MCX WEEKLY NEWSLETTER � BULLION On the demand side, there are signs of revival as demand is showing signs of pick up in India as the impact of demonetization fades. Imports also usually jump post the budget as the duty related uncertainty goes away. A decline in prices will also help physical demand to tick up in India and China. SPDR holdings meanwhile increased by ~43 tonnes in February but holdings are down by ~17 tonnes this month. If gold prices sustain below, we could see more investment outflows in the coming days which could weigh on prices.US economic data continues to be better and the latest jobs data provided further confirmation. Non-farm payrolls increased by 235k last month and the unemployment rate ticked down to 4.7%. Wage growth was lightly disappointing in m/m terms earnings increased by a healthy 2.8% y/y. The total of employed Americans surged by 447,000 to 152.5 million, the highest ever. Initial jobless claims remain near a 43-year low. Claims have now remained below 300k for 102 straight weeks, the longest stretch since 1970. Apart from better jobs data, another factor that will help the Fed to raise rates is that inflation readings are ticking up. The consumer price index (CPI) increased 2.5% y/y in January, the biggest year-on-year gain since March 2012. US PPI increased for a second straight month, rising 1.6% y/y. Wholesale inventories increased 1.0% and wholesale stocks excluding autos increased 0.9%. Inventory investment contributed one percentage point to the economy's 1.9% annualized growth rate in Q4. Importantly, the data showed that sales at wholesalers jumped 2.6% in December, the largest increase since March 2011. Data earlier showed that activity in the mid-Atlantic region accelerated to a two-year high, amid jumps in new orders, employment and inventories. US retail sales and producer prices in December came in mostly in line with forecasts. Retail sales rose in December amid strong demand for automobiles and furniture. Business inventories increased 0.7%, the biggest increase since June 2015. US economy however expanded at a slower annual rate of 1.9% in Q4 after a 3.5% advance in Q3. Much of the slowdown was due to the fact that soyabeans exports fell after a strong jump in Q3. Excluding soybean, GDP increased at about a 2.7% rate in both the third and fourth quarters suggesting that the underlying growth momentum remains strong. Growth accelerated from a 1.4% advance in Q2 and a 0.8% increase in the first three months of 2016. Consumer spending increased at a 2.5% rate in the fourth quarter. The GDP forecast for real GDP growth in Q1 of 2017 is 2.4%. 4.4 4.5 4.6 4.7 4.8 4.9 5 5.1 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 US Jobs Market Nonfarm Payrolls Source: Reuters Unemployment Rate (RHS) 35000 45000 55000 65000 75000 85000 95000 -50000 0 50000 100000 150000 200000 250000 300000 Oct14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Speculative Positioning Gold Net longs Silver Net longs(RHS) Precious Metals Weekly Please refer to the disclaimer at the end of
Tuesday, 14.March.2017
the report. 3 Over the last few months, readings on manufacturing and services have also rebounded. The ISM manufacturing PMI came in at 57.7 in February, up from 56 in January, the highest in three years. The ISM Non-Manufacturing PMI came in at 57.6, boosted by business activity and employment. While rate hikes have been much talked about and hence factored into prices till a considerable degree, political uncertainty emanating from Europe could potentially be price positive. Elections in Netherland are due this week and a win of a far-right candidate could create considerable uncertainty in the region. Euro-skeptic candidate Geert Wilders has gathered momentum among Dutch voters in this year's campaigning. The polls suggest that she may come second but chances of a surprise are high considering the latest controversy between Turkey and Netherlands. Turkey has suspended high-level diplomatic relations with the Netherlands after Dutch authorities prevented its ministers from speaking at rallies of expatriate Turks. This will also help prospects of the anti-Islam Geert Wilders and keep risk premium elevated in gold. If she wins, we could see a risk off sentiment and a rebound in gold as it would create fears of similar results in the French election. In France, markets are assigning a low probability to the victory of Marine Le Pen but we have seen how markets have gone wrong with Brexit and Donald Trump. Le Pen, the far right candidate has spoken about exiting the Euro zone and redenominating France’s national debt in francs. This is a huge potential risk to global market stability and her victory could push safe haven demand significantly higher and help gold and silver.
