Visit us at www.sharekhan.com High cotton export, lower edible oil stock support prices Picks of the Day: Sell sugar, guar and wheat on rise Agricultural sector highlights: Higher domestic and foreign yarn demand supported the cotton prices. In June, export registration surged by 72.7% to a record 142,297MT in comparison with the same corresponding month during last year. The increase in demand led to increasing domestic yarn output. The Indian cotton yarn output over the first half of the year totalled at 658,192MT, 55.4% more versus the same period during last year. Moreover, tighter world cotton balance sheet and firmness at ICE futures also support the prices. India's vegetable oil imports rose by 2% to 889,493 tonne in July as against the 870,328 tonne imported in same period last year SEA. As on August 1, the total edible oil stock in India, the world's biggest buyer of edible oil, dwindled to 1,990,000 tonne both at ports(610,000 tonne) and in pipeline (1,380,000 tonne), as against 2,060,000 tonne in the previous month-sea. In US, recent rainfall and expected wet condition in coming weeks, threatening the cotton crop quality and yield prospects. The U.S. is the world s biggest exporter. India's cotton exports are estimated at about 100 lakh bales (170 kg each) in the 2012-13 cotton season, which is about 20% of the world cotton exports Minister of State for Textiles, India. In Brazil, sugar cane harvesting may be stopped due to recent rainfall-somar. In Malaysia, crude palm oil (CPO) production in July increased -MPOB. China continues to purchase US soybean to make up for its lower stock and expected worst crop output in last 20 years - Oil World. Ukraine exports 2.3MMT of grains from July 1 to August 14, 2013-Ukraine s Agriculture Ministry via. Interfax. Russia harvested 47.6MMT of grains by August 13, 2013 from the 38% of the planted area, which is 17.7 million hectares lower by 2.7 million hectares from last year. The Government of India has set the production target of 259 MT food grains for the year 2013-14 as compared with the 254.24MT targeted last year and also up from fourth advance estimate of 255.36MT. sowing area for kharif crop 2013-14 as on August 2 is up by 10.4% to 819.99 lakh hectares in comparison with 734.57 lakh hectares in the corresponding period during the last year. Grain Wheat A steady tone was witnessed at the futures market. The prices breached the 1600 levels. U.K. wheat imports in the June month fell to 276,451 tonne from 302,716 tonne in May month, while the exports surge to 65,713 tonne in reported month from 58,299 tonne in May month. The total imports for the 2012-13 season were register at 2.96MT, versus 906,706 tonne a year earlier. And, the total exports for 2012-13 were 736,873 tonne, versus 2.55MT a year earlier-ahdb. In Canada, the wheat production is likely to reach at 29.2MT against the 27.2MT in previous year-aafc. Ukraine shipped 823000 tonne of wheat from July 1 to August 14, 2013- Interfax. Russia harvested 34.1MT of wheat by August 13, 2013 against 26.7MT in previous year. USDA Wasde reports increased the global wheat production to 705.38MMT from 697.80MMT in expectation of higher EU and Ukraine output. Meanwhile, the ending stocks were reduced to 172.99MMT on high consumption. Sharekhan Ltd, Regd Add: 10th Floor, Beta Building, Lodha ithink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai 400042, Maharashtra. Tel: 022-61150000. Sharekhan Ltd.: SEBI Regn. Nos. BSE-Cash-INB011073351 ; F&O-INF011073351 ; NSE INB/INF231073330; CD - INE231073330 ; MCX Stock Exchange: INB/INF-261073333 ; CD - INE261073330 ; United Stock Exchange: CD - INE271073350 ; DP-NSDL-IN-DP-NSDL- 233-2003 ; CDSL-IN-DP-CDSL-271-2004 ; PMS-INP000000662 ; Mutual Fund-ARN 20669 ; Commodity trading through Sharekhan Commodities Pvt. Ltd.: Commodity MCX-10080 ; (MCX/TCM/CORP/0425) Buzz (agri-commodities) ; NCDEX -001321; (NCDEX/TCM/CORP/0142) ; NSEL-12790 ; For any Private complaints Circulation email igc@sharekhan.com; only Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and Do s & Don ts by MCX & NCDEX and the T & C on www.sharekhan.com before investing.
