Commodities Daily Report

Wednesday| June 12, 2013

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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Commodities Daily Report

Wednesday| June 12, 2013

Agricultural Commodities
News in brief
Withdrawal of Special Margin in Coriander (DHANIYA) contracts
As per a circular dated 11 June 2013, special margin of 10% on the Long Side in Coriander (SYMBOL: DHANIYA) will be withdrawn with effect from beginning of day Wednesday, June 12, 2013. (Source: NCDEX)
th

Market Highlights (% change)

Last Prev. day

as on June 11, 2013

WoW MoM YoY

Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz

19143 5789 58.34 95.38 1377

-1.53 -1.52 0.32 -0.41 -0.66

-2.06 -2.21 3.27 2.22 -1.44

-2.79 -3.20 6.39 0.22 -4.01

14.85 14.54 4.74 15.33 -13.69

NMCE launches modified black pepper contract

The National Multi Commodity Exchange has launched modified black pepper contract by launching six contracts from July to December. In this new specification, the black pepper has to be free from mineral oil. Central Warehousing Corporation will accept the delivery at designated centres of Kottayam, Kozhikode, Vandanmedu, Thrissur with Kochi as the basis centre. At Vandanmedu, the Spices Boards facilities can be used for grading black pepper from un-garbled to MG1. NMCE will form an independent team of quality experts consisting of quality expert from Spices Board, officer from regional office of CWC and NMCE representative for periodical check of the quality of black pepper in the exchange certified warehouses. (Source: Business Line)

.Source: Reuters

Better prices seen driving soybean acreage this kharif

Planting of soyabean is set to begin in the key producing State of Madhya Pradesh over the next couple of days as monsoon advances further into parts of central India. Relatively higher realisations from the oilseed may prompt farmers to plant more of soyabean, which may continue to displace cotton in some parts of Maharashtra and groundnut in Gujarat, trade sources said. We expect a five to seven per cent increase in soyabean area and it could even go up further, said Rajesh Agarwal, spokesperson for the Indore-based Soyabean Processors Association of India (SOPA). Last year, despite the delayed and erratic monsoon, soyabean was planted on a record 10.6 million hectares (mh) a marginal increase over previous years 10.3 mh. The output, according to the latest or third advance estimates, stood at 14.14 million tonnes (mt), up from 12.21 mt in the previous year. (Source: Business Line)

Cotton Planting in India Seen Increasing on Early Monsoon Rains

Farmers in India, the worlds second-largest cotton grower, may plant more of the crop than estimated after monsoon rains covered the main growing regions early, easing a drought that cut production the previous year. The area under the crop in the 12 months starting Oct. 1 may match 11.77 million hectares (29 million acres) in 2012-2013. Prospects for better yields and a jump in inventories may boost Indias exportable surplus, potentially pressuring prices in New York that climbed 13 percent this year, the biggest gain among the 24 commodities tracked by the Standard & Poors GSCI Spot Index. Global output will drop 4.8 percent in the season starting Aug. 1, while demand climbs 2.3 percent, the International Cotton Advisory Committee estimates. Dry weather is hampering crops in Texas, the biggest U.S. growing state. Farmers have sown 1.17 million hectares as of June 7, compared 1.18 million hectares a year earlier, according to data from the Agriculture Ministry. The harvest dropped about 4 percent to 34 million bales of 170 kilograms each this season, the state-run Cotton Advisory Board said on April 17. Exports may total 9.5 million bales this year, more than the governments estimate of 8.1 million bales. (Source: Bloomberg)

China approves imports of GM soybean from Brazil

China, the main buyer of Brazilian soybeans, has approved imports of three genetically modified varieties of the crop, to be produced on a large scale in the South American country. The Agriculture Ministry said Monday that China gave its green light for the Intacta RR2 PRO variety, which can resist pests such as a type of caterpillar, as well as for the herbicide-resistant CV 127 and Liberty Link. Many Brazilian soybean producers were awaiting China's approval before embarking on production of these genetically modified varieties. Of the 7.2 million tons of soybean exported by Brazil in April, more than 5.6 million went to China. Brazil, which is poised to overtake the United States as the world's leading soybean producer, plans to produce 81.3 million tons during the 2012-2013 harvest, 10.9 percent more than in the previous year. China, the world's most populous nation with 1.3 billion people and the world's second biggest economy, is Brazil's leading partner in the farming sector, importing around $15 billion of agricultural products, mainly soybeans.
(Source: Factiva)

