Date IST Currency Data Forecast Previous Importance 20-Dec 12:30 EUR German PPI m/m 0.1% 0.7% Low

Transcription

1 Commodity Snapshot December 20, 2016 Eased a bit Data and Events due today 123 FOR PRIVATE CIRCULATION ONLY Date IST Currency Data Forecast Previous Importance 20-Dec 12:30 EUR German PPI m/m 0.1% 0.7% Low Indian rupee appreciated by 0.05% to trade at against the US dollar. Rupee has stabilized along with recovery in bond yields and correction in US dollar index. However, weighing on price is weakness in equity market and continuing concerns about fund outflows amid Fed s decision to raise interest rate. Rupee may trade in a range of and bias may be on downside. Bullion Gold- MCX Gold may witness mixed trade tracking cues from international exchange but sell on rise is suggested. COMEX gold trades mixed near $1140/oz amid mixed cues. Choppiness in equity markets and US dollar has lent some support to prices. Safe haven buying is also high amid tensions between US and China over China s seizure of US drone and killing of Russian ambassador to Turkey. However, weighing on price is Fed s monetary tightening outlook and continuing ETF outflows. With no major economic event due in next few days we could see some consolidation and some short covering as well hence we suggest waiting for corrective rebound to go short. Support for MCX Gold February contract is seen at Rs while Resistance is seen at Rs Silver- MCX Silver may note choppy trade in line with international prices but bias may be on downside. COMEX Silver trades mixed near $15/oz amid rangebound movement in gold and weakness in industrial metals. Choppiness in US dollar has lent some support to gold but put pressure on industrial metals. ETF investors also moved to sidelines after recent outflows. Silver may continue to witness mixed as risk sentiment affects gold and industrial metals differently but sell on rise is suggested. Support for MCX Silver March contract is seen at Rs while Resistance is seen at Rs Base Metals Copper- MCX Copper may note choppy movement tracking range bound movement in international exchange. LME Copper trades little changed in early trades today as prices take breather following 2.5% drop yesterday. We expect the metal to trade with a weaker bias today tracking sharp jump in stocks at LME warehouses along with worries over lower demand from China as the property sector shows signs of slowdown. Copper stocks at LME rose by tonnes yesterday and are up 62% in just six days. Prices may further come under pressure tracking strength in US Dollar amid Fed s decision to raise rates and mixed trend in global equity markets. The downside may however be capped amid optimism over recovery in global economic health. Support for MCX Copper November contract is seen at Rs.371 while resistance is seen at Rs.382. Aluminum- MCX Aluminum may continue to witness range bound movement tracking cues from international exchange however overall bias remains weak. LME Aluminium trades little changed in early trades today following yesterday s modest decline. The metal has come under pressure amid weakness across most metals along with worries over glut in physical market due to rising Chinese output. The downside may however be capped amid lower stocks at LME warehouses. Aluminium stocks at LME fell by 5225 tonnes yesterday. For the day we expect the metal to witness choppy trade however bias remains weak. Support for MCX Aluminum December contract is seen at Rs while resistance is seen at Rs Commodity Snapshot Please See Disclaimer on the Last Page 1

