Showing posts with label Our Service's. Show all posts
Showing posts with label Our Service's. Show all posts

Wednesday 19 February 2014

Gold mining output has little impact on prices: Jeff Nichols


 

This year's gold production is expected to hit a record 3000 tons excluding under-reporting by China and possibly a few other countries.The continuing growth in mine production is in contrast to expectations of many a..

NEW YORK (Commodity Online): 

 Gold mining production has little impact on the prices in the short run and less than generally believed over the long run, according to Jeff Nichols, Precious Metals economist and Managing Director of American Precious Metals.

"The price of one ounce of gold, at any moment in time, is exactly what the marginal investor and consumer of gold is willing to pay for it, ....it is no different from the market valuation of other non-income producing assets-- a work of fine art by Vincent Van Gogh or an irreplaceable antique,"  Jeff Nichols said.
This year's gold production is expected to hit a record 3000 tons excluding under-reporting by China and possibly a few other countries.The continuing growth in mine production is in contrast to expectations of many analysts and investors who expect lower prices to impact production.

Jeff Nichols said that despite lower gold prices over the past couple of years, it would take many more years of low prices and disappointing profitability (even losses) at some mines before gold mine supply can decline.

Increased capital spending by the mining industry – in particular, a number of large-scale mining projects undertaken during the decade-long stretch of rising prices – has begun contributing to primary supply and will be an important source of supply for years to come, Jeff Nichols added.
 

commodity market update 20 Feb. 2014

BASE METAL WRAP: Copper dropped by the most in a week, leading industrial metals lower, after a manufacturing gauge for China declined more than estimated, damping demand prospects in the world’s biggest user of metals.
CS CRUDE (FEB.) OVERVIEW:
TREND CONSOLIDATE
SUP1:6338
SUP2:6280
RESIST1:6477
RESIST2:6582

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM  +919200099927

ENERGY WRAP: West Texas Intermediate retreated from the highest price since October after a Chinese manufacturing index slid to a seven-month low, signaling demand may slow from the world’s second-biggest oil consumer. Natural gas futures dropped from a five-year high in New York amid speculation that the biggest gain in 20 months was excessive.
CS GOLD (APRIL) OVERVIEW:
TREND CONSOLIDATE
SUP1:29520
SUP2:29320
RESIST1:30300
RESIST2:30520

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927

PRECIOUS METAL WRAP: Gold held losses after a two-day drop on expectations that the Federal Reserve will continue to taper stimulus in the U.S. and as holdings in the largest exchange-traded fund shrank by the most in two months.          
CS SILVER (MARCH) OVERVIEW:
TREND CONSOLIDATE
SUP1:46700
SUP2:45740   
RESIST1:48100
RESIST2:49240

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927

GLOBAL EVENTS TO WATCH: FOMC Meeting Minutes, PPI Input q/q, HSBC Flash Manufacturing PMI, French Flash Manufacturing PMI, French Flash Services PMI, German Flash Manufacturing PMI, German Flash Services PMI, Core CPI m/m, Unemployment Claims, CPI m/m, Flash Manufacturing PMI, Philly Fed Manufacturing Index, Mortgage Delinquencies, CB Leading Index m/m, Natural Gas Storage, Crude Oil Inventories.
CS COPPER (FEB.) OVERVIEW:
TREND CONSOLIDATE
SUP1:446
SUP2:443
RESIST1:452
RESIST2:454

TRADING STRATEGY: SELL ON RISE
CAPITALSTARS.COM  +919200099927

How retail demand sliced 400oz London Good Delivery bars in 2013


 


“No review of 2013 would be complete without a mention of the unprecedented flow of gold from western vaults to eastern markets, via refiners in North America, Switzerland, and Dubai,”

Commodity Online






The World Gold Council, a collective of gold miners across the globe and an authentic source on gold related information outlines how the fervent demand from the markets in the East resulted in an epic transfer of yellow metal from the West. By East, one should primarily assume India and China or perhaps, Chindia!

“No review of 2013 would be complete without a mention of the unprecedented flow of gold from western vaults to eastern markets, via refiners in North America, Switzerland, and Dubai,” the council stressed in its report ‘Gold Demand Trends’ for the full year of 2013.

