were banned almost a decade ago, hit a record high of Rs. 6,306 per quintal (100 kg) on the country's largest agri bourse NCDEX Friday. Exchange data shows the spot price is even higher at Rs. 6,350 a quintal. Worryingly, the futures market shows that prices would remain elevated during August and September as well Rs. 6,326 and Rs. 6,324 respectively at Friday's closing. That's because the crop arrivals were lower than expected and the new crop will arrive only next year. (Source: ET) Whitefly pest scare to lower cotton acreage Cotton acreage is likely to drop by 20% in season in Punjab and Haryana compared to last season as farmers opt for other kharif crops after bearing heavy crop damage due to whitefly pest attack in the last season. The cotton output dropped 40-45% in the two states in season (Source: ET)

3 Chana Chana futures closed the week with upper circuit as arrivals have been lower and there is every chance of supply crunch in coming months. Moreover, increase of MSP for kharif pulses also extends support to chana. Chana futures for Jul delivery closed 4% higher to settle at Rs 6, 306 per quintal. Govt raises minimum support price (MSP) for Pulses and decided to give a bonus of Rs. 425 per quintal for pulses over and above the MSP recommended by the Commission for Agricultural Costs and s (CACP) for kharif season. To overcome the problem of shortage of Pulses and increasing prices in the country, government is negotiating a long-term arrangement for procurement of Pulses from Myanmar. India imports more than 70 per cent of chana from Australia, which is proving very expensive. Chana imports into the country touched about lt in the current financial year ( ), higher by 146% compared to previous FY Moreover, government initiative to check rising prices is restraining the uptrend. s have been surging higher on anticipation of supply crunch in coming months due to lower production and good demand. We expect chana prices to trade higher on lower stocks and higher demand from millers in the domestic market. Moreover, record imports this season making the prices higher in the domestic market. Technical Levels Chana NCDEX Jul 16 /qtl Sugar Sugar Futures closed higher on Friday on anticipation of supply deficiency in coming months. Sugar Jul futures closed 0.42% higher to settle at Rs. 3,556 per quintal. However, government-imposing stock limits to stabilize prices and avoid black marketing and hoarding cap further increase. The Centre is also considering option of lowering the import duty on sugar to boost supplies. Meanwhile, Maharashtra imposes stockholding limits for retail for 500 quintals and for wholesaler for 5,000 quintals for the maximum of one month on sugar to check prices from rising. As per ISMA, domestic production is forecast to drop 2.2 mt to 25.5 mt due to lower area and yield while consumption is forecast to rise marginally to a record 27.2 mt. For the next year, Maharashtra and Karnataka will have weak crop and the stock balance may go tight. Global Updates ICE sugar prices rallied for the second straight session due to heavy rainfall and loading delays in country s port. Rainfall is forecasted for next two weeks, which may disrupt harvesting and reduce the yield of sugar. In Thailand, the world s second-largest sugar exporter, extreme weather might reduce sugar production in by 14% compared to last season. Raw sugar futures have risen 18.6% since the start of the year as hedge funds and market participants support bullish bets on reports of production deficit. We expect sugar to trade sideways on anticipation of better supplies in physical market as government has imposed stock limit on traders. However, prediction of production deficit in the country can keep the prices firm in coming month. Market Highlights- Chana Unit Last Prev WoW MoM YoY Chana Spot- NCDEX /qt Chana- NCDEX Jul 15 /qt Technical Chart - Chana NCDEX Jul contract Daily NCHN (BOM) Cndl, NCHN6, , 6,100.00, 6,306.00, 6,100.00, 6,306.00, , (+3.99%) 6, , Spread Matrix Spot- Delhi Jun Jul Aug Market Highlights - Sugar Unit Last Prev. day WoW MoM YoY Sugar Spot /qtl Sugar M- NCDEX /qtl Jul 16 ICE-Europe Sugar No $/tonne 5- Aug 16 ICE-US Sugar No 11- Jul 16 Usc/lbs Technical Chart Sugar M Daily NSMN6 5,700 5,400 5,100 NCDEX Jul 16 contract (BOM) Cndl, NSMN6, , 3,543.00, 3,563.00, 3,543.00, 3,556.00, , (+0.40%) ,650 3,600 3, ,550 3,500 3,450 Sugar Spread Matrix Closing 20-Jul Oct Dec-16 Spot Jul Oct Dec

