Government Cuts Sugar Levy Quota To 10% : September 30, 2010

The Indian government has decided to cut back the levy sugar obligation for the mills to 10%. The move was announced by Sharad Pawar, Minister of Agriculture, addressing the 51st Annual General Body meeting of the National Federation of Cooperative Sugar Factories on Wednesday. The decision has been taken in view of prediction of bumper crop this year, said Pawar.

Levy quota refers to the percentage of total output that sugar mills have to provide for sale through the government’s public distribution system (PDS) at much subsidized prices. The industry gets a much lower price for levy sugar compared with the market prices. The government had increased levy obligation in 2009-10 sugar season due to less production of sugar in the country.

The industry has now been urging the government for some time to lower back the levy quota as the total production will jump next season and thereby a lower percentage would ensure the required amount of the sweetener for PDS. The government requires nearly 2.7 million tonne of sugar for supply through ration shops and at the projected production for the next year, the levy percentage of 10% would be enough to meet the requirements.

Referring to demand of decontrolling the commodity by the sugar industry, the minister said this issue was under active consideration of the government, but any decision would be taken only after consultation with various stakeholders. “There are a number of aspects to decontrol and each aspect has to be examined in the context of its nature and impact on stakeholders and apprehensions of all sections need to be addressed”, Pawar said, adding state governments will need to be actively involved in the move.

On the ethanol issue, the minister said that the Cabinet Committee on Economic Affairs (CCEA) has approved price of Rs 27 per litre subject to adjustment against the price to be determined by the Expert Committee. He urged sugar factories to start supplying ethanol at the earliest so that the programme of ethanol blended petrol stabilizes and becomes integral part of our fuel policy.

Gold Prices Moved Higher : September 29, 2010

Gold prices moved higher on Tuesday supported by weak dollar. The yellow metal tends to benefit as the dollar falls, because a weaker dollar renders gold cheaper for holders of other currencies, Also there were rush of safe heaven demand on report of sharp fall in US consumer confidence.

Gold for December delivery reached an all-time high of $1,311.80 an ounce before slipping back to settle at $1,308.30, a rise of $9.70 on the Comex division of the New York Mercantile Exchange. Spot gold last traded at $1,291.40 from $1,296.05 late in New York on Monday.

Crude Prices Made A Good Recovery : September 28, 2010

Crude prices made a good recovery in latter hours from sharp losses to end marginally higher on Monday, tracking the equity markets where major indices showed volatility before closing marginally in red. The crude also got the support of decline in dollar; the American Greenback was down against a basket of major currencies.

Benchmark crude for November delivery settled up 3 cents, or 0.04 percent, at $76.52 a barrel, after trading in a range of $75.52 on the New York Mercantile Exchange.In London Brent November crude fell 30 cents to settle at $78.57 a barrel on the ICE.

Government Is Likely To Extend The Ban On Cotton Export Registration : September 27, 2010

The Indian government is likely to extend the ban on cotton export registration that was to be lifted on October 1, 2010. It is also likely to impose an export duty of around Rs 2,500 per tonne on cotton exports to ensure that shipments remain within reasonable limits and enough of the raw material is made available to the domestic textile industry which has been lobbying hard for export curbs.

This however is unlikely to satisfy the textile lobby which has been asking for at least Rs 10,000 per tonne of levy which will prove complete prohibitive for cotton exports from the country. The government is also facing pressure from cotton traders and farmers’ unions which want lower export duty to ensure significant export from the country that will support domestic prices.

The Indian government is often caught in the lobbying by two opposite sides, cotton farmers and traders on one hand and domestic textile players on the other hand. Although it has an institutionalized mechanism to address the trouble, volatile production and global prices scenario makes a decision difficult. The cotton corporation of India is tasked with keeping a tab on the potential production and the cotton advisory board estimates the exportable surplus. However, the final decision is often taken at the last stage by the top government officials including the textile, agriculture and finance ministers.

India, the world's 2nd largest cotton exporter, had earlier said it would allow exports after local consumption at 5.5 million bales in the next marketing year starting October 1. The US, the largest producer of cotton in the world, has sold nearly 90% of its crop and has nothing significant to offer international markets at this point in time. As such, global cotton prices have been ruling at record high levels and will take a cue from how much export and at what duty is allowed by the government of India.

Production in India in the next season is expected to see a sharp- jump owing to good monsoon. The country is expected to produce a record cotton harvest next season at 35 million bales, higher than earlier estimates of 32.5 million bales due to better yields. This will represent a 17% year-on-year increase in production on the low base of last year. If the government also decides to increase export limit in wake of higher production, it would certainly help bring down global prices as well.

