The Cotton Association of India notes with disappointment the movement by certain sectors of the cotton chain to restrict and even ban Cotton exports. Such recommendations if implemented would bring the country back to the pre-liberalisation era of the 1980’s and early 1990’s.
Any such move will adversely affect the interest of the nation in general and that of the Indian farmer in particular. While the Indian farmer has the protection of a guaranteed MSP, this should not be the reason to prevent him realising a value for his produce which is equal to his counterpart in USA, China, Uzbekistan or several African nations.
India is expected to produce 305 lakh bales and import 7 lakh bales in the 2009-10 season and therefore despite exporting close to 70 lakh bales, after providing for domestic consumption of 240 lakh bales the season will end with a closing stock of around 73.50 lakh bales which will provide for a healthy 3.5 months of consumption.
Local prices have risen lately only in reaction to high prices in the international markets which have gone up by around 15 % in the last one month. It is noteworthy that Indian prices have gone up by less than 10% in the same period.
Unreasonably pessimistic estimates of the crop in a season which has witnessed the highest cotton acreage in history ( 100 lakh hectares) will only cause panic in the market and lead to higher prices.
Despite the rise in prices locally, Indian mills continue to get cotton cheaper than almost any of their counterparts in the world. Over and above this Indian mills have the option to import cotton without any restrictions and nil import duty unlike their competing counterparts in other countries for eg. China where mills have to face quota restrictions, duties and local taxes to import cotton.
It is highly inappropriate that when the spinning industry does not possess adequate capacity to process all the raw cotton produced in the country it should propose any restriction on export of the available surplus. Such a step would only result in the Indian farmer subsidising the Indian spinner.
The theory of ‘value added’ being raised is self contradicting. While cotton is the raw material to make yarn which is spun from it, yarn itself is the raw material for fabric and garments. Both yarn and fabric continue to be freely exportable. However, if one goes by the ‘value added’ theory this should not be the case.
Cotton acreage which has seen a rising trend recently will receive a setback if farmers do not receive a fair price as per international levels as a result of the proposed restrictions on exports.
Reports emerging from the upcountry markets show that this year is again going to see a high quality crop which will be available till the end of the season.
The country is likely to see a very comfortable stock to use ratio of 0.24 at the end of the season. While comparing the ratios with that of other countries one needs to bear in mind that India is a cotton producing country unlike Bangladesh, Taiwan etc which do not produce any cotton. Again India is a net exporting country unlike China, Pakistan or Turkey which are all net importing countries. Also the ratio for India pertains to the October-September period in comparison to the International norm of August-July period. In fact of late, cotton begins to arrive in India even before the statistical season commences on 1st October.
All in all the cotton season 2009-2010 promises to be one with a comfortable position of availability both for the domestic and export markets.
Friday, November 13, 2009
Tuesday, October 27, 2009
Latest Cotton Estimate
Cotton Association of India (CAI) released its September estimates (as on 30th September 2009) of the Cotton Crop for the season 2009-10. CAI estimated the Cotton Crop for the new season at 312.75 lakh bales, marginally higher than last months estimates. The projected Balance Sheet drawn by the CAI for the year 2009-10, estimated the total cotton supply at 391.25 lakh bales, while the domestic consumption was estimated at 250.00 lakh bales, thus leaving a surplus of 141.25 lakh bales. The CAI estimated the cotton exports during 2009-10 season at 70.00 lakh bales. A statement containing the State-wise estimates of Crop and Balance Sheet for the season 2009-10 is enclosed.The impact of flood situation in the States of Andhra Pradesh and Karnataka has not been severe. Yield is a cause of concern because of erratic rains although any decrease in yield is likely to be made up by historical high acreage under cotton close to 100 lakh hectares. Even with higher exports estimated for this season, carry-over stock at the end of the season would be quite comfortable resulting in one of the highest stock-to-use ratio in recent times.
Wednesday, July 22, 2009
MCX resumes trading in gasoline futures
Mumbai: Multi Commodity Exchange of India Ltd (MCX) on Wednesday launched its futures trading in gasoline contracts. MCX is the first exchange in the country to launch the full basket of energy products including crude oil, heating oil and natural gas.
Initially, Gasoline July, August and September 2009 contracts are available for futures trading from Wednesday. On the first day of trading, July, August and September contracts prices were traded at Rs 93, Rs 92.25 and Rs 88.85 per US gallon (3.78 litre). “After crude oil and natural gas futures, gasoline contracts will be the better option in the energy basket for trading as gasoline prices share a great correlation with crude oil prices world over,” a leading analyst said. “The correlation is over 90%. To make the most of this, refiners in developed countries use crude oil and gasoline futures contracts collectively to lock-in their refinery margin. The same can be done for heating oil also as price correlation in that case is around 99%,” he said.
At present, the New York Mercantile Exchange has liquid contracts in gasoline. (Source: FE).
Initially, Gasoline July, August and September 2009 contracts are available for futures trading from Wednesday. On the first day of trading, July, August and September contracts prices were traded at Rs 93, Rs 92.25 and Rs 88.85 per US gallon (3.78 litre). “After crude oil and natural gas futures, gasoline contracts will be the better option in the energy basket for trading as gasoline prices share a great correlation with crude oil prices world over,” a leading analyst said. “The correlation is over 90%. To make the most of this, refiners in developed countries use crude oil and gasoline futures contracts collectively to lock-in their refinery margin. The same can be done for heating oil also as price correlation in that case is around 99%,” he said.
At present, the New York Mercantile Exchange has liquid contracts in gasoline. (Source: FE).
Guar seed futures to remain firm on lower acreage
Mumbai: Guar seed futures prices on the National Commodity & Derivatives Exchange (NCDEX) may remain firm over the next few days on reports of below average monsoon forecast and expected fall in acreage in the upcoming sowing season.
NCDEX August 2009 contracts rose by nearly Rs 70 to trade at Rs 1,903 per quintal on Wednesday over past two days on lower sowing acreage in guar growing areas and lower stocks.
“There are no reports of rains in Rajasthan. Sowing has just started across Rajasthan with slow pace. Only 10-15% sowing is done till date against the normal 50-55%,” a local trader said.
Futures prices hit upper circuit on Tuesday and gained nearly 3.5% over past two days on strong market sentiments thanks to below normal monsoon forecast for season June-September 2009 and drop in the acreage under guar. “Sowing of guar, which normally takes place between May 15 and continues till Mid-June was delayed this year. Drastic fall in acreage under guar has also been witnessed across North Rajasthan,” analyst with Angel Broking said.
Met department has predicted that the monsoon in the Northwest India (which is the main guar belt) is only 81% which will affect the output of guar in the coming season, analyst said.
“A delay in monsoon will also affect the sowing and output which can push guar prices further up,” Tarun Satsangi, AVP, Bonanza Commodity said.
“Technically, guar can see a pullback in prices and it can touch trend line support of Rs 1,846 from where prices can again get into bullish momentum and prices can once again surge towards Rs 1,922 and then towards Rs 1,956 in the near term, he said. (source: FE)
NCDEX August 2009 contracts rose by nearly Rs 70 to trade at Rs 1,903 per quintal on Wednesday over past two days on lower sowing acreage in guar growing areas and lower stocks.
“There are no reports of rains in Rajasthan. Sowing has just started across Rajasthan with slow pace. Only 10-15% sowing is done till date against the normal 50-55%,” a local trader said.
Futures prices hit upper circuit on Tuesday and gained nearly 3.5% over past two days on strong market sentiments thanks to below normal monsoon forecast for season June-September 2009 and drop in the acreage under guar. “Sowing of guar, which normally takes place between May 15 and continues till Mid-June was delayed this year. Drastic fall in acreage under guar has also been witnessed across North Rajasthan,” analyst with Angel Broking said.
Met department has predicted that the monsoon in the Northwest India (which is the main guar belt) is only 81% which will affect the output of guar in the coming season, analyst said.
“A delay in monsoon will also affect the sowing and output which can push guar prices further up,” Tarun Satsangi, AVP, Bonanza Commodity said.
“Technically, guar can see a pullback in prices and it can touch trend line support of Rs 1,846 from where prices can again get into bullish momentum and prices can once again surge towards Rs 1,922 and then towards Rs 1,956 in the near term, he said. (source: FE)
Wednesday, June 3, 2009
Chana futures to remain weak on higher stocks
Mumbai: Chana futures prices on the national commodity bourses may remain weak over the next few days on higher stocks with exchange warehouses supported by continued imported inflows of pulses. Overall demand from local buyers is limited.
Chana futures on NCDEX fell by nearly 12% to trade at Rs 2,119 per quintal on Monday over last month mainly on increased supplies amid restricted buying from basan mills.
Chana prices also fell by Rs 20 to 2,125 per quintal on Monday at Delhi market with daily inflows of about 3,500-4,000 bags.
“Rising stocks in exchange warehouses and higher output estimates by the government pushed the chana futures prices lower,” analyst with Bonanza Commodity Broker said. Demand from millers remained steady, he said.
Warehouse stocks in the NCDEX has risen around 56% in the month of May and stood at 84,154 tonne, as per latest exchange data.
Sowing of kharif pulses including tur, urad and moong may commence in the coming weeks and given the higher prices of these pulses, a higher acreage this season could not be denied.
Spot prices of urad, tur and masoor are ruling higher than chana prices in the northern markets. It can be noted that only yellow peas’ prices are ruling lower than chana due to government intervention. “A stronger rupee that made imports cheaper was nullifying impact of lower arrivals. State run agencies have contracted to import of 64,000 tonne of pulses for 2009-10,” Anand James, senior analyst with Geojit Comtrade, said.
Government agencies had contracted 1.03 million tonne of pulses in the previous year and 9.28 lakh tonne have landed in the country, according to government agencies. “We expect chana prices to remain weak in the coming weeks as stockists may not like to hold for long time when the availability in the open market is good enough. I think prices may slip to below Rs 2,000 levels,” a local trader said.
Chana output may rise to 13.7% to 6.54 million tonne in 2008-09 against the 5.75 million tonne a year ago, according to government estimates. (Source: Financial Express)
Chana futures on NCDEX fell by nearly 12% to trade at Rs 2,119 per quintal on Monday over last month mainly on increased supplies amid restricted buying from basan mills.
Chana prices also fell by Rs 20 to 2,125 per quintal on Monday at Delhi market with daily inflows of about 3,500-4,000 bags.
“Rising stocks in exchange warehouses and higher output estimates by the government pushed the chana futures prices lower,” analyst with Bonanza Commodity Broker said. Demand from millers remained steady, he said.
Warehouse stocks in the NCDEX has risen around 56% in the month of May and stood at 84,154 tonne, as per latest exchange data.
Sowing of kharif pulses including tur, urad and moong may commence in the coming weeks and given the higher prices of these pulses, a higher acreage this season could not be denied.
Spot prices of urad, tur and masoor are ruling higher than chana prices in the northern markets. It can be noted that only yellow peas’ prices are ruling lower than chana due to government intervention. “A stronger rupee that made imports cheaper was nullifying impact of lower arrivals. State run agencies have contracted to import of 64,000 tonne of pulses for 2009-10,” Anand James, senior analyst with Geojit Comtrade, said.
Government agencies had contracted 1.03 million tonne of pulses in the previous year and 9.28 lakh tonne have landed in the country, according to government agencies. “We expect chana prices to remain weak in the coming weeks as stockists may not like to hold for long time when the availability in the open market is good enough. I think prices may slip to below Rs 2,000 levels,” a local trader said.
Chana output may rise to 13.7% to 6.54 million tonne in 2008-09 against the 5.75 million tonne a year ago, according to government estimates. (Source: Financial Express)
Wheat futures to remain weak
Mumbai: Wheat futures prices may remain weak over the next few days mainly on restricted buying interest amid huge stocks with Food Corporation of India (FCI) and state government agencies
Wheat June 2009 futures on the National Commodity & Derivatives Exchange (NCDEX) fell by nearly Rs 35 over eight trading session to trade at Rs 1,105 a quintal on limited buying support.
On Wednesday, prices quoted below Rs 1,100 mark a quintal. Significant volumes were witnessed with an increase in the open interest at 17,350 tonne compared with 6,610 tonne two days back.
“Futures prices are still higher than the spot markets. I think prices may remain under pressure amid slow trades. Buyers have reserved their buying thanks to huge stock base with government agencies. Other hand, spot prices are also weakening slowly on lack of fresh buying. Big MNCs are currently away from the market,” a local trader said.
Spot prices in the northern India also declined gradually and are quoting below minimum support price (MSP) level in some part of Uttar Pradesh and Rajasthan mainly due to restricted buying. Spot price in Delhi market was quoted at Rs 1,088 a quintal as against MSP level of Rs 1,080.
Among the major trading in north India, spot prices were quoted lower at Rs 1,045 at Kanpur mandi, Rs 1,020 at Bareilly mandi and Rs 1,074 a quintal in Kota market.
“Fundamentally, there is a supply glut in both the Indian and global wheat markets. Thus, from the longer term perspective, wheat prices are expected to remain bearish,” analyst with Angel Commodities said.
The government is not in hurry to lift wheat exports curbs which will keep price under check. The quantitative restriction of 20 lakh tonne on wheat export may soon be waived by allowing free trade as there is a record procurement of the food grain this year, trade sources said.
In the short to medium term, prices are likely to fall further due to bumper crop in the current season and government agencies have procured huge stocks in the domestic market due to a record production, analyst said.
It can be noted that huge wheat stocks (13-14 million tonnes as on 1 April) with the government against the normal 4 million tonnes and higher procurement target 24.4 million tonnes ensures that wheat prices in the domestic market are unlikely to shoot up in the longer term. (Source: Financial Express)
Wheat June 2009 futures on the National Commodity & Derivatives Exchange (NCDEX) fell by nearly Rs 35 over eight trading session to trade at Rs 1,105 a quintal on limited buying support.
On Wednesday, prices quoted below Rs 1,100 mark a quintal. Significant volumes were witnessed with an increase in the open interest at 17,350 tonne compared with 6,610 tonne two days back.
“Futures prices are still higher than the spot markets. I think prices may remain under pressure amid slow trades. Buyers have reserved their buying thanks to huge stock base with government agencies. Other hand, spot prices are also weakening slowly on lack of fresh buying. Big MNCs are currently away from the market,” a local trader said.
Spot prices in the northern India also declined gradually and are quoting below minimum support price (MSP) level in some part of Uttar Pradesh and Rajasthan mainly due to restricted buying. Spot price in Delhi market was quoted at Rs 1,088 a quintal as against MSP level of Rs 1,080.
Among the major trading in north India, spot prices were quoted lower at Rs 1,045 at Kanpur mandi, Rs 1,020 at Bareilly mandi and Rs 1,074 a quintal in Kota market.
“Fundamentally, there is a supply glut in both the Indian and global wheat markets. Thus, from the longer term perspective, wheat prices are expected to remain bearish,” analyst with Angel Commodities said.
The government is not in hurry to lift wheat exports curbs which will keep price under check. The quantitative restriction of 20 lakh tonne on wheat export may soon be waived by allowing free trade as there is a record procurement of the food grain this year, trade sources said.
In the short to medium term, prices are likely to fall further due to bumper crop in the current season and government agencies have procured huge stocks in the domestic market due to a record production, analyst said.
It can be noted that huge wheat stocks (13-14 million tonnes as on 1 April) with the government against the normal 4 million tonnes and higher procurement target 24.4 million tonnes ensures that wheat prices in the domestic market are unlikely to shoot up in the longer term. (Source: Financial Express)
Turmeric price to remain bearish
Mumbai: Futures and spot prices of turmeric on the national bourses may continue to remain weak over next few days in anticipation that the production of turmeric in the coming season would be better due to early onset of monsoon.
Last week, turmeric June contracts on the National Commodity & Derivatives Exchange (NCDEX) fell sharply by nearly Rs 590 per quintal or 11% to trade at Rs 4,927 per quintal on Monday over the last week on some profit-taking on reports of weak overseas demand and rise acreage in coming season in Andhra Pradesh.
“Turmeric prices went down by near 4% over past few days extending the losses on weak demand and rise acreage in coming season led the traders to book profits and come out of their long positions,” Anand James, senior analyst, Geojit Comtrade said.
Early onset of the monsoon may induce farmers to go for sowing of turmeric. Sowing of turmeric is expected to increase as they earned better prices in the current year, he added.
Spot prices at the Nizambad mandi also declined by Rs 250 per quintal on scattered buying interest from local buyers. However, spot markets at Nizamabad and Erode remained closed on Saturday due to weekly off. Price gap between spot and futures markets has widened to over Rs 300 per quintal, trade sources said.
“In the long term, prices may take cues from the availability of turmeric in 2009 and demand from the domestic as well as overseas market,” Nalini Rao, analyst with Angel Commodities said.
Physical stocks with the farmers and stockists are at lower levels which include Nizamabad-4 lakh bags, Erode-8 lakh bags, Sangli and Duggiralla-1.5lakh bags each and Warrangal-1 lakh bag.
“Sowing of turmeric is expected to grow in Nizamabad and Erode by around 20% and 40% respectively. Sowing commences with the onset of monsoon in the month of June. Demand from the domestic and overseas market is present in small quantity due to appreciation in rupee and subsequent decline in overseas orders,” she said. (Source: Financial Express)
Last week, turmeric June contracts on the National Commodity & Derivatives Exchange (NCDEX) fell sharply by nearly Rs 590 per quintal or 11% to trade at Rs 4,927 per quintal on Monday over the last week on some profit-taking on reports of weak overseas demand and rise acreage in coming season in Andhra Pradesh.
“Turmeric prices went down by near 4% over past few days extending the losses on weak demand and rise acreage in coming season led the traders to book profits and come out of their long positions,” Anand James, senior analyst, Geojit Comtrade said.
Early onset of the monsoon may induce farmers to go for sowing of turmeric. Sowing of turmeric is expected to increase as they earned better prices in the current year, he added.
Spot prices at the Nizambad mandi also declined by Rs 250 per quintal on scattered buying interest from local buyers. However, spot markets at Nizamabad and Erode remained closed on Saturday due to weekly off. Price gap between spot and futures markets has widened to over Rs 300 per quintal, trade sources said.
“In the long term, prices may take cues from the availability of turmeric in 2009 and demand from the domestic as well as overseas market,” Nalini Rao, analyst with Angel Commodities said.
Physical stocks with the farmers and stockists are at lower levels which include Nizamabad-4 lakh bags, Erode-8 lakh bags, Sangli and Duggiralla-1.5lakh bags each and Warrangal-1 lakh bag.
