A New Year but same worries

Transcription

1 COMMODITY 02 January 2012 A New Year but same worries After a long holiday week, markets need to get ready to brace the oncoming storm Kishore Narne kishorenarne@rathi.com With December now behind and January set to take off, markets can expect S&P downgrades for the European nations to come anytime soon. With a bigger budget deficit this year, Spain seems to be dipping into trouble, having announced aslewofsurprisetaxhikesandwagefreezes. German Finance Minister Wolfgang Schaeuble expects the euro zone to stabilise within 12 months and in an interview published on Friday ruled out a break-up of the single currency. Meanwhile,UKhousepriceswereunchangedin2011andmoreisexpectedasthe economic climate is likely to lead to a similar situation for the housing market in We all know that 2011 was a dire year for equities outside the US, with world stocks poised to drop by around 8% and emerging markets faring far worse. We hopethatthecomingyearturnsouttoberewarding. RM Seed Turmeric Chana Soy Oil Soybean Chilli Silver Gold Crude Oil Natural Gas Top Gainers Price % Change Top Losers Price % Change Key Economic Releases of India & US for 2/1/2012 Country Indicator Time (IST) Previous Survey Actual Please refer to the disclaimer at the end of this report 02/01/2012-1

2 Precious Metals Gold seals its 11th consecutive year of gains Prices up nearly 10% on the year, but suffer Q4 loss Ritesh Gandhi Projected Gold Spot Spot Bearish Low Gold Comex Feb Bearish Low Gold MCX Feb Flat Moderate 27,370-27,270 GoldM MCX Feb Flat Moderate 27,386-27,273 Silver Spot Spot Bearish Low Silver Comex Mar Bearish Moderate Silver MCX Mar Bearish Moderate 51,159-50,775 Gold rose on Friday, and recorded its 11th consecutive annual gain as investors moved to the precious metal to shield their wealth from a stormy economy. Comex Gold February rose 1.7% to settle at $1, an ounce, as opportunistic buyers stepped in after the market's six-session slide. On the year, the benchmark contract rose 10%. Investors, worried that the euro-zone's debt crisis could freeze the financial system, have recently sold gold in favour of the flexibility of cash. Concerns about the euro-zone debt crisis continued after Italy's bond auction failed to attract much buying interest last week and the European Central Bank had to step in and buy Italy's bonds in an effort to slow rising yields. Others closed winning bets on the precious metal to cover losses in other markets. Meanwhile, on Friday holdings of the largest gold-backed exchange-traded-fund, the SPDR Gold Trust, and those of the largest silver-backed ETF, the ishares Silver Trust, were unchanged from Thursday. Money managers cut bullish bets in gold futures and options for a third consecutive week. In the week ended Dec.27, speculators length in Comex gold decreased by a net 5,232 lots to 111,919 lots, U.S. Futures Trading Commission figures showed on Friday. Silver speculators net length too was reduced in the period as silver prices fell, cutting net longs by 1,042 lots to 6,200 lots. Managed money's bullish futures positions are at the lowest since early 2009, a sign that investors may be bailing out of the market. Instrument Gold Prices Price % Change GOLDS Comdty GOLD SPOT $/OZ $ 1, GOLDAU Comdty GOLD SPOT AUD/OZ AUD 1, GOLDLNAM Comdty London Fixing $ 1, IADMGOLD Index Inflation Adjusted ($) $ GDLSLVR Index Gold / Silver Ratio INGLD Index Gold Import Parity Rs. 27, Please refer to the disclaimer at the end of this report 02/01/2012-2

