MCX – WEEKLY NEWS LETTERS
Important News
US Building Permits was at 0.96 million in the last month.
Sanctions on Russia’s biggest oil company boosted crude oil prices.
Euro Zone CPI unchanged at 0.5 percent in the month of June.
Renewed Ukraine concerns spurred safe haven status of gold.
US Philly Fed Manufacturing Index gained to 23.9-mark in July.
Indian Currency
The Indian Rupee traded on a flat note and depreciated for fourth consecutive days and fell around 0.1 percent in yesterday’s trading session. The currency depreciated on the back of dollar demand from state run banks for oil and defense related payments. Further, rise in oil prices after new sanctions imposed by the US on Russia exerted downside pressure on the currency. Unfavorable trade balance data in prior trading session lead to concerns over the financial stability of the country and acted as a negative factor.
Precious Metals
Spot gold prices gained by around 1.4 percent on Thursday as investors sought shelter in the precious metal on fears of further turmoil after news that a Malaysian passenger jetliner had been downed in Ukraine. Earlier, safe-haven bids had already boosted bullion prices on new U.S. and European Union sanctions on Russia, fresh on the heels of news that a Ukrainian fighter plane had been shot down over eastern Ukraine. Gold rallied $20 per ounce in about 40 minutes and the S&P 500 equities index tumbled after the Malaysian airliner was brought down over eastern Ukraine, killing all 295 people aboard and sharply raising the stakes in a conflict between Kiev and pro-Moscow rebels in which Russia and the West back opposing sides.
Before the Malaysian jetliner news, precious metal prices were higher on U.S. President Barack Obama’s move to impose sanctions on some of Russia’s biggest companies for the first time over Moscow’s failure to curb violence in Ukraine.
On the MCX, gold prices rose by around 1.8 percent taking cues from strong international markets and closed at Rs.28199/10gms.
On an next trading session basis, we expect gold and silver prices to trade on a positive note on escalation of tensions in the Ukrainian peninsula and fresh round of sanctions imposed by US on Russia. Housing data released last night did not come as per expectations appealing bullions safe haven
appeal in turn acting as a positive factor for prices.
On the MCX, gold and silver prices are expected to trade on a positive note taking cues from strong international markets.
Base Metals
Base metals on the LME largely gained on Thursday as the manufacturing data from the US turned out to be positive despite expectations of it slowing down. Aluminum prices rose to a 16-month high yesterday as LME inventories slump to the lowest in 22 months.
However, sharp gains were capped on the back of unfavorable housing data from the US. Also, concerns regarding the health of construction sector in China after Huntington Road & Bridge Group warned that it might not be able to repay a $65 million debt due next week exerted downside pressure on prices.
In the Indian markets, all the base metals traded on a positive note taking cues from international markets.
Energy
Oil prices gained on Thursday, extending their rebound from a weeks-long decline as new U.S. sanctions announced on Wednesday took aim at some of Russia’s biggest companies for the first time, including Rosneft, the largest oil producer. Gains accelerated over the afternoon as news spread of a Malaysian airliner crash in eastern Ukraine, where government forces are fighting pro-Moscow rebels. U.S. Vice President Joseph Biden said the jet was “blown out of the sky” and Ukraine accused “terrorists” of shooting it down. On the MCX, crude oil prices rose by around 2.2 percent and closed at Rs.6221/bbl.
Natural gas prices on the NYMEX declined by more than 3 percent on moderating climate in the US and inventory additions in storage more than the market expectations. Utilities have added 107Bcf of gas in the previous week as against previous addition of 93Bcf acting as a negative factor for prices.
On the MCX, NG prices declined by more than 4 percent on weakness in international markets and closed at Rs.238.60/Mmbtu.
On next trading session basis, we expect crude oil prices to trade on a positive note continuing its gains from the previous session. Escalating tensions in Ukraine coupled with additional sanctions imposed on Russia by the US will push crude prices higher.
Besides, incremental demand for crude in the US is visible in draw down in inventories for continuous two weeks in a row is acting as a positive factor. On the MCX, crude prices are expected to trade on a positive note taking cues from strong international markets.
