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Daily Agri Report, February 27
Daily Agri Report, February 27
Agricultural Commodities
Content
News & Market Highlights Chana Sugar Oilseed Complex Spices Complex Kapas/Cotton
Research Team
Vedika Narvekar - Sr. Research Analyst vedika.narvekar@angelbroking.com (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Analyst anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132
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Agricultural Commodities
News in brief
Finance ministry finds proposal to abolish levy sugar bitter
The finance ministry has raised objections to the food ministrys proposal to do away with levy sugar as part of its partial decontrol measure, saying it would raise the governments subsidy burden by Rs. 800- 1,000 crore. Officials said the finance ministry is concerned that if the levy sugar mechanism is abolished, the entire burden of distributing cheap sugar through ration shops will fall on the government, which it can ill- afford at this time. At present, the burden is shared between sugar millers and the Centre. The government sells 2.6- 2.7 million tonnes of sugar annually at cheap rates through ration shops. To meet this requirement, sugar mills are required to sell 10 per cent of their annual production to the Centre at rates much lower than the market price. The government spends around Rs. 23- 25 for each kg sold through ration shops (this includes Rs. 19.50 as the purchase price and the rest as incidental charges), while it earns just around Rs. 13.50 per kg by selling the sweetener. This practically means that the government incurs a subsidy of around Rs. 10- 11 for every kg sold through ration shops. But, if the levy sugar mechanism is dismantled as formulated in the draft Cabinet note, the government will have to either purchase sugar from the open market for sale through ration shops or compensate states for selling sugar at cheap rates. (Source: Business Standard)
Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz
.Source: Reuters
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Agricultural Commodities
Chana
Rising supplies of new crop in the domestic markets along with bumper output expectations pressurized chana prices on Tuesday. Spot prices and April futures settled 2.4% and 1.5% lower respectively in the yesterdays trading session. Arrivals will increase further in the coming days as harvesting will commence in full pace in MP. Ministry of Agriculture in its second advance estimates, have pegged, bumper chana output for 2012-13 season at 8.57 mn tn, up 11% from 2011-12 final estimates of 7.7 mn tn.
Market Highlights
Unit Rs/qtl Rs/qtl Last 3500 3347 Prev day -2.46 -1.53
as on Feb 26, 2013 % change WoW MoM -3.85 -11.39 -2.73 -7.64 YoY -9.71 -11.31
Source: Reuters
Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. The Centre has hiked the MSP by 14 per cent to Rs 3,200 a quintal for chana and as part of its strategy to encourage farmers to grow more pulses to reduce import dependence.
Source: Telequote
Technical Outlook
Contract Chana Apr Futures Unit Rs./qtl Support
3290-3315
Trade Scenario
India imports Chana mainly from Australia and Canada and higher availability in these countries at comparatively cheaper rates is seen boosting imports of Chana to meet the domestic shortfall. In Australia, total chickpea production in 201213 is estimated to have increased to a record 713000 tones as compared with 485000 tons in 2011-12. In Canada chickpea output is estimated at 1.58 lakh tonnes compared with 86000 tn in 2011-12.
Outlook
Increasing arrival pressure may exert downside pressure on the chana prices in the coming days. However, sharp downside may be capped as demand will emerge at lower levels. Also, prices may not sustain below Rs 3200 as farmers will not liquidate their produce below these levels.
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Agricultural Commodities
Sugar
Sugar futures extended the losses of the previous session, however, recovered towards the end on short coverings ahead of budget. Prices have declined in the past few sessions on Governments decision to keep sugar import duty unchanged, which may boost cheaper imports further and keep domestic prices under pressure. Prices also declined as ISO forecasted higher global sugar surplus. The government last week said it has decided not to increase import duty on sugar though industry bodies and manufacturers had demanded a hike in the duty to 60% from the current 10% to curb shipment of the sweetener. Indias Agriculture Minister Sharad Pawar said that they are favoring Food Ministrys proposal to increase the production tax on Sugar from the current Rs. 0.71/kg by Rs. 1.5/kg if mills were freed from an obligation to sell the sweetener at lower prices for public distribution. India's sugar production in the 2013/14 season is set to fall below consumption for the first time in four years as a water shortage trims acreage in three key states. Food minister KV Thomas on Thursday said the government is likely to take a decision on decontrolling the sugar industry before the Budget. Food ministry has proposed dispensing with the regulatory release mechanism and abolishing the levy system.
Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX Mar'13 Futures Rs/qtl Last 3188
as on Feb 26, 2013 % Change Prev. day WoW -0.39 -1.37 MoM -2.04 YoY 9.87
Rs/qtl
3068
0.07
-0.87
-3.97
6.01
Source: Reuters
International Prices
Unit Sugar No 5- LiffeMay'13 Futures Sugar No 11-ICE Mar '13 Futures $/tonne $/tonne Last 508.8 395.33
as on Feb 26, 2013 % Change Prev day WoW 0.65 -1.22 2.66 -2.36 MoM 4.54 -3.21 YoY -23.20 -31.81
.Source: Reuters
Technical Outlook
Contract Sugar Mar NCDEX Futures Unit Rs./qtl Support
3030-3050
Outlook
Sugar prices may trade in a range bound manner during the intraday as market participants may adopt wait and watch policy ahead of budget. Supplies of sugar in both domestic and international markets are huge and thus market need strong signals to bring an upside rebound in the prices. It may be in the form of sugar decontrol or yield concerns over next years output.