The Cabinet Committee on Economic Affairs has approved the export of 20 lakh tonne of wheat from central pool stock of Food Corporation of India during the current financial year subject to a floor price of $ 300 per metric tonne through the Central Public Sector Undertakings (CPSUs) viz. STC, MMTC and PEC. Commerzbank expects wheat prices to rise by $7 per bushels on CBOT and 200 Euros per tonne in Paris. In France, 30% of soft wheat is harvested as of July 29 against the 53% in previous year. Almost 66% of the crop is in good to excellent condition, while 56% of durum wheat is harvested as of July 29 against the 91% in previous year. Almost 57% of the crop is in good to excellent condition. In July 25-31, 72,734MT of wheat and barley was shipped from the Rouen port against the 37,717MT exported in the previous week. IGC raised its global wheat production in 2013-14 to 687MMT from 683MMT on favourable condition in Australia and Black Sea region. The global wheat consumption is also expected to increase to 686MMT from 682MMT. Outlook: Range-bound to weak tone likely to be witnessed in the coming days. Participants are advised to sell at levels of 1600. Maize A steady tone was witnessed in the futures market. At CBOT, the corn prices rallied from a three-year low in expectation of dry weather and frost would stress he crop in US. Ukraine shipped 468000 tonne of corn from July 1 to August 14, 2013- Interfax. USDA revealed that the 94% of crop is in silking stage. The 64% of the crop is in good to excellent condition as compared with the 41% in last year. Celeres estimates the record Brazilian corn output at 85.1MMT for next crop (2013-14) on higher planting on 29.2 million hectares. Commerzbank expects corn prices to average at 170 Euros per tonne in Paris during the first quarter of 2013-14 and may further rise to 185 Euros per tonne by the end of 2014. Informa forecast the total corn output of 14.14 billion bushels in the USA with 158.6 bushels an acre yield against the USDA s estimation of 13.95 billion bushels with the yield of 156.5 bushels per acre. China s state-owned COFCO Corp bought 120,000MT of corn from Ukraine. Brazil exports 733.3 thousand tonne of corn in July, 2013. sowing area for kharif coarse cereals crop 2013-14 surged to 163.07 lakh hectares in comparison with 135.75 lakh hectares in the corresponding period during the last year. This year, the higher maize planting was reported in Maharashtra and Karnataka. Outlook: Volatile movement witnessed in August. We advised participants to sell near 1325-1335 levels. Barley A firm tone was witnessed at NCDEX. Ukraine shipped 953000 tonne of barley from July 1 to August 14, 2013- Interfax. Russia harvested 7.7MT of barley by August 13, 2013 against 9MT in previous year. In France, 98% of winter barley is harvested as of July 29 against the 99% in previous year, while 65% of the crop is in good to excellent condition. The 12% of spring barley is harvested as of July 29 against 32% in previous year. The 67% of the crop is in good to excellent condition. The 58484 tonne of feed barley is exported from the French port of Rouen to Saudi Arabia. In UK, 10% harvesting of winter barley completed by the end of July. Winter barley production seen lower to 1.9MMT against the 2.1MMT produced in last year. Meanwhile, continuous supplies from growing regions weighed on the barley prices. Ukraine may export 2.5MMT of Barley in this year Interfax. Germany s Ministry of Agriculture raised the barley production forecast to 10.09MMT on yield forecast of 6.41 tonne per hectare. Outlook: Range-bound to steady movement likely to be witnessed in the coming days. Pulses Chana Chana witnessed firm movement at futures market. sowing area for kharif pulses crop 2013-14 as on August 2
2 is up by to 79.50 lakh hectares in comparison with 62.99 lakh hectares in the corresponding period during the last year. Commencement of field pea harvesting in Montana and Washington States of USA. sowing area for kharif pulses crop 2013-14 surged to 73.62 lakh hectares from 39.52 lakh hectares. In Canada, lower area sowed under chana is expected in this year and it may decline to 70,000 hectares against 81,000 hectares seeded in the last year. The production is also likely to decline to 120,000 tonne from 158,000 tonne. Meanwhile, the exports are likely to remain unchanged at 65,000 tonne similar to that of 2012-13 on high carry-out stock. The sown area under desi chana in Australia is also down by 43,200 hectares to 448,600 hectares in 2013 as compared from the previous year. Meanwhile, the USDA projected a record planting area of 0.2 million acres under chana, up by 3% from 2012-13. Outlook: Chana price are likely to reach near 3000 levels. Oilseeds and vegitable oil complex Oil seeds (include soybean, RM seed, castor seed) A weak tone was witnessed in soybean. RM seed also witnessed weak tone. China continues to purchase US soybean to make up for its lower stock and expected worst crop output in