✍ BASE METAL MCX Zinc prices cracked last week, trading close to the lowest in the month. Resistances for the futures are placed at 183.65, 185.65 and 188, while supports on the downside are at 179.25 and 176.5. .Copper was among a slew of commodities that posted their biggest weekly decline in months last week after recent rallies showed signs of petering out, pressured by a glut and tepid demand from top consumer China. BHP Billiton last week planned to present workers with an improved offer. What is more, under Chilean employment law, after 30 days of strike, BHP Billiton can bypass the union and legally make individual offers to workers in a bid to encourage them to resume production. If BHP Billiton succeeds in persuading more than half of the workforce to return to work, the union would have to admit defeat and the strike would end. The current strike at Escondida mine is the third-longest so far in recent Chilean mining history. Production at Grasberg mine in Indonesia will be resumed to supply a local smelter with copper concentrate. According to the mine’s operator, production is to run at 40% capacity. New trouble is brewing in Peru, at the Cerro Verde mine. Over half of workers will be going out on strike for an indefinite period. The mine was expanded significantly at the end of 2015 and is the country’s largest copper mine Speculators cut their bullish position by 13,511 lots to 57,149 lots in copper, bringing it to the lowest level since November. Copper stocks in LME-registered warehouses are up 125,500 tons, or 63%, higher than at the start of March and at their highest since
December. The coordinated nature of this inflow suggests the bear-bull battle that raged sporadically across the London market last year has started again. Treatment and refining charges for tradertosmelter deals for shipments to China are reported to have fallen to roughly $70 a ton, at a 4 year low. TC-RC’s are an important indicator of market tightness. A steep drop in China’s aggregate financing, seen as a proxy for credit available to store metals, spooked traders that Beijing may be clamping down on the type of credit used by the metals industry. U.S. employers hired workers at a robust pace of 235,000 in February, beating expectations, which could give the Federal Reserve the green light to raise interest rates this week despite slowing economic growth. Nickel also cracked last week, with an 8% weekly drop, widest since May 2015, on concerns that mine supply from Philippines may pick up just as Indonesia resumes exports. Supply-side uncertainties in Indonesia and the Philippines continue to dominate nickel price sentiment – the latest development is of more Indonesian companies receiving approval to resume nickel-ore exports, following the release last week of further details from government. LME stocks total 384,978 tons, up 3.5% in the year to date amid busy two-way flows. There is little sign of tightness in the market. Indonesian state miner PT Aneka Tambang Tbk will apply next week for a permit to export 6 million tons of nickel ore for year. Nickel prices are set to remain volatile as the market continues to react to supply-side developments. But the recent softening of fundamentals implied by the INSG, coupled with the large overhang of visible stocks, suggests prices will remain low from a historical perspective without greater supply-side discipline. 0 0.5 1 1.5 Escondita Grasberg Morenci Buenavista Del Cobre Collahuasi El Teniente Copper King Disruptions are impacting production at world's two largest copper mines Source: International Production Capacity Copper Study Group Please refer to the disclaimer at the end of the report. 3 Philippines’ mining industry expressed its confidence that Commission on Appointments will reject Gina Lopez as Environment secretary, emphasizing that she was unable to persuade the members of the committee. Nickel prices fell 10% as bears believe there will be rejection. The Philippines is top nickel ore exporter and Lopez’s approval would probably sustain worries over supply disruptions that could lift global prices this year. On other hand, rejection would give miners a key win in battle against environmentalists, adding pressure to nickel prices.