2 Zinc- MCX Zinc may note some decline tracking weakness in international exchange. LME Zinc trades lower in early trades today extending yesterday s 4.5% plunge. The metal has come under pressure amid year-end profit booking and also as rally to near nine year high seems to have outrun fundamentals. Putting further pressure on the prices is cooling in China s property market and mixed trend in equity markets. We expect the metal to trade with a weaker bias today however lingering supply worries due to lower mine output and lower stocks at exchange warehouses may cap the downside. Zinc stocks at LME fell by 1300 tonnes last yesterday. Support for MCX Zinc December contract is seen at Rs.168 while Resistance is seen at Rs.182. Nickel- MCX Nickel may note some gains tracking modest rebound in international exchange however the upside remains capped. LME Nickel trades 0.5% higher in early trades today following 2.6% decline yesterday. Supporting prices is dip buying at lower levels along with lingering worries over further supply disruption from Philippines and hopes of robust demand from China s stainless steel sector. The gains may however be capped amid high inventory overhang and latest report from study group that showed market was in supply surplus. Nickel stocks at LME rose by 114 tonnes yesterday. We expect the metal to note choppy movement today amid mixed cues however bias may be weak in sync with other metals. Support for MCX Nickel December contract is seen at Rs.720 while Resistance is seen at Rs Lead- MCX Lead too may note some decline tracking weakness in international exchange. LME Lead trades lower in early trades today extending yesterday s 3.3% drop. The metal has come under pressure amid profit booking as recent rally seems overdone. Further putting pressure on prices is ample supplies in physical market and mixed trend in equity markets. The downside may however be capped amid expectation of rise in demand for replacement batteries during winter. We expect the metal to witness mixed trade amid mixed cues however bias for the day may be weak. Support for MCX Lead December contract is seen at Rs while Resistance is seen at Rs.151. Energy Crude Oil- MCX Crude may witness choppy trade in line with international market but bias may be on upside. NYMEX crude trades in a narrow range near $52 per barrel amid lack of fresh cues. OPEC and non-opec s commitment to reduce output has improved sentiment but there is still uncertainty whether they will adhere to it or not. Choppiness in US dollar and equity market and mixed economic data from major economies has added to choppiness in crude oil prices as well. Crude may witness choppy trade today amid position squaring ahead of weekly inventory report and contract expiration. Crude may gain some support from expectations of decline in US crude oil stocks. Support for MCX Crude January contract is seen at Rs.3560 while Resistance is seen at Rs Natural Gas- MCX Natural gas may trade with a downward bias tracking cues from international exchange. NYMEX natural gas trades near $3.4/mmBtu amid mixed factors. Weighing on price is forecast of less cold weather in US which will keep a check on heating demand. However, supporting price is expectations of another sharp decline in US gas stocks. Choppiness in crude oil is also affecting gas prices. With no new factors and trading interest rate low near holiday, gas may remain rangebound but selling could be considered at higher levels. Support for MCX Natural gas December contract is seen at Rs.225 while Resistance is seen at Rs.235. Edible Oil Complex Soybean- NCDEX January contract witnessed fresh selling in benchmark Jan contract. Price declined by Rs 21/quintal with higher trading volume and OI indicating short accumulation. Currently prices are pressured by weak demand for soybean meal from local poultry farms amid slow demand for poultry products from end-consumers. Whereas, lower than average arrivals in spot market despite peak arriving season is supporting prices. According to trader, prices are likely to Commodity Snapshot Please See Disclaimer on the Last Page 2

3 remain range-bound in near-term but the same is fragile and may witness more selling pressure if arrivals of raw material rises. Good quality soybean which contains 10 percent moisture traded in the range of Rs2,925-3,000/100kg unchanged on previous session. CBOT Soybean futures for Jan. delivery drop 1.5% to close at $ /2 a bushel, the biggest decline for the contact since Dec. 8. Pressure came as rains boost Brazil soybean crops and provide temporary relief to Argentina. Brazil s soy crop estimate raised by 2.5% to 106.1m tons. NCDEX Jan contract may face technical resistance at Overall trend for soybean is negative. For the session we expect soybean January futures to trade in the range of Rs to Rs Refined Soybean Oil NCDEX Jan contract traded in the range of Rs ending on the lower side. Price settled lower by Rs 0.85/10 kg as traders liquidated long positions. Price took cues from CBOT soy oil and Palm oil. CBOT Soybean-oil futures for Jan. delivery drop 0.5% to 36.56c/lb after touching 36.39c, lowest for the contract since Nov. 29. Strong Indian rupee with lower palm oil set the bearish tone for soy oil. Price in the spot continued to trade steady though futures declined. Current soy oil stock at various ports totalled 1.80 lakh tonnes as on 01-December against 3.25 lakh tonnes on 01-November, as per data compiled by SEA. According to industry, import of soy oil dropped 36 percent in November from same month a year ago, as demonetisation has slowed demand at end-consumers, retailers and road-side shopkeers, as most transaction are cash based. Demand for soy oil is rising as the circulation of new currency has improved. According to SEA, import of soy oil has dropped 36 percent in November against same month last year, due to demonetisation. India imported 1.64 lakh tonnes of soy oil in November 2016 as against 2.56 lakh tonnes in November We expect soy oil price to open lower tracking CBOT soy oil. The price range for Jan contract can be with outlook for the session being bearish. Crude Palm Oil- MCX Jan CPO made a high of 575 and settled at 563.9, price made a low of 562. declined by 2.4 tracking the declined in BMD Palm oil price. BMD Palm oil for March delivery closed -0.6% at 3,143 ringgit/ton. Price declined on the news of Malaysia Jan. crude palm oil export tax raised to 7%. Markets were waiting for some trigger and the export rate hike led to the profit booking. Exports during the first half of Dec were lower as per the latest data. Malaysia s Dec palm oil exports -7.6% m/m to 481,349 tons Intertek estimated. Shipments -9.6% m/m to 464,582 tons: SGS. Meanwhile some pessimism came as Malaysia B10 biofuel mandate not scrapped, only delayed the Malaysian minister said. We expect MCX Jan contract to trade in the range of Rs. 558 to Rs. 568 with a bearish outlook. Rapeseed- NCDEX January contract tumbled by 74 points as bearish fundamentals continued to weigh on Mustard seed price. Price declined with higher trading volume and OI indicating short accumulation. Good sowing prospects weighed on the old crop price. Selling in soybean too added as an external support. Spread traders continued to buy April and sell Jan which further added to the selling pressure on the benchmark Jan contract. Demand of mustard seed from crushers is not improving as per expectation due to weak off take of mustard oil and mustard cake. According to agriculture ministry, mustard seed sowing was completed in lakh hectares as on December 15, against lakh hectares during same period last year. Meanwhile mustard oil demand has also slowed in recent past, despite high demand season, as rival soy oil (Indore) is available at discount of Rs 12/kg. The weather conditions seem to be good as of now. Trading range can be Rs to Rs for Jan future with outlook being bearish for the trading session. Commodity Snapshot Please See Disclaimer on the Last Page 3