“Sowing of turmeric is expected to grow in Nizamabad and Erode by around 20% and 40% respectively. Sowing commences with the onset of monsoon in the month of June. Demand from the domestic and overseas market is present in small quantity due to appreciation in rupee and subsequent decline in overseas orders,” she said. (Source: Financial Express)
Appreciating rupee likely to keep guarseed futures weak
Mumbai: Guarseed futures prices may remain weak over the next few days on reports of appreciating rupee and forecast of early arrival of monsoon.
Thanks to strong rupee value against dollar, demand from overseas market was low and will depend on the currency movement. Also, forecast of early arrival of monsoon will play important role for guarseed output.
“The rupee value had appreciated about 4.25% in past four days. This strong movement was unexpected and unusual, after the ruling coalition won a comfortable victory in the elections. Hence, demand for export is limited as strong rupee may hit exporters’ margin. Futures prices are also ruling lower than spot prices,” a leading trader at Jodhpur said.
Guargum exports were initially estimated to touch 2.25 lakh tonne this fiscal, but now the industry expects it to be 1.75 lakh tonne only.
The NCDEX June 2009 contracts (ex-Jodhpur) fell nearly Rs 50 to trade at Rs 1,757 per quintal on Thursday over past one week while spot price at Jodhpur market was quoted at Rs 1,772.75 per quintal.
“Indian Metrological department (IMD) would give its second long range weather forecast by mid-June. This would decide the further trend in guar complex. If the initial forecast of normal monsoon hold well, guar output may be expected good next year,” analyst with Angel Commodities said.
“Besides output forecast, other factors like demand from the overseas market, rupee movement and trend in crude oil prices would also have an influence on the prices in the long term,” he added. (Source: Finanicial Express)
Thanks to strong rupee value against dollar, demand from overseas market was low and will depend on the currency movement. Also, forecast of early arrival of monsoon will play important role for guarseed output.
“The rupee value had appreciated about 4.25% in past four days. This strong movement was unexpected and unusual, after the ruling coalition won a comfortable victory in the elections. Hence, demand for export is limited as strong rupee may hit exporters’ margin. Futures prices are also ruling lower than spot prices,” a leading trader at Jodhpur said.
Guargum exports were initially estimated to touch 2.25 lakh tonne this fiscal, but now the industry expects it to be 1.75 lakh tonne only.
The NCDEX June 2009 contracts (ex-Jodhpur) fell nearly Rs 50 to trade at Rs 1,757 per quintal on Thursday over past one week while spot price at Jodhpur market was quoted at Rs 1,772.75 per quintal.
“Indian Metrological department (IMD) would give its second long range weather forecast by mid-June. This would decide the further trend in guar complex. If the initial forecast of normal monsoon hold well, guar output may be expected good next year,” analyst with Angel Commodities said.
“Besides output forecast, other factors like demand from the overseas market, rupee movement and trend in crude oil prices would also have an influence on the prices in the long term,” he added. (Source: Finanicial Express)
Diamond supplies rise, gold exports continue to fall
Mumbai: At the time when global supplies of rough diamond is improving, the demand for gold jewellery globally has not yet picked up any momentum in the first four months of current calendar year due to the economic downturn that dramatically impacted demand for gold jewellery and rough diamonds.
Gold and rough diamonds are the major raw materials for the gem and jewellery sector. The Diamond Trading Company’s (DTC), marketing arm of DeBeers group and a major global supplier of rough diamonds, last week increased its supply of rough diamond in May 2009 sight by 25% higher which is more than the March/April 2009 sight estimate, but it is still 62% lower than one year ago. May 2009 sight held an estimated value of $250 million.
“It is definitely good news for our domestic market as we import rough diamond in large quantity from global market but there is no fresh buying from major buyers like USA and Hong Kong,” a leading sight-holder who did not wish to be quoted said.
“Demand for diamond jewellery has not yet picked up any momentum and the diamond industry is still stagnant under the pressure of the global economic slowdown,” he added.
Net US rough diamond imports in March totalled $8.31 million, averaging $1,242 per carat. The US imported a net of 6,689 carats of gem quality rough diamonds during the month, according to latest figures available. Compared to March 2008, net imports fell 58.9% in value and 32.4% in volume. Gross imports of 32,944 carats carried a declared value of $19.25 million, averaging $584.50 per carat. On year-on-year basis, gross imports declined 73.9% in volume and 69.2% in value.
“I believe there is good demand for roughs but it is scattered. The overall availability of roughs is less because DTC has cut production. There is stronger demand for 3 carats that yield polished stone of 1-1.5 carats,” said another sight-holder. In April, India’s rough imports decreased 41.91% to $557.98 million, while exports decreased 23% to $765.74 million.
“Demand has not grown much during the last month and it will continue to remain stagnant or low as far as gems and jewellery sector is concerned,”Rajesh Mehta, MD of Rajesh Exports told FE. He said downturn in this sector may continue for over the next three quarters. Gold import has also gone down substantially and it may remain stagnant.”
Among the major global players, Israel’s polished diamond exports fell 28% to $269.1 million in April 2009 while roughs export dropped 59% to $108.3 million in April 2009. Belgium’s rough imports also decreased 58% to $399 million, while exports decreased 37% to $609.8 million. Net rough imports (rough import less export) widened their deficit for the month to $210.8 million, from negative $21.2 million a year earlier. (Source: Financial Express)
Gold and rough diamonds are the major raw materials for the gem and jewellery sector. The Diamond Trading Company’s (DTC), marketing arm of DeBeers group and a major global supplier of rough diamonds, last week increased its supply of rough diamond in May 2009 sight by 25% higher which is more than the March/April 2009 sight estimate, but it is still 62% lower than one year ago. May 2009 sight held an estimated value of $250 million.
“It is definitely good news for our domestic market as we import rough diamond in large quantity from global market but there is no fresh buying from major buyers like USA and Hong Kong,” a leading sight-holder who did not wish to be quoted said.
“Demand for diamond jewellery has not yet picked up any momentum and the diamond industry is still stagnant under the pressure of the global economic slowdown,” he added.
Net US rough diamond imports in March totalled $8.31 million, averaging $1,242 per carat. The US imported a net of 6,689 carats of gem quality rough diamonds during the month, according to latest figures available. Compared to March 2008, net imports fell 58.9% in value and 32.4% in volume. Gross imports of 32,944 carats carried a declared value of $19.25 million, averaging $584.50 per carat. On year-on-year basis, gross imports declined 73.9% in volume and 69.2% in value.
“I believe there is good demand for roughs but it is scattered. The overall availability of roughs is less because DTC has cut production. There is stronger demand for 3 carats that yield polished stone of 1-1.5 carats,” said another sight-holder. In April, India’s rough imports decreased 41.91% to $557.98 million, while exports decreased 23% to $765.74 million.
“Demand has not grown much during the last month and it will continue to remain stagnant or low as far as gems and jewellery sector is concerned,”Rajesh Mehta, MD of Rajesh Exports told FE. He said downturn in this sector may continue for over the next three quarters. Gold import has also gone down substantially and it may remain stagnant.”
Among the major global players, Israel’s polished diamond exports fell 28% to $269.1 million in April 2009 while roughs export dropped 59% to $108.3 million in April 2009. Belgium’s rough imports also decreased 58% to $399 million, while exports decreased 37% to $609.8 million. Net rough imports (rough import less export) widened their deficit for the month to $210.8 million, from negative $21.2 million a year earlier. (Source: Financial Express)
FMC lifts 2-year ban on futures trade in wheat
Mumbai, New Delhi: In a significant development on the eve of the general election results, commodities regulator Forward Markets Commission (FMC) has overturned a major decision of the outgoing UPA government and allowed exchanges to resume futures trade in wheat, one of the country’s main foodgrains. “The National Commodity Exchange can now apply afresh for new contracts. Once they do so, we will grant permission within two or three days,” FMC chairman BC Khatua told FE.
The FMC is believed to have taken the decision to lift the futures trade ban last month, but its announcement was delayed due to imposition of the model code of conduct. It also comes ahead of the government’s move, probably next week, to ease a more than two-year ban on wheat exports.
The outgoing UPA government banned futures trade in wheat, rice, tur and urad in March 2007 under pressure from its then communist allies, who blamed the futures market for a spike in retail prices of food commodities.
However, a high-level committee constituted under the chairmanship of Planning Commission member Abhijit Sen in 2008 to study the impact of futures trading on spot prices failed to identify any direct correlation between the two. Instead, the panel recommended enlarging the futures trade as volumes for most agricultural commodities was relatively low compared to international norms.
Notwithstanding the conclusions made in the Sen report, the government in May 2008 went ahead and suspended futures trade in potato, rubber, refined soy oil and chana (chikpea) for four months to curb the spurt in retail prices. The suspension was later extended for another two months, after which it was allowed to lapse as prices of all four commodities showed a declining trend.
Friday’s decision to lift the futures ban paves the way for the resumption of trading in one of highest volume grossing commodities on the exchanges. Of the three national bourses, wheat was largely traded on the National Commodity & Derivatives Exchange (NCDEX), the country’s largest agriculture exchange.
Armed with the FMC order, NCDEX immediately submitted its request for new wheat contracts for trading. Exchange sources said it would be ‘compulsory contracts’ and trading could resume as early as next month.
MCX is also expected to file for resumption of trading in wheat futures on Monday and hopes to start trading by Tuesday. Asked about the lifting of the trading ban, MCX CEO & MD Joseph Massey said, “This is a positive development, which will benefit farmers as well as industry.”
“The price of a commodity depends on fundamentals and, therefore, there was no justification in continuing with the ban,” said Debjyoti Chatterjee, associate vice-president at Mape Admisi Commodities, a Mumbai-based brokerage firm.
Comfortable wheat stocks and also a massive surge in procurement during the current harvest season that started in April had also made continuing the ban redundant. India’s wheat production in 2007-08 is estimated to be around 78 million tonne (mt).
In 2008-09, according to the government’s third advanced estimate, wheat output is estimated to be more than 77 mt. Stocks on April 1 are estimated to more than 14 mt, almost 9 mt more than the buffer requirement. (Source: Financial Express)
The FMC is believed to have taken the decision to lift the futures trade ban last month, but its announcement was delayed due to imposition of the model code of conduct. It also comes ahead of the government’s move, probably next week, to ease a more than two-year ban on wheat exports.
The outgoing UPA government banned futures trade in wheat, rice, tur and urad in March 2007 under pressure from its then communist allies, who blamed the futures market for a spike in retail prices of food commodities.
However, a high-level committee constituted under the chairmanship of Planning Commission member Abhijit Sen in 2008 to study the impact of futures trading on spot prices failed to identify any direct correlation between the two. Instead, the panel recommended enlarging the futures trade as volumes for most agricultural commodities was relatively low compared to international norms.
Notwithstanding the conclusions made in the Sen report, the government in May 2008 went ahead and suspended futures trade in potato, rubber, refined soy oil and chana (chikpea) for four months to curb the spurt in retail prices. The suspension was later extended for another two months, after which it was allowed to lapse as prices of all four commodities showed a declining trend.
Friday’s decision to lift the futures ban paves the way for the resumption of trading in one of highest volume grossing commodities on the exchanges. Of the three national bourses, wheat was largely traded on the National Commodity & Derivatives Exchange (NCDEX), the country’s largest agriculture exchange.
Armed with the FMC order, NCDEX immediately submitted its request for new wheat contracts for trading. Exchange sources said it would be ‘compulsory contracts’ and trading could resume as early as next month.
MCX is also expected to file for resumption of trading in wheat futures on Monday and hopes to start trading by Tuesday. Asked about the lifting of the trading ban, MCX CEO & MD Joseph Massey said, “This is a positive development, which will benefit farmers as well as industry.”
“The price of a commodity depends on fundamentals and, therefore, there was no justification in continuing with the ban,” said Debjyoti Chatterjee, associate vice-president at Mape Admisi Commodities, a Mumbai-based brokerage firm.
Comfortable wheat stocks and also a massive surge in procurement during the current harvest season that started in April had also made continuing the ban redundant. India’s wheat production in 2007-08 is estimated to be around 78 million tonne (mt).
In 2008-09, according to the government’s third advanced estimate, wheat output is estimated to be more than 77 mt. Stocks on April 1 are estimated to more than 14 mt, almost 9 mt more than the buffer requirement. (Source: Financial Express)
Kotak may cut stake in Ahd Commex to 40%
Mumbai: The Kotak group will have to reduce its equity stake from current 51% to 40% in the Ahmedabad Commodity Exchange (ACE) within a year from the date of in-principle approval, as per the new guidelines issued for formation of national commodity exchange.
The forward markets commission (FMC) has accorded an in-principle approval to the ACE to upgrade and convert itself into a national multicommodity exchange on the basis of an application made in 2008.
With this in-principle approval, ACE has become the first regional commodity exchange to get the status. The permission has been granted on condition that ACE upgrades itself by replacing its “open outcry” system with online trading.
After getting approval for status of national commodity exchange by regulator, the Kotak Group will soon initiate the acquisition process of the ACE in-line with FMC guidelines.
As part of its plan to become corporatised and demutualised national exchange, ACE had offered 51% equity stake to Kotak Mahindra Bank in January 2008. The acquisition price per equity share of ACE was decided at Rs 321.
“We have proposed to acquire equity stake of 51% in the exchange but as per the new guidelines, we will have to reduce our stake to 40% as an anchor promoter. Firstly, we will complete our acquisition process. We will also go for the demutualisation as per the guidelines,” T Raghunath, head of group strategy for Kotak told FE.
“I think it will take atleast one or two months to complete the process of acquisition and demutualisation,” he said.
There are three major national commodities exchanges in the country, Multi-Commodity Exchange (MCX), National Commodity and Derivative Exchange (NCDEX) and National Multi Commodity Exchange (NMCE).
Apart from these three commodity bourses, India Bulls and MMTC are also jointly setting up new exchange.
“It is an important milestone in the history of commodity exchange. We would transform ourselves from a regional to national player by undertaking demutulisation process and implementing online trading system,” Pravin Thakkar, president, ACE said.
ACE, which currently trades in castor seed and cotton seed with a daily turnover of Rs 25 crore, may introduce all permitted commodities including bullion on its platform in a phase manner, he added. The exchange currently has 212 members.
As per the new guidelines, the regional commodity exchanges are not permitted to list more commodities unless the trading system is online.
In 2008, the exchange passed a resolution and proposed to issue and allot to Kotak Mahindra Bank and/or its associates or subsidiaries up to 1.02 lakh equity shares at a price of Rs 321 per equity share and up to 10.50 lakh share warrants. ACE convened an extraordinary general meeting on February 2008 to seek its shareholders approval for offering stake to Kotak Mahindra Bank. (Source: Financial Express)
The forward markets commission (FMC) has accorded an in-principle approval to the ACE to upgrade and convert itself into a national multicommodity exchange on the basis of an application made in 2008.
With this in-principle approval, ACE has become the first regional commodity exchange to get the status. The permission has been granted on condition that ACE upgrades itself by replacing its “open outcry” system with online trading.
After getting approval for status of national commodity exchange by regulator, the Kotak Group will soon initiate the acquisition process of the ACE in-line with FMC guidelines.
As part of its plan to become corporatised and demutualised national exchange, ACE had offered 51% equity stake to Kotak Mahindra Bank in January 2008. The acquisition price per equity share of ACE was decided at Rs 321.
“We have proposed to acquire equity stake of 51% in the exchange but as per the new guidelines, we will have to reduce our stake to 40% as an anchor promoter. Firstly, we will complete our acquisition process. We will also go for the demutualisation as per the guidelines,” T Raghunath, head of group strategy for Kotak told FE.
“I think it will take atleast one or two months to complete the process of acquisition and demutualisation,” he said.
There are three major national commodities exchanges in the country, Multi-Commodity Exchange (MCX), National Commodity and Derivative Exchange (NCDEX) and National Multi Commodity Exchange (NMCE).
Apart from these three commodity bourses, India Bulls and MMTC are also jointly setting up new exchange.
“It is an important milestone in the history of commodity exchange. We would transform ourselves from a regional to national player by undertaking demutulisation process and implementing online trading system,” Pravin Thakkar, president, ACE said.
ACE, which currently trades in castor seed and cotton seed with a daily turnover of Rs 25 crore, may introduce all permitted commodities including bullion on its platform in a phase manner, he added. The exchange currently has 212 members.
As per the new guidelines, the regional commodity exchanges are not permitted to list more commodities unless the trading system is online.
In 2008, the exchange passed a resolution and proposed to issue and allot to Kotak Mahindra Bank and/or its associates or subsidiaries up to 1.02 lakh equity shares at a price of Rs 321 per equity share and up to 10.50 lakh share warrants. ACE convened an extraordinary general meeting on February 2008 to seek its shareholders approval for offering stake to Kotak Mahindra Bank. (Source: Financial Express)
Diamond industry likely to recover in H2
Mumbai: Global diamond industry may start recovering from the second half of 2009 as positive signals have begun to emerge from main consuming markets, especially the US.
As other global markets show signs of bottoming, it is likely that prices of polished diamonds will firm up and perhaps a gradual recovery will ensue. The recovery is reasonably likely to begin in the second half of 2009, according to latest online survey conducted by International Diamond Exchange (IDEX).
Global polished diamond prices dipped by 10.8% in April 2009 compared to the same month a year ago. It was the fourth month that year-on-year prices dipped for polished diamonds.
All key diamond sizes experienced price deflation. The seven stone sizes represent about one-third of the trading market by value. On a year-on-year comparison, polished diamond prices for the key sizes and qualities fell from the prior year. Almost all sizes of diamonds showed a double-digit loss in April. Comparisons were difficult, since there were a string of double-digit price gains for the larger diamond sizes in 2008.
For the month of April 2009, average global polished diamond prices declined by 1.4% over average diamond prices during March 2009. The IDEX Online Polished Diamond Price Index stood at 108.40 in April 2009 against 121.51 in April a year ago, according survey report.
“Polished diamond prices globally may continue to decline, though at a more modest rate. They have dipped below the historical trend line inflation rate of 3-4% annually, though we believe that they will eventually return to this historic rate of annual inflation,” IDEX report says.
Polished diamond prices appear to have nearly leveled out, ending a free-fall that began in late 2008 and continued into early 2009 as panic selling by diamond dealers has abated.
“We believe that diamond demand and diamond prices are more likely to remain relatively untouched by potential commodity market volatility in the future, once the US and the global economies stabilise. Further, based on 50,000 or more years of demand trends, we do not expect to see any major shift in consumer demand for diamonds or other jewellery as the global economy emerges from the current recession,” report says.