✍ ENERGY WTI prices fell below the psychological $50 mark for the first time since December as the optimism built up post the OPEC deal started to fade. OPEC producers have implemented nearly 98% of the agreed cuts as per latest data. Estimates show that supply from the 11 OPEC members with production targets fell to 29.88 million bpd last month. Production by all OPEC members, including cut-exempted Nigeria and Libya, fell to 32.14 million bpd. Saudi Arabia, which raised oil production to a record this year took a bigger burden of the cut and has reduced output by more than 700,000 bpd to 9.74 million bpd. Iraq’s compliance still hasn’t come fully but more output cuts are likely in the coming weeks. Non-OPEC compliance has been a concern with some estimates suggesting only ~60% compliance so
far. The OPEC and IEA monthly reports due this week will give better understanding about Tuesday, March 14, 2017 Energy Weekly 2 Please refer to the disclaimer at the end of the report. 100 120 140 160 180 200 220 240 260 280 200 275 350 425 500 575 US inventories Crude stocks gasoline RHS distillate RHS the level of compliance. We believe that unless all producers come fully on board to implement their quotas, oil prices could remain under pressure as other factors are outweighing the supply cuts. A bigger worry is the fact that Russia also hasn’t cut output as per the agreed terms with February production unchanged from January at 11.1 mbpd. Brazil’s oil exports also have been climbing with February exports at a record 1.63 mbpd. Brazil is not a part of the non-OPEC group that agreed to production cuts. Meanwhile, given that Libya and Nigeria are exempt, a rebound in their production will increase OPEC output even if other members stick to their quotas. Nigerian output was higher at 1.8 million bpd as per latest data, up 0.2 mbpd from 1.6 million bpd in January. Libya’s oil output is also edging higher and is close to 0.70 million bpd. While the production cut is surely medium term price positive, the biggest headwind to prices is the re-emergence of shale producers. US oil rig count has been increasing since June and is now at its highest since October 2015. Weekly data from EIA shows that US oil production is above 9.0 million bpd and latest EIA forecasts show that oil production could average 9.2 million bpd this year. US shale oil output hit a low of around 8.46 million bpd in July 2016. EIA forecasts show that US shale oil production is expected to rise again in April by 109,000 bpd to 4.96 million bpd suggesting that shale is surely making a comeback at this level of oil prices. On the inventory side, US oil stocks have increased for nine straight weeks, touching a record 528 million barrels, a record high. Crude oil inventory increase since the start of this year has been ~50 million barrels. Gasoline and Distillate stocks are also near the upper end of the five-year range. In Europe, stocks at the Amsterdam-RotterdamAntwerp (ARA) are down 9.4% y/y to 46.54 million barrels. It remains to be seen if reduced OPEC supply leads to significant inventory drawdown in the coming months. In the natural gas market, prices rebounded sharply as weather supported in the recent days.
✍ MCX DAILY LEVELS DAILY
EXPIRY DATE
R4
R3
R2
R1
PP
S1
S2
S3
S4
ALUMINIUM
31 MAR 2017
127
126
125
124
123
122
121
120
119
COPPER
28 APR 2017
396
393
390
387
385
382
379
376
373
CRUDE OIL
20 MAR 2017
3290
3270
3250
3230
3210
3190
3170
3150
3130
GOLD
05 APR 2017
31580
31480
31380 28280 31180 31080
30980
30880
30780
LEAD
31 MAR 2017
154
153
152
151
150
149
148
147
146
NATURAL GAS
28 MAR 2017
209
207
205
203
201
199
197
195
