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Agricultural commodities daily review: India and other countries (March 12, 2010)

Contributed by Nirmal Bang

By Nirmal Bang

SPICES COMPLEX

MARKET ROUNDUP
- Spice complex witnessed some short covering yesterday particularly in Cardamom and Mentha oil. Turmeric hit circuit yesterday early session and ended 4% up on fresh buying. Pepper and Jeera plunged on slack international and domestic demand.

IN FOCUS
- Mentha oil too is expected to increase on the back of increasing export demand as well as domestic demand for the commodity.
- Pepper is continuously increasing for last 3 days as Export demand for Pepper is likely to remain robust despite of fresh arrivals in the physical market.
- Indian pepper exports in January stood at 1,500 tonnes, down 28.57 percent on year, the Spices Board said. India's pepper output in 2010 is expected around last year's levels, but prices are unlikely to fall sharply in coming months due to low carry-over stocks.
- Jeera huge difference between spot and futures has resulted into the selloff in future as despite of rise in futures prices spot prices didn't move up sharply fundamentals for the commodity still remain bullish.
- Turmeric has climbed almost 12% since last fifteen days due to weak arrivals in Errode and some some other spot markets. After a huge rally in the prices, we expect some selloff in the commodity.

FUNDAMENTAL OUTLOOK
- We recommend selling on rise in spices complex except Cardamom, Mentha oil due to slack export demand. Turmeric in particular looks strong for the day; buying at every dips is recommended.

GUAR, PULSES AND GRAINS COMPLEX

MARKET ROUNDUP
- Wheat traded up in yesterday's trading session and ended almost 1% up on profit booking. Chana extended it losses on the hope of fresh arrivals in physical market. Guar complex settled down on short covering.

IN FOCUS
- Speculation is rife that India is about to release some of its stored wheat into already saturated global markets. A report from the US Department of Agriculture suggests Indian authorities need to shift some of last year's wheat to make room for new grain from this year's harvest. India has traditionally kept the bulk of its wheat for domestic consumption, but four years of above average harvests has filled storages to capacity.
- As per the United States Department of Agriculture (USDA), export of wheat US during the period Feb. 26 - Mar. 04, 2010 stood at 541,000 MT were up 15% from the previous week and 24% from the prior 4-week average.
- The procurement of wheat on support price will be started in the state from March 15. Chief Minister Shivraj Singh Chouhan has instructed district collectors to ensure that the benefit of wheat procurement on support price should reach the real farmers of the state only. Chouhan said that monitoring should be undertaken that traders and middlemen do not take advantage of this scheme. Chouhan was addressing district collectors on wheat procurement process through videoconferencing at Mantralaya here today.
- Under pressure to mobilize resources for its "food for all" promise, UPA government is expected to significantly hike the central issue prices for wheat and rice for Above Poverty Line (APL) families getting the benefit under public distribution system.

FUNDAMENTAL OUTLOOK
- We may see some upside moment in wheat as Govt. has stopped releasing the stocks in the market waiting for the new crop. Chana may trade sideways to up. Guar is expected to extend it losses today; selling on each rise is recommended.

OIL AND OIL SEEDS COMPLEX

MARKET ROUNDUP
- Oilseed complex traded sideways to down except Soybean. Soyoil and Palm oil settled down tracking the international bourses. Cottonseed oil cake traded in a thin range.

IN FOCUS
- China's monthly soy imports in the month of February plunged by 28% to 2.95 million tonnes as crushers cut imports in preparation for a halt in operations during the Chinese New year holidays.
- March imports would rise to 3.7 million tonnes or 4 million tones as pig breeders are back to restock after many animals were slaughtered before February holiday, though restocking so far has not been satisfactory. China imported 370,000 tonnes of vegetable oil, mainly Palm oil & soy oil in February. Total imports in the first two months rose 18% as compared to previous year to 910,000 tonnes.
- Demand for soymeal continued to remain weak on the back of breeders slaughtered more pigs over diseases outbreak worries. Greater slaughter also has pressured Chinese pork prices that too in the peak consumption season of the last month. Pork prices have already fallen below breeding cost which in turn is further likely to discourage farmers from breeding animals.
- Exports of Malaysian Palm oil product for March 1-10 rose 5.8% to 434,340 tonnes from 410,459 tonnes as per SGS cargo surveyors.
- Higher transport costs and toll charges have increased the cost of transport for soybeans from the state to port by about 25%. When we combine all the cost associated with transporting soybeans out of Mato Grosso to export facilities, it accounts for nearly 50% of total cost of producing soybeans said Soybean & Corn Advisory.
- Malaysia's Palm oil output plunged by 12.45% and stocks plunged by 11% for the month of February reported by MPOB.

FUNDAMENTAL OUTLOOK
- Oilseed complex is expected to trade side-ways today. Soybean in particular may trade up; buying at dips is recommended.