3 Base Metals Encouraging data from the U.S. lifts copper A weakening dollar also helped fuel Friday's gains Projected ALUMINIUM Jan Flat Moderate COPPER Feb Bullish Moderate LEAD Jan Bullish High NICKEL Jan Bullish Moderate ZINC Jan Flat Moderate STEEL Jan Bullish High 33,055-32,795 On Friday copper futures rose in thin holiday trading due to a slightly weaker dollar and light buying after a set of mostly upbeat recent U.S. economic data. December's readings on the U.S. economy have helped support copper prices in light year-end trading as an improved outlook on the struggling housing and labour markets in particular supported the copperdemand outlook for the world's top economy. A weakening dollar also helped fuel Friday's gains. However, sharp losses from earlier in the year caused the base metal its first annual decline in three years. For 2011, both LME and U.S. copper showed a 21% drop as the metal was sold down on fears related to the European debt crisis and an economic slowdown in China. Since hitting all-time highs of nearly $10,200 a ton in February, copper has lost about a quarter of its value. China's factory sector shrank in December as demand at home and abroad slackened, a purchasing managers' survey showed on Friday. However the contraction was at a slower pace than the previous month. The index stood at 48.7 in December's final reading, up from 47.7 in November. China, with an export-oriented economy, has suffered heavily due to the debt crisis, which has hit economic growth in developed regions and tempered demand for manufactured goods. 30/12/2011 Metal Change Close Cash - 3 M Inventory Change LME Alminum Copper Lead Nickel Tin Zinc Instrument Shanghai Prices (in CNY) Price % Change AA1 Comdty Aluminum CU1 Comdty Copper ZNA1 Comdty Zinc RBT1 Comdty Steel Rebar WRT1 Comdty Wire Steel Separately, Chile produced 457,981 tons of copper in November, down 2% from the same month last year, as lower ore grades hit cathode output in the world's top producer of the red metal, government data showed yesterday. Output was also down from October, when Chile produced 466,822 tons of the metal, boosted by a recovery from harsh weather and labour unrest that have hit production this year. Instrument Aluminum Copper Lead Badla Spread Comment 1.05 Raising 3.75 Falling 0.90 Constant Nickel 5.50 Raising Zinc 1.00 Constant Zinc - Lead Premium Raising Please refer to the disclaimer at the end of this report 02/01/2012-3

4 Iran worries cushion crude prices Speculators net long positions increase on Nymex Energy Ritesh Gandhi Projected NYMEX Crude Feb Bearish Moderate Brent Crude Jan Bearish Moderate MCX Crude Jan Bearish Moderate 5,303-5,286 MCX Crude Feb Bearish Moderate 5,318-5,305 Natural Gas NY Feb Bearish Low MCX Nat Gas Jan Bearish Low Oil futures settled lower on Friday in the final trading session of the year as conflicting news from France and China gave divergent signals of global demand in Nymex Crude February ended 0.8% lower at $98.83 a barrel. Volume was about half normal levels. However, crude ended the year up 8.2%, rising from $91.38 a barrel a year ago. In GOLDLNAM Comdty between, it ranged from a high of more than $113 a barrel in May to a low of less than $76 a barrel in October, whipsawed by such factors as Middle East uprisings, IADMGOLD Europe's Index debt crisis, mixed U.S. economic data and hostilities between Iran and the.gdlslvr West. Index Spread Comment $ Falling $ 0.17 Contango GOLDS Comdty Brent Calendar $ Backwardation GOLDAU Comdty MCX Calendar Rs INGLD Index On Friday, crude futures were pressured by a new report showing slowing manufacturing activity in China. HSBC's monthly China Manufacturing Purchasing Managers Index was in contraction territory once again, though the contraction was more moderate than last month. As China's economic growth has called on a growing share of the world's oil supply, the market has focused close attention on its growth rate for indicators of crude demand. Prices were later supported by news that French refiner Petroplus was shutting three refineries because of credit problems, on the back of weak demand, rising crude costs and foreign competition. The news was seen as bullish for petroleum products refined from U.S. crude, which can be exported to meet foreign demand. Meanwhile, speculators net long positions in U.S. crude oil futures and options were hiked in the week to Dec.27, data from the U.S. Futures Trading Commission showed on Friday. Money managers net long position on the Nymex increased by 13,584 contracts to 192,466 during the week, according to the data Instrument WTI - Brent NYMEX Calendar Spreads NYMEX Crude Option Distribution Contango Thousands Puts Calls Please refer to the disclaimer at the end of this report 02/01/2012-4