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Agricultural Commodities
Oilseeds
Soybean: Soybean futures declined on Tuesday taking cues from
the international markets which declined on expectation of higher South American supplies. Oil meal exports rose by almost 40 per cent to 7.68 lakh tonnes in January this year, industry body Solvent Extractors Association of India said. The export of oil meals, however declined by 18 per cent to 36.79 lakh tonnes in the first 10 months of this fiscal compared to 44.85 lakh tonnes in the year-ago period. The country exported 25.36 lakh tn soybean meal in first 10 months compared to 30.82 lakh tn in the same period last year which showing a decline of 17.72%. According to the second advance estimates, 2012-13 oilseed output is pegged at 29.4 mn tn, down by 1.1%, while soybean output is pegged higher at 12.9 mn tn, up 3.2%.
Market Highlights
Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX Mar '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX Mar '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3386 3294 702.5 689.8
as on Feb 26, 2013 % Change Prev day -0.47 -0.90 -1.49 -1.15 WoW -0.65 -3.07 -4.33 -6.06 MoM 1.62 1.18 -7.04 -5.46 YoY 30.68 28.20 -1.75 -2.39
Source: Reuters
as on Feb 26, 2013 International Prices Soybean- CBOTMar'13 Futures Soybean Oil - CBOTMar'13 Futures Unit USc/ Bushel USc/lbs Last 1448 49.02 Prev day -0.24 -2.10 WoW -1.53 -6.68 MoM 0.47 -5.91
Source: Reuters
International Markets
Soybean Futures on CBOT declined by 0.24% on Tuesday on account of higher ending stocks estimates coupled with active selling by farmers in the US Midwest. Rainfall this week in Argentina's top soyproducing province revived wilting crops as many entered important growth stages, but others were still in urgent need of rain. Argentina soybean acreage is estimated at 19.35 mn ha. U.S. farmers will harvest record soybean crops in 2013, ending three years of falling production and rebuilding nearly depleted stockpiles. German oilseeds analyst Oil World on Tuesday cut its forecast of the 2013 soybean harvest in Argentina by 2 mn tn to 50 mn tn from its Jan estimates because of dry weather, but has raised its forecast of Brazil's soybean crop by 0.5 mn tn.
as on Feb 26, 2013 % Change Prev day WoW -1.32 -0.44 -4.75 -0.98
Unit
CPO-Bursa Malaysia Mar '13 Contract CPO-MCX- Feb '13 Futures
MYR/Tonne Rs/10 kg
Refined Soy Oil: Ref soy oil and CPO declined sharply on higher
global production estimates of palm oil by oil world. Expected higher soy oil stocks in the US also exerted downside pressure on the prices. Global palm oil output is estimated at 55.3 mn tn in 2012-13, up by 3.4 mn tn. U.S. soybean processors say they have been pleasantly surprised by the high oil content of the latest U.S. soybean harvest, a factor that has contributed to strong profit margins and should pad year-end soy oil inventories. India's vegetable oil imports soared 27 percent from a month ago to an all-time high in January on purchases of cheap palm oil. To curb imports, the tariff value of crude palm oil, the edible oil India imports most, has been raised from $ 815 a tonne to $ 848 a tonne, a rise of 4.04%.
Source: Reuters
RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX Apr'13 Futures Rs/100 kgs Rs/100 kgs Last 3656 3401 Prev day -2.21 -0.82
Outlook
Soybean may trade sideways with a negative bias tracking weak international markets. However, lower supplies in the domestic markets support the prices. Mustard seed may remain weak on expectations arrivals to improve soon along with increase in output estimates. CPO may trade on a mixed note. Prices may rise on expectations of palm oil exports to improve gradually while output may fall due to seasonally lower yield. However, higher production estimates may pressurize prices.
Source: Telequote
Technical Outlook
Contract Soy Oil Mar NCDEX Futures Soybean NCDEX Mar Futures RM Seed NCDEX Apr Futures CPO MCX Feb Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl
valid for Feb 27, 2013 Support 681-686 3245-3272 3360-3380 455-459 Resistance 695-701 3325-3350 3420-3440 463-466
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Agricultural Commodities
Black Pepper
Pepper March Futures declined yesterday extending previous days losses on account improvement in the arrivals of the new crop. Low stocks, thin supplies and delayed harvesting due to lack of skilled laborers have led to a rise in the prices over the last couple of weeks. Harvesting of the fresh crop is going in and is expected to gain momentum in the coming days. Food Safety and Standards Authority of India sealed the entire quantity of pepper stored in six warehouses in Kerala of about 8,000 tonnes. Exports demand for Indian pepper in the international markets is also weak due to price parity. The Spot as well as the Futures settled 0.96% and 0.9% lower on Tuesday. According to a circular issued by NCDEX on 09/02/2013, launch of June 2013 expiry contract in Pepper which is scheduled on February 11, 2013, has been postponed till further notice. The revised launch date will be announced in due course. Spices Board has announced plans to import high yielding Madagascar variety that was behind the record productivity in Vietnam. It could raise productivity of Indian pepper from 2,000 kg/ha to 7,000 kg/ha. Pepper prices in the international market are being quoted at $7,500/tn(C&F Europe). Vietnams Austa is quoted at $6,925-6,975/tn, Indonesia GM-1 is quoted at $6,900/tn and Brazil Austa is quoted at $6,600/tn.