NCDEX – WEEKLY NEWS LETTERS
MANSOON WATCH
Monsoon covers entire India—IMD
The Rainfall deficiency falls to 36% from 42%
Agri counters trade with high volatile as moderate corrections seen over revival of Monsoon.
SETELITE IMAGE OF INDIAN WHETHER CONDITION AS ON 11/07/2014 9.45 A.M.
CHANA
After the recent fall in rates for Chana, prices bounced back as demand rose in the mandis. Some more recovery is likely for the counter even as improved Monsoon reports could also keep the uptrend limited. The demand that had picked up over last few days slowed down at these higher levels as traders wait for dips before initiating fresh demand in the mandis. An already weak Monsoon seen so far has been supporting the overall market sentiment for the commodity. Re-peated efforts by the Govt to keep tab on hoarders—mainly for essen-tial Food items are however keeping the uptrend limited also.
Monsoon progress for next few days remains critical. Sowing of Kharif Pulses are likely to get adversely affected if delayed and below normal Monsoon is maintained. Drought like conditions and heat wave delaying sowing of most crops, monsoon rains were 42% below normal till date
As per latest reports of sowing of kharif crops, kharif sowing area has crossed 182.40 lakh hectare. It is reported that as on 4.7.2014, rice has been sown/transplanted in 45.12 lakh ha, pulses in 7.50 lakh
On International front, Australian Chana production reportedly has fallen by 23%. A fall in Dollar vs Re has kept the import cost of Pulses from Myanmar, Australia and Cana-da low resulting in further weaken-ing of market sentiments.
SOYABEAN / REFI.SOYA
Refined soy oil continued the bullish tone on steady demand from traders and stockiests amid low supplies. US markets firmed up on some support from Chinese de-mand at these low levels coupled with geo political tension in Ukraine borders.
The soy oil remained under pres-sure due to excess supplies from imports. As per Solvent Extractors’ Association of India (SEA) data bank, there has been a significant increase in imports of Soy oil, sunflower oil & Rape oil and drop in imports of Palm oil, for last seven months of edible oil marketing year (Nov – Oct Global production of 10 major oilseeds is forecast to climb 3 percent in 2014-15 on a bigger soybean harvest, lifting stocks to a record by the end of the next sea-son.
Soybean markets remained firm on demand from crushers and meal exporters picking up in mandis across MP & Mahrashtra. The supplies are slow as suppliers are expecting a rally in prices in the coming season.
As per per the latest date released by the Ministry of Agriculture, the oilseed sowing is around 14.49 lakh hectares down from a bumper sowing of 110.27 lakh hectares last year during the same period.
Soybean production may jump to 301.9 million tons from 284.11 million tons. Brazil’s harvest may climb to 90 million tons from 86.5 million and Argentina may gather 56 million tons from 55 million a year earlier. The inventories will be at a record 85.31 million tons.
CUMIN SEED (JEERA)
Jeera trades with extreme high volatility as the initial upside move-ment is followed by profit booking by day end. Good Export demand however keeps sentiments firm for the commodity.
Arrival remained moderate. But an expected pick up in exports in coming weeks, supported by a firmness in Dollar vs Re could support the prices. Downtrend from these levels seem limited.
Jeera rates are fetching premium w.r.t. International markets. Low stocks in global trade and political unrest in Turkey and Syria have pushed export demand to India. India will remain the primary export-er for this commodity as of now.
Cumin seed or jeera production in India is expected to rise to 6.5-7 million bags of 55 kg each in the year 2014, from 4.5-5 million bags a year earlier, due to an expanded area under cultivation and favoura-ble weather conditions.
Rape/mustard Seed
Rmseed picked up after a days weakness due to firm demand from meal exporters and crushers in northern belts. The arrivals are in the range of 60,000—80,000 bags of 85 Kg each.
Rajasthan government has lowered the VAT on rapeseed from 5 to 3 %. As per SEA of India, the sowing area is estimated to be around 71.38 lakh ha higher by 3.89 lakh ha compared to last year and production around 72.25 lakh MT.
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