Sugar output could dip 10% in 2013-14 to 22 mt: K V Thomas

Union Food Minister K V Thomas said that sugar output in the country was projected to drop 10 per cent to 22 million tonnes (mt) in the 201314 marketing year starting October, mainly due to lower output in drought-affected states. Output is likely to be affected, especially in Maharashtra and Karnataka, he added. Production in the next year would be just enough to meet the annual demand of 22 mt. But there would not be any problem of sugar supply as the country would have good quantity of carryover stock, he said. Sugar production of India, the world's second largest producer and biggest consumer, in the ongoing 2012-13 marketing year (October-September) is pegged at 24.5 mt and could even reach 25 mt. The latest estimate on sugar output is almost in line with those of US Department of Agriculture (USDA), which recently projected an eight per cent fall in India's sugar production at 23.2 million tonnes for 2013-14 marketing year. According to the USDA, sugar production could decline by 26 per cent in Maharashtra to 5.87 million tonnes and 14 per cent in Karanataka at 2.69 million tonnes in 2013-14.
(Source: Business Standard)

Wheat Rises on U.S. Crop Concerns

Wheat futures rose, halting the longest slump in four months, on concern that U.S. supplies will be cut after drought damaged winter crops and rain delayed planting of spring varieties. Corn and soybeans also gained. About 31 percent of the winter-wheat crop was in good or excellent condition as of June 9, compared with 53 percent a year earlier, the U.S. Department of Agriculture said yesterday. The agency probably will report tomorrow that output will fall 11 percent to 1.468 billion bushels, the lowest since 2006, a Bloomberg survey of analysts showed. (Bloomberg)

Sugar output in Maharashtra seen down 25 per cent y/y

Sugar output in top producing Maharashtra state is likely to fall by 25 percent year-on-year to 6 million tonnes in 2013/14 as drought reduced the acreage under the crop, a state official said. The sharp drop in output in the western state will bring down the country's total sugar production and could lead to higher imports in the 2013/14 marketing year starting Oct. 1. After a drought in 2009, sugar production fell sharply, forcing India to make big purchases from overseas markets and pushing the price of raw sugar futures to 30-year highs. (Source: Reuters)

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Commodities Daily Report

Wednesday| June 12, 2013

Agricultural Commodities
Chana
Chana Spot as well as July futures recovered from lower levels yesterday on account of short coverings and settled 0.45% and 0.69% higher respectively on Tuesday. Lower level buying by stockists also supported prices. However, comfortable supplies have capped sharp upside. Normal monsoon exerted downside pressure on the prices. Favorable progress and distribution of monsoon has raised hopes of kharif Pulses sowing which is also exerting downside pressure on the prices. Sowing of kharif pulses was adversely impacted last year due to deficient rains Also, timely arrival of monsoon this year has led to marginal improvement in water storage levels at major reservoirs.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3200 3167 Prev day 0.45 0.57

as on June 11, 2013 % change WoW MoM -2.71 -5.19 0.00 -4.41 YoY -24.20 -22.34

Chana Spot - NCDEX (Delhi) Chana- NCDEX June'13 Futures

Source: Reuters

Technical Chart - Chana

NCDEX July contract

Demand supply scenario

Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. Chana sowing in 2012-13 was 5.65% higher at 95.17 lakh ha compared to previous year. According to third advance Estimates released on 3 May 2013, Total pulses output for 2012-13 season has been pegged at 18 mn tn, up 5.76% compared to previous year. The target for 2012-13 pulses crop output was set at 18.24 million tonne during the year. Out of the total pulses output, kharif output is estimated at 4.03% lower at 5.95 mn tn while rabi pulses output is pegged 9.25% higher at 12.05 mn tn compared with the final estimates of 2011-12. Chana output is pegged marginally lower to 8.49 mn tn compared with its second advance estimates of 8.57 million tonnes. However, chana output is expected to breach its 2010-11 record output of 8.2 mn tn in 2012-13. Erratic weather in M.P. lowered the yield.
Source: Telequote
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Technical Outlook
Contract Chana July Futures Unit Rs./qtl Support

valid for June 12, 2013 Resistance 3230-3250

3155-3180

Trade Scenario
According to IBIS, imports of chana in the month of April declined to 0.04 lakh metric tonnes compared to 0.11 lakh metric tonnes during the previous month. 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.

Outlook
Chana may trade on a mixed note today. Higher supplies coupled with a good monsoon progress may keep prices under check. However, prices may find support at lower levels as stockists are buying to create inventories. Seasonal pattern in chana indicates that prices generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. Thus, going forward downside seems to be limited as prices are near their MSP levels.