last 20 years. The country bought 11.733 MMT of soybean in August till date, after record purchase of 7.2MMT in July. The soybean stocks are still down by at least 3-3.5 MMT from a year ago, despite the recent sizable year-on-year increase in monthly imports- Oil World. The oilseed witnessed rise in prices by taking cue from the WASDE report stating lower crop estimates for soy production. The recent rainfall and forecast of continuous rainfall in Madhya Pradesh may affect the standing crop which further supports the prices amid the festival demand. sowing area for kharif oilseed crop 2013-14 surged to 181.25 lakh hectares from 153.18 lakh hectares. Outlook: Soybean prices are likely to surge to 3150 levels. RM seed may witness 3,300 levels. Castor seed may witness profit booking near 3600. Edible oils (include ref. soy oil, crude palm oil) The domestic edible oil futures markets witnessed firm tone. Domestic prices also take cue from the rise in prices at BMD exchange. In Malaysia, crude palm oil (CPO) production in July increased by 18.21% to 1,674,857 tonne, compared to 1,416,826 tonne in June month. The CPO stock in July was surged to 2.97% to 874,117 tonne against the 848,944 tonne in June month-mpob. Indian government maintained the import duty on refined edible oils at 7.5% and also continue of ban of exports. Indonesia palm-oil output in the year starting October 2013-2014 is likely to surge to 31MMT from 28.5MMT in previous year USDA. According to SGS, the palm oil export shipments from Malaysia raised by 26% to 421,337 tonne in August 1-10 from 1334,929 tonne during same period in July month. According to Intertek, the palm oil export shipments from Malaysia raised by 4% to 1,406,935 tonne in July, against 1,350,311 tonne exported in same period during June. In Thailand, palm fruit output in 2013-14 is likely to rise to 12.2MMT against the 11.3MMT in previous year. At Rotterdam, the average palm oil prices in 2014 may down to $760 per tonne from $774 per tonne in 2013 PT Bahana Securities. Outlook: Profit-booking is likely to witness in the prices while the Chinese festival demand is likely to support the prices. Cotton complex (Includes cotton, kapas, kapaskhali, cottonseed oil cake) A firm tone was witnessed at futures market. Continuous rainfall and good china import figure support the price. Higher domestic and foreign yarn demand support the cotton prices. In June, export registration surged by 72.7% to a record 142,297MT in comparison of same corresponding month during last year. The increase in demand leads to increasing domestic yarn output. The Indian cotton yarn output over the first half of the year, totalled at 658,192MT, 55.4% more versus the same period during last year. Moreover, tighter world cotton balance sheet and firmness at ICE futures also support the prices. 3
India's cotton exports are estimated at about 100 lakh bales (170 kg each) in the 2012-13 cotton season, which is about 20% of the world cotton exports Minister of State for Textiles, India. In US, recent rainfall and expected wet condition in coming weeks, threatening the cotton crop quality and yield prospects. The U.S. is the world s biggest exporter. ICAC cuts its cotton price forecast by 7 cents per pound to 108 cents per pound on higher world cotton stock. The stock is likely to increase by 1.31MMT to 19.81MMT in expectation of good crop prospects during this year. Meanwhile, the estimated prices imply an upturn from current levels, at 91.10 cents a pound in expectation of good demand from China. The cotton stocks in China is equivalent to a little more than two months of use, consisting 10.8MMT in government s hand and 1.6MMT in private hands. sowing area for kharif cotton crop 2013-14 is surged to 108.52 lakh hectares in comparison of 101.12 lakh hectares in corresponding period during the last year. Outlook: Prices are likely to surge in expectation of crop damage due to continuous rainfall. Sweetners (Include sugar, gur) Sugar and gur Sugar witnessed a weak tone in futures market on fresh buying at lower levels. Gur prices witnessed weak tone. In Brazil, sugar cane harvesting may be stopped due to recent rainfall-somar. International Sugar Organization expects the Brazilian sugar production to rise by 41MMT in comparison of 40MMT in previous year. In Brazil, delay in crushing due to recent rainfall allowed the millers to use more of this year cane crop to make ethanol. The sugar output in the country is estimated at 34.1MMT same as in last year. Moreover, the damage due to frost in last month is still unknown F O Licht. Australia, world s third largest sugar exporter, harvested 27% of sugar cane crop. The country is likely to process 30.4MMT of cane and make 4.1MMT of sugar in this year. sowing area for kharif sugarcane crop 2013-14 is down to 48.53 lakh hectares against 50.06 lakh hectares in corresponding period during the last year. In the week ended on July 24, 1.56MMT of sugar was awaiting for loading at Brazilian port