There are some positive factors that that suggest polished diamond demand is firming, and polished diamond prices could stabilise, prior to potentially moving higher.
One of the key factors is that US jewelry retail sales have stabilised, so there is some optimism in the air. Rough diamond suppliers cut back on mining activities, but some appear poised to restart mining operations due to increased demand. Rough diamond suppliers have played a major role in stabilising polished diamond prices and bringing balance to the polished diamond market. Recent sales forecasts also suggest that global diamond sales will be down by only low double-digit levels in 2009. (source: Financial Express)
As other global markets show signs of bottoming, it is likely that prices of polished diamonds will firm up and perhaps a gradual recovery will ensue. The recovery is reasonably likely to begin in the second half of 2009, according to latest online survey conducted by International Diamond Exchange (IDEX).
Global polished diamond prices dipped by 10.8% in April 2009 compared to the same month a year ago. It was the fourth month that year-on-year prices dipped for polished diamonds.
All key diamond sizes experienced price deflation. The seven stone sizes represent about one-third of the trading market by value. On a year-on-year comparison, polished diamond prices for the key sizes and qualities fell from the prior year. Almost all sizes of diamonds showed a double-digit loss in April. Comparisons were difficult, since there were a string of double-digit price gains for the larger diamond sizes in 2008.
For the month of April 2009, average global polished diamond prices declined by 1.4% over average diamond prices during March 2009. The IDEX Online Polished Diamond Price Index stood at 108.40 in April 2009 against 121.51 in April a year ago, according survey report.
“Polished diamond prices globally may continue to decline, though at a more modest rate. They have dipped below the historical trend line inflation rate of 3-4% annually, though we believe that they will eventually return to this historic rate of annual inflation,” IDEX report says.
Polished diamond prices appear to have nearly leveled out, ending a free-fall that began in late 2008 and continued into early 2009 as panic selling by diamond dealers has abated.
“We believe that diamond demand and diamond prices are more likely to remain relatively untouched by potential commodity market volatility in the future, once the US and the global economies stabilise. Further, based on 50,000 or more years of demand trends, we do not expect to see any major shift in consumer demand for diamonds or other jewellery as the global economy emerges from the current recession,” report says.
There are some positive factors that that suggest polished diamond demand is firming, and polished diamond prices could stabilise, prior to potentially moving higher.
One of the key factors is that US jewelry retail sales have stabilised, so there is some optimism in the air. Rough diamond suppliers cut back on mining activities, but some appear poised to restart mining operations due to increased demand. Rough diamond suppliers have played a major role in stabilising polished diamond prices and bringing balance to the polished diamond market. Recent sales forecasts also suggest that global diamond sales will be down by only low double-digit levels in 2009. (source: Financial Express)
Sugar prices to stay firm on global cues
Mumbai: Sugar prices, spot and futures, may continue to remain firm over the next few days mainly on reports of unviable imports, firm overseas markets and reports of lower domestic supplies.
Sugar M grade 200 (Kolhapur) prices were quoted Rs 50-60 higher to trade at Rs 2,281 for May contracts and Rs 2,408 per quintal for June contracts on NCDEX over previous week due to drop in domestic output and strong international prices.
Global prices rose by 2.5% to trade over 15 cents per pound in past two weeks. Thus, landing cost of raw sugar is higher than the domestic prices. The landed cost of raw sugar in Indian ports will be in the range of $395 a tonne, whereas till now, no mill has contracted at above $330-340. London August white sugar contract moved $8 per tonne higher at $427 per tonne on Saturday.
The ex-factory cost of the processed white (imported) sugar at these rates would be around Rs 24,500 a tonne for mills close to ports and Rs 26,000 for those in Uttar Pradesh, sources said.
Spot prices were quoting higher around Rs 2,236 per quintal in Kolhapur market and Rs 2,490 per quintal in Muzaffar nagar. “Though domestic futures market showed some weakness last week, prices may continue to trade higher during the current week. Rising international prices are making the imports unviable. Talks of lower yield from Brazil’s central South crop have led New York and Liffe sugar to recover in the past few weeks, an analyst with Angel Commodities said.
“Lower output and unviable imports at current prices are likely to support the domestic sugar prices in the short to medium term with expected target of Rs 2600 per quintal,” analyst said.
Sugar M grade 200 (Kolhapur) prices were quoted Rs 50-60 higher to trade at Rs 2,281 for May contracts and Rs 2,408 per quintal for June contracts on NCDEX over previous week due to drop in domestic output and strong international prices.
Global prices rose by 2.5% to trade over 15 cents per pound in past two weeks. Thus, landing cost of raw sugar is higher than the domestic prices. The landed cost of raw sugar in Indian ports will be in the range of $395 a tonne, whereas till now, no mill has contracted at above $330-340. London August white sugar contract moved $8 per tonne higher at $427 per tonne on Saturday.
The ex-factory cost of the processed white (imported) sugar at these rates would be around Rs 24,500 a tonne for mills close to ports and Rs 26,000 for those in Uttar Pradesh, sources said.
Spot prices were quoting higher around Rs 2,236 per quintal in Kolhapur market and Rs 2,490 per quintal in Muzaffar nagar. “Though domestic futures market showed some weakness last week, prices may continue to trade higher during the current week. Rising international prices are making the imports unviable. Talks of lower yield from Brazil’s central South crop have led New York and Liffe sugar to recover in the past few weeks, an analyst with Angel Commodities said.
“Lower output and unviable imports at current prices are likely to support the domestic sugar prices in the short to medium term with expected target of Rs 2600 per quintal,” analyst said.
Castor oil export crosses 3 lakh tonne in 2008-09
Mumbai: At the time when the country’s overall growth of export started showing negative trend in some agri-commodities due to the impact of global economic crisis, export of castor oil has not only buck the trend but also registered a significant growth of 74% during the fiscal year 2008-09.
Annual exports were below 2 lakh tonne over the past five years. Castor oil is the substitute of petroleum products.
For the first time in the recent years, the total export of castor oil has crossed 3 lakh tonne mark in financial year 2008-09. Total export increased to 3.08 lakh tonne in 2008-09 from 1.76 lakh tonnes in 2007-08, up by 74% thanks to good buying from China.
“There are some enquires from China. I think the country exports about 8,000 tonne castor oil per month to China as Chinese buyers prefers small lots in containers,” said Wamanbhai Udeshi, director, Jayant Agro-Organics, a leading exporter of castor oil products.
“Shippers are offering castor oil around $1,020-1,030 per tonne (C&F basis) ex-Kandla for next month shipment,” a local broker said.
The country has so far exported about 75,000 tonne of castor oil till April during the current calendar year as fresh arrivals of new crop started in last January. Daily arrivals reached to one lakh bags (each of 75 kgs).
Traders expect export demand to continue from China. However, there are some enquiries from Europe and the US but hardly any major deals heard, sources said. The country expects 10.5-11 lakh tonne of castorseed crop for the current season. Of which, about 2.5 lakh tonne have already arrived in the major market yards of Gujarat and Rajasthan.
Shippers and stockists are major buyers in the market as they feel prices to remain firm over the next few days, a broker said.
Castorseed May contracts on NCDEX platform were up Rs 14-15 to trade at Rs 501 per 10 kg on Monday on continued buying support.
Annual exports were below 2 lakh tonne over the past five years. Castor oil is the substitute of petroleum products.
For the first time in the recent years, the total export of castor oil has crossed 3 lakh tonne mark in financial year 2008-09. Total export increased to 3.08 lakh tonne in 2008-09 from 1.76 lakh tonnes in 2007-08, up by 74% thanks to good buying from China.
“There are some enquires from China. I think the country exports about 8,000 tonne castor oil per month to China as Chinese buyers prefers small lots in containers,” said Wamanbhai Udeshi, director, Jayant Agro-Organics, a leading exporter of castor oil products.
“Shippers are offering castor oil around $1,020-1,030 per tonne (C&F basis) ex-Kandla for next month shipment,” a local broker said.
The country has so far exported about 75,000 tonne of castor oil till April during the current calendar year as fresh arrivals of new crop started in last January. Daily arrivals reached to one lakh bags (each of 75 kgs).
Traders expect export demand to continue from China. However, there are some enquiries from Europe and the US but hardly any major deals heard, sources said. The country expects 10.5-11 lakh tonne of castorseed crop for the current season. Of which, about 2.5 lakh tonne have already arrived in the major market yards of Gujarat and Rajasthan.
Shippers and stockists are major buyers in the market as they feel prices to remain firm over the next few days, a broker said.
Castorseed May contracts on NCDEX platform were up Rs 14-15 to trade at Rs 501 per 10 kg on Monday on continued buying support.
Wednesday, April 29, 2009
After two-day slide, soyabean futures bounce back
After a sharp correction of 7.4% witnessed over past two days on reports of swine flu outbreak in Mexico and US, soyabean May futures on the National Commodity & Derivatives Exchange (NCDEX) once again bounced back on Tuesday. The market has discounted the news of swine flu and prices regained mainly on concerns over Argentina’s harvest and strong demand from China.
Soyabean May contracts rose to Rs 2,600 level on Tuesday after touching a low of Rs 2,594 per quintal. Earlier, the contract rose to Rs 2,800 per quintal, up by almost 20% in April month. Spot prices in Indore market also gained Rs 2 at Rs 2607 per quintal on Tuesday.
On Monday, NCDEX May soyabean futures hit lower limit of 4% in tandem with overseas market on fear of lower demand of soy meal, feed demand in near future due to outbreak of swine flu in Mexico.
A 10% special margin, which was levied on long side on all soyabean contracts, also weighed on the markets. Swine flu outbreak will impact on meat and livestock feed demand, a local trader said.
The World Health Organization has raised its six-stage pandemic alert level to 4 from 3 because of evidence of increased human-to-human contact, as swine flu is spreading across North America. Hog and pork-belly futures plunged 3 cents a pound.
“Soyabean prices are expected to rise in near term on due to concerns over Argentina’s harvest and strong demand from China,” an analyst with Angel Commodities said.
For medium term and long term, it is bullish on account of lower global soybean production estimates to 218.8 million tonnes. And higher export demand of Indian soyameal is expected from Asian and Middle East countries in coming year owing tight supply in global market, he said.
“We feel the fall in prices could be limited. Market sentiments could take it down further but now the shorts if any needs to be covered. The undertone for the commodity looks fairly bullish and this fall has opened an opportunity to go long,” analyst with Kotak Commodities said.
China is likely to import 3.83 million tonnes of soybean in April and 3.18 million tonnes in May according to Chinese government estimates issued last week. (source: fianancial express)
Soyabean May contracts rose to Rs 2,600 level on Tuesday after touching a low of Rs 2,594 per quintal. Earlier, the contract rose to Rs 2,800 per quintal, up by almost 20% in April month. Spot prices in Indore market also gained Rs 2 at Rs 2607 per quintal on Tuesday.
On Monday, NCDEX May soyabean futures hit lower limit of 4% in tandem with overseas market on fear of lower demand of soy meal, feed demand in near future due to outbreak of swine flu in Mexico.
A 10% special margin, which was levied on long side on all soyabean contracts, also weighed on the markets. Swine flu outbreak will impact on meat and livestock feed demand, a local trader said.
The World Health Organization has raised its six-stage pandemic alert level to 4 from 3 because of evidence of increased human-to-human contact, as swine flu is spreading across North America. Hog and pork-belly futures plunged 3 cents a pound.
“Soyabean prices are expected to rise in near term on due to concerns over Argentina’s harvest and strong demand from China,” an analyst with Angel Commodities said.
For medium term and long term, it is bullish on account of lower global soybean production estimates to 218.8 million tonnes. And higher export demand of Indian soyameal is expected from Asian and Middle East countries in coming year owing tight supply in global market, he said.
“We feel the fall in prices could be limited. Market sentiments could take it down further but now the shorts if any needs to be covered. The undertone for the commodity looks fairly bullish and this fall has opened an opportunity to go long,” analyst with Kotak Commodities said.
China is likely to import 3.83 million tonnes of soybean in April and 3.18 million tonnes in May according to Chinese government estimates issued last week. (source: fianancial express)
Margins fail to dent sugar futures
Strong fundamentals and good summer demand once again pushed up the sugar futures market on Monday after a short correction last week and may continue to rise over the next few days, despite the imposition of special margins levied by Forward Markets Commission (FMC) to curb the excess speculation in the commodity.
Despite the facts that government’s efforts to control the domestic prices by imposing numbers of measures including approval of duty free imports of white sugar, imposition of stock limit, additional release of free sale quota and special margins on long positions of all running contracts, futures prices on the National commodity & derivatives exchange (NCDEX) on Monday increased by 2% over the previous day.
NCDEX June contracts jumped up by Rs 46 to finish at Rs 2,341 per quintal over previous day on continued support even after the report that NCDEX and MCX imposed special margin of 5% on sugar futures to curb volatility in prices. With these special margins, the total margins on sugar contracts would be 17.5% including an initial margin of 7.5% and special margins of 10%.
“I don’t think special margins will have any practical impact on the futures market as spot prices in North India are still ruling higher by Rs 100 over futures prices,” a leading trader of Kolhapur said.
“Consideration the good summer season demand, we don’t expect much downside in prices, despite the increase in overall supply,” he said.
Spot prices of sugar medium grade in North India are already ruling high at Rs 2,445 per quintal in Muzaffarnagar and Rs 2,415 in Delhi market. In Navi Mumbai, medium grade prices were ruling at Rs 2,280-2,370 per quintal.
The FMC was recently asked by the Committee of Secretaries (CoS) to watch the movement in sugar prices in the futures market and take necessary steps to curb excessive speculation.
In the next round of measures, the government may ask sugar mills to sell some stocks directly to co-operatives like Kendriya Bhandars at mutually agreed price. Also the regulator may even increase special margins by another 5% over the next few days. The government may also consider the proposal to convert excess (unsold) April free quota into levy sugar.
“From the medium term perspective, fundamentals for sugar remain strong due to lower production estimates in the India as well as rising deficit in global markets. World sugar demand is expected to outstrip supply and build a larger deficit in 2009-10," an analyst with Angel Commodities said. (source: Financial express)
Despite the facts that government’s efforts to control the domestic prices by imposing numbers of measures including approval of duty free imports of white sugar, imposition of stock limit, additional release of free sale quota and special margins on long positions of all running contracts, futures prices on the National commodity & derivatives exchange (NCDEX) on Monday increased by 2% over the previous day.
NCDEX June contracts jumped up by Rs 46 to finish at Rs 2,341 per quintal over previous day on continued support even after the report that NCDEX and MCX imposed special margin of 5% on sugar futures to curb volatility in prices. With these special margins, the total margins on sugar contracts would be 17.5% including an initial margin of 7.5% and special margins of 10%.
“I don’t think special margins will have any practical impact on the futures market as spot prices in North India are still ruling higher by Rs 100 over futures prices,” a leading trader of Kolhapur said.
“Consideration the good summer season demand, we don’t expect much downside in prices, despite the increase in overall supply,” he said.
Spot prices of sugar medium grade in North India are already ruling high at Rs 2,445 per quintal in Muzaffarnagar and Rs 2,415 in Delhi market. In Navi Mumbai, medium grade prices were ruling at Rs 2,280-2,370 per quintal.
The FMC was recently asked by the Committee of Secretaries (CoS) to watch the movement in sugar prices in the futures market and take necessary steps to curb excessive speculation.
In the next round of measures, the government may ask sugar mills to sell some stocks directly to co-operatives like Kendriya Bhandars at mutually agreed price. Also the regulator may even increase special margins by another 5% over the next few days. The government may also consider the proposal to convert excess (unsold) April free quota into levy sugar.
“From the medium term perspective, fundamentals for sugar remain strong due to lower production estimates in the India as well as rising deficit in global markets. World sugar demand is expected to outstrip supply and build a larger deficit in 2009-10," an analyst with Angel Commodities said. (source: Financial express)
Gold imports regain after brief lull
Mumbai: Finally, import of gold into India, the world’s largest buyer, has re-started in full swing in April, after a gap of two months because of higher global prices and dull demand for gold jewellery in the country.
Traders expect gold import to reach about 40 tonne this month mainly to cash in on the gold rush for Akshaya Tritiya day which falls on April 27 along with current wedding season.
“I think banks and government agencies together may import nearly 40 tonne of gold this month,” Bhargav Vaidya, a leading gold expert told FE.
Bullion dealers have started importing in small quantities and expect a revival of demand for gold jewellery during wedding season. Apart from jewellery, gold coins of various denominations (10 gm, 8 gm, 5 gm, 2.5 gm and 1 gm) are in good demand this month, sources said.
Gold import parcels of about 25 tonne have been landed till date and may add another 10-15 tonne by month end, sources said.
The country has been importing less gold recently as prices remain volatile amid the global financial crisis.
On the other hand, overall exports of gems and jewellery sector witnessed a decline of 18.88% in second half of financial year 2008-09 owing to the slowdown in the USA.
“The stock markets across the globe remained in better form on expectations of an early rebound in economic slowdown. Gold prices have been following a common pattern throughout this bull ish market. It rises for a six-to-nine-month period and then consolidates for a year to 18 months, before its next rise. These movements are independent of the currency in which prices are measured,” a local bullion dealer said.
Spot gold in world market may trade in the range of $870-$900 a troy ounce and prices in local markets will continue hovering in the range of Rs 14,500 to 15,000 per 10 grams.
“Local prices will remain firm over the next few days as demand for gold coins and jewellery may continue for some time due to current wedding season and Akshaye Trithya,” a local dealer said.
“After making a double-bottom around $864 gold has turned upside and is currently forming a bullish price pattern called inverse head and shoulders pattern on the hourly chart. Currently, the price is flirting around the neckline of the pattern on MCX rests around Rs14, 500. Once gold breaches this neckline, it is likely to test Rs 14,800 to Rs 15,000 on upside,” said a technical analyst with Sharekhan. (source: financial express)
Traders expect gold import to reach about 40 tonne this month mainly to cash in on the gold rush for Akshaya Tritiya day which falls on April 27 along with current wedding season.
“I think banks and government agencies together may import nearly 40 tonne of gold this month,” Bhargav Vaidya, a leading gold expert told FE.
Bullion dealers have started importing in small quantities and expect a revival of demand for gold jewellery during wedding season. Apart from jewellery, gold coins of various denominations (10 gm, 8 gm, 5 gm, 2.5 gm and 1 gm) are in good demand this month, sources said.
