Commodity Research Report 07 November 2016 Ways2Capital

Page 1


✍ MCX DAILY LEVELS DAILY

EXPIRY

R4

R3

R2

R1

PP

S1

S2

S3

S4

ALUMINIUM

30-NOV-2016

120

118

117

116

115

114

113

112

111

COPPER

30-NOV-2016

348

343

338

336

333

331

328

323

318

CRUDE OIL

18-NOV-2016

3201

3118

3035

2988

2952

2905

2869

2786

2703

GOLD

05-DEC-2016

31274

31022

30770

30663

30518

30411

30266

30014

29762

LEAD

30-NOV-2016

143

143

141

139

137

135

133

131

129

NATURAL GAS

25-NOV-2015

201

196

191

188

186

183

181

176

171

NICKEL

30-NOV-2016

720

713

706

702

69699

695

692

685

678

SILVER

05-DEC-2016

45233

44603

43973

43685

43343

43055

42713

42083

41453

ZINC

30-NOV-2016

172

169

166

165

163

162

160

157

154

R4

R3

R2

R1

PP

S1

S2

S3

S4

✍ MCX WEEKLY LEVELS WEEKLY

EXPIRY

ALUMINIUM

30-NOV-2016

142

133

126

119

112

110

105

98

91

COPPER

30-NOV-2016

372

365

350

335

329

320

314

305

290

CRUDE OIL

15-NOV-2016

4301

3888

3475

3208

3062

2795

2649

2236

1823

GOLD

05-DEC-2016

32696

31926

31156

30857

30386

30087

29616

28846

28076

LEAD

30-NOV-2016

150

146

142

141

138

137

134

130

126

NATURALGA S

25-NOV-2015

280

251

222

204

193

175

164

135

106

NICKEL

30-NOV-2016

743

728

713

705

698

690

683

668

653

SILVER

05-DEC-2016

48903

47039

45175

44287

43311

42423

41447

39583

37719

ZINC

30-NOV-2016

180

174

168

166

162

160

156

150

144

Monday, 07 November 2016


WEEKLY MCX CALL BUY CRUDEOIL NOV ABOVE 3000 TGT 4000 SL 2994 ✍ FOREX DAILY LEVELS DAILY

EXPIRY

R4

R3

R2

USDINR

26-OCT2016

67.30

67.20

67.10

EURINR

26-OCT2016

74.60

74.50

GBPINR

26-OCT2016

83.90

JPYINR

26-OCT2016

64.70

DATE

R1

PP

S1

S2

S3

S4

67

66.90

66.80

66.7 0

66.60

66.5 0

74.40

74.3 0

74.20

74.10

74

73.90

73.8 0

83.80

83.70

83.6 0

83.50

83.40

83.3 0

83.20

83.1 0

64.60

64.50

64.4 0

64.30

64.20

64.1 0

64

63.9 0

✍ FOREX WEEKLY LEVELS DAILY

EXPIRY

R4

R3

R2

R1

PP

S1

S2

S3

S4

USDINR

26-OCT2016

67.70

67.5 0

67.30

67.1 0

66.90

66.70

66.5 0

66.30

66.10

EURINR

26-OCT2016

75

74.8 0

74.60

74.4 0

74.20

74

73.8 0

73.60

73.40

GBPINR

26-OCT2016

84.30

84.1 0

83.90

83.7 0

83.50

83.30

83.1 0

82.90

82.70

JPYINR

26-OCT2016

65.10

64.9 0

64.70

64.5 0

64.30

64.10

63.9 0

63.70

63.50

WEEKLY FOREX CALL BUY GBPINR NOV ABOVE 83.60 TGT 84.60 SL 82.80 PREVIOUS WEEK CALL BUY GBPINR NOV ABOVE 82.80 TGT 83.50 SL 82.20 - NOT EXECUTED BUY JPYINR NOV ABOVE 64.70 TGT 65.20 SL 64.30 - NOT EXECUTED