As the price of yellow metal dipped in April and June last year, consumers put on an impressive show of buying. In a feverish pitch, they alone, across the world, generated 21% increase in gold demand; demand for jewellery, small bars and coins took the consumption figures to well around 3,863.5 tons for last year. The impact of lower prices was widespread across the globe in H2, 2013, especially in the jewellery sector. When the macro sentiment pertaining to the economy in US got improved, this resulted in a steady flow of gold from the ETF vaults as well, a phenomenon marked by tactical selling.

“These shifts resulted in the shipment and transformation – on an epic scale – of 400oz London Good Delivery (LGD) bars into smaller denominations more suitable for consumers’ pockets,” the WGC report said as low prices fuelled a fiery retail demand fire of historic scales.

 Despite enduring nuclear taboo in place, Japan is now on the road to manufacture public consent for nuclear weapons.






By Rakesh Neelakandan
A nuclear weapon is a status symbol until it is used

When the sovereignty and territorial sanctity of a nation faces threats, the basic instinct would be to get nationally nervous. Fight-or-flight choice is triggered. However, a nation is not like an individual and when the former gets nervous, it means it has got a single option on the table. To fight! And to fight, you need weapons—nuclear and conventional-- and a collective of systems in place. These facilities presuppose that public opinion is quite in favour of acquiring Weapons of Mass Destruction.

In any other country, nuclear weapons in the arsenal are deemed to be a status symbol; not Japan. Having been the victim of collateral destruction and damage, the Japanese psyche’s revulsion to nuclear weapons is the stuff of legends. However, despite enduring nuclear taboo in place Japan is now on the road to manufacture public consent for nuclear weapons. Attempts to revive nationalism in a deflated political economy should be seen in this light.

That Japanese Prime Minister Shinzo Abe is provocative is no secret. 
His controversial visit to Yasukuni Shrine in December last year kicked a hornet’s nest in Asia. He is also trying hard to keep up with an assertive and often aggressive China. Recall for example the case of East China Sea ADIZ proclamation by China and Japan’s reaction to it.

No wonder that the news of Japan secretly developing nuclear weapons cannot be treated as belonging completely to the realm of fiction as much as it cannot be considered as belonging to the section of facts. Truth is evasive.

Japan has a horrible past. One of the most aggressive countries of last century, Japan was pressed under the US nuclear boots which also led to the permanent footprint getting itself imprinted on Japanese ‘peace constitution’.

In fact, Japanese atomic policy rests on four pillars.

---Atomic Energy Basic Law of 1955 that limits Japan’s using of nuclear energy to the strict confines of peaceful purposes.
---The Three Non-Nuclear Principles wherein Japanese Diet or Parliament has pledged not to make, possess or even allow nuke weapons in its territory.
---Non Proliferation Treaty regime compliance and promotion by Japan.
---Japan’s reliance on US nuclear umbrella and security pact 
If reports are anything to go by, three of these pillars are under threat endangering the fourth one as well.

The first pillar faced the threat of dismantling when the Japanese Diet amended the 57 year old Atomic Energy Act wherein national security was included in the aims of the law, making it oxymoronic in character, despite assurances of contrary nature from highest echelons of Japanese political circles. 
The existence of second pillar had always been in doubt. After all, it is just a principle adopted by the Diet and has not been signed into law. The space to manoeuvre thus laid was a Japanese strategic decision to protect its scope and power to build nuclear weapons.

That Japan is capable of building nuclear weapons is no secret since 1994.The then Japanese PM Mr.Hata had made it abundantly clear: 'It is certainly the case that Japan has the capability to possess nuclear weapons, but has not made them.’

During those times, China was not in the nuclear calculus of Japan. Now, it has changed and perhaps changed forever.

There also exists the possibility that Japanese government may allow the US to bring in nuclear weapons on to its territory as recently iterated by Japan’s foreign minister Fumio Kishida, provided the national security of Japan is threatened.

While this gives out the impression that Japan would indeed allow US to bring in nuclear weapons, I believe that this was just a feeler sent by the political class in Japan to gauge public opinion. It should not be read as Japan warming up in the tight embrace of the US; far from it.


Tuesday 18 February 2014

Fresh buying seen in Natural Gas, open interest up 6.45%

Naturalgas is getting support at 335.8 and below same could see a test of 331 level, and resistance is now likely to be seen at 345.4, a move above could see prices testing 350.2.