Gold import parcels of about 25 tonne have been landed till date and may add another 10-15 tonne by month end, sources said.
The country has been importing less gold recently as prices remain volatile amid the global financial crisis.
On the other hand, overall exports of gems and jewellery sector witnessed a decline of 18.88% in second half of financial year 2008-09 owing to the slowdown in the USA.
“The stock markets across the globe remained in better form on expectations of an early rebound in economic slowdown. Gold prices have been following a common pattern throughout this bull ish market. It rises for a six-to-nine-month period and then consolidates for a year to 18 months, before its next rise. These movements are independent of the currency in which prices are measured,” a local bullion dealer said.
Spot gold in world market may trade in the range of $870-$900 a troy ounce and prices in local markets will continue hovering in the range of Rs 14,500 to 15,000 per 10 grams.
“Local prices will remain firm over the next few days as demand for gold coins and jewellery may continue for some time due to current wedding season and Akshaye Trithya,” a local dealer said.
“After making a double-bottom around $864 gold has turned upside and is currently forming a bullish price pattern called inverse head and shoulders pattern on the hourly chart. Currently, the price is flirting around the neckline of the pattern on MCX rests around Rs14, 500. Once gold breaches this neckline, it is likely to test Rs 14,800 to Rs 15,000 on upside,” said a technical analyst with Sharekhan. (source: financial express)
Friday, April 17, 2009
Gur turns bitter for consumers as prices go up 25%
After a long rally witnessed in sugar, rising prices of gur have now turned bitter for consumers on the eve of general election in the country.
Gur spot prices at the major terminal markets including Muzaffarnagar and Hapur mandis have increased sharply by nearly 25% during the current month.
It can be noted that local prices of sugar also increased to Rs 2,600 per quintal this week from Rs 2,200 a quintal, despite release of higher free sale quota for the month.
Spot prices of gur in Muzaffarnagar have increased by nearly Rs 200 to trade at Rs 1,050 per 40 kg on Thursday on reports of reduced stocks in Uttar Pradesh and expected lower output of gur in the country.
Spot price of Gur Balti in Hapur market also increased to Rs 1,030 per 40 kg on increased offtake. NCDEX gur July futures also jumped up by nearly Rs 175, or 18%, to trade at Rs 1,134 per 40 kg on Wednesday over the beginning of the month.
“Prices have touched record levels during the month mainly on reports of cane shortage, reduced stocks and expected lower output this season. Total output is expected to be lowered by 30-40% in Uttar Pradesh and Maharashtra,” Pankaj Agrawal, a leading trader of Muzaffarnagar said.
Overall output of gur in the country is estimated lower around 8.5 to 9 million tonne for the current season from 14-15 million tonne last season. Total stock is expected to be around 10 lakh bags (each 40 kg) in Uttar Pradesh.
“There is good demand for black gur from Gujarat as it is used for making country liquor. Normally, demand for country liquor increases during the general election time. Some traders in Gujarat are holding large stocks of yellow and black gur ahead of election as there is no stock limit in gur,” a local trader said.
“Prices may remain higher in the next few days on short supply. Total output in south India is believed to be good but inflows of new gur from south are expected to begin in early June,” he said. (Source: Financial Express)
Gur spot prices at the major terminal markets including Muzaffarnagar and Hapur mandis have increased sharply by nearly 25% during the current month.
It can be noted that local prices of sugar also increased to Rs 2,600 per quintal this week from Rs 2,200 a quintal, despite release of higher free sale quota for the month.
Spot prices of gur in Muzaffarnagar have increased by nearly Rs 200 to trade at Rs 1,050 per 40 kg on Thursday on reports of reduced stocks in Uttar Pradesh and expected lower output of gur in the country.
Spot price of Gur Balti in Hapur market also increased to Rs 1,030 per 40 kg on increased offtake. NCDEX gur July futures also jumped up by nearly Rs 175, or 18%, to trade at Rs 1,134 per 40 kg on Wednesday over the beginning of the month.
“Prices have touched record levels during the month mainly on reports of cane shortage, reduced stocks and expected lower output this season. Total output is expected to be lowered by 30-40% in Uttar Pradesh and Maharashtra,” Pankaj Agrawal, a leading trader of Muzaffarnagar said.
Overall output of gur in the country is estimated lower around 8.5 to 9 million tonne for the current season from 14-15 million tonne last season. Total stock is expected to be around 10 lakh bags (each 40 kg) in Uttar Pradesh.
“There is good demand for black gur from Gujarat as it is used for making country liquor. Normally, demand for country liquor increases during the general election time. Some traders in Gujarat are holding large stocks of yellow and black gur ahead of election as there is no stock limit in gur,” a local trader said.
“Prices may remain higher in the next few days on short supply. Total output in south India is believed to be good but inflows of new gur from south are expected to begin in early June,” he said. (Source: Financial Express)
Anti-dumping inquiry into VSF import
The government has initiated anti-dumping investigation concerning import of Viscose Staple Fibre (VSF) excluding bamboo fibre originating in or exporting from China and Indonesia.
The Association of Man Made Fibre industry of India (AMFII) has filed an application before the designated authority last month and has requested for initiation of anti-dumping investigation and levy of anti-dumping duties. The period of investigation for the purpose of the present investigation is July 1 to December 31, 2008. Grasim Industries Ltd (GIL) is the sole producer of such product in India and has provided injury and costing information.
“Our association has filed an application before the designated authority and requested for the initiation of anti dumping investigation as the industry was suffering from such imports. There is sufficient evidence to justify initiation of an anti-dumping investigation in terms of AD rules,” Vijay Kaul, chief marketing officer, Grasim Industries Ltd (GIL) told FE.
The domestic industry had to reduce its VSF prices by nearly 25% during FY2009 due to dumping of such material from China and Indonesia, he added. The applicant has claimed that there is no other producer in India. As per the evidence available on record, production of GIL accounts for a major proportion of the domestic production. The production of Grasim is more than 50% of Indian production. The countries involved in the present investigation are People’s Republic of China and Indonesia (referred to as subject countries).
There is, prima facie, evidence that the normal value of the subject goods in the subject countries is significantly higher than the ex-factory export price indicating, prima facie, that the subject goods are being dumped by exporters from the subject countries. Parameters like increase in the absolute volume of imports and increase in the market share of imports from the subject countries in total imports, significant decline in the domestic selling price indicate that the industry has suffered material injury on account of dumping of subject goods from subject countries. (Source: Financial Express)
The Association of Man Made Fibre industry of India (AMFII) has filed an application before the designated authority last month and has requested for initiation of anti-dumping investigation and levy of anti-dumping duties. The period of investigation for the purpose of the present investigation is July 1 to December 31, 2008. Grasim Industries Ltd (GIL) is the sole producer of such product in India and has provided injury and costing information.
“Our association has filed an application before the designated authority and requested for the initiation of anti dumping investigation as the industry was suffering from such imports. There is sufficient evidence to justify initiation of an anti-dumping investigation in terms of AD rules,” Vijay Kaul, chief marketing officer, Grasim Industries Ltd (GIL) told FE.
The domestic industry had to reduce its VSF prices by nearly 25% during FY2009 due to dumping of such material from China and Indonesia, he added. The applicant has claimed that there is no other producer in India. As per the evidence available on record, production of GIL accounts for a major proportion of the domestic production. The production of Grasim is more than 50% of Indian production. The countries involved in the present investigation are People’s Republic of China and Indonesia (referred to as subject countries).
There is, prima facie, evidence that the normal value of the subject goods in the subject countries is significantly higher than the ex-factory export price indicating, prima facie, that the subject goods are being dumped by exporters from the subject countries. Parameters like increase in the absolute volume of imports and increase in the market share of imports from the subject countries in total imports, significant decline in the domestic selling price indicate that the industry has suffered material injury on account of dumping of subject goods from subject countries. (Source: Financial Express)
GJF to issue smart card for jewellers soon
All India Gems and Jewellery Trade Federation’s (GJF) will soon issue smart cards for the jewellers and their staff with the objective of authenticating jewellers’ status and facilitating hassle-free movement across India.
GJF is a national trade federation for the promotion and growth of trade in gems and jewellery across the country. “The card is basically for jewellers and their staffs who are our members and it will be launched by year-end. We will have to get government approval for that,” C Vinod Hayagriv, chairman, GJF told FE.
The card is to be produced when challenged by government authorities. The card is to be recognised by the government as a valid proof and identification. It aims to create transparency and accountability for the industry. “We are intending to issue about 50,000-1 lakh cards in the near future,” he said.
The card will have customised design and security measures incorporated so that it is not easily copied. The card will hold up to 64kb of data. Complete details of a jeweller will be incorporated in the card, he said.
“In times of recession, it is important we take steps to protect our industry by improving productivity and enhancing transparency and ethical profitability,” he said. Similarly, the federation will shortly expand its trustmark initiative to other major cities. The trustmark is an assurance to a customer of the commitment of the jeweller for his quality and best business practice. The ‘Trustmark’ logo will have three categories for a jeweller to participate. The federation also plans to design special GJF coins available starting from 2 grams. (source: Financial Express)
GJF is a national trade federation for the promotion and growth of trade in gems and jewellery across the country. “The card is basically for jewellers and their staffs who are our members and it will be launched by year-end. We will have to get government approval for that,” C Vinod Hayagriv, chairman, GJF told FE.
The card is to be produced when challenged by government authorities. The card is to be recognised by the government as a valid proof and identification. It aims to create transparency and accountability for the industry. “We are intending to issue about 50,000-1 lakh cards in the near future,” he said.
The card will have customised design and security measures incorporated so that it is not easily copied. The card will hold up to 64kb of data. Complete details of a jeweller will be incorporated in the card, he said.
“In times of recession, it is important we take steps to protect our industry by improving productivity and enhancing transparency and ethical profitability,” he said. Similarly, the federation will shortly expand its trustmark initiative to other major cities. The trustmark is an assurance to a customer of the commitment of the jeweller for his quality and best business practice. The ‘Trustmark’ logo will have three categories for a jeweller to participate. The federation also plans to design special GJF coins available starting from 2 grams. (source: Financial Express)
Higher supply fails to curb sugar prices, spot up 7.5%
Increased supply for summer by the government and imposition of stocks limit for traders announced last months have failed to curb spot prices of sugar in the physical market over the past four days.
Improved summer season demand coupled with lower crop estimates kept sugar prices firm at the major terminal markets including Delhi, Muzaffar Nagar, Mumbai and Kolhapur, traders said.
Sugar prices of medium grade in Delhi, Muzaffar Nagar and Kolhapur have increased by Rs 160-165, or 7.5%, to trade at Rs 2,345, Rs 2,335 and Rs 2,170 per quintal, respectively.
On the futures trading platform, NCDEX April contracts (Kolhapur delivery) also rose by 4% to trade at Rs 2,171 on Monday over last week.
“Trading interest has shifted from April to May contracts,” a trader said.
Spot prices in Mumbai also gained significantly and crossed Rs 2,300 per quintal on continued buying from bulk consumers.
“Overall monthly supply of nearly 19 lakh tonne for the current month is enough to cater the domestic demand, Mukesh Kuvadia, secretary, Bombay Sugar Merchants' Association (BSMA) said.
Overall fundamentals remain supportive for the prices with lower output forecast in India and a global deficit of more than 43 lakh tonne, up from a previous projection of 36 lakh tonne, sources said.
“Sugar imports, both raw and white even at zero-duty, have become unviable in the present scenario as international prices are ruling high. Thus, despite government's effort to ease import norms, we don't expect imports to take place in the coming weeks,” an analyst with Angel Broking said.
From the medium term perspective, fundamentals for sugar remain strong due to lower production estimates for India as well as rising deficit in global markets. Global sugar demand is expected to outstrip supply and build a larger deficit in 2009-10, she said.
Sugar production would touch 150 lakh tonne for season 2008-09, according to SL Jain, director general, ISMA.
“Prices closed above its five days SMA, 20 days SMA and 65 days SMA indicating an up trend. RSI is at 70.01 and is currently moving in the overbought region,” technical analyst said. (Source: Financial Express)
Improved summer season demand coupled with lower crop estimates kept sugar prices firm at the major terminal markets including Delhi, Muzaffar Nagar, Mumbai and Kolhapur, traders said.
Sugar prices of medium grade in Delhi, Muzaffar Nagar and Kolhapur have increased by Rs 160-165, or 7.5%, to trade at Rs 2,345, Rs 2,335 and Rs 2,170 per quintal, respectively.
On the futures trading platform, NCDEX April contracts (Kolhapur delivery) also rose by 4% to trade at Rs 2,171 on Monday over last week.
“Trading interest has shifted from April to May contracts,” a trader said.
Spot prices in Mumbai also gained significantly and crossed Rs 2,300 per quintal on continued buying from bulk consumers.
“Overall monthly supply of nearly 19 lakh tonne for the current month is enough to cater the domestic demand, Mukesh Kuvadia, secretary, Bombay Sugar Merchants' Association (BSMA) said.
Overall fundamentals remain supportive for the prices with lower output forecast in India and a global deficit of more than 43 lakh tonne, up from a previous projection of 36 lakh tonne, sources said.
“Sugar imports, both raw and white even at zero-duty, have become unviable in the present scenario as international prices are ruling high. Thus, despite government's effort to ease import norms, we don't expect imports to take place in the coming weeks,” an analyst with Angel Broking said.
From the medium term perspective, fundamentals for sugar remain strong due to lower production estimates for India as well as rising deficit in global markets. Global sugar demand is expected to outstrip supply and build a larger deficit in 2009-10, she said.
Sugar production would touch 150 lakh tonne for season 2008-09, according to SL Jain, director general, ISMA.
“Prices closed above its five days SMA, 20 days SMA and 65 days SMA indicating an up trend. RSI is at 70.01 and is currently moving in the overbought region,” technical analyst said. (Source: Financial Express)
NCDEX urges FMC re-look scrapping of transaction fees
The National Commodity and Derivatives Exchange recently made a detailed submission to the Forward Markets Commission (FMC) with a request to reconsider its decision on withdrawing proposed transaction fees. Additionally, the exchange has also communicated to its employees over the observations made by the FMC in the February order, with a view to set its image right.
NCDEX’s attempt to lower transaction charges starting December 2008 was disallowed by the FMC and there were several observations made in the order. In a mailed communication to its employees on Saturday, the exchange management has sought to clear its position. These key issues included the issue of transaction fees, unauthorised deviations in use of funds and settlement guarantee fund (SGF). The ongoing tussle between the commodity futures market regulator and the NCDEX started in January when the commodity market regulator rejected a proposal by the exchange to cut transaction charges in its evening trade hours.
Faced with a sharp drop in turnover since July, the NCDEX had last month created two slabs for exchange rates, before 5 pm and after 5 pm. The aim was to encourage commodity traders to trade in the Indian evening hours when the New York and London commodity markets were open. This was expected to make it easy for traders to arbitrage between those markets and India. The additional trading would, therefore, have been a boon for NCDEX and also could have created a fine price discovery in commodities like metals. But the Forward Market Commission took exception to this reduction, saying it might affect the business of two other commodity exchanges adversely.
“We have made detailed submissions to the FMC with a request to reconsider the decision. We hope that the submissions would be considered objectively, in the larger public interest and with due regard to the commercial principles put forth by the exchange,” says the communication, confirmed an exchange official on Saturday.
The NCDEX approached the Bombay high court for relief. But the court on February 5 upheld the market regulator’s objection to the introduction of the new transaction fees and asked FMC to sort it out within 2 weeks.
The Commission in a 20-page document said that the NCDEX would not be able to attract more traders simply by reducing transaction charges levied by the exchange. “Transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring a substantial jump in the volumes as expected by the exchange.”
FMC also observed that the exchange did not comply with the commission’s guidelines on transaction fees (by issuing a circular relating to transaction fees without taking the permission of the FMC). The exchange had said in its response that circulars issued by NCDEX did not violate any existing guideline issued by the regulator.
The allegation that the exchange has made unauthorised deviations and diversion of funds is baseless, maintains the communication. The exchange unequivocally affirmed that the funds belonging to the members are fully invested and are safe and secure and not used by the exchange for its operational purposes, it adds.
It also says, “Such an observation conveys impression that the exchange has been diverting member funds, thus endangering the integrity of the market, implying that member funds are not safe in the exchange and that the exchange is bent upon using income not belonging to it and therefore the decision on reducing the transaction charge has to be interfered with.”
The exchange clarified that the margins are posted by a member and belong to the member concerned whereas SGF is pool of funds which is used to meet the shortfall in the event of a settlement default by any member. The margin posted by one member for taking positions cannot be appropriated against the requirement of margins of another member for taking positions.
In the event of a default, the SGF which is a kitty or pool of funds can be dipped into to make good the amount under default obligation of the defaulting member. One should not mix up member’s margin deposits and SGF as they are distinct.
The exchange reassures that the members’ money which is not part of SGF has been invested safely, as confirmed by the external auditors appointed by the FMC and not used by the exchange for its operations. The FMC is also aware that the exchange has been using the interest earned from out of the funds, in line with global practices and as per the practice adopted by the other national commodity exchanges, the communication mentions. (source: Financial Express)
NCDEX’s attempt to lower transaction charges starting December 2008 was disallowed by the FMC and there were several observations made in the order. In a mailed communication to its employees on Saturday, the exchange management has sought to clear its position. These key issues included the issue of transaction fees, unauthorised deviations in use of funds and settlement guarantee fund (SGF). The ongoing tussle between the commodity futures market regulator and the NCDEX started in January when the commodity market regulator rejected a proposal by the exchange to cut transaction charges in its evening trade hours.
Faced with a sharp drop in turnover since July, the NCDEX had last month created two slabs for exchange rates, before 5 pm and after 5 pm. The aim was to encourage commodity traders to trade in the Indian evening hours when the New York and London commodity markets were open. This was expected to make it easy for traders to arbitrage between those markets and India. The additional trading would, therefore, have been a boon for NCDEX and also could have created a fine price discovery in commodities like metals. But the Forward Market Commission took exception to this reduction, saying it might affect the business of two other commodity exchanges adversely.
“We have made detailed submissions to the FMC with a request to reconsider the decision. We hope that the submissions would be considered objectively, in the larger public interest and with due regard to the commercial principles put forth by the exchange,” says the communication, confirmed an exchange official on Saturday.
The NCDEX approached the Bombay high court for relief. But the court on February 5 upheld the market regulator’s objection to the introduction of the new transaction fees and asked FMC to sort it out within 2 weeks.