✍ NCDEX DAILY LEVELS DAILY

EXPIRY

R4

R3

R2

R1

PP

S1

S2

S3

S4

SYOREFIDR

20-DEC-2016

687

682

677

675

672

670

667

662

657

SYBEANIDR

20-DEC-2016

327 8

3232

318 6

3159

3140

3113

3094

3048

3002

RMSEED

20-DEC-2016

499 7

4867

473 7

4689

4607

4559

4477

4347

4217

JEERAUNJHA

20-DEC-2016

190 47

1864 7

182 47

18093

1784 7

1769 3

1744 7

1704 7

1664 7

GUARSEED10

20-DEC-2016

351 4

3466

341 8

3391

3370

3343

3322

3274

3226

TMC

20-DEC-2016

752 1

7421

732 1

7281

7221

7181

7121

7021

6921

DATE

✍ NCDEX WEEKLY LEVELS WEEKLY

EXPIRY

R4

R3

R2

R1

PP

S1

S2

S3

S4

SYOREFIDR

20-DEC-2016

725

706

687

680

668

661

649

630

611

SYBEANIDR

20-DEC-2016

3445

334 5

3245

318 3

3145

3083

3045

2945

2845

RMSEED

20-DEC-2016

5165

497 2

4779

471 0

4586

4517

4393

4200

4007

JEERAUNJHA

20-DEC-2016

1992 7

191 97

1846 7

182 03

1773 7

1747 3

17007

1627 7

1554 7

GUARSEED10

20-DEC-2016

3684

357 8

3472

341 7

3366

3311

3260

3154

3048

TMC

20-DEC-2016

7670

751 4

7358

730 0

7202

7144

7046

6890

6734

DATE

WEEKLY NCDEX CALL BUY GUARSEED DEC ABOVE 3370 TGT 3470 SL 3280


MCX - WEEKLY NEWS LETTERS � BULLION Gold edged higher on Thursday in response to a lower dollar and also uncertainty about the outcome of a tight U.S. presidential race. Democrat Hillary Clinton maintained her narrow lead over Republican rival Donald Trump just days ahead of the Nov. 8 election, according to two polls released on Thursday. helped the dollar to recover from multi-week lows, although it remained 0.1 percent lower against a basket of six main currencies. "Risk-off sentiment has helped gold above $1,300 yesterday ... and as long as uncertainty around the outcome of U.S. elections continues, we can see support," Saxo Bank head of research Ole Hansen said. Spot gold XAU= , lower initially, rose 0.2 percent to $1,298.91 an ounce at 1537 GMT. It touched a onemonth high of $1,307.76 in the previous session, before retreating as Federal Reserve signalled it could raise interest rates next month. The Fed kept rates unchanged on Wednesday, but said the economy had gathered steam and job gains remained solid. Policymakers also expressed more optimism that inflation was moving toward their 2 percent target. gold futures GCcv1 fell 1.4 percent to $1,289.30. "The fact that the Fed made some hawkish comments opening up to a rate increase in December could be seen as a negative for gold," Mitsubishi Corp analyst Jonathan Butler said. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets, while also boosting the dollar, in which the metal is priced. "But the narrowing of the polls between Clinton and Trump is more important in terms of gold's positioning this week. We could see more gains before Tuesday, as the dollar retreats and safe havens such us the Japanese yen or the Swiss franc increase." The market will now focus on nonfarm payrolls data, which will be released on Friday. FRX/ are expected to have added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters. "Even bad data won't change the idea of a rate hike as the Fed has shown that there is a high probability for a rate hike in December," Jiang Shu of Shandong Gold Group said. Among other precious metals, silver XAG= fell 1.1 percent to $18.23, retreating from a high of about $18.73 on Wednesday, its best level since Oct. 4. Platinum XPT= was up 0.6 percent at $991.40 and palladium XPD= dropped 0.8 percent to $623.25.

� ENERGY Oil prices edged up in early trading on Friday, stabilising after five straight days of falls triggered by a surge in U.S. crude inventories and doubts over the ability of oil producers to coordinate an output cuts. International Brent crude oil futures LCOc1 were trading at $46.50 per barrel at 0036 GMT, up 15 cents, or 0.3 percent, from their last close. U.S. West Texas Intermediate futures were at $44.83, up 17 cents, or 0.4 percent. Despite the slight increases, traders said market sentiment was bearish. Brent futures fell for the past five straight trading sessions and is