MUMBAI:  
 
Naturalgas settled up 1.01% at 340.60 shot up on Tuesday as a winter storm trekked across the northeastern U.S., sparking a rally due to sentiments homes and business will crank up their heating. Updated weather forecasting models indicated that a strong winter storm was set to sweep over the northeastern U.S. on Tuesday and bring strong winds and fresh snowfall. Frigid weather reports sent gas prices rising on sentiments demand for the commodity will climb at thermal power plants to heat the region's homes and businesses.

Nymex natural gas prices surged 8.41% last week, the first weekly gain in three weeks, as chilly winter temperatures in the U.S. led households to burn a higher than normal amount of the fuel to heat their homes. The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department. Speculation that this week’s supply data will show a larger-than-average drawdown in supplies also lent support. Early withdrawal estimates range from 212 billion cubic feet to 240 billion cubic feet. Total U.S. natural gas storage stood at 1.686 trillion cubic feet as of last week, the lowest for this time of year since 2004.

Technically market is under fresh buying as market has witnessed gain in open interest by 6.45% to settled at 15983 while prices up 3.4 rupee, now Naturalgas is getting support at 335.8 and below same could see a test of 331 level, and resistance is now likely to be seen at 345.4, a move above could see prices testing 350.2.

Trading Ideas:

--Naturalgas trading range for the day is 331-350.2.

--Natural gas rose as a winter storm trekked across the northeastern U.S., sparking a rally due to sentiments homes and business will crank up their heating.

--Updated weather forecasting models indicated that a strong winter storm was set to sweep over the northeastern U.S. and bring strong winds and fresh snowfall.

--Speculation that this week’s supply data will show a larger-than-average drawdown in supplies also lent support.

India Rubber prospects to improve on lower production, automotive industry demand

 
In view of the excise reduction in automobiles, major manufactuers have already announced reduction in prices ranging from Rs 5000 to Rs 50,000 which could boost sales.

KOTTAYAM/MUMBAI, INDIA (Commodity Online): 

Rubber prices climbed up in Indian spot and futures market as Kerala Government renewed its committment to provide support for rubber by continuing to procure the commodity at Rs 2 per kg above market prices and lower production data released by Rubber Board. Meanwhile, the lowering of excise duty for a variety of passenger cars could raise demand for automobiles from April to June period, increasing the demand for tyres, analysts said.

Spot rubber prices tracked by Rubber Board has risen from Rs 14200 per 100 kg for RSS$ grade in the beginning of February to Rs 15500 per 100 kg on February 18th.

NMCE rubber futures fell more than three per cent on Tuesday, almost erasing the previous gains, possibly on profit booking. Moreover, investors/traders are probably awaiting further details on the rubber procurement scheme proposed by the State Government. In the meantime, natural rubber in the overseas market is seen moving in thin ranges with mild positive bias after the recent bounce back. TOCOM rubber futures edged up on Wednesday and so were AFET and SHFE rubber futures. Gains in crude oil prices aided the sentiments, Geojit Comtrade said in a daily report. 

NMCE March contract have support at 15200, 15100, 15000, 14850, 14750, 14600. Ressistance 15500, 15650, 15820,16060, 16180, 16250 a, according to Geojit Comtrade.

According to Rubber Board,Production and consumption in India declined during April 2013 to January 2014 compared to a year ago. Production was 9.4 per cent lower on a year ago. Production in this period was provisionally estimated at 723,000 tonnes. The main reasons for the decline were excessive rains, leaf diseases and low prices. However, the area increased from 504,000 hectares in 2012-13 to 518,000 hectares in 2013-14."

In view of the excise reduction in automobiles, major manufactuers have already announced reduction in prices ranging from Rs 5000 to Rs 50,000 which could boost sales.

Global trends

International Rubber Study Group expects production of rubber to rise 3.4% to 12.1 mn tons and consumption to be 11.9 mn tons in 2014. In 2013, the corresponding figures were 11.7 mn tons and 11.3 mn tons.

