21/02/2011 (Commodity Online) - Soybean prices tracked global trends to fall in Indian markets while chana prices declined on arrivals and sluggish domestic demand. Soybean prices fell at CBOT after US exports to China fell on scrapping of an order signaling importers may be switching to South American supplies, according to a Bloomberg report.

U.S. exporters sold 396,332 metric tons of soybeans from the prior and next harvests in the week to Feb. 10, a 59 percent plunge from a week earlier, the U.S. Department of Agriculture said yesterday. It also said China, the biggest buyer, canceled a 120,000-ton purchase from the U.S. That would have been for delivery in the marketing year to Aug. 31, the report added.

COMMODITY ANALYSIS

Pepper
India’s pepper futures closed lower at the end of the week on sluggish export and domestic demand and on lower availability of commodity from the fresh crop. Pepper futures in midweek gained tracking weak overseas market and on limited stocks and tight supply.

Export demand is weak because Vietnam is offering lower (rates) than India. But prices are unlikely to fall much from these levels because stocks are very thin globally, according to a trader from Kochi.

Local arrivals from the fresh crop has started coming in the spot markets of Kerala but in very small quantity. Traders expect the arrival to pick up slowly. Industry officials expect depleting domestic stocks and lower availability in major producing countries to help pepper prices recover.

On Friday, in Kochi spot market pepper edged down 6 rupees to end at 23,476 rupees per 100 kg due to weak exports. In futures market at NCDEX Pepper February contract opened this week at Rs.25589 and closed lower by 7.04 % to Rs 23785 while March contract fell by 6.01% from Rs.25040 to Rs 23535.

India has slipped to the fourth position in the world pepper export market due to decline in the production since the past few years. In the international pepper markets too output is expected to decline this year. Black pepper production in Vietnam is likely to be lower by around 9 percent at 1 lakh tones as compared to 1.10 lakh tonnes in the previous year.

Chana
Chana futures showed weakness this week although towards weekend bargain-buying and firm domestic demand helped recover from lower levels Chana futures fell this week on rising arrivals in the spot markets and sluggish local demand. Analysts and traders expect increasing supplies in spot and regular government intervention to keep chana prices under check.

Production of chana, or chickpea, is likely to fall to 7.37 million tonnes from 7.48 million tonnes a year ago, the farm ministry said.

On Friday in the key spot market in Delhi, spot prices rose 11.20 rupees to 2,600 rupees per 100 kg on some local enquiries from millers.

NCDEX February delivery contract opened at Rs 2640 and closed at Rs 2566, down by 2.80 % whereas Chana March contract opened at Rs.2727 and ended at Rs.2619, down by 3.96 % and market is supported by marriage season demand and arrival delays due to adverse weather.

Chana acreage as on Jan 28, 2011 has increased by 11.8% to 95.12 lakh hectares (lh) as compared to 85.55 lh the same period previous year. Despite of increase in acreage under Chana, the production has declined compared to the previous year due to untimely rains in the month of October and November.

Rubber
Rubber futures gained this weekend tracking strong demand in the physical market and on fresh buying. The physical rubber prices continued to explore new highs on Friday. In Global market, TOCOM fell on Friday on profit booking.

The February futures for RSS 3 increased to ¥544.2 (Rs 295.27) from ¥540 a kg during the day session but then fell back to ¥540 (Rs 292.99) in the night session on the Tokyo Commodity Exchange (TOCOM).

The gap between domestic and international prices has made imports impossible for tyre companies. International rubber prices jumped up from Rs 226.39 a kg in the first week of January to Rs 291.14 a kg on last Thursday, an appreciation of 29 per cent.

At NMCE, February contract closed down by 0.42% to Rs 23500 while March contract gained by 1.39% to 24435 per quintal. Spot rates of rubber on Friday were (Rs/kg): Spot rates were (Rs/kg): RSS-4: 240; RSS-5: 231; ungraded: 228 and latex 60 per cent: 149.

There are some reports that global demand for natural and synthetic rubber will enhance by about 40 per cent to 33.9 million tonnes in 2020 driven by consumption in India and China. Output from Thailand, Indonesia and Malaysia has been cut as a La Nina weather event caused higher-than-average rains in parts of Southeast Asia.

Soybean
Soybean futures in India edged up on lower arrivals at the end of the week while soy oil continued downtrend tracking weak global palm oil market.

On Friday, in the Indore spot market, soyoil was up 4.75 rupees at 634.75 rupees per 10 kg, while soybean rose by 24 to 2,425 rupees per 100 kg. At Sri Ganganagar spot market in Rajasthan rapeseed price was steady at 2,780 rupees per 100 kg. India's rapeseed output could jump 16.1 percent in 2011 to 6.85 million tonnes, helped by favourable weather conditions, a leading trade body had said.