Crude Prices Rose On Friday : September 25, 2010

Crude prices rose on Friday, a surprise rise in Germany’s Ifo index of business sentiment along with decline in dollar helped the crude to post its biggest weekly gain in two months. Investors are still hopeful that the Federal Reserve would take measures to support a faltering economic recovery and that would raise the crude demand. The dollar fell against a basket of currencies to its lowest level since February on the strong German data, making the crude cheaper to buy.

Benchmark crude for November delivery rose $1.31, or 1.74 percent, to settle at $76.49 a barrel, after trading in a range of $74.66 to $76.68 on the New York Mercantile Exchange. In London Brent November crude rose 76 cents to settle at $78.87 a barrel on the ICE.

Guarseed Futures Are Trading Flat : September 24, 2010

Guarseed futures are trading flat due to subdued demand in the physical market. Good rains in Rajasthan have been responsible for the fall in prices for Guar over last few weeks; however, further apprehensions are of heavy rains in coming weeks which could also lead to possibilities of crop damage that may affect the productivity to some extent.

The contract for October delivery was trading flat at Rs 2023, down by 0.20% or Rs 4 from its previous closing of Rs 2027.The open interest of the contract stood at 207250 lots.

The contract for November delivery was trading at Rs 1964, down by 1.16% or Rs 23 from its previous closing of Rs 1987. The open interest of the contract stood at 95820 lots on NCDEX.

Copper Prices Chased Higher Levels : September 23, 2010

Copper prices chased higher levels as investor sentiment remained extremely positive on the back of decline in the US currency after the Federal Reserve assured support to the ailing economy. Weakness in greenback took the red metal prices to the highest level in the 5 months as the metal priced in dollar becomes more attractive for global investors.

Copper futures for December delivery rose 2.4% to reach $ 3.56 per lb, after trading in the range of $3.47 to $3.59, on the Comex metals division of the New York Mercantile Exchange. Copper for three-months delivery on the London Metal Exchange closed after adding $160 at $7,840 per tonne.

Mentha Oil Futures Were Trading Up : September 22, 2010

Mentha Oil futures were trading up owing to the fresh buying by the traders following pick up in domestic and export demand. Lower arrivals from Chandausi in Uttar Pradesh mainly pushed up mentha oil prices at futures trade.

The contract for September delivery was trading at Rs 832.40, up by 1.15% or Rs 9.50 from its previous closing of Rs 822.90. The open interest of the contract stood at 4875 lots.

The contract for October delivery was trading at Rs 844.30, up by 1.11% or Rs 9.30 from its previous closing of Rs 835.00. The open interest of the contract stood at 4529 lots on the MCX.

Crude Prices Snapped Their Four Days Losing Streak : September 21, 2010

Crude prices snapped their four days losing streak and gained on Monday tracking wide gains in equity markets that were lifted by optimism about the strength of the economic recovery. The rise in the prices got the support of an expected drop in crude oil inventories in the United States following the outage last week on Enbridge main pipelines delivering crude from Canada to US Midwest.

The industry group American Petroleum Institute, will releases its oil inventory data for the week to September 17 on Tuesday.

Benchmark crude for October delivery rose $1.20, or 1.63 percent, to settle at $74.86 a barrel, after trading in a range of $73.32 to $75.45 on the New York Mercantile Exchange. In London Brent for November delivery closed up $1.10 to $79.32 a barrel at ICE.

Crude Oil Close Lower : September 18, 2010

Crude prices continued their decline and closed lower for the fourth straight day on Friday, posting the biggest weekly percentage loss in five weeks. A downbeat consumer sentiment that showed deterioration in early September, down to 66.6, the weakest reading in 13 months raised fresh concerns about oil demand. Also the Enbridge’s Repairs to the pipeline were completed on Tuesday night and regulatory approval for a restart was soon after clinched by the company.

Benchmark crude for October delivery settled down 91 cents, or 1.22 percent, at $73.66 a barrel, after trading in a range of $72.75 to $75.25 on the New York Mercantile Exchange. In London Brent for November delivery fell 27 cents to settle at $78.21 a barrel at ICE.

Road For Commodity Options Gets Easier : September 17, 2010

Very soon commodity traders will get an opportunity to take their bets in option’s segment as well because in an important move on Thursday the Union Cabinet has approved amendments to the Forward Contracts (Regulation) Act 1952 by introducing the Forward Contracts (Regulation) Amendment Bill, 2010 in the Parliament.