down about 13.5 percent since its most recent peak in mid-October. Analysts said markets were also weighed down by traders pulling out money from crude futures ahead of the upcoming U.S. presidential elections, which are seen as a risk to global markets. "I suspect the main drivers are that risk is being taken off the table ahead of next week's election and the continuance of long liquidation," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore. Beyond concerns ahead of the U.S. elections, traders said oil market fundamentals were also weak, with U.S. crude stocks surging, demand growth low, and doubts that the Organization of the Petroleum Exporting Countries and non-OPEC producer Russia can agree on a meaningful output cut later this month."Crude oil continued to sell off with new data raising concerns of an expanding surplus... Investors also continued to fret about OPEC failing to reach an agreement on production cuts," ANZ bank said on Friday. U.S. crude oil stockpiles soared more than 14 million barrels last week, the largest weekly build since the U.S. Energy Department started keeping records in 1982, highlighting that a global fuel supply overhang is far from over. oil production remains near records and inventories are high, British bank Barclays said demand growth was timid. "Q3 16 demand growth rate is less than one-third that of the same quarter last year," Barclays bank said in a note to clients, estimating last quarter's growth below 1 million barrels per day (bpd). It said consumption increases for the last quarter of the year would not be much higher, before averaging 1.3 million bpd in 2017.

Oil prices settled down more than 1 percent on Thursday as investors reeled from a record weekly surge in U.S. crude inventories, and remained skeptical about whether OPEC can actually implement its planned output cap.U.S. crude CLc1 fell 68 cents, or 1.5 percent, to settle at $44.66 per barrel. At one point, oil had fallen more than $1 a barrel and hit a session low of $44.37. Brent crude LCOc1 was down 51 cents, or 1.1 percent, at $46.35 a barrel. It hit a session low of 45.99.Traders said energy monitoring service Genscape reported a weekly build of 1.2 million barrels at the U.S. delivery base in Cushing, Oklahoma. That kept a lid on oil prices a day after crude fell to a five-week low, when U.S. data on Wednesday showed stockpiles of oil surged a record 14 million barrels last week. Thursday, prices were also pressured as U.S. equities fell, with the S&P 500 stock index headed for its longest losing streak since the 2008 financial crisis. Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) meet on Nov. 30 in Vienna to agree on a production cap to reduce a global glut and combat low prices.Market watchers have grown skeptical that a concrete deal can be reached or enforced. OPEC has not made clear how much each member should cut, and several have been resistant. A Reuters survey this week based on shipping data and industry sources indicated that OPEC output probably set a record high in October. got this rally a few weeks ago, recent weeks on the expectation that we'll see some cohesive cut coming through from OPEC, but that's been slowly unwound," said Matt Smith, director of commodity research at energy data provider


ClipperData. News of an attack on a Nigerian pipeline, which sources say cut output by at least 200,000 barrels, lent some support to crude prices. Nigeria, Africa's largest crude producer, has been hamstrung in months by rebel activity. prices have been falling for four days and have not recovered to levels reached in October after the preliminary agreement by OPEC to cap production, reached at a meeting in Algiers. "If there were broadly three drivers propelling oil prices from about $45 per barrel ahead of Algiers to $53 - OPEC expectations, inventories and a more or less benign macro environment - they suddenly seem spent," Credit Suisse analysts said in a note. � BASE METAL Copper futures traded a shade lower at Rs 328.20 per kg as speculators trimmed positions, tracking a weak trend overseas and muted spot demand. At the Multi Commodity Exchange, copper for delivery in current month declined by 15 paise or 0.05 per cent to Rs 328.20 per kg in business turnover of 854 lots. Similarly, the metal for delivery in February contracts shed 15 paise or 0.04 per cent to Rs 333.65 per kg in 4 lots. Analysts attributed the fall in copper futures to weak trend in global markets where copper weakened and fall in demand at the domestic spot markets here. Meanwhile, Copper for delivery in three month fell 0.4 per cent at the London Metal Exchange. Nickel prices went up 0.96 per cent to Rs 703 per kg in futures trade as speculators raised their bets, driven by rising demand at the domestic spot markets amid a firming trend in base metals at the London Metal Exchange. In futures trading at the Multi Commodity Exchange, nickel for delivery in November spurted Rs 6.70, or 0.96 per cent, to Rs 703 per kg, in a business turnover of 898 lots. The metal for delivery in December was trading higher by Rs 6.70, or 0.95 per cent, to Rs 708.50 per kg in 11 lots. Analysts said the rise in nickel prices at futures trade was mostly attributed to strong demand from alloy makers at the domestic spot markets coupled with a strength in base metals at the London Metal Exchange (LME) after China's economy stabilised in the third quarter, to bolster the outlook for commodities demand. Nickel prices went up by 0.56 per cent to Rs 694.80 per kg in futures trade as speculators raised their bets, driven by a firming trend at the domestic spot markets on pick-up in demand. In futures trading at the Multi Commodity Exchange, nickel for delivery in current month spurted Rs 3.90, or 0.56 per cent, to Rs 694.80 per kg, in a business turnover of 985 lots. The metal for delivery in December was trading higher by Rs 3.40, or 0.49 per cent, to Rs 700 per kg in 22 lots. Analysts said a firming trend at the domestic spot markets following increased demand from alloy-makers mainly pushed up nickel prices at futures trade here.