4 Technical Sugar NCDEX Jul 16 /qtl Soybean Soybean futures closed higher yesterday taking clues from international markets and reports of harvest disturbances if monsoon extends due to on-set delay. Soybean Jun 16 contract closed 1.30% higher to settle at Rs. 3,883/quintal. There will lower acreage in MP and Maharashtra as farmers may switch to pulses and other cash crop as prices have been lower. Moreover, increase in MSP and announcement of bonus (Rs. 100) for soybean helps prices jump. According to the SPOA, output of the soybean for is forecasted down at 6.9 mt, compared to earlier estimate of 7.4 mt. Global update U.S. soybean fell as traders booked profits as traders booked profits ahead of the weekend following steep gains in the recent trades. s have climbed by nearly 30 per cent since March, driven upward by crop shortfalls in South America and anticipation of increased demand for U.S. soybeans. Soybean planting in the US as on 29-May- 16 complete 73% and export Exports of 212,200 tonnes were up 77 % from the previous week, but down 3 % from the prior 4-week average. International Grains Council in its latest release has forecasted 6 mt drop in soybean global output in 2015/16 to 314 mt but still 14% above the prior five-year average. We expect Soybean prices to trade sideways to down on anticipation of higher production next season on forecast of good. Moreover, demand for crushing is limited due to lower meal exports monsoon may keep prices in check. Rape/mustard Seed Mustard seed futures closed higher on Friday to continue its range bound trading due to low demand and sufficient supplies in the physical market. The June contract ended 0.30% higher at Rs. 4,407 per quintal. The prices are moving in a range on forecast of above normal monsoon and higher edible oil imports. Market participants are active at lower prices due to steady demand from stockists. Global updates According to latest May 16 USDA report, global rapeseed production is forecast to decline in 2016/17 to mt. Lower sown area is reported in Canada, Ukraine, the EU, and China. Crop reductions for major exporting countries may limit rapeseed imports, particularly for China and the EU. In Canada and EU the rapeseed production might fall due lower acreage and expectation of insect damage. We expect mustard seed to trade sideways on steady demand for crushing as monsoon approaching in the country. Moreover, sufficient edible oil stock keeping the prices under check. Technical Levels Market Highlights - Oilseeds Prev Unit Last day WoW MoM YoY Soybean Spot- NCDEX /qtl Soybean- NCDEX Jun 16 /qtl Soybean-CBOT Jul 16 USc/Bsh RM Seed Spot- NCDEX /qtl RM Seed- NCDEX Jun 16 /qtl Technical Chart Soybean Daily NSBN6 Cndl, NSBN6, , 3,900.00, 3,950.00, 3,898.00, 3,929.00, , (+1.37%) Soybean Spread Matrix Spot Jun Jul Aug Technical Chart Mustard Daily NRSM6 Cndl, NRSM6, , 4,385.00, 4,424.00, 4,385.00, 4,407.00, +7.00, (+0.16%) 4,200 4,100 4,000 3, ,900 4,600 4,500 4, ,400 4,300 Mustard Seed Spread Matrix Spot Jun Jul Aug Soybean NCDEX Jun 16 /qtl RM Seed NCDEX Jun 16 /qtl

5 Refined Soy Oil Refined soy oil futures closed lower on steady demand and higher supplies with the stockists. Ref Soy oil Jun 16 expiry closed 0.44% lower to settle at Rs / 10 kg. Recently, prices have been surging higher due to good physical demand coupled with anticipation of import duty hike for refine oil. However, sufficient stock in the physical market on report of higher imports on vegetable may weigh on prices. As per SEA data, lower landed cost of refined oils against crude veg oils pushed up refined oil imports by 168 % to lt during Nov 2015 to Apr 2016 period as against 4.92 lt in the same period previous year. Moreover, Import of soyoil during Apr increased by over 86 % to 3.5 lt in April from 1.87 lt in the year-ago period. Soy oil futures may trade higher today tracking other edible oil surge. Soybean production was lower last year due to erratic weather which resulting to higher Edible Oil imports. Thus, increase cost of soy oil globally will reflect into domestic prices. Crude Palm Oil