COMMODITY MARKET TREND-19 FEB. 2014


BASE METAL WRAP: Copper futures rose to a three-week high, amid speculation demand from top consumer China will increase after data pointed to an improvement in Chinese credit growth.
CS SILVER (MARCH) OVERVIEW:
TREND CONSOLIDATE
SUP1:47280
SUP2:46700   
RESIST1:49240
RESIST2:50400

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927
ENERGY WRAP: West Texas Intermediate crude surged above $102, the highest level in four months, on speculation that inventories in Cushing, Oklahoma, decreased last week and as cold weather in the U.S. boosted fuel demand. Natural gas futures jumped to a three-week high in New York as storms and cold weather boosted heating demand, cutting stockpiles to the lowest in 10 years.
CS GOLD (APRIL) OVERVIEW:
TREND CONSOLIDATE
SUP1:30000
SUP2:29520
RESIST1:30520
RESIST2:30680

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927
PRECIOUS METAL WRAP: Gold extended a decline from the highest level in more than three months amid expectations that Federal Reserve minutes will show policy makers backing further stimulus cuts. Silver snapped the longest rally in four decades.
CS CRUDE (FEB.) OVERVIEW:
TREND CONSOLIDATE
SUP1:6280
SUP2:6160
RESIST1:6477
RESIST2:6582

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927
GLOBAL EVENTS TO WATCH: Claimant Count Change, MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, Unemployment Rate, German 10-y Bond Auction, Wholesale Sales m/m, Building Permits, PPI m/m, Core PPI m/m, Housing Starts.
CS COPPER (FEB.) OVERVIEW:
TREND CONSOLIDATE
SUP1:448
SUP2:446
RESIST1:452
RESIST2:454

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927



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Natural Gas pricing: Is Kejriwal barking up the wrong tree?

Then the question comes, why explore gas domestically, if it entails a cost higher than global exploration costs. Here the Ministry's logic is the huge outgo on foreign exchange (oil and natural gas is our number one .
By Sreekumar Raghavan
 
As some one who has been following the developments in natural gas sector from an 'arms length' and the number of columns written by people who are not really experts but mostly laymen using some logic to come to a conclusion, I wouldn't be surprised if you get the facts right on this issue. Most of us either end up on the side of Kejriwal or hardcore UPA supporters the oppoiste.

In fact Dr C Rangarajan, a distinguished economist and former Governor of Reserve Bank of India (RBI) who didn't have anything to do with natural gas or crude oil headed a committee under the Prime Minister's Economic Advisory Council (EAC) to study the problems related to pricing of natural gas in India.

The Oil and Natural Gas Ministry seems to have partially adopted the recommendations of the committee and also based on Comptroller and Auditor General (CAG) reports, has come out with a new pricing formula effective from April 1, 2014. But nowhere does it mention that prices would rise to $8 per MMBTU (million British Thermal Units). Instead it is based on a formula that averages the prices that producers in other regions of the world and exporting centres get on a quarterly basis and that value is used to arrive at the domestic gas price in India.

A notification of the Ministry of Petroleum and Natural Gas dated January 1, 2014 states that prices applicable for domestic gas producers will be calculated on the basis of following methodology:

- The netback price of all Indian imports at the wellhead of the exporting countries will be estimated. It will be a weighted average pf such netback of import prices at the wellheads represent the average global price for Indian LNG imports.

Secondly, weighted average of prices prevailing at trading points of transactions – i.e., the hubs or balancing points of the major global markets will be estimated. For this, (a) the hub price (at the Henry Hub) in the US (for North America), (b) the price at the National Balancing Point of the UK (for Europe), and (c) the netback wellhead price at the sources of supply for Japan will be taken as the average price for producers at their supply points across continents.

-Finally, the simple average of the prices arrived at through the aforementioned two methods will be determined as the price for domestically produced natural gas in India.

This is the formula: PAV = (PIAV = PWAV)/2.
As per this notification, there is no reason to assume that prices will double to $8 per MMBTU as the variables are international prices and they have usually moved in a narrow band with markets presently bullish on colder weather in USA and Europe.

The Rangarajan Committee and the Petroleum and Natural Gas Ministry have put forward some objectives behind this pricing formula.

1) India doesn't have a domestic price for natural gas as it is mostly imported. This applies to crude oil too.

2)If India needs to enable energy security there needs to incentivisation to domestically explore the sources of natural gas. Hence this pricing formula which Kejriwal and co says would push prices to $8 per MMBTU

3) There is a reasonable basis to assume that India's production cost would be higher compared to other nations which have reached an advance level of exploration and mining of natural resources.