as compared with 1.73MMT of sugar to load in previous week. Outlook: For both, sugar and gur, prices are likely to trade range-bound in near short term. Spices (Include cardamom, chilli, coriander (dhaniya), cumin seed (jeera), turmeric) Cardamom Cardamom market witnessed weak movement. As per Spices Board of India, small cardamom exports in 2012-13 (April-March) were lower at 2,250 tonne, compared with 4,650 tonne a year ago. In expectation of good upcoming crop and comfortable stock positions are currently weighs on the prices. Commencements of arrivals are expected in first week of July. Total arrivals and sales during the current season from August 1, 2012 to July 21, 2013 were at around 16,018 tonne (last year 20,539 tonne) and 15,365 tonne (19,754 tonne) respectively (source - CPMC). Outlook: Prices are getting good support at lower levels (650-700). Chilli Futures market remained weak. According to the Andhra Pradesh Agriculture Department, chilli sown area surged to 17806 hectares as compared from 24754 hectares in last year. Full pace sowing is reported in various states of the country. According to Spices Board of India, chilli exports in 2012-13 (April-March) were surged to 281,000 tonne, compared with 241,000 tonne in previous year. Outlook: Range-bound to weak movement is expected. Coriander Coriander witnessed a weak tone. According to the Spices Board of India, coriander exports in 2012-13 (April-March) were higher at 37,100 tonne, compared with 28,100 tonne a year ago. Masala millers are buying on current level, thus supporting the prices. Export queries from Thailand and Dubai also restricted the fall in prices. Traders and framers liquated large portion of their old stocks, which currently weighs on the prices. However, lower production would support the prices in long term. Outlook: Weak movement is expected on comfortable stock position and dull export demand. 4
Jeera Futures markets witnessed firm tone. Market sources revealed that lower crop prospects are expected in Iran, Turkey and Syria. Syria is expected to produce 4,000-5,000 tonne while Turkey will produce 5,000 tonne in this year. Market participants revealed that jeera exports during 2013-14 (April-March) surged to 90,000 tonne. Meanwhile, according to Spices Board of India, jeera exports in 2012-13 (April-March) were at 79,900 tonne compared with 45,500 tonne a year ago. The new crop arrivals weigh on the prices but lower supply in lean season would support the prices in near term. Export demand is likely to improve in the coming weeks because of lack of supplies from Syria and Turkey. Cumin seed planting reported only 10% of normal in the second largest producing country, Syria. Meanwhile, output in Turkey may be normal at 8,000-10,000 tonne. For Singapore, 1% Indian cumin seed offered at $2,350- $2,400 per tonne FOB Mumbai. For Europe, 1% Indian cumin seed offered at $2,750- $2,850 per tonne CNF from Mumbai. Outlook: Range-bound movement is expected. Turmeric Futures market remained weak. According to the Andhra Pradesh Agriculture Department, turmeric sown area surged to 39,442 hectares as compared from 40,370 hectares in last year. NCDEX imposed Special Margin of 10% on the Short side on all running contracts and yet to be launched contracts in Turmeric with effect from beginning of day Tuesday, August 06, 2013. Full pace sowing is reported in various states of the country. As per market source, the country s carryover stocks are currently pegged at 370,000-400,000 tonne, up from a year ago. According to the latest data from the Spices Board data, turmeric exports rose to 80,050 tonne in 2012-13 compared with 79,500 tonne a year ago. Moreover, the demand from domestic and overseas markets is expected to improve by July. Turmeric farmers may shift to other competitive crop like sugarcane and maize crop in expectation of higher return. India's total area planted under turmeric has been reduced by around 20% in 2012-13. The domestic production is expected to be at 45-50 lakh bags and out of them, 37 lakh bags (80kg) are expected to be carry forward stocks. Outlook: Prices are likely to remain range-bound in between Rs5,000-6,000 per quintal. Guar complex (Includes guar gum, guar seed) Guar gum Guar seed and gum remain firm. Guar sowing is in progress in major growing states (Haryana, Punjab, Rajasthan, Maharashtra and Gujarat). Higher sowing expected in on-going season as farmers may shift from cotton and other crops. Comfortable stock positions in domestic market also resist prices. In the Jodhpur domestic market, guar seed is being quoted at about Rs5,000-6,000 per quintal, while gum is being quoted at about Rs14,500-17,000 per quintal. Outlook: Both guar gum and seed, are likely to witness volatile movement at future exchange. Guar seeds already reached to our previous estimates of 4,500 per quintal and may further dwindle to 3,500 per quintal. Mentha Oil Volatile movement witnessed on continuous selling. And the adequate supplies