The Commission in a 20-page document said that the NCDEX would not be able to attract more traders simply by reducing transaction charges levied by the exchange. “Transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring a substantial jump in the volumes as expected by the exchange.”
FMC also observed that the exchange did not comply with the commission’s guidelines on transaction fees (by issuing a circular relating to transaction fees without taking the permission of the FMC). The exchange had said in its response that circulars issued by NCDEX did not violate any existing guideline issued by the regulator.
The allegation that the exchange has made unauthorised deviations and diversion of funds is baseless, maintains the communication. The exchange unequivocally affirmed that the funds belonging to the members are fully invested and are safe and secure and not used by the exchange for its operational purposes, it adds.
It also says, “Such an observation conveys impression that the exchange has been diverting member funds, thus endangering the integrity of the market, implying that member funds are not safe in the exchange and that the exchange is bent upon using income not belonging to it and therefore the decision on reducing the transaction charge has to be interfered with.”
The exchange clarified that the margins are posted by a member and belong to the member concerned whereas SGF is pool of funds which is used to meet the shortfall in the event of a settlement default by any member. The margin posted by one member for taking positions cannot be appropriated against the requirement of margins of another member for taking positions.
In the event of a default, the SGF which is a kitty or pool of funds can be dipped into to make good the amount under default obligation of the defaulting member. One should not mix up member’s margin deposits and SGF as they are distinct.
The exchange reassures that the members’ money which is not part of SGF has been invested safely, as confirmed by the external auditors appointed by the FMC and not used by the exchange for its operations. The FMC is also aware that the exchange has been using the interest earned from out of the funds, in line with global practices and as per the practice adopted by the other national commodity exchanges, the communication mentions. (source: Financial Express)
Monday, April 6, 2009
Low scrap inflows, nil imports bring bullion trade to standstill
Amid nil imports over the past two months and low scrap inflows in the local markets, physical trading in bullion has virtually come to a halt since beginning of the year, if bullion traders in Mumbai are to be believed.
Local trading volume in gold and silver in the physical market remained low at 20-30 kg per day compared to nearly 250-300 kg last year, trade sources said.
The country did not import any yellow metal for the second consecutive month in March 2009. Imports in February and March last year were 23 tonne and 21 tonne, respectively. On the other hand, inflows of recycled gold from local refineries have also reduced to average 25-30 kg per day from 150-200 kg last year, sources said.
“Overhead costs are eating into the already depressed margins of bullion dealers forcing some of them to sell stocks at a loss to meet operating expenses. Even after gold prices rose 22% in three months from Rs 12,500 around the beginning of December to Rs 16,040 per 10 gm more recently, demand for gold jewellery has crashed,” Samir Shah, vice president (business development), Riddhi Siddhi Bullion Ltd said.
“Most jewellers are sitting on stocks of old jewellery sold by families cashing in on the sharp rise in the gold price. Recycled gold from this jewellery is enough to meet any fresh demand,” he said.
“Investors continue to book profits in gold in anticipation of limited upside due to weak demand for jewellery amid the economic downturn,” Debjyoti Chatterjee of ADMISI Commodities said.
For 2008, gold had performed the best with a gain of 4.32%, followed by silver with a loss of 26.90%, with platinum in last place with a loss of 41.31%. (source: Financial Express)
Local trading volume in gold and silver in the physical market remained low at 20-30 kg per day compared to nearly 250-300 kg last year, trade sources said.
The country did not import any yellow metal for the second consecutive month in March 2009. Imports in February and March last year were 23 tonne and 21 tonne, respectively. On the other hand, inflows of recycled gold from local refineries have also reduced to average 25-30 kg per day from 150-200 kg last year, sources said.
“Overhead costs are eating into the already depressed margins of bullion dealers forcing some of them to sell stocks at a loss to meet operating expenses. Even after gold prices rose 22% in three months from Rs 12,500 around the beginning of December to Rs 16,040 per 10 gm more recently, demand for gold jewellery has crashed,” Samir Shah, vice president (business development), Riddhi Siddhi Bullion Ltd said.
“Most jewellers are sitting on stocks of old jewellery sold by families cashing in on the sharp rise in the gold price. Recycled gold from this jewellery is enough to meet any fresh demand,” he said.
“Investors continue to book profits in gold in anticipation of limited upside due to weak demand for jewellery amid the economic downturn,” Debjyoti Chatterjee of ADMISI Commodities said.
For 2008, gold had performed the best with a gain of 4.32%, followed by silver with a loss of 26.90%, with platinum in last place with a loss of 41.31%. (source: Financial Express)
CCI offloads 55 lakh bales cotton
Cotton Corporation of India (CCI) has so far offloaded about 55 lakh bales (each of 170 kg) thanks to bulk discount offer scheme with advantage of longer delivery period and supported by good buying from mills and ginners.
The corporation has so far procured about 88 lakh bales for the current season, nearly 30% of the national estimated crop. Last month, the Cotton Advisory Board (CAB) lowered its output estimate to 290 lakh bales from the earlier 322 lakh bales due to delayed sowing and erratic monsoon.
“We have so far achieved sales volume of about 55 lakh bales because of our bulk discount offer. I think sales may slowdown in the days to come as majority of mills have covered its requirement as they generally buy cotton for 2-3 months’ consumption,” said a top CCI official, who did not wish to be quoted.
“The corporation is offering a cash discount of Rs 400 per candy (each of 356 kg) on bulk purchases between 10,000 and 25,000 bales and also providing Rs 450 per candy on the buying between 25,000 and 50,000 bales. Similarly, millers are getting a discount of Rs 500 per candy on bulk purchases between 50,000 and 2 lakh bales and Rs 650 per candy on purchase of 2 lakh bales or more,” an official said.
During the current month, CCI has increased its sale prices by Rs 700-1,000 per candy on sustained buying interest by mills amid reduced arrivals at the major cotton trading centres.
“CCI has suspended the sales of two major varieties, Gujarat Sankar-6 and Maharashtra Bunny. As a result, private ginners may shift their buying to the open market,” a leading cotton trader said.
Total arrivals of raw cotton in the country have so far reached to 250 lakh bales.
“Daily arrivals across the country have come down to 90,000 bales. There are some buying interests from southern mills. I expect traders have struck deals to import at least 16-17 lakh bales so far and nearly 13 lakh bales have already arrived in the market,” Kishor Shah of M/s Shree Rang Cotton said.
“The government has hiked MSP in cotton for this season. As a result, domestic cotton prices are ruling higher than international markets. I believe imports will increase substantially and export will not be possible under the present scenario,” he added. Cotton price may remain steady in the next few days and S-6 may hover around Rs 21,000-21,500 per candy, he said. Sankar-6 and Kalyan V-797 in Gujarat are quoted around Rs 21,500 and Rs 15,500 per candy, respectively. (Source: Financial Express)
The corporation has so far procured about 88 lakh bales for the current season, nearly 30% of the national estimated crop. Last month, the Cotton Advisory Board (CAB) lowered its output estimate to 290 lakh bales from the earlier 322 lakh bales due to delayed sowing and erratic monsoon.
“We have so far achieved sales volume of about 55 lakh bales because of our bulk discount offer. I think sales may slowdown in the days to come as majority of mills have covered its requirement as they generally buy cotton for 2-3 months’ consumption,” said a top CCI official, who did not wish to be quoted.
“The corporation is offering a cash discount of Rs 400 per candy (each of 356 kg) on bulk purchases between 10,000 and 25,000 bales and also providing Rs 450 per candy on the buying between 25,000 and 50,000 bales. Similarly, millers are getting a discount of Rs 500 per candy on bulk purchases between 50,000 and 2 lakh bales and Rs 650 per candy on purchase of 2 lakh bales or more,” an official said.
During the current month, CCI has increased its sale prices by Rs 700-1,000 per candy on sustained buying interest by mills amid reduced arrivals at the major cotton trading centres.
“CCI has suspended the sales of two major varieties, Gujarat Sankar-6 and Maharashtra Bunny. As a result, private ginners may shift their buying to the open market,” a leading cotton trader said.
Total arrivals of raw cotton in the country have so far reached to 250 lakh bales.
“Daily arrivals across the country have come down to 90,000 bales. There are some buying interests from southern mills. I expect traders have struck deals to import at least 16-17 lakh bales so far and nearly 13 lakh bales have already arrived in the market,” Kishor Shah of M/s Shree Rang Cotton said.
“The government has hiked MSP in cotton for this season. As a result, domestic cotton prices are ruling higher than international markets. I believe imports will increase substantially and export will not be possible under the present scenario,” he added. Cotton price may remain steady in the next few days and S-6 may hover around Rs 21,000-21,500 per candy, he said. Sankar-6 and Kalyan V-797 in Gujarat are quoted around Rs 21,500 and Rs 15,500 per candy, respectively. (Source: Financial Express)
Turmeric prices up 20% on lower crop prospects, stocks
Turmeric spot and futures prices have shot up sharply over the past one month, on reports of lower carryover stocks amid prospects of a lower crop in major turmeric-producing states. NCDEX April 2009 contracts increased by nearly 21% or Rs 818 to trade at Rs 4,726 per quintal on Monday over last month and May 2009 contracts also shot up by 17% or Rs 700 to trade at Rs 4,800 per quintal. Spot price of old crop at Nizam mandi was Rs 200 higher and traded at Rs 4,290 per quintal on Tuesday.
"Futures prices have jumped up by nearly 21% over last month on reports of lower carryover stocks at producing centres and lower revised estimate of turmeric crop for the 2009 season," a local trader said. The new crop has now been estimated at around 42-43 lakh bags (each of 75 kg) from an initial estimate of 47-48 lakh bags, he said.
Revised estimates of turmeric production for 2009 have been further lowered to 43 lakh bags as compared to 45 lakh bags projected earlier in January 2009, according to latest estimate made by Angel Commodities.
"Farmers are hoarding stocks and not aggressively selling fresh turmeric. Carryover stocks are expected to be around 6-7 lakh bags," an analyst with Angel Commodities said. Fresh arrivals are expected to improve in the coming days.
"Carryover stocks in February 2009 were reported at 5 lakh bags, which is quite less than that of 8 - 9 lakh bags recorded last year," an analyst with Sharekhan said. "Much in line with the bullish view, we held on turmeric since it was trading around Rs 3,900- Rs 4,000 per quintal. The commodity finally rose yesterday to close at Rs 4,700, near its last year high of Rs 5,100 per quintal. Fundamentals suggest that low international crop and almost same crop size this year (43-44 lakh bags) coupled with low carryover stock is bound to have its affect even in the coming months. Given the strong fundamentals, we maintain our bullish view on turmeric," he said. (source: Financial Express)
"Futures prices have jumped up by nearly 21% over last month on reports of lower carryover stocks at producing centres and lower revised estimate of turmeric crop for the 2009 season," a local trader said. The new crop has now been estimated at around 42-43 lakh bags (each of 75 kg) from an initial estimate of 47-48 lakh bags, he said.
Revised estimates of turmeric production for 2009 have been further lowered to 43 lakh bags as compared to 45 lakh bags projected earlier in January 2009, according to latest estimate made by Angel Commodities.
"Farmers are hoarding stocks and not aggressively selling fresh turmeric. Carryover stocks are expected to be around 6-7 lakh bags," an analyst with Angel Commodities said. Fresh arrivals are expected to improve in the coming days.
"Carryover stocks in February 2009 were reported at 5 lakh bags, which is quite less than that of 8 - 9 lakh bags recorded last year," an analyst with Sharekhan said. "Much in line with the bullish view, we held on turmeric since it was trading around Rs 3,900- Rs 4,000 per quintal. The commodity finally rose yesterday to close at Rs 4,700, near its last year high of Rs 5,100 per quintal. Fundamentals suggest that low international crop and almost same crop size this year (43-44 lakh bags) coupled with low carryover stock is bound to have its affect even in the coming months. Given the strong fundamentals, we maintain our bullish view on turmeric," he said. (source: Financial Express)
NCDEX urges FMC re-look scrapping of transaction fees
The National Commodity and Derivatives Exchange recently made a detailed submission to the Forward Markets Commission (FMC) with a request to reconsider its decision on withdrawing proposed transaction fees. Additionally, the exchange has also communicated to its employees over the observations made by the FMC in the February order, with a view to set its image right.
NCDEX’s attempt to lower transaction charges starting December 2008 was disallowed by the FMC and there were several observations made in the order. In a mailed communication to its employees on Saturday, the exchange management has sought to clear its position. These key issues included the issue of transaction fees, unauthorised deviations in use of funds and settlement guarantee fund (SGF). The ongoing tussle between the commodity futures market regulator and the NCDEX started in January when the commodity market regulator rejected a proposal by the exchange to cut transaction charges in its evening trade hours.
Faced with a sharp drop in turnover since July, the NCDEX had last month created two slabs for exchange rates, before 5 pm and after 5 pm. The aim was to encourage commodity traders to trade in the Indian evening hours when the New York and London commodity markets were open. This was expected to make it easy for traders to arbitrage between those markets and India. The additional trading would, therefore, have been a boon for NCDEX and also could have created a fine price discovery in commodities like metals. But the Forward Market Commission took exception to this reduction, saying it might affect the business of two other commodity exchanges adversely.
“We have made detailed submissions to the FMC with a request to reconsider the decision. We hope that the submissions would be considered objectively, in the larger public interest and with due regard to the commercial principles put forth by the exchange,” says the communication, confirmed an exchange official on Saturday.
The NCDEX approached the Bombay high court for relief. But the court on February 5 upheld the market regulator’s objection to the introduction of the new transaction fees and asked FMC to sort it out within 2 weeks.
The Commission in a 20-page document said that the NCDEX would not be able to attract more traders simply by reducing transaction charges levied by the exchange. “Transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring a substantial jump in the volumes as expected by the exchange.”
FMC also observed that the exchange did not comply with the commission’s guidelines on transaction fees (by issuing a circular relating to transaction fees without taking the permission of the FMC). The exchange had said in its response that circulars issued by NCDEX did not violate any existing guideline issued by the regulator.
The allegation that the exchange has made unauthorised deviations and diversion of funds is baseless, maintains the communication. The exchange unequivocally affirmed that the funds belonging to the members are fully invested and are safe and secure and not used by the exchange for its operational purposes, it adds.
It also says, “Such an observation conveys impression that the exchange has been diverting member funds, thus endangering the integrity of the market, implying that member funds are not safe in the exchange and that the exchange is bent upon using income not belonging to it and therefore the decision on reducing the transaction charge has to be interfered with.”
The exchange clarified that the margins are posted by a member and belong to the member concerned whereas SGF is pool of funds which is used to meet the shortfall in the event of a settlement default by any member. The margin posted by one member for taking positions cannot be appropriated against the requirement of margins of another member for taking positions.
In the event of a default, the SGF which is a kitty or pool of funds can be dipped into to make good the amount under default obligation of the defaulting member. One should not mix up member’s margin deposits and SGF as they are distinct.
The exchange reassures that the members’ money which is not part of SGF has been invested safely, as confirmed by the external auditors appointed by the FMC and not used by the exchange for its operations. The FMC is also aware that the exchange has been using the interest earned from out of the funds, in line with global practices and as per the practice adopted by the other national commodity exchanges, the communication mentions.
NCDEX’s attempt to lower transaction charges starting December 2008 was disallowed by the FMC and there were several observations made in the order. In a mailed communication to its employees on Saturday, the exchange management has sought to clear its position. These key issues included the issue of transaction fees, unauthorised deviations in use of funds and settlement guarantee fund (SGF). The ongoing tussle between the commodity futures market regulator and the NCDEX started in January when the commodity market regulator rejected a proposal by the exchange to cut transaction charges in its evening trade hours.
Faced with a sharp drop in turnover since July, the NCDEX had last month created two slabs for exchange rates, before 5 pm and after 5 pm. The aim was to encourage commodity traders to trade in the Indian evening hours when the New York and London commodity markets were open. This was expected to make it easy for traders to arbitrage between those markets and India. The additional trading would, therefore, have been a boon for NCDEX and also could have created a fine price discovery in commodities like metals. But the Forward Market Commission took exception to this reduction, saying it might affect the business of two other commodity exchanges adversely.
“We have made detailed submissions to the FMC with a request to reconsider the decision. We hope that the submissions would be considered objectively, in the larger public interest and with due regard to the commercial principles put forth by the exchange,” says the communication, confirmed an exchange official on Saturday.
The NCDEX approached the Bombay high court for relief. But the court on February 5 upheld the market regulator’s objection to the introduction of the new transaction fees and asked FMC to sort it out within 2 weeks.
The Commission in a 20-page document said that the NCDEX would not be able to attract more traders simply by reducing transaction charges levied by the exchange. “Transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring a substantial jump in the volumes as expected by the exchange.”
FMC also observed that the exchange did not comply with the commission’s guidelines on transaction fees (by issuing a circular relating to transaction fees without taking the permission of the FMC). The exchange had said in its response that circulars issued by NCDEX did not violate any existing guideline issued by the regulator.
The allegation that the exchange has made unauthorised deviations and diversion of funds is baseless, maintains the communication. The exchange unequivocally affirmed that the funds belonging to the members are fully invested and are safe and secure and not used by the exchange for its operational purposes, it adds.
It also says, “Such an observation conveys impression that the exchange has been diverting member funds, thus endangering the integrity of the market, implying that member funds are not safe in the exchange and that the exchange is bent upon using income not belonging to it and therefore the decision on reducing the transaction charge has to be interfered with.”
The exchange clarified that the margins are posted by a member and belong to the member concerned whereas SGF is pool of funds which is used to meet the shortfall in the event of a settlement default by any member. The margin posted by one member for taking positions cannot be appropriated against the requirement of margins of another member for taking positions.
In the event of a default, the SGF which is a kitty or pool of funds can be dipped into to make good the amount under default obligation of the defaulting member. One should not mix up member’s margin deposits and SGF as they are distinct.
The exchange reassures that the members’ money which is not part of SGF has been invested safely, as confirmed by the external auditors appointed by the FMC and not used by the exchange for its operations. The FMC is also aware that the exchange has been using the interest earned from out of the funds, in line with global practices and as per the practice adopted by the other national commodity exchanges, the communication mentions.
Monday, March 23, 2009
Castor oil export on growth path, 2.90 lakh tonne likely this year
At a time when overall exports of major agriculture commodities have registered a negative growth in the last few months, export of castor oil and its derivatives has sustained its growth till date and will continue to show positive sign this year.