Market Highlights
Unit Pepper SpotNCDEX (Kochi) Pepper- NCDEX Mar'13 Futures Rs/qtl Rs/qtl Last 39743 37070 % Change Prev day -0.96 -0.90
as on Feb 26, 2013 WoW -3.17 -10.46 MoM -0.09 -2.92 YoY 9.36 0.58
Source: Reuters
Technical Outlook
Contract Black Pepper NCDEX Mar Futures Unit Rs/qtl
Outlook
Pepper may trade on a mixed note today. Low stocks coupled with thin arrivals may support prices. However, improvement in arrivals may pressurize prices. Reports that farmers are holding back stocks may also support prices at lower levels.
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Agricultural Commodities
Jeera
Jeera Futures declined sharply yesterday as the increasing arrivals of the new crop have pressurized prices over the last few days. The arrivals of new crop are around 10,000-14,000 bags/day and are expected to increase in the coming days. Higher sowing as well as conducive weather in Gujarat, the main jeera growing region has increased output expectations. According to Gujarat State Agri Dept. sowing in Gujarat is reported at 3.244 lakh ha till Jan, 2013 compared with 3.64 lakh ha last year. In Rajasthan, sowing is expected to increase by 10-15%. The spot as well as the Futures settled 0.1% and 0.29% lower on Tuesday. According to markets sources about 75% exports target has already been achieved due to a supply crunch in the global markets. Supply concerns from Syria and Turkey still exists. Expectations are that export orders may still be diverted to India from the international markets due to lack of supplies from Syria on back of the ongoing civil war. Production in Syria and Turkey is being reported around 17,000 tonnes and around 4,000-5,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,975-$3,000 tn (c&f) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 5-6 lakh bags.
Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX Mar '13 Futures Rs/qtl Rs/qtl Last 13419 12885 Prev day -0.10 -0.29
as on Feb 26, 2013 % Change WoW -3.54 -4.06 MoM -4.80 -4.17 YoY -6.29 -7.10
Source: Reuters
Market Highlights
Prev day -0.60 -0.03
Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX Apr '13 Futures Rs/qtl Rs/qtl
Outlook
Jeera Futures is expected to continue to trade lower as higher arrivals may pressurize prices. However, fresh overseas demand at lower levels may support prices at lower levels. In the medium term, prices are likely to stay firm as Syria and Turkey have stopped shipments.
Turmeric
Turmeric Futures traded on a mixed note yesterday. Lower output expectations supported prices at lower levels while higher supplies of the new crop coupled with higher carryover stocks pressurized prices. Prices have gained over the last few days due to some unseasonal rains in Andhra Pradesh coupled with output concerns. There is good demand from local buyers and stockists. The Spot settled as well as the Futures settled 0.6% and 0.03% lower on Tuesday.
Source: Telequote
Technical Outlook
Unit Rs/qtl Rs/qtl
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Agricultural Commodities
Kapas
After witnessing short coverings, Kapas prices continued with its upward trend and settled 1.33% higher on Monday. MCX march Cotton also settled 0.28% higher. Prices are on an uptrend as government last week decided to continue with current cotton exports policy. However, sufficient supplies pressurized prices at higher levels. Traders expect exports to cross governments estimates of 8 mn bales. Cotton supplies since the beginning of the year in October 2012 until February 10, 2013 were down at 183.4 lakh bales, down from 189.27 lakh bales a year earlier.
Market Highlights
Unit Rs/20 kgs Rs/Bale Last 993 17850
as on Feb 26, 2013 % Change Prev. day WoW 1.33 7.24 0.28 3.06 MoM 9.30 3.06 YoY #N/A 6.50
Source: Reuters
International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 80.33 81.35
as on Feb 26, 2013 % Change Prev day WoW 0.14 -2.25 0.00 0.00 MoM -0.24 0.00 YoY -12.36 -29.20
Source: Reuters
Source: Telequote
Outlook
Source: Telequote
Kapas/Cotton prices might trade with upward bias on expectations that China may release higher import quota which might boost imports. Also, expected lower US cotton acreage and output in 2013-14 may also support prices at lower levels.
Technical Outlook
Contract Kapas NCDEX April Futures Cotton MCX Feb Futures Unit Rs/20 kgs Rs/bale
valid for Feb 27, 2013 Support 960-975 17750-17940 Resistance 1000-1018 18260-18380
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