193
NICKEL
31 MAR 2017
690
685
680
675
670
665
660
655
650
SILVER
05 MAY 2017
41000
40800
39600
39400
ZINC
31 MAR 2017
185
184
183
182
181
40600 40400 40200 40000 39800 180 179
178
177
✍ MCX WEEKLY LEVELS WEEKLY
EXPIRY
R4
R3
R2
R1
PP
S1
S2
S3
S4
ALUMINIUM
31 MAR 2017
130
128
126
124
122
120
118
116
114
COPPER
28 APR 2017
402
397
392
387
382
377
372
367
362
CRUDE OIL
20 MAR 2017
3320
3290
3260
3230
3200
3170
3140
3110
3080
GOLD
05 APR 2017
28900 28750
28500
28280
28150
27950
27750
27550
27200
LEAD
31 MAR 2017
157
155
153
151
149
147
145
143
141
NATURAL GAS
28 MAR 2017
213
210
2017
203
200
197
194
191
188
NICKEL
31 MAR 2017
705
695
685
675
665
655
645
635
625
SILVER
05 MAY 2017
40700
40400
40100
39800
39500
39200
38900
ZINC
31 MAR 2017
184
182
180
178
176
174
172
41300 41000 188
186
✍ FOREX DAILY LEVELS DAILY
EXPIRY DATE
USDINR
29 MAR 2017
EURINR
R4
R3
R2
R1
PP
S1
S2
S3
S4
66.65 66.55
66.45
66.35
66.25
66.15
66
65.90
65.80
29 MAR 2017
71.25 71.05
70.90
70.75
70.60
70.45
70.30
70.15
70
GBPINR
29 MAR 2017
81.70 81.50
81.30
81.10
80.90
80.70
80.50
80.30
80.10
JPYINR
29 MAR 2017
58.30 58.15
58
57.85
57.70
57.55
57.40
57.25
57.10
✍ FOREX WEEKLY LEVELS DAILY
EXPIRY DATE
R4
S1
S2
S3
S4
USDINR
29 MAR 2017
66.97 66.77 66.57
66.37 66.17
66
65.80
65.60
65.40
EURINR
29 MAR 2017
71.50 71.25
70.75 70.50 70.25
70
69.75
69.50
GBPINR
29 MAR 2017
81.70 81.40
81.10 80.80 80.50
80.20
79.90
79.60
JPYINR
29 MAR 2017
58.70 58.40 58.10
57.85 57.60 57.30
57
56.70
56.40
82
R3
R2
71
R1
PP
TECHNICAL PERSPECTIVE Gold prices have tested the immediate support of 50% retracement mark in the previous week and settled just above it along with a Doji candle stick formation on the daily chart. Going ahead, prices are likely hold the support of 50% retracement level for this week and could lead to recovery in the coming session till 29650 then 29860 levels. However a convincing close below 29300 will extend fall till the next key support of 61.8% retracement level of 27960. Momentum indicators, MACD is still on a positive note, while the RSI indicator sharply declined from 0.49 – 0.44.
MCX Copper corrected last week amidst all the strike concerns globally and rising LME inventory. We expect prices to take resistance at 389 and 394.7 above which prices may turn positive for the short term. Strong supports on the downside are placed at 378 and 372.5.
MCX Zinc prices cracked last week, trading close to the lowest in the month. Resistances for the futures are placed at 183.65, 185.65 and 188, while supports on the downside are at 179.25 and 176.5
✍ NCDEX DAILY LEVELS DAILY
EXPIRY
SYOREFIDR
DATE 20-APR-2017
SYBEANIDR
20-APR-2017
RMSEED
20-APR-2017
R4
R3
R2
R1
PP
S1
S2
S3
S4
641
639
637
635
633
631
629
627
2930
2910
2890
2870
2850
2830
2810
2790
2770
3885
3865
3845
3825
3805
3785
3765
3745
3725
JEERAUNJHA
20-APR-2017 17400
17300
17200 17000 16900 16800
16700
16600 16500
GUARSEED10
20-APR-2017
3880
3860
3840
3815
3800
3780
3760
3740
3720
TMC
20-APR-2017
6820
6780
6740
6700
6660
6620
6580
6540
6500
643
✍ NCDEX WEEKLY LEVELS WEEKLY
EXPIRY
R4
R3
R2
R1
PP
S1
S2
S3
S4
648
645
DATE SYOREFIDR
20-APR-2017
641
638
636
633
630
627
624
SYBEANIDR
20-APR-2017 2960 2930 2900
2870
2852
2820
2790
2760
2730
RMSEED
20-APR-2017 3900 3875 3850
3825
3803
3775
3750
3725
3700
JEERAUNJHA
20-APR-2017 17600 17400 17200 17000 16800 16600
16400
16200
16000
GUARSEED10
20-APR-2017 3900 3870 3840
3815
3795
3762
3730
3700
3664
TMC
20-APR-2017 7000 6900 6800
6700
6600
6500
6400
6300
6200