Total export is expected to reach at 2.90 lakh tonne in the financial year that ends on March 31, the highest in the last five years. Annual exports were below 2 lakh tonne during the last five years. Export has registered a significant growth of around 80% in last ten months and reached 2.71 lakh tonne, up from 1.50 lakh tonne in the same period previous year.
"Castor oil export is expected to be around 17,000-18,000 tonne during February and March 2009 including 10,000-12,000 tonne in bulk cargoes and 5,000-6,000 tonne in containers," Wamanbhai Udeshi, director, Jayant Agro-Organics Ltd told FE. Total export of castor oil may touch 2.90 lakh tonne in 2008-09 (April-March) from 1.76 lakh tonne actual recorded in 2007-08 with the advantage of depreciating rupee value against US dollar and the higher crude oil prices globally.
Traders expect castor oil export to grow more than 60% during the current financial year over previous year, because of its unique chemical structure that makes it a unique substitute for petrol-based fuels.
"There is some export enquires for castor oil. Recently, a Thailand based importer has booked cargoes of about 400 tonne at $850 per tonne FOB value," Udeshi said.
International prices of castor oil are currently ruling lower at $1,250 -ex-tank Rotterdam for April/May 2009 shipments-last week from $1,425 per tonne in January 2009.
"Weak rupee value and expected fresh demand from China and Russia may keep prices firm," a leading exporter said.
In the domestic market, fresh buying from millers and stockists will continue. They are accumulating some stocks at the moment. Total arrivals at major market yards across Gujarat have increased to 45,000 bags (each of 75 kg), a leading broker said. Spot castor oil first special grade prices are quoted around Rs 475 per 20 kg ex-Kandla.
"We expect export demand to generate in coming days, as stimulus packages released by various governments including that by China, our major importer of castor oil is put to work," analyst with Sharekhan said. The country expects a bumper crop of 11 lakh tonne of castorseed this year. (Source: Financial Express)
Total export is expected to reach at 2.90 lakh tonne in the financial year that ends on March 31, the highest in the last five years. Annual exports were below 2 lakh tonne during the last five years. Export has registered a significant growth of around 80% in last ten months and reached 2.71 lakh tonne, up from 1.50 lakh tonne in the same period previous year.
"Castor oil export is expected to be around 17,000-18,000 tonne during February and March 2009 including 10,000-12,000 tonne in bulk cargoes and 5,000-6,000 tonne in containers," Wamanbhai Udeshi, director, Jayant Agro-Organics Ltd told FE. Total export of castor oil may touch 2.90 lakh tonne in 2008-09 (April-March) from 1.76 lakh tonne actual recorded in 2007-08 with the advantage of depreciating rupee value against US dollar and the higher crude oil prices globally.
Traders expect castor oil export to grow more than 60% during the current financial year over previous year, because of its unique chemical structure that makes it a unique substitute for petrol-based fuels.
"There is some export enquires for castor oil. Recently, a Thailand based importer has booked cargoes of about 400 tonne at $850 per tonne FOB value," Udeshi said.
International prices of castor oil are currently ruling lower at $1,250 -ex-tank Rotterdam for April/May 2009 shipments-last week from $1,425 per tonne in January 2009.
"Weak rupee value and expected fresh demand from China and Russia may keep prices firm," a leading exporter said.
In the domestic market, fresh buying from millers and stockists will continue. They are accumulating some stocks at the moment. Total arrivals at major market yards across Gujarat have increased to 45,000 bags (each of 75 kg), a leading broker said. Spot castor oil first special grade prices are quoted around Rs 475 per 20 kg ex-Kandla.
"We expect export demand to generate in coming days, as stimulus packages released by various governments including that by China, our major importer of castor oil is put to work," analyst with Sharekhan said. The country expects a bumper crop of 11 lakh tonne of castorseed this year. (Source: Financial Express)
Sunday, March 22, 2009
Mentha oil futures up 15%, acreage likely to dip
Mumbai: Mentha oil March futures prices on the Multi Commodity Exchange (MCX) have jumped up by nearly 15% in just two weeks on reports of a likely drop in acreage for 2009 crop supported by stockists holding, trade sources said.
Mentha oil March 2009 contracts gained by about Rs 80 to trade at Rs 597.40 per kg on Tuesday over the past two weeks on improved demand from domestic markets. Spot prices in the producing centre also increased by nearly Rs 22-25 a kg as major stockists are holding in the exchange designated warehouses.
“MCX March contract is witnessing some correction, after testing a high of Rs 604 per kg. At present, the availability of stocks in the exchange warehouses is very low at 752 drums (1 drum = 180 kgs). This will support the prices to remain firm in the short term,” Naveen Mathur, head, Angel Commodities told FE. “The medium to long term trend would depend on the overseas demand which is currently at a very slow pace. Also, weather will play a crucial role in affecting the availability of mentha oil and its next crop size,” he added.
Now prices are seen in correction mode due to profit booking at higher levels and easing demand ahead of summer season.
“Initial reports of sowing are indicating less acreage under mentha crop for the year, which may be a bullish factor in days to come. Arrivals to the spot market have increased to 300 drums per day,” Tarun Satsangi, AVP research (commodities), Bonanza Commodity Brokers said.
In MCX April futures counter, immediate resistance is seen at Rs 580 a kg and support is at Rs 550 and look to sell around Rs 570-575 with stop loss above Rs 580 and target Rs 550-536, analyst said.
Exports of mint products, mentha oil, menthol and menthol crystals, eased 4.35% to 17,500 tonne in the April-January (2008-2009) period from a year ago. (source: Financial Express)
Mentha oil March 2009 contracts gained by about Rs 80 to trade at Rs 597.40 per kg on Tuesday over the past two weeks on improved demand from domestic markets. Spot prices in the producing centre also increased by nearly Rs 22-25 a kg as major stockists are holding in the exchange designated warehouses.
“MCX March contract is witnessing some correction, after testing a high of Rs 604 per kg. At present, the availability of stocks in the exchange warehouses is very low at 752 drums (1 drum = 180 kgs). This will support the prices to remain firm in the short term,” Naveen Mathur, head, Angel Commodities told FE. “The medium to long term trend would depend on the overseas demand which is currently at a very slow pace. Also, weather will play a crucial role in affecting the availability of mentha oil and its next crop size,” he added.
Now prices are seen in correction mode due to profit booking at higher levels and easing demand ahead of summer season.
“Initial reports of sowing are indicating less acreage under mentha crop for the year, which may be a bullish factor in days to come. Arrivals to the spot market have increased to 300 drums per day,” Tarun Satsangi, AVP research (commodities), Bonanza Commodity Brokers said.
In MCX April futures counter, immediate resistance is seen at Rs 580 a kg and support is at Rs 550 and look to sell around Rs 570-575 with stop loss above Rs 580 and target Rs 550-536, analyst said.
Exports of mint products, mentha oil, menthol and menthol crystals, eased 4.35% to 17,500 tonne in the April-January (2008-2009) period from a year ago. (source: Financial Express)
Hard times ahead as global economies expected to contract further
By Naveen Mathur (Head, Angel Commdities)
Global financial markets have faced the brunt of the economic slowdown and the IMF expects global growth to contract by ½ to 1% in 2009. Industrial activity has been affected and demand for industrial metals has been hit badly. The year 2008 was very volatile as the first-half witnessed a gain in commodity prices followed by a slump in the second-half. However, commodities have started 2009 on an upbeat note as expectations of the impact of stimulus packages have provided support. Prices have also risen on the back of technically driven rallies and short-covering. The impact of production cutbacks on prices has not been witnessed as yet as the demand situation is grim. But by the end of this year we could see a recovery in prices as demand could slightly improve and the already taken production cutbacks will show their impact.
Amid all this global financial turmoil, gold has performed phenomenally as it is the most traditional form of investment and considered as a safe-haven asset. Base metal prices have also gained on the back of short-covering rallies and anticipation of buying activity due to re-weighting of some commodity indices, during the first half of January. Therefore, the reason for the rise in base metal prices in 2009 has nothing to do with the improvement in fundamentals. Hence, we feel that the gains that were made in the short-term may be given back as fast as they were achieved. Though there are indications of a pick-up in demand from China for re-stocking, the overall improvement may not happen soon and we expect a revival and recovery in prices in 2HCY2009. This recovery in prices could be fuelled by a pick up in demand from Asia, especially China, as the country implements its $586-billion stimulus package that is aimed at infrastructure development. On the other hand, the supply side will also play a major role in pushing prices higher as cutbacks have been widespread, fast and large in scale. Markets have not yet responded to the impact of cutbacks but could feel the effects in full swing by 2HCY2009. The extensive production cuts could help boost sentiments and push prices higher.
More Info on this Link: http://www.financialexpress.com/news/Hard-times-ahead-as-global-economies-expected-to-contract-further/437448/
(source: Financial Express)
Global financial markets have faced the brunt of the economic slowdown and the IMF expects global growth to contract by ½ to 1% in 2009. Industrial activity has been affected and demand for industrial metals has been hit badly. The year 2008 was very volatile as the first-half witnessed a gain in commodity prices followed by a slump in the second-half. However, commodities have started 2009 on an upbeat note as expectations of the impact of stimulus packages have provided support. Prices have also risen on the back of technically driven rallies and short-covering. The impact of production cutbacks on prices has not been witnessed as yet as the demand situation is grim. But by the end of this year we could see a recovery in prices as demand could slightly improve and the already taken production cutbacks will show their impact.
Amid all this global financial turmoil, gold has performed phenomenally as it is the most traditional form of investment and considered as a safe-haven asset. Base metal prices have also gained on the back of short-covering rallies and anticipation of buying activity due to re-weighting of some commodity indices, during the first half of January. Therefore, the reason for the rise in base metal prices in 2009 has nothing to do with the improvement in fundamentals. Hence, we feel that the gains that were made in the short-term may be given back as fast as they were achieved. Though there are indications of a pick-up in demand from China for re-stocking, the overall improvement may not happen soon and we expect a revival and recovery in prices in 2HCY2009. This recovery in prices could be fuelled by a pick up in demand from Asia, especially China, as the country implements its $586-billion stimulus package that is aimed at infrastructure development. On the other hand, the supply side will also play a major role in pushing prices higher as cutbacks have been widespread, fast and large in scale. Markets have not yet responded to the impact of cutbacks but could feel the effects in full swing by 2HCY2009. The extensive production cuts could help boost sentiments and push prices higher.
More Info on this Link: http://www.financialexpress.com/news/Hard-times-ahead-as-global-economies-expected-to-contract-further/437448/
(source: Financial Express)
Is organic farming a feasible alternative?
Organic foods are a matter of choice of an individual or enterprises. If somebody wants to go in for organic farming, primarily on commercial consideration/profits motive, to take advantage of the unusually higher prices of organic food, they are free to do so.
Organic farming is essentially a marking tool, and cannot replace conventional farming for food security, quality and quantity of crop outputs. With a growing population and precarious food situation, the country cannot afford to take a risk with organic farming alone.
"Organic farming is not feasible as an alternative to conventional farming under all circumstances in the Indian context. The shortfall in inorganic nutrient supply, uneconomic returns to inorganic inputs under dryland and rainfed farming systems, inherent better response to organic farming in crops like vegetables, legumes and millets under traditional farming systems paves way for integration of conventional farming with organic farming," BG Shivakumar, eminent scientist, division of agronomy, Indian Agricultural Research Institute (IARI), New Delhi said.
"There will be scope for practicing organic farming on a case-to-case basis in traditional strongholds like hilly areas, rainfed and dryland farming systems to cater to the demands of organic produces in urban areas that would pay premium prices for such commodities," he said.
A transition period of 3-4 years is generally required to convert a conventional farm into an organic farm. In this period, the produce is not considered as organically produced. The reduced yields and lack of benefits of premium for the produce is a double blow for farmers, leading to financial losses, which are substantial for small- to medium-farmers.
Organic farming should be considered for lesser endowed regions of the country. It should be started with low volume high value crops like spices and medicinal aromatic crops. A holistic approach involving integrated nutrient management, integrated pest management, enhanced input use efficiency and adoption of region-specific promising cropping systems would be the best farming strategy for India, he added.
"State governments like Karnataka and Uttaranchal are taking special efforts to increase the area under organic farming. But there is reluctance on the part of farmers, due to the very high cost of conversion from conventional to organic farming, to make the land free from chemical residues," S Kumarasamy, Chairman of Agrochemicals Policy Group (APG) said.
"The certification system is yet to be fully functional. Some of the certification agencies do not strictly adhere to the standards of organic farming operations to protect their commercial interest. This has come to light recently, when a consignment of organic Basmati rice from India was held up in Finland, as it was found to contain pesticide residues. Given these constraints, the growth of area under organic farming is minimal," he said. (Source: Financial Express)
Organic farming is essentially a marking tool, and cannot replace conventional farming for food security, quality and quantity of crop outputs. With a growing population and precarious food situation, the country cannot afford to take a risk with organic farming alone.
"Organic farming is not feasible as an alternative to conventional farming under all circumstances in the Indian context. The shortfall in inorganic nutrient supply, uneconomic returns to inorganic inputs under dryland and rainfed farming systems, inherent better response to organic farming in crops like vegetables, legumes and millets under traditional farming systems paves way for integration of conventional farming with organic farming," BG Shivakumar, eminent scientist, division of agronomy, Indian Agricultural Research Institute (IARI), New Delhi said.
"There will be scope for practicing organic farming on a case-to-case basis in traditional strongholds like hilly areas, rainfed and dryland farming systems to cater to the demands of organic produces in urban areas that would pay premium prices for such commodities," he said.
A transition period of 3-4 years is generally required to convert a conventional farm into an organic farm. In this period, the produce is not considered as organically produced. The reduced yields and lack of benefits of premium for the produce is a double blow for farmers, leading to financial losses, which are substantial for small- to medium-farmers.
Organic farming should be considered for lesser endowed regions of the country. It should be started with low volume high value crops like spices and medicinal aromatic crops. A holistic approach involving integrated nutrient management, integrated pest management, enhanced input use efficiency and adoption of region-specific promising cropping systems would be the best farming strategy for India, he added.
"State governments like Karnataka and Uttaranchal are taking special efforts to increase the area under organic farming. But there is reluctance on the part of farmers, due to the very high cost of conversion from conventional to organic farming, to make the land free from chemical residues," S Kumarasamy, Chairman of Agrochemicals Policy Group (APG) said.
"The certification system is yet to be fully functional. Some of the certification agencies do not strictly adhere to the standards of organic farming operations to protect their commercial interest. This has come to light recently, when a consignment of organic Basmati rice from India was held up in Finland, as it was found to contain pesticide residues. Given these constraints, the growth of area under organic farming is minimal," he said. (Source: Financial Express)
Saturday, March 7, 2009
Oilmeal exports seen at 5.5 mt
Mumbai, New Delhi: Total exports of oilmeals from the country may reach to a record level of 5.5 million tonne valued at nearly Rs 8,500 crore (FOB value) for the current financial year 2008-09, thanks to the overall good crop of major oilseeds last year supported by higher price realisation in the international markets.
So far, the overall export of oilmeals for the period April 2008 to February 2009 was reported at 5.05 million tonne against 4.58 million tonne, up by 10%. Total FOB earning is estimated at Rs 7,790 crore, according to the latest data released by Solvent Extractors' Association of India (SEA).
"I think total export of oilmeals may reach to 5.4-5.5 million tonne for FY 2008-09 due to good crop of major oilseeds and higher price realisation in the international markets. I expect export for March to reach around 4,00,000 tonne," BV Mehta, executive director, SEAI told FE.
Export of oilmeals for February 2009 was reported at 4,41,000 tonne against 7,63,000 tonne in February 2008, down by 42%. The FOB earning was Rs 790 crore.
The export jumped during the first two quarters of 2008-09 due to excellent demand and FOB realisation. However, export got stagnated in the third quarter and in last two months export declined heavily due to stagnation in production of meat and poultry worldwide following financial crisis and pronounced slowdown in economic activity affected consumer demand for livestock products, he said.
In last few months, export of oilmeals has declined sharply due to various reasons. The association has decided to step up promotional efforts to check the declining trend and planning to depute a trade delegation in second half of May 2009 to some of the key markets in South-East Asia like Cambodia, Laos and Phillipines to maintain India's share in world market and to develop a new markets for oilmeals.
Meanwhile, Indore-based traded body Soyabean Processors Association of India (SOPA) on Thursday said that the export of soymeal during February 2009 fell by more than 40% to 3,81,000 tonne against 6,40,000 tonne achieved during the same month last year.
The exports during April 2008 to February 2009 period rose to 4.2 million tonne as compared to 3.38 million tonne achieved during the same period last year, up by 24%.
“Low realisation from crushing and high cost of soymeal are main reasons for decline in exports,” Rajesh Agrawal, co-ordinator, SOPA told FE. The prices of soymeal, widely used for human consumption and poultry feed, has hit a record high at Rs 21,200 a tonne against around Rs 18,000 per tonne prevailed recently. (Source: Financial Express)
So far, the overall export of oilmeals for the period April 2008 to February 2009 was reported at 5.05 million tonne against 4.58 million tonne, up by 10%. Total FOB earning is estimated at Rs 7,790 crore, according to the latest data released by Solvent Extractors' Association of India (SEA).
"I think total export of oilmeals may reach to 5.4-5.5 million tonne for FY 2008-09 due to good crop of major oilseeds and higher price realisation in the international markets. I expect export for March to reach around 4,00,000 tonne," BV Mehta, executive director, SEAI told FE.
Export of oilmeals for February 2009 was reported at 4,41,000 tonne against 7,63,000 tonne in February 2008, down by 42%. The FOB earning was Rs 790 crore.
The export jumped during the first two quarters of 2008-09 due to excellent demand and FOB realisation. However, export got stagnated in the third quarter and in last two months export declined heavily due to stagnation in production of meat and poultry worldwide following financial crisis and pronounced slowdown in economic activity affected consumer demand for livestock products, he said.
In last few months, export of oilmeals has declined sharply due to various reasons. The association has decided to step up promotional efforts to check the declining trend and planning to depute a trade delegation in second half of May 2009 to some of the key markets in South-East Asia like Cambodia, Laos and Phillipines to maintain India's share in world market and to develop a new markets for oilmeals.
Meanwhile, Indore-based traded body Soyabean Processors Association of India (SOPA) on Thursday said that the export of soymeal during February 2009 fell by more than 40% to 3,81,000 tonne against 6,40,000 tonne achieved during the same month last year.
The exports during April 2008 to February 2009 period rose to 4.2 million tonne as compared to 3.38 million tonne achieved during the same period last year, up by 24%.