from Chandausi in Uttar Pradesh mainly influenced mentha oil prices at futures trade. According to the market participants, around 15-20% of crop is yet to be harvested in the major mentha growing regions. Outlook: Prices reached to our estimate of 890 but likely to remain range-bound in coming weeks. Potato Volatile movement witnessed on lower levels. Meanwhile, higher supply and comfortable stock positions are likely to restrict the major rise in prices, Adequate supply in southern India and huge stock in West Bengal weigh on the prices. The Domestic Export and Marketing Intelligence Cell (DEMIC) functioning in Tamil Nadu Agricultural University suggest the farmers to hold the crop and offload the stock in July after analysing the 10 years' prices of potato. Floods in eastern parts of Germany may lead to scarce supply of potatoes in coming months further hints towards the rise in prices. Outlook: Prices are likely to remain weak to range bound. 5
Weather Report (Source: India Meteorological Department, ICAR) Southwest monsoon was vigorous over West Madhya Pradesh, Gujarat region, Saurashtra, Kutch & Diu, Madhya Maharashtra, Marathawada, Vidarbha, Telangana, and Kerala for one or two days of the last week. According to the IMD, normal rainfall (94-106% of long period average (LPA)) is expected during the second half of the 2013 southwest monsoon season (August to September). The LPA of the rainfall in the second half of the monsoon season over the country as a whole is 43.5cm (49% of the average season rainfall) based on the 1951-2000 climatology. IMD forecast that India will have 98% of its normal (long-period average) rainfall, with an error margin of 5% (+ or -). Seasonal rainfall (June 1 to August 7, 2013) The cumulative seasonal rainfall during June 1 to August 7, 2013 for the country as a whole was 593.8mm which is 15% above normal rainfall of 517.2mm. Out of 36 meteorological sub-divisions, the rainfall was excess in seventeen sub-divisions, normal in thirteen sub-divisions, and deficit in six sub-divisions and scanty in zero sub-divisions and no rain in zero sub-division. In the country, 39% districts received excess and 31% districts received normal rainfall during southwest monsoon season so far. However, 24% districts received deficient and 6% districts received scanty rainfall and 0% districts received no rainfall. Outlook for subsequent days from August 14-20, 2013 Rain/thundershowers would occur over northeastern states, Sub-Himalayan West Bengal & Sikkim, western Himalayan region, Punjab and Haryana, Chandigarh & Delhi, Rajasthan, Uttar Pradesh, Gujarat, Madhya Pradesh, Odisha, Chhattisgarh Vidarbha, Andhra Pradesh and Andaman & Nicobar Islands. Agricultural activities Light rainfall received in entire Bihar state during past few days. Around, 50 to 55 percent rice transplanting and 95 to 100 percent maize sowing was reported from across the state. The districts such as Banka, Bhabua, Jamui, Nawada, Gaya, Aurangabad, Munger, Shekhpura, Khagaria, Lakhisarai, Gopalganj, Jehanabad, Siwan, Patna, Vaishali, Muzafferpur, Samastipur and Nalanda reported very poor transplanting in the range of 30 to 35 percent due to very deficit rainfall. Agricultural operations like transplanting of rice in low land areas, sowing vegetables like bhindi, brinjal, early cauliflower, chilli, radish, weeding in the transplanted paddy, sowing of arhar in the upland areas, direct seeding of short duration rice verities like, Shabhagi, Riccharya, Turanta, Prabhat, NDR-97, Pusa 834, in medium land are in progress. No pests and diseases were noticed. Heavy rainfall received in Himachal Pradesh state during past few days. Agricultural operations like arranging the fodder for cattle and dairy animals and hand weeding in the rice and maize crops are in progress. No pests and diseases were noticed. Scanty rainfall received in Jharkhand state during past few days. Agricultural operations like transplanting of rice in low land field are in progress. Moderate intensity of pyrilla in sugarcane crop was noticed. Home "This document has been prepared by Sharekhan Commodities Pvt. Ltd. and is intended only for the person or entity to which it is addressed to and may contain confidential and/or privileged material and is not for any type of circulation. Any review, retransmission, or any other use is prohibited. Kindly note that this document does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. If you have received this in error, please contact the sender and delete the material immediately from your computer/mailbox. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may from time to time have positions in, or options on, and buy and sell securities referred to herein. We may Commodity from time to Buzz time solicit (agri-commodities) from, or perform investment 6 banking, August or other 16, services 2013for, any company mentioned. Any comments or statements made herein do not necessarily reflect those of Sharekhan Commodities Pvt. Ltd."