Then the question comes, why explore gas domestically, if it entails a cost higher than global exploration costs. Here the Ministry's logic is the huge outgo on foreign exchange (oil and natural gas is our number one guzzler of foreign exchange and therefore a major contributor increasing Current Account Deficit, apart from gold).

There are several issues related to Production Sharing Contracts and royalty payments, cost recoveries under NELP contracts which is beyond the scope of this column. The saddest part is that energy experts haven't really commented on the issue so far.
 
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Monday 17 February 2014

Gems and Jewellery industry disappointed over status quo on India Gold import duty

GJF feels that the G&J industry is being discriminated against because excise duty relief has been granted to luxury items such as large/ mid-sized cars & SUVs under the pretext that the automobile industry is..

MUMBAI (Commodity Online): 

The All India Gems and Jewellery Trade Federation (GJF), the national trade federation for the promotion and growth of trade in Gems and Jewellery (G&J) Industry across India, has expressed deep disappointment and shock at the Interim Budget proposals that are anti jewellery sector, depriving livelihood of millions of people engaged in the sector.

“It is anti-people budget impacting over three crores people as the Finance Minister ignores the plight of jewellery artisans and craftsmen”, said Mr. Haresh Soni, Chairman, GJF. “The entire Gems & Jewellery Industry is deeply disappointed and shocked at the insensitive treatment meted out to it by the Government. The Government seems to be inconsiderate to the plight of lakhs of families of goldsmiths and craftsmen, who are suffering due to lack of job work and thereby threatening their livelihood. The Government is also turning a blind eye to the increasing instances of gold smuggling that is not only creating a parallel economy but also threatening the security of the country due to rise in anti-social activities”, Mr Soni said. Even Gjf suggestions to control CAD thrown out of window as it demanded that the 80:20 must be withdrawn and duty must be brought down to 2%. Government now should roll back the restricted policy as the Current Account Deficit has reduced substantially. Such policy reversal would also curve the growing black marketing activities in the trade.”

GJF has reiterated that the Government’s recent policies such as 80:20 scheme has resulted in high premium and monopolized business environment, destroying the organized G&J industry as well as lead to unemployment and starvation amongst the workforce.

GJF feels that the G&J industry is being discriminated against because excise duty relief has been granted to luxury items such as large/ mid-sized cars & SUVs under the pretext that the automobile industry is registering negative growth but the same was not extended to the G&J industry.

The domestic gems and jewellery industry, which employs 40 lakh people, had a market size of Rs. 251,000 crore in 2013, with a potential to grow to Rs. 500,000-530,000 crore by 2018 (FICCI-AT Kearney Report 2013). But its growth has been curbed after the ‘Gold Control Raj’ was imposed in the country in August 2013 and after the Government sought to restrict gold imports under 80:20 scheme.

Reiterating that gold cannot be considered as the only factor responsible for the growing current account deficit, GJF said that the Government should recognize people’s sentiments to consider gold jewellery as the best social security and also preserve the centuries old jewellery design legacy of India. If India’s artisans, craftsmen and goldsmiths don’t survive, then the country’s centuries old heritage of jewellery making will die a natural death and will be lost forever!

“We urge the Government to keep import duties on gold low to eliminate smuggling; and immediately remove the 80:20 Rule while allowing consignment gold imports to ensure fair open market controlled business. We urge the Government to keep import duties on ready finished imports moderately high to protect Indian industry, still not banning imports. Competition from overseas is important for keeping domestic jewellary manufacturing industry competitive in design and quality.” Mr Soni said.

GJF also expressed disappointment that while the Union Finance Minister spoke about the fall in manufacturing investment worrying and attracting capital investment, the manufacturing facilities in the G&J industry were lying unutilized due to Government policies. The Indian G&J sector has not attracted any national or international investment in jewellery manufacturing and the technology has not been upgraded to keep pace with global tools & techniques.

On one hand, the Government was encouraging the National Skills Development programme and sector mentor counsel by labor employment department, but on the other hand, its policies resulted in driving lakhs of jobless artisans and craftsmen towards suicide. The Government was promoting entrepreneurship but discouraging it in the G&J sector, as per the GJF. The Government seems to be controlling fiscal deficit at the cost of sacrificing the indigenous G&J industry.