NCDEX WEEKLY NEWSLETTER ✍ CASTORSEED In Palanpur market in Gujarat, castor seeds prices traded at Rs.4025/quintal down by Rs.45/quintal amid decreased arrivals of 1180 quintals In Siddhpur market, prices traded at Rs.4015/quintal, up by Rs.3/quintal amid increased arrivals of 2090 quintals while at Visnagar market, prices traded at Rs.4017/quintal, down by Rs.60/quintal amid increased arrivals of 2310 quintals During Feb’17, castor meal were exported at 30,312 tons, down by 25% Y/Y According to SEA, castor seeds production is likely to decrease by 25% to 1.06 million compared 1.43 million MT in 2015-16 At NCDEX approved warehouses, total 50,920 MT castor seeds are available, up by 1,854 MT compared to prior day,
✍ CARDAMOM During the last trade, cardamom futures traded mostly in lower note Good rainfall in growing district of Kerala which is good for the crop weighed down the cardamom futures prices Hence, Apr futures closed the trade at Rs.1385.5/kg, down by 1.21% while May futures closed with loss of 1.10% from their previous close During the last auctions at spot centers, supplies were at 25 MTs which traded at average price of Rs.1215/kg and superior quality material fetched Rs.1434/kg There is slight improvement in the buying activities at spot market as prices have fallen considerably in past few days
✍ TURMERIC During the last trade, turmeric futures witnessed smart recovery from prior sharp fall on profit booking at lower levels However, steady pace of fresh crop supplies at spot market limited recovery for turmeric futures prices Hence, Apr futures closed the trade at Rs.6692/quintal, up by 2.04% while May futures closed with recovery of 1.95% from its previous close During last trade at Erode, prices decreased in the range of Rs.100-300 to Rs.8300/quintal and Rs.7500/quintal due to weak demand from North India
✍ DHANIYA According to FISS, dhaniya production is expected to 0.72 lt, 1.62 lt and 1.71 lt in Rajasthan, Madhya Pradesh and Gujarat respectively (lt: lakh tons) At Mandsaur market in MP, FAQ variety prices traded at Rs.3810/quintal amid increased arrivals of 2000 quinatls At Halvad market, prices were traded at Rs.5150/quintal, up by Rs.150/quintal amid decreased supplies of 2340 quintals while at Neemuch and Junagadh market prices were traded at Rs.3950/quintal and Rs.5250/quintal respectively
✍ JEERA
At Unjha market, jeera prices traded at Rs.16250/quintal while at Gondal market, prices traded at Rs.15055/quintal,Expectations of pickup in demand in coming days supported prices to trade higher However, higher supplies of new crop across major spot markets limited the gains for jeera futures prices Hence, Mar futures closed the trade at Rs.17010/quintal, down by 1.22% while Apr futures closed with loss of 1.12% from its previous close
TECHNICAL PERSPECTIVE RM seed prices traded on corrective move last week and retracted till the low of 3871 and finally ended at 3894 mark. On the weekly chart, prices have exactly tested the previous candle high support as well as the breakout trend line support and have recovered from the same. Prices holding above the trend line are indicating further bullishness in the counter and we expect the prices to move higher till the next resistance of 4020 levels. While the immediate support is at 3860 and the crucial support of the whole at 3800 mark break down below that will turn the scenario bearish.
NCDEX Jeera is consolidating in the form of a symmetrical triangle C-C1 and breakout of the same is expected soon. Strong short-term supports are placed at Rs.17000 / 16600 whereas Rs.17450 / 18100 may act as stiff resistances. Range bound movement is likely to continue. Risk takers can go long near mentioned support with strict SL below 16600 for a pullback rally.
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