4 Softs Cotton: Cotton prices posted their steepest percentage drop since Oct. 31 Monday as bullish speculators took profits ahead of the holidays. Cotton for March delivery lost 2% to end at cents a pound on the ICE Futures U.S. exchange, the lowest close since Nov. 14. As 2016 comes to a close, some specs will likely book profits on their longs. Index-fund rebalancing in 2017 will likely result in fewer funds taking long positions in cotton. As of last Tuesday, hedge funds and other speculators betting on higher prices for cotton outweighed bearish positions by 83,095 contracts, more than double the contract's position at the start of the year. Fundamentally, the cotton market has been stuck in a tight trading range as market players weigh strong overseas demand for cotton against a strong dollar that could damp demand for all commodities and government supply estimates that traders have read as mostly bearish. Sales of the fiber overseas reported last week were the second highest in the marketing year at 318,000 bales and outpaced the weekly rate needed to reach U.S. Department of Agriculture export targets. Still, the USDA raised production and ending stocks above analyst s expectations in its monthly forecast of supply and demand for the fiber this month. The USDA placed ending stocks at 4.8 million bales versus 4.5 million in November, boosted production to million bales due to better than expected crops in Texas and increased exports to 12.2 million bales. Overall we expect cotton price to trade sideways to lower for the day. The trading range for January future contract at MCX is to Rs per bale. Sugar: Sugar prices extended fall in the spot markets of Mumbai on Monday on subdued demand and weak cues from future market. Bearish demand is being continuously observed in the wholesale market of sugar in Mumbai due to cash crunch. The retailers as well as bulk buyers have reduced their buying due to weak demand from the end-users. Arrivals were truckloads and local dispatches were down at truckloads. Kolhapur ex-mill rates declined. S- grade of sugar was quoted at Rs. 3,405-3,490/100kg and M-grade of sugar was offered at Rs. 3,495-3,550/100kg. Accordingly, spot prices at Vashi market for S-grade sugar were quoted at Rs. 3,525-3,610/100kg while M-grade sugar traded at Rs. 3,615-3,670/100kg. Bombay Sugar Merchant Association s spot rates were a little down. S-grade of sugar was quoted at Rs. 3,542-3,741/100kg and M-grade of sugar traded at Rs. 3,626-3,892/100kg. The wholesale prices of sugar were unchanged in markets of Delhi on Monday amid sluggish buying and weak cues from domestic future market. Sugar futures continued its bearish trend at local bourse as there appeared no improvement in buying sentiment. The Indian sugar Mills Association (ISMA) has also anticipated depressed demand for the sweetener to continue in the domestic market till January 2017 as sugar sales in the first fortnight were down due to demonetization effect. As per the market analysts, higher production data recorded in Uttar Pradesh in first fortnight of December will keep sugar prices under pressure in near term as current demand is slow due to cash crunch in the market, particularly, bulk buyers of confectionary sector have limited their demand as liquidity squeeze has affected their business. As on December 15, 2016, sugar factories of Uttar Pradesh produced lakh tonnes of sugar in the current sugar season , double to last season s production of 8.52 lakh tonnes. M-grade sugar was priced flat at Rs. 3,670-3,750/100Kg while ex-mill rates were also steady at Rs. 3,650-3,500/100kg. Arrivals of sugar were estimated around 10,000 bags. Overall we expect sugar market to remain sideways and selling could be emerged from higher levels. The trading range for sugar in India is expected to be in the range of Rs to Rs per quintal for March 2017 contract at NCDEX. Commodity Snapshot Please See Disclaimer on the Last Page 4

