News & Analysis

Agricultural commodities daily review: India and other countries (March 19, 2010)

Contributed by Nirmal Bang

By Nirmal Bang

SPICES COMPLEX

MARKET ROUNDUP

- Spices witnessed volatiles trading yesterday after long rally turmeric prices finally hit lower freeze during evening session along with jeera and chilli. Black pepper traded strong yesterday as reports of firm price trend in Vietnam helped the sentiments.

IN FOCUS

- Black pepper after hitting four percent upper freeze on Wednesday yesterday too traded strong as prospects of better than expected demand coupled with less carry forward stock remain the main reason for prices to shoot up. If international origins continue to remain firm the rally in spices may continue.

- Jeera high arrivals coupled with sluggish demand from stockiest and exports prices have remained under pressure in yesterday's trading session. Arrivals have remained as high as 20000-22000 bags where as demand from exports continue to remain sluggish as exporters are expecting further fall in the prices.

- Turmeric, was surprising despite of stronger than expected auction at Nizamabad prices hit lower freze during evening session. Prices were up by Rs.500 quintal in Nizamabad during morning session but lot of these positive news are discounted in the price and finally we have seen massive liquidation in turmeric.

- Cardamom prices softened by Rs 7.60 to Rs 1,222.30 per kg in the futures market on Thursday on off-loading by speculators, driven by increased arrival in the market

FUNDAMENTAL OUTLOOK

- We expect turmeric to remain under pressure along with Jeera during the day but pepper is expected to trade strong today.

GUAR, PULSES AND GRAINS COMPLEX

MARKET ROUNDUP

- Wheat futures ended flat on Thursday after the news in the market of ban on exports of Wheat to stay long limited its gains yesterday. Chana April contract ended almost 1% up on higher demand. Guar complex slumped up to 1% in yesterday's trading session.

IN FOCUS

- Despite comfortable wheat stocks and lack of adequate storage space, the Centre does not propose to allow export of wheat. Instead, it will extend duty-free import of wheat till March 31, step up efforts to enhance storage capacity and release more quantities for Above Poverty Line people under the Targeted Public Distribution System.

- The Cabinet on Friday is scheduled to take up the controversial proposal for raising prices of wheat and rice sold through ration shops to Rs 11 a kg and Rs 15.37 a kg, respectively, for about 11 crore families above poverty line (APL). The move is certain to face stiff resistance from within the Cabinet and the ruling alliance.

- Hours after a media report that showed millions of metric tons of wheat grain rotting away in Punjab, Agriculture Minister Sharad Pawar promised on Thursday that his ministry would look for an urgent solution.

- The Centre could extend ban on pulses exports by another year besides allowing dutyfree imports till March 31, 2011. The subsidized pulses distribution scheme could also be stretched by another year till March 31, 2011, with four lakh tonnes of pulses distributed through the scheme. The government is also likely to put off any decision on export of wheat amid high food inflation.

FUNDAMENTAL OUTLOOK

- We expect Wheat to trade sideways to down on the back of news in the market for not further exports of Wheat. Chana prices are undervalued and demand is in the growth pace; we recommend buying at dips in Chana. Guar may extend its downward rally.

OIL AND OIL SEEDS COMPLEX

MARKET ROUNDUP

- Oilseed complex traded in red territory on global cues. Soybean settled almost 1% down on the back of excess supply in the market. Soy  oil and Palm oil too plunged on Thursday tracking international bourses.

IN FOCUS

- Argentina's 2009/10 soy harvest crop is seen at a record of between 51 million and 55 million tonnes, the Agriculture Ministry said on Thursday in its first estimate for the new crop. Argentina, the world's No. 3 soy exporter and the top provider of soymeal and oil, produced 32 million tonnes of the oilseed in the previous drought-hit campaign.

- The prospects for soybean imports are fairly bright in 2009/10 with the improved weather conditions in South America. Post expects total soybean imports to increase to 580 (thousand metric tonnes) TMT in 2009/10 and the U.S. should retain the top supplier position with a market share of 58 percent. Another increase of five percent in total imports is expected in 2010/11.

- While China is expected to remain the most important market for Malaysian palm oil, U.S. has emerged as the fifth largest market for Malaysian palm oil (since the FDA requirement for the transfat labeling in January 2006). Total area under coconut cultivation has dropped steadily over the years and the outlook for copra output is a slow downtrend in the near term. Depending on overseas demand, Malaysian oil refiners may find it profitable to refine imported crude coconut oil for re-exports to third countries.

- Cotton exports may exceed forecast, the Cotton Association of India said. Overseas sales this season may total 6.8 million bales of 170 kg each, compared with 6.5 million bales estimated previously, the group said today in an email. Production may total 30.1 million bales versus demand of 24.7 million bales, leaving a surplus of 13.5 million bales, the group said.

FUNDAMENTAL OUTLOOK

- We expect Soybean to trade sideways to down today. Soy oil and Palm will trade sideways taking cues from the international market.