The bill pitches for providing autonomy and power to the Forward Markets Commission (FMC) to regulate the market effectively. Once the bill is passed and enacted by the Parliament, new products like ‘options’ will be allowed in the commodity market.

Introduction of 'options' is expected to improve investor participation in the commodity market while helping the farmers to take benefit of ‘price discovery’ and ‘price risk management’.

Jeera Futures Prices Get In Correction Mode : September 16, 2010

Jeera futures have plunged due to profit taking at higher levels and have corrected to rates for spice considerably. Rains in Gujarat and expectation of bumper crop have been creating a bearish sentiment for the commodity pressurizing it to trade further low.

The contract for September delivery was trading at Rs 13614, down by 1.17% or Rs 246 from its previous closing of Rs 13860. The open interest of the contract stood at 7587 lots.

The contract for October delivery was trading at Rs 13750, down by 1.81% or Rs 253 from its previous closing of Rs 14003. The open interest of the contract stood at 13866 lots on the NCDEX

From Scanty Rains Last Year, It Is Now Problem Of Plenty : September 15, 2010

India’s monsoon rains, which delivered the lowest rains in nearly four decades last year, leading to half of the country’s cultivated land facing a drought like scenario, have reversed gears this year and after an extremely rainy September so far, a problem of plenty seems to be emerging.

The initial forecast of the Indian Meteorological Department (IMD) was that rains would be just 2% below the long period average (LPA) this season, which is considered normal. The start of the monsoon was rather poor with rains 20% below the LPA in June. However, the IMD soon upgraded its forecast to 4% above normal rains saying the second half of the four month (June-Sept) period would produce much more rains.

The prediction now seems to be coming true with much higher-than-average rains being witnessed in September. So far, cumulative rainfall since June 1 has been about 2% above the LPA while in September the rainfall has been about 22% higher compared to normal. Further, the Met department now expects that the withdrawal of monsoon would start towards the end of this month, which will be a month late compared with normal timings.

While so far there has not been any considerable damage to crops, if there are excessive rains in the rest of the September, it could impact cotton and soybean crops. Some parts of Punjab and Haryana, which are among the top producers of Kharif crops like cotton and paddy, are already facing flood like scenario and more rains can certainly impact the standing crops.

Excessive September rains could also hurt the soybean harvest, which usually begins by middle of the month. Last year’s drought has already turned India into the largest importer of vegetable oils ahead of China, and any significant damage to crop this year can boost already high food inflation. Cotton harvest too has been slightly delayed by heavy showers.

Though, at this stage, it would be too early to predict any substantial damage to crops. Also, some late rains in east, which was facing a rather drought like scenario in contrast to the rest of the country, can also help compensate some of the crop looses in other parts of the country. However, if rains continue to remain much higher than average throughout the September, then there could be some significant damage to crops.

Guar Seed Futures Are Trading In Green : September 14, 2010

Guar seed futures are trading in green after sliding in early trade, the commodity prices have rebounded owing to short covering. The commodity witnessed a fall in previous session on expectation of a rise in output as farmers expanded area under cultivation and also due to subdued spot demand.

The contract for September delivery was trading at Rs 2007.00, up by 1.26% or Rs 25 from its previous closing of Rs 1982.00. The open interest of the contract stood at 83010 lots.

The contract for October delivery was trading at Rs 2019.00, up by 1.46% or Rs 29 from its previous closing of Rs 1990.00. The open interest of the contract stood at 179360 lots on NCDEX.

Gold Prices Have Turned A Bit Subdued : September 13, 2010

Gold prices have turned a bit subdued on Monday, after having fallen to a one-week low in the previous session, on getting good industrial output data from China helping to dissipate fears of a worsening global economy and raising risk appetite that has eased safe-haven demand.

Gold future for December delivery has declined by 0.2 percent to $1,244.1 an ounce on the Comex metals division of the New York Mercantile Exchange. Spot gold fell $1.95 to $1,243.05 an ounce.

Pepper Futures Are Trading Lower : September 10, 2010

Pepper futures are trading lower on the NCDEX though some spurt was seen in the markets due to higher domestic demand on the back of festivals season but lower export demand was putting pressure on the prices as Indonesia & Brazil continued to charge lower rates as compared to Indian parity.

The contract for September delivery was trading at Rs 20659.00, down by 0.35% or Rs 72 from its previous closing of Rs 20731.00. The open interest of the contract stood at 10568 lots.