Aluminium prices edged lower by 0.39 per cent to Rs 115.50 in futures trade as speculators booked profits at prevailing levels. At the Multi Commodity Exchange, aluminium for delivery


in November eased by 45 paise, or 0.39 per cent to Rs 115.50 per kg in a business turnover of 704 lots. Similarly, the metal for delivery in December shed 25 paise, or 0.21 per cent to Rs 116.05 per kg in 6 lots. Market analysts said besides profit-booking by participants, fall in demand from consuming industries in the spot market, mainly influenced aluminium prices at futures trade. At the Multi Commodity Exchange, zinc for delivery in December was trading higher by Rs 1.05, or 0.64 per cent, to Rs 165.50 per kg, in a business turnover of 59 lots. The metal for delivery in November rose Re one, or 0.61 per cent, to trade at Rs 164.90 per kg in 1,009 lots. Globally, zinc for delivery in three months rose 2.6 per cent to settle at USD 2,458 per tonne at the London Metal Exchange yesterday, after touching USD 2,479.50, the highest since August 2011. Market analysts attributed the rise in zinc futures to fresh bets created by participants on the back of rising demand at the domestic spot market and metal climbing to over five-year highs at the LME with investors betting that a rebound in demand from China will underpin prices. NCDEX - WEEKLY MARKET REVIEW Heavy rain forecast for AP, Odisha coasts as depression lingers in Vicinity The depression in the west-central Bay of Bengal lay 240 km south-east of Visakhapatnam and 520 km southsouthwest of Paradip on Friday evening. It was 880 km south-southwest of Khepupara in Bangladesh, where it is headed for landfall as a deep depression, a stepdown from a tropical cyclone forecast earlier. The intensification may happen after it recurves away to the North-East from the Andhra Pradesh coast, skirting both the Odisha and Bengal coasts, according to the Met Department. The proximity to the East Coast should bring light to moderate, at times heavy, rain to the coastal areas of these three States until Sunday, the Met said. The US Joint Typhoon Warning Centre , too, has officially cancelled its outlook for any further strengthening of the depression. It is noted that the system is encountering increasing wind shear as it prepares to recurve to the North-East. Wind shear refers to the sudden change in wind speed and direction with height. Rabi sowing 8.3% lower on drop in acreage of pulses, coarse cereals Sowing of key rabi crops (winter crops), such as wheat, mustard and gram, has begun in major producing States. According to the Agriculture Ministry, sowing has taken place so far on about 81.55 lakh ha, which is about 8.3 per cent lower than the corresponding period last year. Rabi planting generally starts in early October and goes on till late January. The decline in acreage so far is largely because of a drop in the area under pulses and coarse cereals. However, sowing is expected to accelerate as the season advances. The acreage under wheat — the main rabi cereal — as on November 4 stood at 4.28 lakh hectares, higher than the 2.76 lakh hectares sown during the same period last year. Planting of rice stood at 9.51 lakh ha (6.25 lakh ha). The acreage under oilseeds was highest at 29.79 lakh ha (19.91 lakh ha). Mustard is the main oilseed crop grown during the rabi season, while chana or gram is the main pulses crop. Sowing of pulses was down at 24.16