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Sunday 16 February 2014

India Budget 2014-15: GDP growth seen at 4.9%, agricultural growth, agri growth 4.6%

India is expected to record a growth of 4.9% after GDP fell to 4.4% from 7.9% in nine quarters, according to Finance Minsiter P Chidambaram.

NEW DELHI (Commodity Online): 

India has outperformed other emerging market economies although the nation is not immune to developments taking place in the global economy. India is expected to record a growth of 4.9% after GDP fell to 4.4% from 7.9% in nine quarters, according to Finance Minsiter P Chidambaram.

Presenting the interim budget for 2014-15, he said that the national food security act has ensured food for 67% of population."We are proud of the stellar production of the agri section. Estimates of production of sugar, cotton, and oils seeds point to a new record . Food grain production estimated at 263 mt against 255 mt last year," P Chidambaram said.

Finance Minsiter said that Rupee was under tremendous pressure this financilal year.Governments, RBI and SEBI took measures to stabilise foreign exchange. Among other emerging economies rupee was affected the least. 

Highlights:

IFCI will set up VC fund for scheduled caste. Initial capital of Rs. 200 crore will be given
-Govt, RBI, SEBI stabilised forex
-GDP fell to 4.4% from 7.9% in nine quarters
-FY14 India GDP seen at 4.9%: FM
-Coal production grew to 554 mn tons vs 361 over the decade
-Govt's two terms delivered growth above GDP trend rate
-Food Security act ensures food to 67% of population
-PSU Capex seen at Rs 2.61 lakh cr in FY 14
-Power sector to add 50,000 MW of thermal and hydro power
-FY15 Central assistance to states seen at Rs 3.38 lakh cr.

COMMODITY MARKET TREND-17 FEB. 2014

BASE METAL WRAP: Copper climbed to a one-week high, extending two weeks of gains, after a report showed China’s new credit increased to a record last month, boosting demand prospects for industrial metals from the top user.
CS CHANA (APRIL) OVERVIEW:
TREND CONSOLIDATE
SUP1:2990
SUP2:2950   
RESIST1:3090
RESIST2:3124

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927

ENERGY WRAP: West Texas Intermediate crude rose for the first time in three days as an improved U.S. economy bolstered the demand outlook in the world’s biggest oil consumer. Natural gas rose in New York, extending the first weekly gain in three weeks.
CS JEERA (MARCH) OVERVIEW:
TREND CONSOLIDATE
SUP1:11675
SUP2:11460
RESIST1:12270
RESIST2:12470

TRADING STRATEGY: SELL ON RISE
CAPITALSTAR0S.COM +919200099927

PRECIOUS METAL WRAP: Gold advanced to the highest level in more than three months as speculation that a U.S. economic recovery will stall boosted demand for haven assets. Silver headed for a 12th day of gains.
CS TURMERIC (APRIL) OVERVIEW:
TREND BULLISH
SUP1:7100
SUP2:6980
RESIST1:7530
RESIST2:7730

TRADING STRATEGY: BUY ON DIPS
CAPITALSTARS.COM +919200099927

GLOBAL EVENTS TO WATCH: Retail Sales q/q, Bank Holiday.
CS SOYABEAN (MARCH) OVERVIEW:
TREND CONSOLIDATE
SUP1:3865
SUP2:3820
RESIST1:3967
RESIST2:4020

TRADING STRATEGY: SELL ON RISE
CAPITALSTARS.COM +919200099927

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India interim Budget 2014-14: Gold import duty may fall by 2%

Chidambaram may address the issues related to slowdwon in the economy while some people expeced relaxation in import curbs on gold in view of the persistent demand from gem and jewellery industry.


NEW DELHI (Commodity Online): 

 India' Finance Minsiter P Chidambaram's last budget before the term of the ministry comes to an end is expected to have some populist measures with an eye on elections but at the same time an uneventful affair as it is an interim budget to approve expenditure for four months beyond March 31. Market expects gold import duty to be eased by 2% from the current 10% in view of success attained in containing current account deficit (CAD).

Chidambaram will no doubt highlight the achievements of the government in containing Current Account Deficit and fiscal deficit. The fiscal deficit is likely to have been fallen to 4.8% of the GDP or lower by postponing expenditure and advancing income. Huge dividend payout from public sector companies and windfall from spectrum allocation is expected to bring some balance to government's financila position.