5 Spices Pepper gains on thin-volume trade Turmeric ends down on increase in spot supplies Prathamesh Mallya Projected Jeera Jan Bullish Moderate 16,100-15,825 Pepper Jan Flat Moderate 33,175-32,755 Chilli Feb Bullish Low 6,595-6,467 MCX Cardmom Mar Bearish Moderate Turmeric Apr Bullish High 4,867-4,689 Pepper On Friday, pepper futures rose in thin-volume trade, as traders bought at lower level. An expected increase in supplies from the new season crop capped the gains. The January pepper contract closed up 1.41% at Rs.33,150 per 100 kg. Marginal supplies of new season pepper have started in the spot market and are likely to pick up by January. GOLDS Comdty In the Kochi spot market in Kerala, pepper rose by Rs.49 to Rs.33,319 per 100 kg. GOLDAU Comdty Jeera GOLDLNAM Comdty Jeera futures reversed early losses on buying by traders expecting aiadmgold surge inindex export demand and tight supply situation in spot markets. The January jeera.gdlslvr contract Index closed up 0.97% at Rs.16,030 per 100 kg. Lower inventories in the world markets are a cause.ingld Index of worry now and these will lift prices in the coming access sessions. In the Unjha spot market in top-producing Gujarat jeera rose by Rs.19 to Rs.15,497 per 100 kg. Turmeric Turmeric futures extended losses for the third straight session on an expected increase in supplies in spot markets and higher carry-forward stocks with farmers. The April turmeric contract was down 1.21% at Rs.4,639 per 100 kg. In the Nizamabad spot market, turmeric fell by Rs.24 to Rs.5,113 per 100 kg. Please refer to the disclaimer at the end of this report 02/01/2012-5

6 Oil Seeds & Edible Oil Rapeseed gains on worries about production shortfall Dry weather still a concern in South America Prathamesh Mallya prathameshmallya@rathi.com Projected RM Seed Jan Bullish Moderate 3,839-3,713 Soy Bean Jan Bullish Moderate 2,539-2,495 Soy Oil - NCDEX Jan Bullish Moderate Soy Oil - MCX Jan Bullish Moderate CPO - MCX Jan Bullish Moderate NCDEX - Castor Jan Bullish High 4,092-3,984 Soybean Rapeseed futures extended the previous session's gains to hit a fresh record high on worries about a production shortfall after area under the oilseed fell. Soyoil futures ended lower after hitting a record high in the previous session as profit-taking outweighed a rise in Malaysian palm oil and a weak rupee. Soybean also eased on profit-taking. The January GOLDS Comdty rapeseed contract climbed 0.61% to Rs.3,630 per 100 kg, after hitting a record high of GOLDAU Comdty Rs.3,658 earlier in the day. The January soybean contract inched down 0.44% to Rs.2, per 100 kg, while the January soyoil closed down 0.42% at Rs GOLDLNAM per Comdty 10 kg. IADMGOLD Index In the Indore spot market, soyoil eased by Rs.2.90 to Rs per 10 kg, while soybean fell by Rs.10 to Rs.2,475 per 100 kg. At Sri Ganganagar in Rajasthan, rapeseed.gdlslvr climbed Index by Rs.36 to Rs.3,463 per 100 kg..ingld Index On Friday soybean futures on the Chicago Board of Trade ended 3 to 5 cents per bushel higher on short-covering this last trading day of the year and worries about South American crop weather. Dry weather in Parana, Brazil's second-largest soy producing state, has already caused irreversible losses to the crop, the state's association of cooperatives, Ocepar, said. The USDA reported exports of U.S. soybeans in the latest week at 663,200 tons, above a range of trade estimates of 300,000 to 600,000 tons. The USDA reported weekly U.S. soymeal exports at 51,100 tons and soyoil sales at 2,300 tons. CBOT markets closed at the regular time on Friday ahead of the long holiday weekend. The U.S. markets will be closed today in observance of New Year's Day. Soybean March gained 3.75 cents to close at $12 a bushel; soymeal March gained $0.80 to close at $ a ton; soyoil March gained 0.33 of a cent to close at cents per lb. Malaysian crude palm oil futures inched up on Friday in thinly traded markets, lifted by positive U.S. economic data and concerns that heavy rainfall in second-largest producer Malaysia may cause supply disruption Palm Malaysian crude palm oil futures inched up on Friday in thinly traded markets, lifted by positive U.S. economic data and concerns that heavy rainfall in second-largest producer Malaysia may cause supply disruption. Benchmark March CPO futures on the BMD closed 0.6% higher at 3,175 ringgit ($1,000) a ton. The Malaysian Meteorological Department issued a warning that heavy rains may continue until Friday for key oil palm growing states of Johor, Pahang and Sabah. Please refer to the disclaimer at the end of this report 02/01/2012-6

