Commodity Trends: Sugar imports surge in India

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

29 Nov 2009

India is set to import a record six million tonnes of sugar in 2009-10 season due to a sharp dip in production, according to USDA as against an import of 2.8 mn tonnes in the last season. Sugar prices rebounded from a six- week low in New York as countries including India, the world’s largest consumer, increased purchases. Sugar prices have surged 93 percent this year as adverse weather hampered cane harvests in Brazil and India, extending a global-production deficit. Demand from Pakistan, Indonesia and Bangladesh also supported prices.
On the other hand gold imports have fallen to 26 tonnes in October compared to 44 tonnes a year earlier. During the month of October gold prices rose from Rs 15,870 per 10 grams to Rs 16,190, according to the data released by the Bombay Bullion Association.
The Indian Commodity Exchange (ICEX), India’s fourth national multi-commodity exchange, has commenced operations with seven contracts in agricultural and non-agricultural commodities. ICEX is promoted by Indiabulls Financial Services and MMTC.
The tenth World Spice Congress being organised by the Spices Board India and the All India Spices Exporters Forum will be held in Delhi from February 3 to 5, 2010.
Gold
Gold prices touched a high of $1,195/oz in the last week and prices surged higher on the back of bullish sentiments related to higher investment demand for the yellow metal. On Friday, prices corrected as global financial markets also fell sharply. US Treasuries jumped and credit default swaps surged as Dubai’s attempt to delay debt repayments unnerved investors. The dollar rallied against the other currencies which pulled down gold prices. Though the short term trend in Gold remains up, we feel that even slight strength in the dollar could put pressure on prices. Investment demand from central bankers is on the rise and this factor is expected to be positive for the yellow metal.
If more news on gold buying by central bankers is released in the coming days then prices could test new highs. US interest rates are expected to remain low for an extended period and that may continue to trigger a downside in the Dollar Index from the short-term perspective. Gold prices have risen around 30% since the start of the year and weakness in the dollar has been a major aid to the rally. Gold prices come under selling pressure as the dollar strengthens but fundamentals like low interest rates would continue to be bearish for the dollar and further buying in gold could emerge as investment demand has emerged. Doubts about a nascent economic recovery and jitters among central banks, some of which have diversified away from the dollar, have raised gold's allure as a safe haven asset. MCX December Contract shall find a strong support at 17200/16670 and resistance at 17960/18400 levels in the coming week.
Base Metals
Base metals led by copper has seen a surge in recent times thanks to upbeat US economic data and Federal Reserve’s forecast for economic growth and US jobless data. On Monday, LME copper rose to $7010 with weaker dollar and resilient equity markets quite supportive. On Thursday, it further rallied to $7026. Shanghai 3-month copper has rallied to 55,500 yuan levels although fundamentals don’t look supportive. However, the news of Dubai debt crisis and repayment default could have impact on the market sentiments in the coming days. No one is for sure whether metals complex will take the news in its stride. LME three month delivery copper was still up 34 on Friday at 6,855 and is awaiting further developments on the Dubai crisis front.
On the supply side, there are no constraints foreseen as one of the largest copper mines in Peru, Antamina- a new labour contract has been signed ending four months of intense negotiations. MCX Copper is exhibiting a weak trend on strong dollar gains offset by rising inventories in London Metals Exchange. LME stocks have risen 475 tonnes to 432,075 tonnes.
On the downside, China’s refined copper imports are down 40% in October and doubts of economic recovery still persist. Dubai debt crisis may cause adverse impact on financial markets and it is not yet certain. MCX Dec Copper fell lower to Rs 315 on Friday and could test 306 mark very soon. Global copper prices have risen 125% so far in 2009 and rally looks extended. So markets may see a correction soon aided by the likely impact of Dubai debt crisis.
Crude Oil
Crude oil is exhibiting weakness as US inventory is reportedly higher although a weak dollar is supportive of the commodity. The Dubai debt crisi has had impact on the financial sector and equity markets already. A state-owned investment conglomerate Dubai World, with $59 billion of liabilities, set off a global stock market selloff this week after it said it wants to restructure its debt, including at its property subsidiary Nakheel. The Dow Jones industrial average slumped 155 points on Friday before trading ended three hours early due to the Thanksgiving holiday. The Dow fell as much as 233 points. The broad retreat from riskier assets pushed Treasury prices higher. The dollar gained against most other major currencies and commodities tumbled. This has led Crude oil to trade in range $74-77 levels in New York. On Friday, US Crude January contract fell to $76 and a stronger dollar weighs on demand for crude oil. Despite the Dubai crisis and stronger dollar movements, crude looks supported above $75 levels in the medium term.
Wheat
India’s wheat futures at NCDEX fell on higher stocks and rising acreage due to good rains received in wheat-growing northern states of Uttar Pradesh, Punjab and Haryana. This favours wheat sowing even as high temperatures will reduce overall crop area.
NCDEX December contract ended at Rs 1391, a fall of Rs 10 from the previous weeks close after rising to Rs 1410. As on November 19, the acreage of wheat was 9.30 mn hectares up from 8.57 mn hectares during the same period last year.
India has set an output target of 82 mn tonnes as against 80 mn tonnes produced last year. This is also to compensate for the loss in rice output due to worst monsoon since 1972 witnessed in 2009.
Wheat stocks at government warehouses were at 30 million tonnes against a target of 16.2 million tonnes, Union Agriculture Minister Sharad Pawar told Parliament recently. Wheat futures are expected to show weakness in the days ahead and is likely to trade in narrow range of 1389 to Rs 1398.

Source: Commodity Online