Chidambaram may address the issues related to slowdwon in the economy while some people expeced relaxation in import curbs on gold in view of the persistent demand from gem and jewellery industry.
Some of the sectors expecting relief are automobilies, mining and agriculture.

All in all, Chidambaram would take this chance to go down the history as a finance minister who dared to stick to fiscal consolidation ahead of an election. Only for this reason, he is unlikely to make any populist announcements, apart from some minor ones like cut in import tax on gold, according to leading columnist Swaminathan S Anklesaria Aiyar in Economic Times.

Official figures clearly show that based on his own budget estimates for 2013-14, the country's fiscal deficit touched phenomenal Rs.5,16,390 crore during April- December, India Today reported.

Some of the recent pupulist measures could put strain on government finances including deferment of decision to hike diesel prices. The export subsidy for sugar announced due to pressure from Agriculture Minsitry is expected set the national chequer back by around Rs 1400 cr.
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FMC said the new directive was to ensure greater efficiencies and allow the market participants to derive the benefit of lower costs. 


MUMBAI (Commodity Online): 
India's commodity market regulator, Forward Markets Commission (FMC) has allowed commodity exchanges to levy differential transaction charges based on commodities and or trade timings.

In a new directive that overrules the earlier directives of 2005 and 2009 disallowing levy of differential transaction charges, FMC said that the new directive is in repsonse to representation suggesting differential transactions charges for delivery based and non-delivery based commodities contracts, as substantial investments is required to be made by Exchanges to provide for an efficient delivery mechanism by way of warehousing and assaying infrastructure. Thus, there is inherent merit in implementing a differential transaction charge structure because the cost of offering delivery based contracts is substantially higher than the cost of offering non-delivery based contracts. There is also a need to promote competition in the market to bring in greater efficiencies and lower transaction costs to market participants., FMC said.

FMC said the new directive was to ensure greater efficiencies and allow the market participants to derive the benefit of lower costs. The Exchanges have been directed to make necessary amendments to the Bye-laws, Business Rules and Regulations in order to incorporate the above directions of the Commission and submit a compliance report in this regard by 20th February, 2014
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Friday 14 February 2014

WEEKLY AGRI COMMODITY REPORT-15 Feb 2014














Investment Market Trends


Weak Dollar, safe haven buying helps Gold rally above $1300, Silver $21 Nat Gas

John J Hardy of Saxo Bank said that precious metals made pronounced gains challenging key technical levels. Weak dollar and US retail sales data laso weighed on market sentiments boosting risky and precious assets on 


LONDON (Commodity Online): 

The week saw gold climbing over $1300 while silver poked its head above $21 levels attaining the highest level since mid-November.

John J Hardy of Saxo Bank said that precious metals made pronounced gains challenging key technical levels. Weak dollar and US retail sales data laso weighed on market sentiments boosting risky and precious assets on the possible implicationof FEd polcy. Meanwhile, menacing winter weatehr saw spot natural gas ripping higher on the week, John J Hardy said.

Energy markets in the US remain squarely in focus on yet another wave of extreme winter weather blasting the northeastern and eastern portion of the country, which is the most heavily populated. The front March Natural Gas contract pushed back above the 5.00 dollar level in very volatile trading. Meanwhile, daily closes in the back months have remained capped by the technically significant 4.65 area, which is a 100% extension of the previous rally from the November lows.

The March to April roll is a seasonally critical one as the timing of the US winter’s end is at stake. These two months could continue to swing wildly as they have recently as weather forecasters hold the market in their thrall. Inventories are at their lowest level for this time of the year in 10 years for key areas of the country and with yet another large draw last week of -237 BCF before another round of cold extremes hit this week. Traders will need to tread carefully as the risk of a combination of low inventories and an unusually long winter could stretch prices and spreads in wild swings. The timing of the switch to building inventories from drawing on them will be critical.

WTI Crude was about flat for the week but is still trading at very high levels just under 100 dollars a barrel and thus close to the highs of the range since October as cold weather remains a focus rather than risks to demand from spotty and inconsistent US data. The irony here could be that weather is both boosting energy prices and weakening the economic data, which would normally act as a headwind on prices. Products were generally higher on further draws on inventories. The WTI/Brent spread shrank to its lowest level by later in the week, at just below 8.50 dollars/bbl., since last October on the North American weather focus. US Crude stocks have come off their lows and remain at the upper end of their five-year range, though distillates and propane are extremely low on exceptional demand driven by cold weather. 