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Commodities Daily Report

Wednesday| June 12, 2013

Agricultural Commodities
Sugar
After witnessing some profit taking in the previous session, sugar futures recovered yesterday and settled 0.9% higher in the July contract. Prices have gained on account of good demand from the stockists coupled with concerns about cane output in the coming season due to drought conditions in Maharashtra. Expectations an increase in the import duty also helped push up the prices. The recent rains in the drought affected sugarcane areas in the Southern and Western part of the country coupled with higher supplies have capped the upside. According to the Ministry of Agriculture, Sugarcane has been planted in 42.09 lakh ha as compared to 46.78 lakh ha as drought affected Maharashtra and Karnataka have reported lower area. The government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector in the last month. The Minimum Initial Margin has been revised to 5% of the value of the contract or VaR based margin whichever is higher and will be imposed on all running contracts and yet to be launched contracts w.e.f beginning of trading day Monday, May 13, 2013.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX June '13 Futures Rs/qtl Last 3072

as on June 11, 2013 % Change Prev. day WoW 0.51 0.52 MoM 0.26 YoY 5.69

Rs/qtl

3090

0.29

1.58

1.38

9.30

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 476.4 362.00

as on June 11, 2013 % Change Prev day WoW -0.58 -0.55 -0.10 -0.55 MoM -2.02 -6.75 YoY -18.91 -20.42

.Source: Reuters

Technical Chart - Sugar

NCDEX July contract

Domestic Production and Exports

According to ISMA, Indias Sugar production between October-April stood at 24.52 mn tn, lower by 3% during the same period last year. Maharashtras production dipped 10% to 8 mn tn while production in Uttar Pradesh increased by 7% to 7.43 mn tn. India is likely to produce 24.6 mn tn of sugar in 2012-13 year ending on Sept. 30, higher than the previous estimate of 24.3 mn tn, the Indian Sugar Mills Association (ISMA) said. With the opening stocks of 6.5 mn tn, domestic Sugar supplies are estimated at higher against the domestic consumption of around 22.5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly.

Global Sugar Updates

LIFFE sugar as well as while Raw sugar on the ICE touched a three year low and settled 0.58% and 0.55% lower on Tuesday on account of huge supplies from Brazil. Prices have declined due to three years of back to back sugar surplus. Unica reported a fall in the output in the second half of May due to late rains in Brazil and a shift towards ethanol production. Raw Sugar open interest has climbed to a 5 year high. The ISO has forecast sugar surplus of atleast 3.5 mn tonnes for 2013-14 season. Reports that China may curb imports as their stocks have more than doubled last season have also added to the downside. However, there are reports that demand from Brazil's resurgent biofuels industry will cut burgeoning global sugar surplus, helping cushion prices that fell below 17 cents per lb for the first time in almost three years. According to Unica, South-Central Brazil cane crush projected at 589.60 million tons for 2013/2014. Main center-south sugar cane crop will produce a record 35.5 mn tn of sugar in the 2013/14 season, higher by 4.1% compared to 34.1 mn tn last year.

Source: Telequote

Technical Outlook
Contract Sugar July NCDEX Futures Unit Rs./qtl Support

valid for June 12, 2013 Resistance 3155-3170

3100-3125

Outlook
Sugar futures may trade higher today due to demand from stockists coupled with output concerns this season. Expectations of imposition of import duty may also support prices. However, weak international prices may cap upside. Also good rains in the cane growing regions in Southern and Western part of the country may pressurize prices at higher levels.

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Commodities Daily Report

Wednesday| June 12, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean July futures opened higher tracking weakness in
the Rupee. However, prices declined from higher levels as the good progress of monsoon and thereby hopes of better sowing in the coming season pressurized prices at higher levels. The planting of kharif oilseeds such as groundnut, sesame and castor has started in states such as Andhra Pradesh, Karnataka and Tamil Nadu. Soybean sowing shall commence this week with good monsoon over Maharashtra since last couple of days. Indias soy meal exports for the month of May 2013 were 0.97 lakh tonnes, lower by 29.74 percent from 1.39 lakh tonnes a year ago. According to the 3rd advance estimates, Soybean output is pegged at 14.14 mn tonnes. IMDs forecasts of normal monsoon have raised hopes of better output next season too. International Markets CBOT Soybean traded on a positive note and settled 1.9% higher on Tuesday on account of tight supplies of soybean in the US. Soybean planting has been delayed due to heavy rains in the US Midwest and is reported at 71% as against 57% last week. However, it is much lower as against 97% last year and 5 year average of 84%. Large South American crop coupled with forecasts for US weather to improve in the coming week have capped pressurized prices at higher levels. Argentinas agriculture ministry has cut its 2012/13 forecast to 50.6 mn tn from its April forecast of 51.3 mn tn. China is forecast to import a record 66 mn tn of soy in 2013/14, 11% higher than the estimates of current season, driven by robust domestic demand and low stocks.
International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1541 48.04

Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX June '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX June '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3900 3768 712.5 710.8 Prev day 0.65 -0.36 0.66 0.29

as on June 11, 2013

WoW 1.51 0.16 -0.01 0.75

MoM -3.08 -6.21 -1.69 -1.06

YoY 13.34 10.84 -0.65 -1.18

Source: Reuters

as on June 11, 2013 Prev day 1.90 -0.06 WoW 0.77 -1.13 MoM 3.51 -2.30 YoY 8.12 -3.42

Source: Reuters

Crude Palm Oil

as on June 11, 2013 % Change Prev day WoW 0.17 0.14 3.21 3.62

Unit
CPO-Bursa Malaysia June '13 Contract CPO-MCX- June '13 Futures

Last 2415 500.4

MoM 5.46 5.99

YoY -18.41 -9.15

MYR/Tonne Rs/10 kg

Refined Soy Oil: Ref soy oil July contract as well as CPO corrected
from higher levels as Rupee recovered from an all time low towards the end of the session and settled 0.12% lower and 0.14% higher respectively on Tuesday. Palm stocks in Malaysia and Indonesia are expected to decline & demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products in May declined 3.4% to 1,248,014 tn from 1,292,371 tn shipped during April. It is expected that output in Malaysia, the world's second largest producer, to slow this month and help to further ease stocks that have dipped below the psychological 2 million tn mark to 1.93 million tn in April. India's palm oil imports declined for a third straight month in April. But India, the world's largest importer of edible oils, is still on track to surpass last year's record purchases of 10 million tonnes of cooking oil as demand rises.

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX June '13 Futures Rs/100 kgs Rs/100 kgs Last 3532 3525 Prev day 0.26 0.28 WoW 0.63 1.12

as on June 11, 2013 MoM 2.89 1.44 YoY -7.67 -4.21

Source: Reuters

Technical Chart Soybean

NCDEX July contract

Rape/mustard Seed: Mustard July Futures settled 0.17% lower on

Tuesday on account of profit taking. Downside seems to be limited in Mustard seed as prices may start recovering with declining supplies. Huge supplies of the new crop coupled with higher output estimates had led to a sharp decline in the prices in the last month. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%. Outlook Soybean may remain under downside pressure tracking good progress of monsoon along with weak meal export demand. However, poor supplies and a weak Rupee may support prices at lower levels. Mustard may remain firm on account of declining arrival pressure. Soy oil as well as CPO may continue to gain due to lower yield period. Higher international prices may also support prices.
Source: Telequote

Technical Outlook
Contract Soy Oil July NCDEX Futures Soybean NCDEX July Futures RM Seed NCDEX July Futures CPO MCX June Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl

valid for June 12, 2013 Support 688-691 3755-3770 3520-3535 494-497 Resistance 698-702 3800-3820 3565-3580 505-509

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Commodities Daily Report

Wednesday| June 12, 2013

Jeera Agricultural Commodities

Jeera Futures traded on a mixed note yesterday. Prices gained in the initial part of the day on account of export demand. However, good supplies pressurized prices at higher levels and settled 0.23% lower on Tuesday. Currently, about 25-30% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices have declined sharply over the last few months on the back of higher production estimates. Due to the ongoing geo-political tensions in Syria and Turkey, supply concerns from these two major exporting countries still exist. Export orders may still continue to be diverted to India 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 4,0005,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,450 tn (FOB Mumbai) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 8-9 lakh bags.

Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX June '13 Futures Rs/qtl Rs/qtl Last 13435 12910 Prev day -0.24 -0.12

as on June 11, 2013 % Change WoW -0.41 -1.41 MoM -0.19 -0.25 YoY -0.05 0.78

Source: Reuters

Technical Chart Jeera

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 11,000 bags on Tuesday. Production of Jeera in 2012-13 is expected around 40-42 lakh bags (55 kgs each), marginally higher than 40 lakh bags last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)

Outlook
Jeera is expected to decline today as higher arrivals may pressurize prices. However, fresh export demand may support prices at lower levels. Overall trend remains positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.
Source: Telequote

Market Highlights
Prev day -2.11 -1.12

as on June 11, 2013 % Change

Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX June '13 Futures Rs/qtl Rs/qtl