5 Spices Jeera: Jeera futures January Contract closed lower to 16955/quintal on 16th December from previous close of 17420/quintal down by 2.67%. The PVOI analysis indicates higher volumes with lower open interest forming a long accumulation. Huge selling pressure is witnessed in the market due to expectancy of better quality crop by traders in the harvest season. Progressive sowing report indicates 67% of normal capacity has been completed in the state of Gujarat. Normal capacity in Gujarat is hectares. Spot prices closed lower to /quintal compared to previous close of /quintal down by 1.12%. There has been huge decline in arrivals in Unjha market from 4000 bags (1 bag=55 kgs) to 700 bags while Jodhpur market has witnessed an increase of 25 bags from 125 bags to 150 bags. The decline in arrivals was due to lesser buyers in compared to the supply that is being brought in Unjha market. Jeera January Contract is expected to trade bearish for the day with a price range of Commodity Snapshot Please See Disclaimer on the Last Page 5

6 Aurobinda Gayan- Vice President Research Fundamental Team Faiyaz Hudani- AVP Research Oilseeds; Pulses Madhavi Mehta- AVP Research Bullion; Energy Priyanka Jhaveri- Sr. Research Analyst Base Metals Technical Team Tapan Patel- Sr. Research Analyst Shabbir Kayyumi- Research Analyst Karan Shah- Research Analyst Disclaimer This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. which has closed around Rs is expected to trade in the range of Rs to Rs per quintal. From the global front the ICE raw sugar for March delivery continues to hold a positive trend near 23 cents/lb. Overall for the day we expect sugar price to trade in the range of Rs to Rs for October future at NCDEX. This material is for the personal information of the authorized recipient and we are not soliciting any action based upon it. This report is not to be construed as an offer to seller or solicitation of an offer to buy any commodity or commodity derivative to any person in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of Kotak Commodity Services Private Limited. It doesn t constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. We have reviewed the report, and in so far as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither Kotak Commodity Services Private Limited, nor any person connected with it, accepts any liability arising from the use of this document. The recipients of this material should rely on their own investigations and take their own professional advice. Price and value of the commodity referred to in this material may go up or down. Past performance is not a guide for future performance. Certain transactions including those involving commodity derivatives involve substantial risk and are not suitable for all investors. Reports based on technical analysis centers on studying charts of a commodity s price movement and trading volume as opposed to focusing on a commodity s fundamentals and as such may not match with a report on a commodity's fundamentals. We do not have any information other than information available to general public. The report is based on information from sources like respective industry associations, FICCI, CII, companies, media and other public sources. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. Our proprietary trading may make trading decisions that are inconsistent with the recommendations expressed herein. We and our affiliates, officers, directors, and employees worldwide may: (a) from time to time, have long or short positions in, and buy or sell the commodities mentioned herein or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodity/ (ies) discussed herein or have other potential conflict of interest with respect to any recommendation and related information and opinions. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject commodity and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. No part of this material may be duplicated in any form and/or redistributed without Kotak Commodity Services Private Limited s prior written consent. Registered Office: Kotak Commodity Services Private Limited, Nirlon house, 1 st Floor, Dr. Annie Besant Road, Opp. Sasmira, Worli, Mumbai-30 CIN No. U65910MH1987PTC Fax: Customer care Website- Commodity Snapshot Please See Disclaimer on the Last Page 6