Thursday 13 February 2014

India's Sugar export subsidy to arrest the fall in prices:CRISIL

At the all-India level, average sugarcane cost as a percentage of sugar prices is expected to reach nearly 100% in the current season from 86% in the last. Despite significant inventory levels at the beginning of the 

MUMBAI (Commodity Online): India government’s decision to give a subsidy of Rs 3.33 per kg on exports of 4 million tonnes (mt) of raw sugar over the next 2 years will reverse the trend of falling domestic sugar prices and provide some respite to the manufacturers, CRISIL Research estimates.

An expected 1.5 mt decline in sugar production in the current sugar season (October-September) due to lower cane output is also likely to support sugar prices.

CRISIL Research expects ex-mill (Maharashtra) sugar prices to increase from Rs 26 or so currently to Rs 29 per kg by the end of the season – a jump of over 10%.

The growing disparity between sugarcane and sugar prices has severely affected domestic sugar mills in the last couple of years. As many as 29 sugar companies, together accounting for a quarter of domestic production, had posted net losses of Rs 18 billion for the 2012-13 sugar season, mainly because of high sugarcane prices and high interest costs.

These losses are expected to worsen in the current season as domestic prices have declined a further 16% in the first 4 months of the current season and are currently at a 27-month low.

At the all-India level, average sugarcane cost as a percentage of sugar prices is expected to reach nearly 100% in the current season from 86% in the last. Despite significant inventory levels at the beginning of the 2013-14 season, the players were unable to export since the export realisations were Rs 2.00-2.50 per kg lower than domestic prices due to weak international prices.

Says Rahul Prithiani, Director – Industry Research, CRISIL Research,"With the export subsidy, nearly 1.5 mt of sugar is expected to be exported in the 2013-14 sugar season. This, coupled with a 1.5 mt year-on-year fall in domestic production due to a likely decrease in cane output will result in a decline in inventory levels. This, in turn, will lead to a Rs 2-3 per kg increase in sugar prices by September 2014. Hence, the loss for sugar companies is expected to halve from current levels of around Rs 6 per kg on domestic sugar sales by the end of this season. But even with this increase, average prices for the current season will still be 5-10% lower than the last due to weak prices in October-January."

Happily for manufacturers, the upward momentum in prices is expected to sustain through the 2014-15 sugar season. Given their continued losses, CRISIL believes the cash flows of sugar mills will remain stressed in the current sugar season. This, coupled with a delay in disbursement of interest subvention loans due to high leverage of companies, will result in relatively lower payment to farmers in the first half of the season.

Says Prasad Koparkar, Senior Director – Industry and Customised Research, CRISIL Research, "With the rise in arrears, farmers are likely to shift to other crops, resulting in lower acreage under sugarcane cultivation, leading to a decline in sugar production and inventory levels in the 2014-15 sugar season. Consequently, sugar prices are expected to move higher."

Return of positive trend in commodity indices in Jan: DB


Last year, commodities were the worst performing asset class on a total returns basis with returns on the DJUBSCI declining 9.6% for the full year.
LONDON (Commodity Online): After showing a dismal performance in 2013, commodity indices turned positive in January helped by better performance of precious metals and live stock sectors while energy and industrial metals continued to suffer.

Deutsche Bank said in a monthly report that heaviest losses happened in industrial metals and agricultural sectors exposed to general drawdwon in gloabl equity markets as well as financial market weakness across a number of emerign market countries.

In agricultural markets, rising production particularly as it relates to the South American crop is sustaining the decline in agricultural returns as inventories across the complex are rebuilt. However, there have been pockets of strength with US natural gas, heating oil, coffee and cocoa among the strongest performers. Despite the strong gains in parts of the energy complex, helped by extreme cold weather in the US, these have been insufficient to offset losses earlier in the month. 

Last year, commodities were the worst performing asset class on a total returns basis with returns on the DJUBSCI declining 9.6% for the full year. In comparison to other asset classes, the first month of 2014 has been relatively kind to commodities compared to the losses suffered on benchmark equity and EM indices.