CPO Futures closed lower in the thin trading in the absence of any major fundamentals. CPO Jun 16 expiry closed 0.41% higher to settle at Rs per 10 kg. However, limited demand from stockists and steady demand may pressurize prices at higher levels. According to latest data released by SEA, import of RBD palmolein have risen sharply to lt in the first six months of the current oil year ending October 2016 from 4.92 lt in the year-ago period. In April 2016, Palm oil imports rose marginally to 7,29,536 tonnes in April on sharp jump in shipments of refined palm oil. Malaysian palm oil futures fell on Friday weighed down by a stronger ringgit and weak export demand. Palm oil shipments from Malaysia rose percent for the full month of May versus a month ago, but traders were expecting stronger demand leading up to the Muslim fasting month of Ramadan. A stronger ringgit makes palm oil more expensive for holders of foreign currencies, weighing down on palm oil prices. Earlier, prices rose on news of increase in Malaysia's biodiesel mandate, which controls the amount of biofuel in diesel. It will raise its biodiesel mandate to 10 % for the transport sector, and to 7 % for the industrial sector beginning June. Malaysia raised its export tax on crude palm oil to 5.5% for June. In comparison, Indonesia, the world's largest palm oil producer, aims to raise the minimum bio content of diesel to 20% this year. We expect CPO prices to trade sideways to lower as supplies in the domestic market are sufficient due to record imports and steady demand. Technical Ref Soy Oil NCDEX Jun 16 /qtl CPO MCX May 16 /qtl Market Highlights- Edible oils Ref Soyoil Spot - Mumbai Ref Soy oil- NCDEX May 16 Soybean Oil- CBOT- Jul 16 CPO-Bursa Malaysia - Aug 16 CPO- MCX Jun 16 Technical Chart Ref Soy Oil Daily NSOM6 Unit Last Prev day WoW MoM YoY /10 kg /10 kg USc/lb MYR/Tn /10 kg Cndl, NSOM6, , , , , , -2.65, (-0.41%) Refined Soy Oil SpreadMatrix Spot Jun Jul Aug Technical Chart Crude Palm Oil (BOM) Daily MCAM6 Cndl, MCAM6, , , , , , -0.90, (-0.17%) MCX May 16 contract CPO Spread Matrix Closing 30-Jun Jul Aug Jun Jul Aug B B

6 Spices Jeera Jeera futures recovered on Friday after losing for 3 days on bargain buying. The Jun 16 Jeera contract traded on NCDEX closed 0.51% higher to close at Rs 15,920 per quintal. Spot prices also down on limited local buying by traders and stockists as they have sourced sufficient quantity for their requirements. Currently, absence of any major export demands weighing on jeera prices and may be under pressure in coming months if pace of export demand will not pick up in few weeks. {{ According to Dept of Commerce data, the export of jeera during (Apr-Feb) surged to 93,539 tonnes compared to 1.56 lt exported last year same period. The exports for declined compared to last year. Devaluation of currencies in the buying countries and appreciation of Indian currency combined with high prices have led to a steep decline in jeera exports in As per third advance estimate of Gujarat State for , production is pegged at 2.13 lt higher by about 7% forecasted in revised fourth advance estimate of 1.97 lt. In , production was 3.46 lt. We expect Jeera futures to trade sideways due to lower export demand and sufficient supplies in the physical market. Currently, prices looking to consolidate downwards as market players are expecting little less export demand in coming months as monsoon may hit India next month. Turmeric Turmeric futures closed higher on Friday but down on weekly basis due to chart based trading. The Jun 16 delivery contract on NCDEX closed 0.33% higher to settle at Rs 7,920/quintal. However, reports of lower domestic demand and expectation of higher sowing prospects may cap further gains. The prices may be range bound on reports of forecast of good rains in turmeric growing area in south India. Turmeric arrivals have been higher in February, March and April compared to last year but the arrivals have slowed in May as per agmarknet data. However, the arrivals are higher by 105% in May 2016 compared to last year same month. Producers are releasing their lower or medium grade Turmeric and holding premium quality in the anticipation of better return ahead on anticipation of some weather disturbances in the coming