7 Other Commodities Sugar tracks global sentiments Chana remains lacklustre, guar hot-blooded Rajni Daswani Projected MENTHAOIL Jan Flat Moderate 1,316-1,302 CHANA Jan Strong Moderate 3,413-3,319 COCUDAKL Jan Bullish High 1,250-1,234 GUAR GUM Jan Bearish Moderate 23,689-22,208 GUAR SEED Jan Bearish Moderate 7,311-6,916 POTATO - NCDX Mar Strong Low WHEAT Jan Bullish Moderate 1,249-1,229 BARLEY Jan Bullish High 1,223-1,214 SUGAR Jan Bearish Moderate 2,888-2,869 Kapas V797 Apr Bullish Moderate On Friday, guar seed futures fell 4%, its maximum daily limit, on profit taking and fears that demand might be dented at higher levels. Guar prices have been on GOLDS a rising Comdty curve for the past few months and traders have pointed to fundamentals such as strong export GOLDAU Comdty demand, the rupee's weakness, low carry-forward stocks and a decline in output. Both the GOLDLNAM Comdty Forward Markets Commission and the NCDEX are currently investigating reasons for the rise, which some players feel are out of proportion. On the NCDEX, IADMGOLD guar seed Index for January closed at Rs.7,052 per 100 kg, down 4%. In the Jodhpur spot market,.gdlslvr Index guar seed fell by Rs.191 to Rs.6,977 per 100 kg. Chana futures also fell on lacklustre consumer demand in spot markets, with the downtrend seen as limited because of lower acreage and a likely pick-up in demand from next month, when the country celebrates a slew of festivals. On the NCDEX, chana for January closed at Rs.3,288 per 100 kg, down 0.24%. In the Delhi spot market, chana fell by Rs.2 to Rs.3,325 per 100 kg. Meanwhile, sugar futures in India fell on Friday tracking a drop in the world market and on an estimated rise in output, though the spot market inched up on less availability of non-levy sugar for January. The weakness in the world market was weighing on the sentiment. On the NCDEX, sugar for January closed at Rs.2,896 per 100 kg, down 0.55%. In the Kolhapur spot market, the most traded S-variety ended up 1% at Rs.2,862 ($53.90) per 100 kg. guar seed futures fell 4%, its maximum daily limit, on profit taking and fears that demand might be dented at higher levels.ingld Index 1 Please refer to the disclaimer at the end of this report 02/01/2012-7