lakh ha (30.07 lakh ha). Coarse cereal acreage declined to 13.84 lakh ha (29.92 lakh ha). A near normal South-West monsoon this year after two consecutive droughts has led to improved soil moisture levels and comfortable water storage levels across major parts of the country, which should aid the rabi planting. Delayed crushing in western States pulls down Oct sugar production Sugar production in the country in October 2016 -- the first month of the ongoing sugar season -dropped sharply by 44 per cent to 1.04 lakh tonnes compared to the same month last year as Maharashtra and Gujarat delayed production. v“In all, 28 mills have started crushing as on October 31 2016, as against 65 in 2015-16 sugar season same time,” according to industry body Indian Sugar Mills Association. During 2016-17, Maharashtra mills delayed their crushing operations to get the cane matured further to get better sugar recovery from standing cane, according to an official release. “These mills are now expected to start crushing from November 5, 2016. Similarly, Gujarat mills are expected to start this week,” the release added. With the carryover stock of 77 lakh tonnes as on October 1 2016 and estimated sugar production of 234 lakh tonnes, total sugar available in the country during 2016-17 sugar season would be around 311 lakh tonnes against the estimated consumption of 255 lakh tonnes, according to ISMA estimates. ✍ Sugar Sugar Futures closed down last week due to subdued physical demand and expectation of sufficient supplies in the country. However, the price recovered on Friday on reports of lower sugar production in October compared to last year. The most-active December sugar contract closed 0.44% higher on Friday to settle at 3,441 per quintal. Sugar production in the country in October 2016 -- the first month of the ongoing sugar season -- dropped sharply by 44 per cent to 1.04 lakh tonnes compared to the same month last year as Maharashtra and Gujarat delayed production As per ISMA’s first media release, during 2016-17 SS, Maharashtra mills delayed their starting so as to get the cane matured further to get better sugar recovery from standing cane. These mills are now expected to start crushing from 5th November, 2016. Similarly, Gujarat mills are expected to start this week. The carryover stock as on 1st October is pegged at 77 lt and production is estimated at 234 lt in 2016-17 SS. Thus, total sugar available in the country during 2016-17 SS would be around 311 lt, against the estimated consumption of 255 lt. Moreover, government is looking to enhance domestic supplies by reduce import duty if the prices domestic market increase. Central government is exploring the option of lowering the 40% import duty on the sweetener in its raw form. Due to droughts, sugar production in Maharashtra is likely to drop nearly 40 percent to 5 million tonnes in the 2016/17 season started on Oct. 1 compared with a year earlier. ✍ Soybean Soybean futures closed lower last week due to higher arrivals of soybean in the physical markets. The prices have dropped below the MSP in States of MP and Gujarat. The most-active Nov’16


delivery contract closed 1.45% down last week to settle at Rs. 3,069 per quintal. The harvesting of soybean in full swing and supplies are strong in the physical market. As per SEA recent survey soybean production in 2016- 17 forecasted at 10.9 mt, up 58% from the last year. CBOT soybean rose for the second straight session on Friday as investors turned their attention to export data after a price slide fuelled by big harvest supplies. The USDA’s weekly export sales report support prices, led by brisk Chinese buying of U.S. soybeans. As per USDA, net sales of 2.5 mt for 2016/2017--a marketing-year high--were up 28% from the previous week and 34% from the prior 4-week average. U.S. soy harvest was 87% complete as on 30 Oct, ahead of the five-year average of 85 percent but in line with an average of trade expectations. Soybean traders are also watching crop prospects in South America and expectations for a big Brazilian harvest are being reinforced by rapid planting followed by beneficial rainfall. ✍ Mustard Seed Mustard seed futures gain last week due to increase in demand from the industrial consumer for crushing as winter sets in. However,reports of good progress of sowing in Rajasthan capped further rise. The Nov’16 contract ended 2.74% higher last week to settle at Rs.4,650/quintal. As per agriculture ministry data, all-India acreage of mustard in the ongoing rabi season was nearly 2.73 mln ha as on Nov 04 up 80% from a year ago. The country's production of rapeseed is expected to increase by 12.5% to 6.3 mt from a year earlier. The rabi sowing in the largest mustard producing state, Rajasthan has started. According to government data, Rajasthan has sown 13.7 lakh hectares as on 24th Oct 2016, up by 191.5% higher compared to last year acreage.As per the latest USDA monthly report, global rapeseed production for 2016/17 is forecast at 67.6 mt, up from 66.9 mt last month and down 3 % from 2015/16. Larger crops are expected from Canada, Australia, and the United States offset a slight decrease for Russia. ✍ Refined Soy Oil Refined soy oil futures closed lower last week due to pressure on domestic soybean and International edible oil prices. The most active,Ref Soy oil Nov’16 expiry contract closed 0.19% down to settle at Rs. 667.9 per quintal last week. Though the tariff value of crude soyoil were raised by $8 per tn to $853 which was the third increase in two month by the government the domestic prices were traded lower on steady demand and good stocks. Since January 2016, the base import prices for crude soy oil increase by more than 20% from $720 per tonnes. As per SEA data, India September crude soyoil import 469,564 tonnes, an increase of 46 % compared to 321,062 tonnes year ago while, India Nov-Sep crude soyoil import 3.96 mt vs 2.58 mt – an increase of 53% y/y for the current oil year. Earlier, India has cut import taxes on both crude palm oil and refined edible oils by 5% points to 7.5 and15 % respectively. ✍ Jeera Jeera futures gain for third consecutive day on Friday to close higher last week due to pickup in physical demand and lower level buying by the market participants. NCDEX Nov’16 Jeera