Last 5474 5288

WoW -6.63 -6.93

MoM -9.66 -9.36

YoY 55.23 47.54

Turmeric
Turmeric July continued to decline and hit a fresh contract low of Rs. 5266 on account of huge carryover stocks coupled with weak demand and good monsoon prospects and settled 1.85% lower on Tuesday. NCDEX issued a circular whereby the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. The regulator also withdrew special margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. Special Margin of 10% on the Long Side on all the running contracts in Turmeric have been withdrawn w.e.f Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 2,500 bags and 3,500 bags on Tuesday. Exports of Turmeric between Apr 2012Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Turmeric production in 2012 is estimated lower by 40-50% at around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 was at a historical high of 10.62 lakh tn. It is estimated that current years (2012-13) carryover stocks would be around 10 lakh bags. (1 bag= 75 kgs) Outlook Turmeric is expected to trade lower today as higher stocks with farmers coupled with huge carryover stocks may continue to pressurize prices. However, declining arrivals as farmers may not sell their stocks at such low prices may support prices. Expectations of improvement in export demand may also support prices at lower levels.
Source: Telequote

Technical Outlook
Unit Jeera NCDEX July Futures Turmeric NCDEX July Futures Rs/qtl Rs/qtl

Valid for June 12, 2013

Support 12810-12950 5204-5258 Resistance 13240-13400 5374-5436

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Commodities Daily Report

Wednesday| June 12, 2013

Agricultural Commodities
Kapas
Kapas as well as MCX Cotton prices traded on a mixed note yesterday. Upbeat sentiment across cotton markets coupled with a weak Rupee supported prices. However, good sowing of cotton in North India pressurized prices at higher levels. Overall sentiments for Cotton remain positive on account of thin supplies in the physical markets and good demand for yarn since past 3-4 weeks. With the cotton season nearing its end, arrivals have declined considerably. Cotton supplies since the beginning of the year in October th 2012 until 26 May, 2013 were down at 311.17 lakh bales, down from 320.82 lakh bales a year earlier.

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1072 19130

as on June 11, 2013 % Change Prev. day WoW 0.14 -1.29 -0.31 1.32 MoM YoY 3.58 12.43 1.32 21.46

NCDEX Kapas Apr Futures MCX Cotton June Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 88.06 93.9

as on June 11, 2013 % Change Prev day WoW 1.63 4.14 0.75 2.62 MoM 0.16 -1.16 YoY 17.27 13.61

Sowing Progress
Cotton planting has been reported at 11.86 lakh ha as against 10.4 lakh ha during the same period last year. Higher sowing is report from Punjab and Haryana while a decline has been reported in Rajasthan. Sowing in the rain fed areas of Southern India has also commenced while in the central India it will gain pace with the progress of monsoon.

Source: Reuters

Domestic Production and Consumption

Technical Chart - Kapas

th

NCDEX April contract

Cotton Advisory Board in its latest meet dated 17 April 2013 has projected cotton crop at 34 mn bales for 2012-13 season compared to the previous estimates of 33 mn bales. Mill consumption is expected to go up from 22.3 million bales last year to 23.5 million bales. Exports are estimated at 8.1 mn bales while imports are estimated 2.5 mn bales. However, Cotton Association of Indias estimates differ from that of the cotton advisory board which pegs cotton output for 2012-13 at 35.2 million bales as on May 31 down 6% compared with 37.3 million bales in 2011-12.

Global Cotton Updates

ICE Cotton futures gained 1.63% on Tuesday and traded around the highest levels in three months on account of merchant buying as market expects a supply squeeze ahead of the July expiry as well as lower than expected carryover stocks. Concern that a persistent drought will reduce output in Texas, the top U.S. producer also supported prices. Further, lower planting is also supporting an upside in the cotton prices. Plantings were reported at 88% v/s 95% last week, 5 year avg of 92%. China cotton imports declined 18.5% in April compared to March. The USDA monthly crop report forecast a sharp rise in the in the cotton stockpiles by almost 10%. The U.S. Department of Agriculture has forecast global cotton stockpiles will rise almost 10 percent to a record high in 2013/14, pushing prices lower and reinforcing concerns about stagnating demand in China, the world's No. 1 textile market. According to the USDA report, planting intentions for the 2013-14 season are said to be at a 4 year low. Also, there are expectations of good export demand from China. Reports of India and China releasing stocks from the state reserve led to a decline in the prices.
Source: Telequote Source: Telequote

Technical Chart - Cotton

MCX June contract

Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX June Futures Unit Rs/20 kgs Rs/bale

valid for June 12, 2013 Support 1060-1065 18830-18950 Resistance 1076-1083 19250-19400

Outlook
Cotton may trade on a positive note today as thin supplies and good demand for yarn may support an upside in the prices. Further, international markets have turned positive on expectations that lower planting in US coupled with persistent drought in Texas may lower productivity.

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