Commodity Trends: Cotton soars; pepper,chana tumble


It was a mixed week for agri-commodities worldwide with cotton prices soared to record highs on textile mills demand while pepper. chana futures tumbled in Indian markets on weak demand. Global food inflation continues to be worrying and the Middle East tensions only add to the anxieties about further rise in prices of food grains.
An index of 55 food commodities rose 2.2 percent to 236 points from 230.9 in January, the eighth consecutive gain, according to the UN’s Food and Agriculture Organization. In February, the World Bank said the rise has pushed 44 million more people into extreme poverty since June.
In global markets, Sugar futures dropped 13 percent from their high on Feb. 2 Wheat, hogs, soybeans and cattle retreated 8.9 percent, 5.5 percent, 2.7 percent and 0.8 percent, respectively, from their 2011 peaks, Bloomberg reported.
Indian pepper fell this week on weak exports due to higher prices of Indian produce and on fresh supply from Vietnam. Weak supplies and depleting stocks, however, limited the losses.
The traders said that tightening of the borders by the Sales Tax department in Idukki and Wayanad to arrest evasion just before the financial year ends may have compelled the dealers to sell their produce in the terminal market. But good quantities were earlier sent directly from the primary markets to parts of North India since dealers in the primary markets have become good processors/exporters/interstate dealers, they said. As a result, the arrivals remained squeezed at the terminal market in recent months.
In the international market, Indian parity stood at $5,225 – $ 5,250 a tonne (c&f) and remained in line with Indonesia and Brazil, while Vietnam was not showing any interest in selling higher grade pepper as they were not converting the bold pepper into white, which is fetching higher prices.
India’s pepper exports in April-January fell 7 percent on year to 15,700 tonnes. In Kochi on Friday pepper ended 27 rupees down to 22,770 rupees per 100 kg. Analysts expect March contract to test support at 22,400 rupees per 100 kg. In futures market at NCDEX Pepper March contract opened this week at Rs.22765 and closed lower by 1.51 % to Rs 22421 (low 22185, high 22890) while April contract slightly down by 0.43% from Rs.22885 to Rs 22786 (High 23260).
Industry officials, however, expect declining stocks with other pepper producing countries and locally due to nearly stagnant production in the last few years may help prices to recover from support levels.
India chana tumbled this week as new crop arrivals and a decline in prices of other pulses continued to put pressure. According to a chana trader, arrival of new chana in Maharashtra also added to the bearish sentiment.
Madhya Pradesh holds the key to a good chana crop in the country as it makes up 36 per cent of the total area under the crop and 40 per cent of the total production in the country. The second advance estimate for 2010-11 agriculture season ending June has projected the crop at 7.37 million tonnes (mt) against a record 7.48 mt last season.
Production of pulses in the country is expected to grow by nearly two million tonnes to touch a record 16.5 million tonnes whereas the 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.
In 2011/12 federal budget, the government allocated 3 billion rupees to promote 60,000 pulses villages in rain-fed areas to boost pulses cultivation.
On Friday, in the key Delhi spot market, chana ended almost steady at 2,542 rupees per 100 kg. NCDEX March delivery contract opened at Rs 2500 and closed at Rs 2429, down by 2.84% (high 2500) whereas Chana April contract opened at Rs.2612 and ended at Rs.2539, down by 2.79 % (High 2616).
According to data released by Ministry of Agriculture, Chana acreage as on Jan 28, 2011 has increased by 11.8% to 95.12 lakh hectares (lh) as compared to 85.55 in the same period previous year. Acreage under pulses till February 18, 2011 improved to 15.2 million hectares (mh) as compared to 14 mh the previous year.
In Global markets, rubber futures eased this weekend as sentiment remained bearish on worries that unrest in the Middle East could hurt the global economy, but losses were limited due to tight supply. In Indian market spot rubber fell on sluggish demand in the market and on selling pressure. Rubber futures gained at the week end on short covering.
On Friday, the key Tokyo Commodity Exchange rubber contract for August delivery fell 2.7 yen or 0.6 percent to 473 yen per kg. The most active Shanghai rubber contract for May delivery fell 400 yuan to close at 38,460 yuan ($5,856) per tonne on Thursday.
Tokyo rubber futures are likely to move higher this month because of seasonally tight supply and strong demand from the tyre industry, but prices won’t hit the record highs seen in mid-February and may slip back in April.
At NMCE, March contract closed up by 6.89 % to Rs 22876 (High 22979) while April contract gained by 6.91 % to 23788 per quintal (High 24205). Spot rates of rubber on Friday were (Rs/kg): Spot rates were (Rs/kg): R RSS-4: 230; RSS-5: 228; ungraded: 225 and latex 60 per cent: 137.
Demand for natural rubber in China, India and Malaysia, which account for 48 percent of global usage, is expected to increase this year, the bulletin said. Demand in China may gain 9.1 percent to 3.6 million tons; India’s usage may gain 5 percent to 991,000 tons and consumption in Malaysia may rise 7 percent to 490,000 tons.
Soybean prices fell this week in global markets and it was reflected in Indian futures market also. Rapeseed closed down as harvesting season started. In global market also soybean gained this week.
Soybeans were choppy, rallying late on concerns about labor unrest at ports in Argentina and harvest delays in Brazil. Earlier, however, the market fell sharply after private analysts raised estimates for the South American soy crop.
In the Indore spot market on Friday, soyoil was flat at 631 rupees per 10 kg, but soybean rose by 9 rupees to 2,421 rupees per 100 kg on low arrivals. At Sri Ganganagar market in western Rajasthan state, rapeseed price fell by 10 rupees to 2,780 rupees per 100 kg as arrivals of new harvests started.
There are reports that India is likely to export 2.5-3 lakh tonnes (lt) of soy meal in the month of March and around 1.5lt in April. Demand for soymeal from the overseas buyers has also declined as major soymeal buyers are placing their orders at competitive destinations such as Latin America where fresh crop arrivals have commenced.
In futures market, NCDEX March soybean prices fell from Rs.2437 to Rs 2428, fall of 0.36 per cent (High 2448) while April Soybean prices settled lower by 0.54 % from Rs 2480 to Rs.2466.50. March soyoil prices fell from Rs 637.05 to Rs 636.65 (High 641), April contract opened at 650 and closed at 647.95 (high 653).