“Low realisation from crushing and high cost of soymeal are main reasons for decline in exports,” Rajesh Agrawal, co-ordinator, SOPA told FE. The prices of soymeal, widely used for human consumption and poultry feed, has hit a record high at Rs 21,200 a tonne against around Rs 18,000 per tonne prevailed recently. (Source: Financial Express)
NCDEX Spot launches delivery contract of black pepper
Mumbai: NCDEX Spot Exchange Ltd (NSPOT) is launching compulsory delivery contract of black pepper-garbled on its electronic platform from Friday.
At this moment, the contract is aimed at black pepper producers of Kerala but later Karnataka will also be included.
While the current contract is for garbled black pepper, the exchange would launch a separate contract of un-garbled pepper later.
"After successful launch of sugar in Maharashtra, this move will benefit the farmers of the Kerala immensely," R Ramasheshan, managing director and CEO, NCDEX said.
The delivery centre for the contract would be at Kochi with minimum trading lot of one tonne. All trades on the exchange are guaranteed by the exchange for delivery and payments. The tick size of the contract will be Rs 1 per quintal.
According to contract specifications, three level circuit filters has been designed for this contract. Once the first level of (+/-) 6% is hit, trading is halted for 15 minutes then the filter is enhanced by (+/-) 3% to create the second level. After resumption, if the second level is hit the trading is again halted for 15 minutes and the filter is enhanced further by another (+/-) 3% to create the third level. Incase the third level is also hit; trading is suspended for the day.
The contract will allow participants from all over the country to buy black pepper, thereby, enabling producers in Kochi to discover best price for their black pepper traded on the exchange platform. (source: Financial Express)
At this moment, the contract is aimed at black pepper producers of Kerala but later Karnataka will also be included.
While the current contract is for garbled black pepper, the exchange would launch a separate contract of un-garbled pepper later.
"After successful launch of sugar in Maharashtra, this move will benefit the farmers of the Kerala immensely," R Ramasheshan, managing director and CEO, NCDEX said.
The delivery centre for the contract would be at Kochi with minimum trading lot of one tonne. All trades on the exchange are guaranteed by the exchange for delivery and payments. The tick size of the contract will be Rs 1 per quintal.
According to contract specifications, three level circuit filters has been designed for this contract. Once the first level of (+/-) 6% is hit, trading is halted for 15 minutes then the filter is enhanced by (+/-) 3% to create the second level. After resumption, if the second level is hit the trading is again halted for 15 minutes and the filter is enhanced further by another (+/-) 3% to create the third level. Incase the third level is also hit; trading is suspended for the day.
The contract will allow participants from all over the country to buy black pepper, thereby, enabling producers in Kochi to discover best price for their black pepper traded on the exchange platform. (source: Financial Express)
Futures market regulator urged to improve price info
Mumbai: The futures market regulators should improve the availability and quality of information on commodities traded in related physical and OTC derivatives markets. Such information may be needed to understand price formation or to monitor and detect manipulation in the futures markets. This is one of the key recommendations made by the task force on commodity futures markets.
The international organisation of securities commissions' (IOSCO) technical committee on Thursday released a final report prepared by its Task Force on Commodity
Futures Markets (Task Force) in Madrid (Spain) which contains recommendations to improve the supervision of commodity futures markets and global regulatory cooperation.
"Commodities markets, and the trade in their related futures, are fundamental to a vibrant global economy. Given the growth in these markets, and recent volatility in commodities prices, there are concerns about the possibility of market manipulation involving both these futures markets and related physical and OTC derivative markets,” Kathleen Casey, chairman, Technical Committee, said.
The other major recommendations focused on the ability of futures market regulators to access relevant information concerning related commodity markets over which futures market regulators generally do not have jurisdiction, such as the cash and OTC derivatives markets, improving regulators' supervisory and enforcement powers and the enhancement of global cooperation.
The Task Force, which was formed following concerns around the price rises and volatility in agricultural and energy commodities in 2008, focused on whether futures market regulators' supervisory approaches was appropriate in light of recent market developments.
While reports reviewed by the Task Force concluded that fundamentals rather than speculative activity was the plausible explanation for price changes, the Task Force has made a number of recommendations to improve the transparency and supervision of these markets.
Task Force called for measures to improve regulators' supervisory and enforcement powers and the enhancement of global cooperation. (source: Financial Express)
The international organisation of securities commissions' (IOSCO) technical committee on Thursday released a final report prepared by its Task Force on Commodity
Futures Markets (Task Force) in Madrid (Spain) which contains recommendations to improve the supervision of commodity futures markets and global regulatory cooperation.
"Commodities markets, and the trade in their related futures, are fundamental to a vibrant global economy. Given the growth in these markets, and recent volatility in commodities prices, there are concerns about the possibility of market manipulation involving both these futures markets and related physical and OTC derivative markets,” Kathleen Casey, chairman, Technical Committee, said.
The other major recommendations focused on the ability of futures market regulators to access relevant information concerning related commodity markets over which futures market regulators generally do not have jurisdiction, such as the cash and OTC derivatives markets, improving regulators' supervisory and enforcement powers and the enhancement of global cooperation.
The Task Force, which was formed following concerns around the price rises and volatility in agricultural and energy commodities in 2008, focused on whether futures market regulators' supervisory approaches was appropriate in light of recent market developments.
While reports reviewed by the Task Force concluded that fundamentals rather than speculative activity was the plausible explanation for price changes, the Task Force has made a number of recommendations to improve the transparency and supervision of these markets.
Task Force called for measures to improve regulators' supervisory and enforcement powers and the enhancement of global cooperation. (source: Financial Express)
Tuesday, March 3, 2009
DTC Feb Sight Estimated at $110M
Participants in the Diamond Trading Company's (DTC) February sight reported a slight increase in activity and interest in goods, although the sight remained comparatively very small. While somewhat hesitant to commit to a figure, sight participants estimated the sight's value at about $110 million. “It’s very difficult to assess the sights in this environment,” said one observer, but noted that there was "a little more movement in goods than the previous two sights.” He speculated that sightholders have gotten somewhat used to the current market, and are now more focused on doing business, buying goods from DTC and selling in the market. One sightholder agreed that there was more of a buzz at the sight, but suspected that “there is a lot of window-shopping going on, and not so much buying.” Louise Prior, DTC spokesperson, also noted a more positive mood at the February sight than there had been in December and January, and reported an improvement in sales from those previous two sights. She declined to project whether this signaled some stabilization of the market. Rapaport News estimated the December and January sights as worth about $100 million and $80 million, respectively. Sales during the past three months have been about 83 percent below those recorded in the three DTC sights from December 2007 through February 2008, with an estimated total of $1.7 billion.Prices Drop But Still Above MarketAll of the February sight participants surveyed by Rapaport News reported some price revision but agreed that DTC's prices were still above other rough sources in the market. One sightholder estimated that DTC goods were still 15 to 20 percent too high, and behind the market. “DTC is staying firm on their pricing,” said another sightholder. Some boxes reflected the shift in the polished market value, mainly on the smaller goods, "maybe 3 grainers and down, where there is more interest at the moment,” said one. The bigger the stones, the larger the gap was between DTC prices and market value, he explained. De Beers reported that its rough diamond prices rose by an average of 14 percent in 2008, on the back of the boom in the market in the first half of the year. A company spokesperson told Rapaport News that lower consumer demand for most categories of polished diamonds in the second half “led to downward pressure on DTC prices and lower purchase requirements from sightholders whilst they adjusted to liquidity and inventory-level challenges and the global financing situation.” The company reported in August 2008 that prices had risen by a cumulative 16 percent for the year to date. According to Rapaport estimates, the decline in the fourth quarter brought prices in December to about 20 percent lower than they were in August. RBC Capital Markets estimated this week in a note about the Harry Winston Diamond Corporation that rough diamond prices fell approximately 40 percent in the final quarter of 2008. De Beers has also cut its production significantly to meet lower demand from sightholders, which has helped it maintain its price levels. Second Sight weekIn an unprecedented move, DTC carried over some rejected stock from the February sight after it closed on Friday, February 27, to sell to sightholders this week. The company is offering rejected boxes to sightholders that need specific items or that need goods that weren’t in their Intention to offer (ITO). Prior said that DTC is gathering feedback from sightholders to assess the success of the initiative. She added that the company has not decided to go to the secondary market, as DTC hinted it might in January, but it is keeping all its options open. Bracing for a Challenging Year Varda Shine, DTC's managing director, said in the recently published De Beers annual report that “a combination of high inventory levels in the cutting centers and a forecast for a further marginal contraction in 2009 consumer demand is expected to impact global rough sales significantly.” The outlook for trading in southern Africa in 2009 also remains challenging, given the weak polished market and working capital constraints, she added. DTC ended 2008 with sales flat at $5.93 billion across its operations in London, Botswana, Namibia and South Africa. Sales from DTC Botswana (DTCB) and Namibia DTC (NDTC) were $367 million and $172 million, respectively, while DTC South Africa achieved sales of $574 million, De Beers reported. Shine said that DTC would focus on achieving "further cost efficiencies" in 2009's "pressured trading environment." (source: Rapaport News Wire)
Saturday, February 28, 2009
Jeera prices to remain firm on lower stocks, shortfall in output
Mumbai: Jeera spot and futures prices may remain steady-to-firm over the next few days on increased offtake by upcountry traders supported by lower carryover stocks and shortfall in the new crop expected in Gujarat.
Jeera March 2009 contracts at the National Commodity and Derivatives Exchange of India (NCDEX) were traded at Rs 11,240 a quintal on Thursday. Jeera June 2009 contracts prices on Wednesday resumed trading and quoted higher at Rs 11,940 a quintal up by nearly Rs 400 over benchmark contracts.
“The market is weather-driven. With the fog conditions in some parts of Gujarat, traders expect the crop to be lower by 10%-15% in 2009 on unfavorable weather conditions,” a local trader said.
Spot prices at the Unjha market yard are hovering around Rs 1,800-Rs 2,500 per 20 kg depending on quality.
“The overall crop of new jeera in Gujarat and Rajasthan is expected to be the same as last season. But this year the yield is believed to be lower than that of last year. New arrivals from Saurashtra have reached to 15,000-16,000 bags (each of 50-55 kg) daily. There are export enquiries from Dubai, so the export demand may remain steady,” Amrutbhai Patel, a leading dealer and president, chamber of commerce (Unjha) told FE.
New inflows from Rajasthan will commence in the next 15-20 days. The picture will be clearer about quality. Total crop is expected to around 28-29 lakh bags, Patel added.
There are lower stocks with exchanges and stockists in the domestic market.
“Jeera prices are likely to find support around 11,000 from where the overall upward trend is likely to resume. We continue to hold our bias up for the target of Rs 12,800 with reversal below Rs 10,800,” an analyst with Sharekhan Commodities said.
The new crop from Turkey, Iran, and Syria are to arrive in the markets only in July and August, which would also be supporting the price of Indian jeera, the analyst added. (source: financial express)
Jeera March 2009 contracts at the National Commodity and Derivatives Exchange of India (NCDEX) were traded at Rs 11,240 a quintal on Thursday. Jeera June 2009 contracts prices on Wednesday resumed trading and quoted higher at Rs 11,940 a quintal up by nearly Rs 400 over benchmark contracts.
“The market is weather-driven. With the fog conditions in some parts of Gujarat, traders expect the crop to be lower by 10%-15% in 2009 on unfavorable weather conditions,” a local trader said.
Spot prices at the Unjha market yard are hovering around Rs 1,800-Rs 2,500 per 20 kg depending on quality.
“The overall crop of new jeera in Gujarat and Rajasthan is expected to be the same as last season. But this year the yield is believed to be lower than that of last year. New arrivals from Saurashtra have reached to 15,000-16,000 bags (each of 50-55 kg) daily. There are export enquiries from Dubai, so the export demand may remain steady,” Amrutbhai Patel, a leading dealer and president, chamber of commerce (Unjha) told FE.
New inflows from Rajasthan will commence in the next 15-20 days. The picture will be clearer about quality. Total crop is expected to around 28-29 lakh bags, Patel added.
There are lower stocks with exchanges and stockists in the domestic market.
“Jeera prices are likely to find support around 11,000 from where the overall upward trend is likely to resume. We continue to hold our bias up for the target of Rs 12,800 with reversal below Rs 10,800,” an analyst with Sharekhan Commodities said.
The new crop from Turkey, Iran, and Syria are to arrive in the markets only in July and August, which would also be supporting the price of Indian jeera, the analyst added. (source: financial express)
FMC raps NCDEX on fall in SGF, violation of rules
The Forward Markets Commission (FMC) has taken a serious note of the mismanagement of financial affairs and diversion of funds made by the National Commodity & Derivatives Exchange Ltd (NCDEX) in the dealing and utilisation of the Settlement Guarantee Fund (SGF) which has violated regulatory rules.
The regulator also noted that NCDEX’s SGF had slipped below the minimum amount of Rs 5 crore as prescribed in the exchange’s own bylaws. The fund size was reduced to just Rs 5.05 lakh as on December 31 from Rs 24.87 crore between March 2004 and March 2006.
In a 20-page document released by FMC on the transaction charges levied by the exchange, it has examined the issue of reduced transaction charges and said in its finding that transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring an substantial jump in the volumes as expected by the exchange.
The commission has also rejected the two likely scenarios given by the exchange that could increase the volume of the exchange. Firstly, that the exchange was able to attract new clients who were so far not present in the market. Secondly, that the exchange was able to attract clients of other exchanges in the evening hours which would result in an increase of 30%-35% of the average daily trade value, i.e. 200% growth in turnover of the exchange in the evening hours.
“First of all, expecting a 200% rise in volume only on the strength of reduced transaction charges is highly impractical. Secondly, it would be incorrect to presume that such a potential shift in volume would go without any retaliatory action from competitors,” said the regulator. (source: financial express)
The regulator also noted that NCDEX’s SGF had slipped below the minimum amount of Rs 5 crore as prescribed in the exchange’s own bylaws. The fund size was reduced to just Rs 5.05 lakh as on December 31 from Rs 24.87 crore between March 2004 and March 2006.
In a 20-page document released by FMC on the transaction charges levied by the exchange, it has examined the issue of reduced transaction charges and said in its finding that transaction charges may make only marginal difference in the choice of the exchange as far as market participation is concerned. The drastic cut in transaction charges cannot by itself bring an substantial jump in the volumes as expected by the exchange.
The commission has also rejected the two likely scenarios given by the exchange that could increase the volume of the exchange. Firstly, that the exchange was able to attract new clients who were so far not present in the market. Secondly, that the exchange was able to attract clients of other exchanges in the evening hours which would result in an increase of 30%-35% of the average daily trade value, i.e. 200% growth in turnover of the exchange in the evening hours.
“First of all, expecting a 200% rise in volume only on the strength of reduced transaction charges is highly impractical. Secondly, it would be incorrect to presume that such a potential shift in volume would go without any retaliatory action from competitors,” said the regulator. (source: financial express)
Nafed to sell cotton on NSEL platform
Mumbai: The National Agricultural Cooperative Marketing Federation (Nafed) has decided to offer cotton through online spot trading system, the National Spot Exchange Ltd (NSEL). The federation has so far sold about 2,500 bales averaged around Rs 20,000 per candy valued at Rs 3 crore - Rs 4 crore through the online platform and may gear up for the sale from next week.
“The federation has so far procured total of about 35 lakh bales from states including Maharashtra, Gujarat and Andhra Pradesh. We will continue to sell cotton through all methods including online trading. Small buyers have a good option to buy through online platform as there is no competition on sales up to 10,000 bales,” said UKS Chauhan, managing director, Nafed said. This week, cotton sales has evoked good response as the major buyers in the contracts were Vardhman Mills, JG Spinning Mills, GIMA Textiles and exporter Ram Gopal Ramesh Kumar.
“The spot contracts in which sale transactions happened were Wani, Aurangabad and Nagpur delivery contracts. Since Nafed stock is lying at CWC (Central Warehousing Corporation) or SWC (State Warehousing Corporation) warehouses, the same warehouses have been designated as delivery centers of NSEL. Hence, Nafed does not incur any expenses on transportation; rather it is sold on ex-warehouse basis from existing locations,” Anjani Sinha, managing director, NSEL, said. NSEL has launched 11 contracts for Maharashtra, 3 contracts each for Gujarat and Andhra Pradesh.
“We have started participating in NSEL. We want to experiment with this new initiative. I believe the future of commodity trading lies in such electronic markets only.This will help us in reducing our cost of procurement as well as eliminating all counter party risks,” an official of a leading export house said. (source: financial express)
“The federation has so far procured total of about 35 lakh bales from states including Maharashtra, Gujarat and Andhra Pradesh. We will continue to sell cotton through all methods including online trading. Small buyers have a good option to buy through online platform as there is no competition on sales up to 10,000 bales,” said UKS Chauhan, managing director, Nafed said. This week, cotton sales has evoked good response as the major buyers in the contracts were Vardhman Mills, JG Spinning Mills, GIMA Textiles and exporter Ram Gopal Ramesh Kumar.
“The spot contracts in which sale transactions happened were Wani, Aurangabad and Nagpur delivery contracts. Since Nafed stock is lying at CWC (Central Warehousing Corporation) or SWC (State Warehousing Corporation) warehouses, the same warehouses have been designated as delivery centers of NSEL. Hence, Nafed does not incur any expenses on transportation; rather it is sold on ex-warehouse basis from existing locations,” Anjani Sinha, managing director, NSEL, said. NSEL has launched 11 contracts for Maharashtra, 3 contracts each for Gujarat and Andhra Pradesh.
“We have started participating in NSEL. We want to experiment with this new initiative. I believe the future of commodity trading lies in such electronic markets only.This will help us in reducing our cost of procurement as well as eliminating all counter party risks,” an official of a leading export house said. (source: financial express)
Hold gold: mantra for investors
Gold investment has traditionally been the preserve of a minority of investors buying it on futures exchanges or through bullion dealers. There has been an unprecedented surge in investment demand. Everybody spoke about a gold rush last week when the yellow metal jumped back above $1,000 an ounce on last Monday – not far off last spring’s record of $1,033 – before slipping back on profit taking, raising its gains to 45% since October.
Gold usually moves inversely to the dollar, but it has gained around 13% this year, despite the greenback rising by around 10% against the euro. It has hit new records in a range of currencies, including pounds, euros and Canadian and Australian dollars.