The contract for October delivery was trading at Rs 20770.00, down by 0.27% or Rs 56 from its previous closing of Rs 20826.00. The open interest of the contract stood at 6564 lots on the NCDEX.

Copper Prices Rise On Easing European Concern: September 09, 2010

The copper prices gained on Wednesday on the back of some improvement in the investor sentiments on easing concern over European banks and sovereign debt after successful Portuguese bond auction. The red metal price rose along with the rising stock markets giving some respite to the traders around the world.

Copper futures for December delivery gained 0.86 percent to reach $ 3.50 per lb, after trading in the range of $3.45 to $3.51, on the Comex metals division of the New York Mercantile Exchange. Copper for three-months delivery on the London Metal Exchange closed after gaining $46 at $7,675 per tonne.

Turmeric Futures Are Trading Up : September 08, 2010

Turmeric futures are trading up due to short covering but may not be able to sustain their uptrend as the overall sentiment remains weak for the commodity. The sentiments are bearish given that area under the cultivation for this commodity is high and good wether condition will bolster its growth.

The contract for September delivery was trading at Rs 12080, up by 1.94% or Rs 230 from its previous closing of Rs 11850.The open interest of the contract stood at 7150 lots.

The contract for October delivery was trading at Rs 11620, up by 0.73% or Rs 84 from its previous closing of Rs 11536.The open interest of the contract stood at 2660 lots on the NCDEX.

Mentha Oil Futures Are Trading Up : September 07, 2010

Mentha Oil futures are trading up amid the likely fall in production,keeping the sentiment high. Traders are also reportedly holding back stocks in anticipation of rise in price in the coming weeks. Traders hold a bullish overview for the commodity in the medium term on expectation of further pickup in domestic and export demand at lower levels.

The contract for September delivery was trading at Rs 813.00, up by 1.65% or Rs 13.20 from its previous closing of Rs 799.80.The open interest of the contract stood at 6906 lots.

The contract for October delivery was trading at Rs 824.20, up by 1.75% or Rs 14.20 from its previous closing of Rs 810. The open interest of the contract stood at 2934 lots on the MCX.

Gold Prices Decline Further As The Risk Appetite Increase: September 06, 2010

Gold prices have inched further down on Monday as the equities in the Asian markets were moving higher on optimism, the US economy would not suffer a double dip recession, on the same time a slight drop in ETF holdings was putting an additional pressure on the yellow metal.

US gold futures for December delivery fell $1.9 to $1,249.2 an ounce. Spot gold has eased 14 cents to $1,247.90 an ounce by, having fallen as low as $1,235.70 on Friday.

Turmeric Futures Gain Momentum On Restricted Arrival: September 04, 2010

Turmeric futures gained momentum due to its restricted arrival in Nizamabad mandi as arrivals there stood at 400 bags against 600 bags on Thursday. The commodity is witnessing a volatile trading due to weak demand amid its higher crop estimation.

The contract for September delivery was trading at Rs 12302, up by 2.01% or Rs 242 from its previous closing of Rs 12060.The open interest of the contract stood at 6940 lots.

The contract for October delivery was trading at Rs 11858, up by 3.58% or Rs 410 from its previous closing of Rs 11448. The open interest of the contract stood at 2365 lots on the NCDEX.

Copper Prices Attain 4 Month High Level On Strong US Data: September 03, 2010

The copper prices reached a fresh four month peak level on Thursday after the US reported better than expected home sales and factory order numbers. The red metal prices also rose on account of improved global economic prospects and the encouraging manufacturing and other macroeconomic data from the US that implied that the nation may not be headed for a double dip-recession.

Copper futures for December delivery gained 0.5% to reach $ 3.49 per lb, after trading in the range of $3.46 to $3.54, on the Comex metals division of the New York Mercantile Exchange. Copper for three-months delivery on the London Metal Exchange closed after adding $47 at $7,653 per tonne.

Crude Continued Its Decline For Second Day On Tuesday: September 01, 2010

Crude continued its decline for a second day on Tuesday, ending August with the worst performance in last three months, worries of slowing pace of economic recovery erupted with Fed statement that economy might need further stimulus. Though there were good economic reports that consumer confidence rose in the month but traders squared books ahead of weekly inventory data forecast to show a further rise in crude inventories. US weekly retail gasoline demand fell 3.1 percent in the week ending August 27.

Benchmark crude for October delivery settled down $2.78, or 3.72 percent, at $71.92 a barrel, after trading in a range of $71.71 to $74.73 on the New York Mercantile Exchange. In London Brent crude for October fell 68 cents to $75.92 a barrel on the ICE.