India's oilmeal exports rose 67 percent in January from a year ago, the seventh straight monthly rise, on good demand from buyers in Japan, Vietnam, South Korea and the European Union, data from a leading trade body showed.

In futures market, NCDEX February soybean prices fell from Rs.2465 to Rs 2430, a fall of 1.44% while March Soybean prices settled down by 2.82% from Rs 2530 to Rs.2458.50. Feb soyoil prices fell from Rs 643 to Rs 631.20, down by 1.86 %. March soyoil fell from Rs 663 to Rs 638.50. after hitting a high of 666.50.

Precious Metals
Gold prices attained its best weekly gain since early January on the back of inflation fears sparked by rising oil prices and flaring Middle East tensions. On Friday, gold rose above $1,390 an ounce notching its best weekly performance since December, underpinned by fears over a European debt crisis, rising inflation and growing unrest in the Middle East.

Silver prices also climbed this week as mounting unrest in the Middle East spurred demand for precious metals as a haven. Palladium jumped to the highest in almost 10 years.

On Friday, Gold futures for April delivery gained $3.50, or 0.3 percent, to $1,388.60 an ounce. The metal climbed 2 percent this week.

Silver futures for March delivery rose 72.6 cents, or 2.3 percent, to settle at $32.296 an ounce on the Comex in New York. This week, the metal gained 7.7 percent, the most since early December.

Palladium futures for March delivery climbed $14.70 or 1.7 percent, to $857.70 an ounce on the New York Mercantile Exchange. Earlier, the price reached $858.25, the highest since March 2001. The metal advanced 5.3 percent this week.

Platinum futures for April delivery fell 70 cents to $1,843.30 an ounce. The metal gained 1.6 percent this week. In Indian market, MCX April Gold Futures opened in the week at Rs.20325 and closed at Rs.20548, up by 1.08%, whereas June contract is up by 1.38%% to Rs.20832 per 10 Grms. MCX Silver March opened this week at Rs.45420 and ended higher by 6.86% to Rs 48538.

Crude Oil
Crude oil fell at the end of the week based on the news that Egypt will allow Iran to send navy ships through the Suez Canal and intensifying unrest in the region. U.S. crude oil futures ended lower on Friday in a bout of profit-taking and position-squaring ahead of a three-day holiday weekend.

Crude prices may increase next week as mounting Middle East tensions bolster the risk of a disruption of shipments from the region, a Bloomberg News survey showed.

On Friday, Crude for March delivery settled at $86.20 a barrel on the New York Mercantile Exchange. Futures gained 0.7 percent this week. The more active April contract increased 87 cents to $89.71 a barrel.

Brent crude for April settlement slipped 7 cents to $102.52 a barrel on the ICE Futures Europe exchange in London. The contract has risen 1.6 percent this week, its fourth consecutive increase.

At MCX, Crude oil March contract declined from Rs.4093 to Rs.4072, down by 0.51% per cent whereas the April contract dropped1.33 per cent to Rs.4206.

Base Metals
Copper prices continued uptrend on speculation that consumption in China will remain robust Copper also gained as the dollar fell for the fourth straight day against a basket of major currencies, boosting the appeal of commodities as an alternative investment.

Copper for delivery in three months rose $55, or 0.6 percent, to $9,860 a metric ton ($4.47 a pound) on the London Metal Exchange. The price fell 1 percent this week. Other base metals like Tin, lead, nickel, zinc and aluminum rose in London.

In New York, copper futures for May delivery fell 0.1 cent to $4.496 a pound on the Comex.

In India at MCX, Copper February contract fell from Rs 459.15 to Rs 445.35 levels, a decline of 2.87%. April contract prices declined from Rs.463.50 per Kg to Rs.450.15 per Kg, down by 2.83 per cent.

Major Headlines
Inflation should come down to 'no more than 7%': PM
Prime Minister Manmohan Singh flaunted 8.5% growth as his biggest achievement, but a reality check came when an editor asked him at the media interaction whether it really meant much for those facing trouble over buying food.

Jan inflation eases to 8.23% on cheaper pulses, sugar
Inflation, based on the annual Wholesale Price Index (WPI), eased in January to 8.23 per cent from the 8.43 per cent reported in December, according to data released by the Government on Monday.

Uniform membership norms for commodity exchanges soon
The Forward Markets Commission (FMC) proposes to work out uniform membership norms for trading members across commodity exchanges.

NCDEX under FMC scanner on anchor investor rules
The National Commodities and Derivatives Exchange (NCDEX) has yet to respond satisfactorily to earlier directives on its shareholders not trading on the exchange, says the Forward Markets Commission (FMC).

MCX launches futures trading in silver micro
The Multi Commodity Exchange of India Ltd (MCX) on Friday launched futures trading in silver micro.

High global prices hit tyre firms' rubber imports
The widening gap between domestic and international prices of natural rubber has made import impossible for local tyre companies. Industry says that it has missed the opportunity due to delay in government’s import policy.