monsoon. As per dept of commerce data, turmeric exports in are pegged at 85,426 tonnes while the export for the was 90,738 tonnes for the same period. We expect turmeric prices to trade sideways as demand from north India buyers seems to be easing due to arriving of monsoon rains and lower export demand. There is steady demand from traders and stockists. The prices may trade in a range in coming weeks. Technical Market Highlights - Spices Unit Last Prev WoW MoM YoY Jeera Spot- NCDEX /qt Jeera- NCDEX Jun 15 /qt Turmeric Spot- NCDEX /qt Turmeric- NCDEX Jun 16 /qt Technical Chart Jeera Daily NJEM6 Cndl, NJEM6, , 15,900.00, 15,980.00, 15,830.00, 15,920.00, , (+0.38%) Jeera Spread Matrix Spot Jun Jul Aug Technical Chart Turmeric Daily NTMM6 Turmeric Spread Matrix Spot Jun Jul Aug ,500 17,000 16,500 15, ,000 Cndl, NTMM6, , 7,930.00, 7,950.00, 7,862.00, 7,920.00, , (+0.58%) 8,400 8,200 8,000 7, ,800 Unit Support Resistance Jeera NCDEX May 16 /qtl Turmeric NCDEX May 16 /qtl

7 Kapas Cotton complex traded higher for the second day on Friday due to low level buying by the market participants. NCDEX Kapas for Apr 17 closed 0.50% higher while MCX Jun 16 cotton closed higher by 0.66%. However, demand is growing from textile sector due to limited supplies of quality cotton in the domestic market. There are reports of lesser sowing area in major producing belts of Punjab and Haryana. Similarly, Telangana farmers advised to sow less cotton this season. Currently, CCI is actively auctioning cotton bales from its reserves to keep the supplies adequate. Domestic update Cotton acreage is likely to drop by 20% in season in Punjab and Haryana compared to last season as farmers opt for other kharif crops after bearing heavy crop damage due to whitefly pest attack in the last season. As per CCI, cotton supplies in Indian spot markets fell 12.5 percent compared with last year to lakh bales of cotton have arrived in domestic market between Oct - April. Cotton Association of India (CAI) has cut production estimate to 341 lakh bales (of 170 kg each) of the fiber in the 2015/16 season that started on October 1, from 342 lakh bales estimated last month. As per Indian Cotton Federation (ICF), cotton supply in the current season is around 415 lakh bales after estimating opening stock of 52 lakh bales and the imports of 11 lakh bales. Total cotton consumption/demand for the season estimated to be around 380 lakh bales this season. Global Cotton Updates ICE cotton futures closed higher on Friday, boosted by a weaker dollar and rains in Texas, the largest growing region in the U.S. Expected U.S. cotton plantings are already behind, with 59% of cotton in the ground as of the week ended May 29 versus the five-year average for this time of year at 69% of cotton planted. Cotton prices have been trading higher in the International markets fueled by the hopes that China may boost import quotas, lifting demand from the United States and other top exporters. However, China cotton futures on the Zhengzhou Commodity Exchange closed little down at 12,450 yuan per tonne. As per ICAC latest press release, world cotton production dropped by 17% to 21.8 million tons in as world cotton area shrank and many countries experienced below-average yield. However, production is forecast to increase by 6% to 23 million tons as world cotton area expands and yields improve. Moreover, world cotton consumption declined by 3% to 23.6 mt in and likely remains at the same level in due primarily to low polyester prices and weak global economic growth. Market Highlights- Cotton Unit Last Prev. day WoW MoM YoY NCDEX Kapas Apr kgs MCX Cotton Jun 16 /Bale ICE Cotton Jul 16 USc/Lbs Cotton ZCE Yuan/t Technical Chart - Kapas Daily NKKJ7 Cndl, NKKJ7, , , , , , +4.50, (+0.50%) Technical Chart - Cotton NCDEX Apr 17 contract (BOM) Jun 16 20B MCX Jun 16 contract Daily MCOTM (GMT) Cndl, MCOTM6, , 18,190.00, 18,350.00, 18,160.00, 18,330.00, , (+0.77%) 18, , Cotton Spread Matrix Closing 30-Jun Jul Aug Jun Jul Aug ,000 17,700 17,400 17,100 We expect cotton prices may trade higher today on expectation of limited supplies of quality cotton in the domestic market coupled reports of lesser sowing in north India may keep prices supported. Technical Kapas NCDEX April 17 /20 kgs Cotton MCX Jun 16 /bale