closed 1.75% higher last week to close at Rs 17,715 per quintal..The price trend on the chart looks positive on reports of dwindling physical supplies and slow start to the new season sowing in Gujaratand Rajasthan. Moreover, pickup in physical demand and expecting dwindling supplies in the physical market pushed the prices higher. According Department of commerce data, the exports of Jeera in the first five months (Apr-Aug) of 2016-17 is at 60,907 tonnes, higher by 62% compared to last year same time. The exports of jeera during August 2016 increase 65% m/m to 9,003 tonnes while there is also increase exports y/y by 65.7%. ✍ Turmeric Turmeric futures closed higher during the last week and continue its positive trend due to good demand from the local buyers as well as expectation of demand upcountry buyers as supplies may dwindle during next month. Turmeric Nov’16 delivery contract on NCDEX closed 1.12% higher last week to settle at Rs 7,414 per quintal. Currently the supplies are for medium and poor quality during the restof the season till new crop arrived which may keep the prices sideways to higher. It is expected that the demand from the industrial buyers will support the prices just before new season harvesting. On the export front, country exported about 51,147 tonnes of turmeric during April-August period up by 32% compared last year, as per department of commerce data. Expectations of increasing production in coming harvesting season and lowering export demand in recent months are putting pressure on turmeric prices at higher levels. Turmeric acreage in Telangana and Andhra Pradesh was higher this year as compared last year. ✍ Kapas Cotton complex prices closed lower last week due to higher arrivals in the physical market coupled with lower off take from the buyers as prices were at higher levels. Last week, NCDEX Kapas for Apr’17 closed 0.28% lower while MCX Oct’16 cotton closed 1.50% down%. The arrivals have begun in Gujarat, Madhya Pradesh and are expected to pick in Haryana where the ginners have called off their strike. Industry expects the cotton output to surpass 35-36 million bales this season. Despite less area under cotton, good monsoon expected to rescue the 2016-17 production. industry are estimating 355 lakh bales 170 kg each for the season 2016-17 (Oct-Sep), as against the government’s first estimate of 321.2 lakh bales. As per CAB, India's cotton output is seen at 351 lakh bales (1 bale = 170 kg), up 4% from 338 lakh bales a year ago due to good monsoon and minimum pest infestation. Cotton area is down by 11.6% at 105.6 lh against 116 lh last year.For the current season, cotton arrivals in the country are pegged at 21 lakh bales as on 2 nd November, 2016. In October, Punjab, Haryana and Rajasthan together account for at 5.82 lakh bales while Gujarat and Maharashtra added 7.3 lakh bales. Madhya Pradesh too seen about 1.82 lakh bales arrivals. In South India, about 3.36 lakh bales arrivals have been recorded. According to USDA, production in India is forecast at 26.5 million bales 5.77 mt, up marginally from 2015/16. A rebound in India’s yield is expected to offset a 10-percent reduction in cotton area this season.


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