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International Perspective: Commodity prices witnessed a mixed
performance with energy and base metal prices ending in the green
while the bullion prices slumped. But, in base metals pack,
aluminum prices were the exception as the metal prices declined
more than 1%. The US Dollar Index (DX) depreciated around 2.4
percent last week and this factor supported an upside in prices.
On the MCX, depreciation of the Indian Rupee helped base metal
prices to gain further. Spot Rupee depreciated around 0.2 percent,
to close at 45.43 last week.
China raised bank reserve requirements by 50 basis points on
Friday, effective from 20th January. This is the seventh increase
since early 2010, following the country's step to curb the rising
inflation. This factor led to some selling pressure across commodities
but the metal and energy prices managed to gain after US industrial
production data reported an increase of 0.8% in December as
against expectations of 0.3%. On the domestic front, India's WPI
inflation increased 8.43% y-o-y in December as against 7.48% in
November. Markets were expecting the headline inflation to increase
8.35% in December
Spot Gold prices came under pressure mainly due to successful
bond auctions of Spain and Portugal coupled with China's step to
curb inflation. Prices declined around 0.5% on the MCX last week.
Spot silver prices declined by 0.7%, to close at $28.70/oz in the
last week.
Crude oil prices gained more than 3.5% on the MCX in the last
week on the back of supply concerns due to shut down of Alaska
pipeline and two North Sea oilfields. Oil prices gained around 4
percent on the Nymex. Prices touched a high of $92.39/bbl on the
Nymex last week and closed at $91.54/bbl on Friday.
Commodities Update
Outlook: In this week, we expect commodity prices to take cues
from the economic data from China and the US coupled with
meeting of Euro zone ministers for increasing financial stability
amount of the Euro zone countries. Base metal prices as well as
crude oil prices will mainly take cues from Chinese data as the
country is the major driver of these prices. It is amongst the top
consumer of energy and base metals. Rise in industrial production
or better-than-expected GDP growth in the world's fastest growing
economy would boost metal and energy prices. Gold prices will
take cues mainly from dollar movement and developments in the
Euro zone. Any positive updates on the Euro front could further
lead to downside in the bullion prices, especially gold, as safehaven
demand may ease, thus affecting prices negatively.
Among Agri commodities, Chana futures are expected to trade
firm on possible yield losses in MP, the major Chana producing
state in India. Black Pepper prices will gain due to lower global
availability and delay in harvesting in the domestic market. Edible
Oil Complex may continue to trade higher tracking the international
markets.
Agri Perspective: Guar complex lead the gainers list during the
last week on reports of declining arrivals amidst rising export
demand. Guar seed and Guar gum prices surged 6.3% and
7.4% respectively w-o-w. Kapas extended the rally for the fifth
consecutive week and gained 4.5% during the last week on the
reports of rising export demand amidst global supply tightness.
After declining marginally during the preceding week, Soybean
prices surged 3.9% in the previous week on concerns of dry
weather in Argentina, the third largest exporting nation of
oilseed. Report of lower global end stocks as per the WASDE
report also supported the rally during the last week. Most of the
spices plunged during the last week due to lackluster demand
except for Jeera. Red Chili and Turmeric plummeted 6.2% and
3.2% respectively on expectations that the arrivals would pick
up in the coming weeks. Sugar prices declined 2.4% during the
last week as the crushing is going on in full swing.
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