8 - Level Playing Sheet Prices as of Close on 31/12/2011 Projected Gold Spot Spot Bearish Low Gold Comex Feb Bearish Low Gold MCX Feb Flat Moderate 27,370-27,270 GoldM MCX Feb Flat Moderate 27,386-27,273 Silver Spot Spot Bearish Low Silver Comex Mar Bearish Moderate Silver MCX Mar Bearish Moderate 51,159-50,775 ALUMINIUM Jan Flat Moderate COPPER Feb Bullish Moderate LEAD Jan Bullish High NICKEL Jan Bullish Moderate ZINC Jan Flat Moderate STEEL Jan Bullish High 33,055-32,795 NYMEX Crude Feb Bearish Moderate Brent Crude Jan Bearish Moderate MCX Crude Jan Bearish Moderate 5,303-5,286 MCX Crude Feb Bearish Moderate 5,318-5,305 Natural Gas NY Feb Bearish Low MCX Nat Gas Jan Bearish Low Jeera Jan Bullish Moderate 16,100-15,825 Pepper Jan Flat Moderate 33,175-32,755 Chilli Feb Bullish Low 6,595-6,467 MCX Cardmom Mar Bearish Moderate Turmeric Apr Bullish High 4,867-4,689 RM Seed Jan Bullish Moderate 3,839-3,713 Soy Bean Jan Bullish Moderate 2,539-2,495 Soy Oil - NCDEX Jan Bullish Moderate Soy Oil - MCX Jan Bullish Moderate CPO - MCX Jan Bullish Moderate NCDEX - Castor Jan Bullish High 4,092-3,984 MENTHAOIL Jan Flat Moderate 1,316-1,302 SUGAR Jan Bearish Moderate 2,888-2,869 CHANA Jan Strong Moderate 3,413-3,319 COCUDAKL Jan Bullish High 1,250-1,234 Kapas V797 Apr Bullish Moderate GUAR GUM Jan Bearish Moderate 23,689-22,208 GUAR SEED Jan Bearish Moderate 7,311-6,916 POTATO - NCDX Mar Strong Low WHEAT Jan Bullish Moderate 1,249-1,229 BARLEY Jan Bullish High 1,223-1,214 Guidelines to Use: * 5DMA = 5 Day Moving Average; 20 DMA = 20 Day Moving Average; * S1; S2; S3 are 1st, 2nd and 3rd Supports respectively R1; R2; R3 are 1st, 2nd and 3rd Resistances respectively + Trend: This is a broad based technical Trend of the commodity prevalent, may not be necessarily for the day # Projected high and low are indicative range for the day, if the price moves out of the range the trend in that side may accelerate and turn highly bullish or bearish Please refer to the disclaimer at the end of this report 02/01/2012-8

9 Intraday call tracker for Date Call Entry Target Stop loss Exit / Close Result Profit / Loss Analyst 20-Dec-11 LeadMini Buy At / Profit 1800 Siva 30-Dec-11 SYBEANIDR Sell At Profit 2400 Siva 30-Dec-11 SYOREFIDR Sell At / Loss Siva 30-Dec-11 SUGARS150 Buy Between / Loss Siva Total 50% NI = Not Initiated Disclaimer: This report has been issued by AnandRathi Share & Stock Brokers Ltd., (A Part of Anand Rathi Group) which is regulated with SEBI, India. The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any Currencies or any options, future or other derivatives related to such Currencies ( related investment ). AnandRathi Share & Stock Brokers Ltd and its affiliated may trade for their own accounts as market maker/ jobber and /or arbitrageur in any Currencies of this issuer(s) or in related investments, and may be on the opposite side of public orders. AnandRathi Share & Stock Brokers Ltd, its affiliates, directors, officers, and employees may have a long or short position in any Currencies of this issuer(s) or in related investment banking or other business from, any entity mentioned in this report. This research report is prepared for private circulation. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial situation and the particular needs of any specific investing in any Currencies or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such Currencies, if any, may fluctuate and that each commodity s price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any or related investment mentioned in this report. Please refer to the disclaimer at the end of this report 02/01/2012-9