During the first two months of 2009, gold London spot rose to $989.75 at the end of February, up by 14% from $869 in early January 2009. Over the year as a whole, the gold price averaged $872, up 25% from $695 in 2007.
During the current month, gold prices reached near the psychological Rs 16,000-mark, attracting more scrap sales, as consumers chose to cash in on this rally while imports continued to slacken to zero.
Global retail investment in quarter four of 2008 jumped by almost 400%, with retail investors in France becoming net buyers of gold for the first time in 25 years. Indian consumers at the retail level invested an all time high figure of Rs 88,056 crore on gold in the calendar year 2008, as opposed to Rs 71,761 crore in 2007 - an increase of 22.7% over the previous year and 71% of this value went towards the purchasing of gold jewellery and 29% was towards investment products like gold bars and coins.
“Gold will not lose its value. I think investors should keep themselves open to acquire gold at every dip. A year from now we could see these prices as a bargain,” Prakash Jain, a bullion trader said.
As shares on stock markets around the world lost an estimated $14 trillion in value, identifiable investment demand for gold, which incorporates exchange traded funds (ETFs) and bars and coins, was 64% higher in 2008 than in 2007, equivalent to an additional inflow of $15 billion. A major shift was witnessed in gold buying from traditional jewellery to coins and bars.
“The global recession and financial crisis will hit the entire investment basket. Gold will be affected in its dual role of currency as well as commodity. Commodities across the board have fallen by more than 50% from highs. Gold would be affected to a lesser extent due to its characteristic of being a safe investment and a hedge against inflation. The physical demand for jewellery would reduce due to the current global economic conditions. Reduction in oil prices would reduce investment surplus for oil exporting nations, this would drive away another important investment group from gold,” Bhargava Vaidya, a leading bullion analyst said.
Inflows into gold exchange traded funds (ETFs) have continued to surge this year. The gold holdings of the world’s largest gold trust, the New York-listed SPDR Gold Trust has absorbed 10% of worldwide annual mine output in the past seven weeks.
At this rate, 2009’s ETF purchases would be enough to surpass the tonnage of jewellery bought last year, replacing jewellery as the top source of demand. It is now the world’s seventh-largest gold bullion holder, behind a handful of central banks.
“Gold is expected to develop a stronger trading link to the currency world as risk premia on money stabilise. Then, as the US fiscal and trade deficits get un-manageable, the weaker dollar could then help gold break through $1200/oz,” Gnanasekar Thaigrajan, director, Commtrendz Research said.
Gold jewellery demand globally fell by 6% to reach at 538.9 tonne in quarter four of 2008 from 570.3 tonne in the same quarter of 2007.
Gold in the year 2008 outperformed most of the asset classes and has provided a 32% return on investment in rupee terms for the year 2008, according to latest report of the World Gold Council (WGC).
The compounded annualised returns provided by gold in the last five years ending 2008 have been 19.54%. (10 year figure is 13.63%), the WGC report said. (source: financial express)
Gold usually moves inversely to the dollar, but it has gained around 13% this year, despite the greenback rising by around 10% against the euro. It has hit new records in a range of currencies, including pounds, euros and Canadian and Australian dollars.
During the first two months of 2009, gold London spot rose to $989.75 at the end of February, up by 14% from $869 in early January 2009. Over the year as a whole, the gold price averaged $872, up 25% from $695 in 2007.
During the current month, gold prices reached near the psychological Rs 16,000-mark, attracting more scrap sales, as consumers chose to cash in on this rally while imports continued to slacken to zero.
Global retail investment in quarter four of 2008 jumped by almost 400%, with retail investors in France becoming net buyers of gold for the first time in 25 years. Indian consumers at the retail level invested an all time high figure of Rs 88,056 crore on gold in the calendar year 2008, as opposed to Rs 71,761 crore in 2007 - an increase of 22.7% over the previous year and 71% of this value went towards the purchasing of gold jewellery and 29% was towards investment products like gold bars and coins.
“Gold will not lose its value. I think investors should keep themselves open to acquire gold at every dip. A year from now we could see these prices as a bargain,” Prakash Jain, a bullion trader said.
As shares on stock markets around the world lost an estimated $14 trillion in value, identifiable investment demand for gold, which incorporates exchange traded funds (ETFs) and bars and coins, was 64% higher in 2008 than in 2007, equivalent to an additional inflow of $15 billion. A major shift was witnessed in gold buying from traditional jewellery to coins and bars.
“The global recession and financial crisis will hit the entire investment basket. Gold will be affected in its dual role of currency as well as commodity. Commodities across the board have fallen by more than 50% from highs. Gold would be affected to a lesser extent due to its characteristic of being a safe investment and a hedge against inflation. The physical demand for jewellery would reduce due to the current global economic conditions. Reduction in oil prices would reduce investment surplus for oil exporting nations, this would drive away another important investment group from gold,” Bhargava Vaidya, a leading bullion analyst said.
Inflows into gold exchange traded funds (ETFs) have continued to surge this year. The gold holdings of the world’s largest gold trust, the New York-listed SPDR Gold Trust has absorbed 10% of worldwide annual mine output in the past seven weeks.
At this rate, 2009’s ETF purchases would be enough to surpass the tonnage of jewellery bought last year, replacing jewellery as the top source of demand. It is now the world’s seventh-largest gold bullion holder, behind a handful of central banks.
“Gold is expected to develop a stronger trading link to the currency world as risk premia on money stabilise. Then, as the US fiscal and trade deficits get un-manageable, the weaker dollar could then help gold break through $1200/oz,” Gnanasekar Thaigrajan, director, Commtrendz Research said.
Gold jewellery demand globally fell by 6% to reach at 538.9 tonne in quarter four of 2008 from 570.3 tonne in the same quarter of 2007.
Gold in the year 2008 outperformed most of the asset classes and has provided a 32% return on investment in rupee terms for the year 2008, according to latest report of the World Gold Council (WGC).
The compounded annualised returns provided by gold in the last five years ending 2008 have been 19.54%. (10 year figure is 13.63%), the WGC report said. (source: financial express)
Sunday, February 22, 2009
Oil palm smallholders in Indonesia to get sustainable farming training
Small-scale oil-palm farmers are being encouraged to go green, and will be provided with training on how to run their plantations without harming the environment, Achmad Mangga Barani, the director general of plantations said at the Ministry of Agriculture on Friday.
The passport to environmental approval is the Roundtable of Sustainable Palm Oil, or RSPO, certification. Previously, the endorsement had only been available to big plantation companies that could afford the training and environmental upgrades.
“We will start the training in March,” Achmad said. “Most farmers at present are handling their plantations in traditional ways, so it’s very important to heighten their awareness of RSPO certification.”
The roundtable was formed in 2004 by palm-oil producers, processors, traders, consumer-goods manufacturers, environmentalists and nongovernmental organizations, bankers, investors and other stakeholders with the aim of promoting the growth of sustainable products under responsible environmental conditions.
One of the concerns has been that although big companies had resources to reorganize their plantations to gain certification, smallholders, who own a total of 35 percent of the oil-palm hectarage in the country, would suffer by being unable to sell their produce for export without certification.
“After training, farmers must reorder the management of their plantations and then apply for certificates,” Achmad said. Given the high cost of certification, the ministry proposes to band smallholders into groups to request certification together. Auditing costs per hectare for certification range from $20 to $40, excluding the cost of modifying plantation practices.
RSPO certification involves eight general principles and 39 criteria, including the commitment to manage environmental and economic sustainability, and responsibility for natural resources and labor welfare.
Derom Bangun, vice chairman of the RSPO, said that aside from the nature issue, rumors in European Union countries that plantations in this country use child labor were disturbing
“Some say there are plantations that are employing children under the age limit and paying them very little,” he said. All of the stakeholders needed to be aware of the rumors and combat them, he said, in the effort to maintain exports to the EU and other countries.
Of nine major palm-oil companies controlling more than 2.9 million hectares around the country, only PT Musim Mas has gained RSPO certification. Five other companies — PT Hindoli, PT London Sumatera Tbk, PT Sime Indo Agro and PTPN III — are currently in the process, Derom said. (Source: thejakartaglobal.com)
The passport to environmental approval is the Roundtable of Sustainable Palm Oil, or RSPO, certification. Previously, the endorsement had only been available to big plantation companies that could afford the training and environmental upgrades.
“We will start the training in March,” Achmad said. “Most farmers at present are handling their plantations in traditional ways, so it’s very important to heighten their awareness of RSPO certification.”
The roundtable was formed in 2004 by palm-oil producers, processors, traders, consumer-goods manufacturers, environmentalists and nongovernmental organizations, bankers, investors and other stakeholders with the aim of promoting the growth of sustainable products under responsible environmental conditions.
One of the concerns has been that although big companies had resources to reorganize their plantations to gain certification, smallholders, who own a total of 35 percent of the oil-palm hectarage in the country, would suffer by being unable to sell their produce for export without certification.
“After training, farmers must reorder the management of their plantations and then apply for certificates,” Achmad said. Given the high cost of certification, the ministry proposes to band smallholders into groups to request certification together. Auditing costs per hectare for certification range from $20 to $40, excluding the cost of modifying plantation practices.
RSPO certification involves eight general principles and 39 criteria, including the commitment to manage environmental and economic sustainability, and responsibility for natural resources and labor welfare.
Derom Bangun, vice chairman of the RSPO, said that aside from the nature issue, rumors in European Union countries that plantations in this country use child labor were disturbing
“Some say there are plantations that are employing children under the age limit and paying them very little,” he said. All of the stakeholders needed to be aware of the rumors and combat them, he said, in the effort to maintain exports to the EU and other countries.
Of nine major palm-oil companies controlling more than 2.9 million hectares around the country, only PT Musim Mas has gained RSPO certification. Five other companies — PT Hindoli, PT London Sumatera Tbk, PT Sime Indo Agro and PTPN III — are currently in the process, Derom said. (Source: thejakartaglobal.com)
Tea sector to prosper in recession, say experts
Kochi: What do the people do in times of recession? Well, it seems that they sit more at home and drink tea, and drink more tea by shifting from Cola, Beer and Vodka, say commodity experts. And the penchant for tea in times of uncertainty and recessionary blues helps the tea industry. Perhaps, it may be the only sector and industry smiling and flourishing, while other markets shrink and crawl. Experts estimate it to grow handsomely in the years to come as people turn more health conscious.
In the US market, tea's appeal is immense and vibrant according to Joseph P Simrany of the Tea Association of USA. Import of tea into the US market is seen growing with green tea, in particular, growing by almost 200% in a decade. The total market has grown from $1.84 billion in 1990 to $7.3 billion in 2008. It is estimated to double in the next five years, Simrany said.
By the year 2012, the tea market in the US would be worth over $15 billion, he added. Traditional tea is expected to grow in the range of 2-3%,while the ready-to-drink segment is estimated to grow by 5-10%.
It has been observed that there is a ten-fold increase in specialty tearooms from 200 to 2,400. Even, traditional coffee houses are offering specialty tea, Simrany observed.
Marcus Wolf from Schroeder & Rudolph Hamann oHG of Germany also expects the market to stay in positive territory in the coming days. The demand for tea is seen increasing all over Europe with people lining up to buy or consume their tea. The per capita consumption of tea is estimated at 25 litres by the German Tea association. The large Turkish population aids German tea consumption.
Similar is the case of the UK market says Pradeep Jeyathilak of Unilever UK. "The only thing cheaper than tea is tap water. A cup of tea comes for 1.8 pence, while instant coffee retails for 3.9 pence and carbonated drinks cost 16. 5 pence," he said. During the last recession, 50% of the households claimed to spend less on eating out of home. It is seen that people sit at home and drink more tea, he added. The total UK market for tea has seen 2% growth in 2007 when compared to 2006 and 0.4% growth in 2008, when compared to 2007. Tea sales increased in the UK aided by its retail price relative to other drinks, its high level of home consumption and the emotional benefits, Pradeep Jeyathilak said.
Alexey Shvetsov of Ormi Traders, says that in Russia more consumers are shifting from Cola, beer and Vodka. "What else can people drink? People still dink tea as a healthy and traditional drink. And an obvious choice when you have less money is still tea," he said. The total import into Russia in 2008 is seen at 178.6 million kg. Shvetsov thinks that people may shift from premium varieties of tea to the less costly varieties if the crisis lingers. Consumers may also shift from relatively expensive tea bags to the loose packages, he added.
Other tea drinking nations like Egypt, Iran and Iraq are also reporting a growth in tea consumption.
Developed nations are shifting from traditional tea to the ready-to-drink segment and specialty teas, while the West Asian and Asian nations still prefer tea the traditional way. (Source: Financial Express)
In the US market, tea's appeal is immense and vibrant according to Joseph P Simrany of the Tea Association of USA. Import of tea into the US market is seen growing with green tea, in particular, growing by almost 200% in a decade. The total market has grown from $1.84 billion in 1990 to $7.3 billion in 2008. It is estimated to double in the next five years, Simrany said.
By the year 2012, the tea market in the US would be worth over $15 billion, he added. Traditional tea is expected to grow in the range of 2-3%,while the ready-to-drink segment is estimated to grow by 5-10%.
It has been observed that there is a ten-fold increase in specialty tearooms from 200 to 2,400. Even, traditional coffee houses are offering specialty tea, Simrany observed.
Marcus Wolf from Schroeder & Rudolph Hamann oHG of Germany also expects the market to stay in positive territory in the coming days. The demand for tea is seen increasing all over Europe with people lining up to buy or consume their tea. The per capita consumption of tea is estimated at 25 litres by the German Tea association. The large Turkish population aids German tea consumption.
Similar is the case of the UK market says Pradeep Jeyathilak of Unilever UK. "The only thing cheaper than tea is tap water. A cup of tea comes for 1.8 pence, while instant coffee retails for 3.9 pence and carbonated drinks cost 16. 5 pence," he said. During the last recession, 50% of the households claimed to spend less on eating out of home. It is seen that people sit at home and drink more tea, he added. The total UK market for tea has seen 2% growth in 2007 when compared to 2006 and 0.4% growth in 2008, when compared to 2007. Tea sales increased in the UK aided by its retail price relative to other drinks, its high level of home consumption and the emotional benefits, Pradeep Jeyathilak said.
Alexey Shvetsov of Ormi Traders, says that in Russia more consumers are shifting from Cola, beer and Vodka. "What else can people drink? People still dink tea as a healthy and traditional drink. And an obvious choice when you have less money is still tea," he said. The total import into Russia in 2008 is seen at 178.6 million kg. Shvetsov thinks that people may shift from premium varieties of tea to the less costly varieties if the crisis lingers. Consumers may also shift from relatively expensive tea bags to the loose packages, he added.
Other tea drinking nations like Egypt, Iran and Iraq are also reporting a growth in tea consumption.
Developed nations are shifting from traditional tea to the ready-to-drink segment and specialty teas, while the West Asian and Asian nations still prefer tea the traditional way. (Source: Financial Express)
Silver futures crosses 23,000-level, crude oil futures drops 6%
Mumbai: Base metals futures prices fell marginally on the week ended on Friday on rising inventories amid slow demand. Gold futures continued to climb last week mainly on buying support from retail investors as the global economic scenario continues to remain grim.
Silver prices also surged in line with gold. Silver March on Friday crossed the Rs 23,000 per kg mark mainly on strong buying support.
On the other hand, crude oil prices continued to remain lower on lack of renewed buying interest.
MCX copper February 2009 contracts continued to rule weak and settled at 5.24% lower at Rs 157.35 per kg on Friday from Rs 166.05 over the previous week. "Support is seen at Rs 155 per kg," a local analyst said.
Copper stocks in LME registered warehouses have gained 2,950 tonne to remain at 5,28,250 tonne. Global copper market saw a surplus of 3.29 lakh tonne in 2008, the World Bureau of Metal Statistics (WBMS) report said. LME Copper cash was quoted at $3,254.75 per tonne last week.
MCX crude oil March 2009 contracts once again slipped below the Rs 2,000-level and ended lower at Rs 1,957 per barrel on Friday over the previous week's close of Rs 2,080 per barrel, down by 5.91%. WTI crude oil price in NYMEX hovered at around $39.88 per barrel.
Even though inventory data showed a drop in oil stocks, the bearish picture for crude oil consumption is still in place, an analyst with Angel Broking said.
Crude oil prices may trade sideways as demand is unlikely to increase in the medium term, a trader said.
MCX gold April 2009 contracts finished higher at Rs 15,661 per 10 gram on Friday over the previous week's Rs 14,638 per 10 gram, up by 7% as investors have flocked to gold, the safe haven asset. In the London market, spot prices touched $998.57 an ounce.
MCX silver March 2009 contracts were traded higher at Rs 22,970 per kg on Friday from Rs 21,818 over the previous week, up by 5.28%.
The white metals crossed the Rs 23,000 per kg level on Friday mainly on sustained buying support. (source: Financial Express)
Silver prices also surged in line with gold. Silver March on Friday crossed the Rs 23,000 per kg mark mainly on strong buying support.
On the other hand, crude oil prices continued to remain lower on lack of renewed buying interest.
MCX copper February 2009 contracts continued to rule weak and settled at 5.24% lower at Rs 157.35 per kg on Friday from Rs 166.05 over the previous week. "Support is seen at Rs 155 per kg," a local analyst said.
Copper stocks in LME registered warehouses have gained 2,950 tonne to remain at 5,28,250 tonne. Global copper market saw a surplus of 3.29 lakh tonne in 2008, the World Bureau of Metal Statistics (WBMS) report said. LME Copper cash was quoted at $3,254.75 per tonne last week.
MCX crude oil March 2009 contracts once again slipped below the Rs 2,000-level and ended lower at Rs 1,957 per barrel on Friday over the previous week's close of Rs 2,080 per barrel, down by 5.91%. WTI crude oil price in NYMEX hovered at around $39.88 per barrel.
Even though inventory data showed a drop in oil stocks, the bearish picture for crude oil consumption is still in place, an analyst with Angel Broking said.
Crude oil prices may trade sideways as demand is unlikely to increase in the medium term, a trader said.
MCX gold April 2009 contracts finished higher at Rs 15,661 per 10 gram on Friday over the previous week's Rs 14,638 per 10 gram, up by 7% as investors have flocked to gold, the safe haven asset. In the London market, spot prices touched $998.57 an ounce.
MCX silver March 2009 contracts were traded higher at Rs 22,970 per kg on Friday from Rs 21,818 over the previous week, up by 5.28%.
The white metals crossed the Rs 23,000 per kg level on Friday mainly on sustained buying support. (source: Financial Express)
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