Commodity Updates for 16 March 2015

Market News: Chana prices closed higher 0.98 per cent on Friday at the National Commodity & Derivatives Exchange Limited (NCDEX) as the traders enlarged their holdings in the commodity on account of the good demand in the market. At the NCDEX, chana futures for April 2015 contract closed at Rs. 3,721 per quintal, up by 0.98 per cent, after opening at Rs. 3,688 against the previous closing price of Rs. 3,685. It touched the intra-day high of Rs. 3,730. Moreover, the restricted arrivals of the commodity in the physical market due to lower estimated output also influenced the chana prices. India is the largest producer of chickpea followed by Pakistan, Turkey and Iran. India produces around 6 to 8 million tonnes and contributes around 70 per cent of the total world production.

Mustard seed prices closed higher by 0.35 per cent on Friday at the National Commodity & Derivatives Exchange Limited (NCDEX) as a result of the decline in the supply for the commodity in the major markets. At the NCDEX, mustard seed futures for April 2015 contract closed at Rs. 3,399 per quintal, up by 0.35 per cent, after opening at Rs. 3,387 against the previous closing price of Rs. 3,387. It touched the intra-day high of Rs. 3,410. India produces 5.5 million MT to7 million MT annually and about 0.15 million MT is retained for sowing and direct consumption as seed which leaves about 4.8-5.1 million MT for crushing and extracting oil.

Jeera prices closed higher by 0.75 per cent on Friday at the National Commodity & Derivatives Exchange Limited (NCDEX) as the investors increased their holdings in the commodity in the midst limited arrivals from growing regions. At the NCDEX, jeera futures for March 2015 contract closed at Rs. 14,705 per quintal, up by 0.75 per cent, after opening at Rs. 14,655 against the previous closing price of Rs. 14,595. It touched the intra-day high of Rs. 14,875. Sentiment improved further as a result of reduced domestic supplies in the physical markets and some export enquiries. Global output of Jeera is around 2.2 lakh MT per year, of which India produces about 1.5 lakh MT per year. India exports Jeera mainly to the US, UK, UAE, Japan, Brazil, Bangladesh, Singapore and many other countries. Other Major exporters are Syria and Turkey.

Barley prices closed higher by 0.8 per cent on Friday at the National Commodity & Derivatives Exchange Limited (NCDEX) as a result of strong demand from beer and cattle-feed making industries against restricted supply in physical markets. At the NCDEX, barley futures for April 2015 contract closed at Rs. 1,192 per quintal, up by 0.8 per cent, after opening at Rs. 1,185 against the previous closing price of Rs. 1,182.5. It touched the intra-day high of Rs. 1,195. The consumption demand for Barley in India mainly comes for malt, poultry and animal feed. Barley malt is majorly used for the production of alcoholic beverages in the country.

Maize prices closed higher by 0.08 per cent on Friday at the National Commodity & Derivatives Exchange Limited (NCDEX) as a result of a rise in the demand from exporters and poultry industries. At the NCDEX, maize futures for March 2015 contract closed at Rs. 1,299 per quintal, up by 0.08 per cent, after opening at Rs. 1,299 against the previous closing price of Rs. 1,298. It touched the intra-day high of Rs. 1,299. USA, China and Brazil are the top three maize producing countries in the world while the prominent exporters of maize are USA, Argentina and Brazil. Chief importers are Japan, EU, Malaysia, Taiwan, Indonesia etc.

Crude oil futures sank in the domestic market on Friday as investors and speculators exited positions in the energy commodity after the International Energy Agency (IEA) upped its US oil production forecasts, warning that tanks are at risks of becoming full, while Saudi Arabia, the world’s biggest oil exporter, said that it was “too early to say”, if the OPEC may revise its policy when it meets on June 5, 2015. The IEA boosted its US oil production estimates by about 750,000 barrels per day to 12.56 million barrels per day in 2015. Investors cast aside data which showed that US rig count fell to the lowest level since March 2011 to 866 in the week ended March 13, down 56 from the previous week.

A drop in US consumer sentiment this month signaled a slowdown in the world’s biggest economy, clouding the demand outlook for the fuel. The gauge measuring US consumer sentiment fell to a four-month low of 91.2 in March from 95.4 in February. Crude oil may extend a decline today amid fears that surging US output may widen a global supply glut. At the MCX, Crude oil futures, for the March 2015 contract, closed at Rs 2,866 per barrel, down by 3.89 per cent, after opening at Rs 2,964, against the previous close price of Rs 2,982. It touched an intraday low of Rs 2,846 till the closing.

Gold futures closed higher in the domestic market on Friday as the sharp depreciation of the Indian rupee against the US dollar exerted upward pressure on prices of the bullion in the domestic market; more than offsetting the flat closing in the overseas market. The yellow metal closed little changed in the overseas market on Friday as investors and speculators shied away from booking fresh positions in the bullion as a stronger dollar curbed the demand for gold as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus dimming demand.

Caution ahead of the US Federal Reserve’s policy meet this week where the Fed may drop the word “patient” over monetary tightening, and probably signal a rate hike towards the middle of the year also curbed the demand for the bullion as a store of value. Meanwhile, US wholesale prices fell for a fourth straight month, down 0.5 per cent in February, dimming the bullion’s appeal as a hedge against inflation. Gold may fall today as investors stick to a cautious stance ahead of the FOMC meet this week. At the MCX, Gold futures for April 2015 contract closed at Rs 25,890 per 10 gram, up by 0.92 per cent after opening at Rs 25,720, against the previous closing price of Rs 25,655. It touched the intra-day high of Rs 25,918 till the closing.

Natural Gas futures rebounded from Thursday’s sharp losses, on Friday, in the domestic market, amid bargain buying by investors and speculators, at existing levels. However, gas prices are likely to come under pressure in the next few sessions as mild weather limits demand for the heating fuel in the world’s biggest fuel consumer, the US. The Commodity Weather Group expects above-normal temperatures across the contiguous states through March 17, 2015. At the MCX, Natural Gas futures for March 2015 contract closed at Rs 173.50 per 1 kg, up by 0.87 per cent after opening at Rs 172.50, against the previous closing price of Rs 172. It touched the intra-day high of Rs 174.50 till the closing.

Zinc futures ended higher in the domestic market on Friday as investors and speculators booked fresh positions in the industrial metal amid a pickup in physical demand for zinc in the domestic spot market. Further, China, the world’s biggest metals consumer, indicated that it may undertake more measures to boost economic growth and lift consumption from consumers and businesses, bolstering the demand outlook for industrial metals. The country’s Premier Li Keqiang said that there are “more tools in our toolbox” to address flagging growth and lift employment.

At the MCX, Zinc futures for March 2015 contract closed at Rs 126.95 per 1 kg, up by 1.03 per cent after opening at Rs 125.90, against the previous closing price of Rs 125.65. It touched the intra-day high of Rs 127.25 till the closing.