11th Annual Commodities Research Magazine (For private circulation only) C MMODITY O U T L O O K 2 0 1 9 2 19 Commodities to OUTSHINE IN 2019?
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CONTENT COMMODITY OUTLOOK 2019 Page No. 1. Chairman s Interview 4 2. Performance of range forecast 2018 & events of 2019 5 3. Commodity performance 2018 6 4. Asset class comparison 2018 7 5. Span of price movement 8 6. Commodity calls performance in 2018 9-13 7. Economic indicators 14-15 8. Outlook 2019 i. Bullions 16-18 ii. Energy 19-21 iii. Base metals 22-26 iv. Oilseeds & edible oil 28-30 v. Spices 31-34 vi. Other Commodities 35-38 9. Technical Corner 39-43 SMC GLOBAL SECURITIES LTD. REGISTERED OFFICES: 11 / 6B, Shanti Chamber, Pusa Road, New Delhi 110005. Tel: 91-11-30111000, Fax: 91-11-25754365 MUMBAI OFFICE: Lotus Corporate Park, A Wing 401 / 402, 4th Floor, Graham Firth Steel Compound, Off Western Express Highway, Jay Coach Signal, Goreagon (East) Mumbai - 400063. 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Tel: 97145139780 Fax: 97145139781 Email ID : pankaj@smccomex.com Printed and Published on behalf of SMC Comtrade Ltd. smcdmcc@gmail.com 11/6B, Shanti Chamber, Pusa Road, New Delhi-110005 Website: www.smcindiaonline.com Investor Grievance : smc@smcindiaonline.com Printed at: S&S MARKETING 102, Mahavirji Complex LSC-3, Rishabh Vihar, New Delhi - 110092 (India) Ph.: +91-11- 43035012, 43035014, Email: ss@sandsmarketing.in Dear Readers, It s the time of the year when we are all able to put things into perspective. It has always been an enjoyable experience to be a part of the Commodity outlook ; today we are celebrating 11th Anniversary of it. With your continued support and my team's efforts, I am very confident that our annual publication Commodity Outlook will continue its pattern of success in the years ahead. The year 2018 can be marked as an unstable year for commodities after a two year period of continuous recovery was seen in the year 2016 and 2017. In the year gone by, a major correction was seen, which was more than 9% if we consider CRB Index, hinting major dent to the sentiments. If we consider the performance on quarterly basis, it was well-built in first two quarters based on better demand in the middle of some supply constraint in crude and industrial metals. Afterward, it saw major plunge in the prices, especially in 4th quarter on distress selling in agro commodities amid historical corrections in metals and energy, amid fall in equity market, increased supply and rise in dollar index. Undoubtedly, it was a relief on inflation front but growth concern arose too. Meanwhile, the word slowdown came again in limelight and we saw revised growth rate expectations by many rating agencies. In the beginning of 2018, apart from geopolitical tensions between US and North Korea and some unrest in Middle East, it was troubled trade equation amid strengthening dollar index which gave uncertainty to the commodities prices. In continuation, US and China trade war made the whole world nervous and disturbed the historical trading pattern. Mr. Trump who is better known as Mr. Tariff stood tough and imposed import duty on $200Billion import, China without delay retaliated the same. After G20 summit both of them adopted softer policy. The trade war which shaped in 2018 may see softer stance in 2019 but at the same time Brexit issue will prolong to trouble the financial market. Confidence in currency is fragile right now be it EU currencies or emerging nations. Gold may get stronger further for the same reason amid some ambiguity in stock market. Gold has already saw good recovery in 2018 and any uncertainty in growth pattern or fragile equity can make it more muscular and one can eye $1360 levels. Back at home, SEBI s historic decisions are shaping up the futures as well as spot market for a better participation and integrity of the market. Market regulator SEBI has given year end gift to the commodities and allowed mutual funds entry into commodity derivatives markets. Additionally, SEBI s decision to amend Sebi (Custodian of Securities) Regulations, 1996 will allow small players to hedge their commodity risk through mutual funds rather through direct membership. We can expect bigger platform with more trading tools in 2019, and this may attract more volume which the market needs for prices discovery. Market participants are also expecting more options in commodities. After a turbulent 2018, the year 2019 seems to be an interesting year in many aspects. Hostile trade environment, political events, tension in Europe may slowdown the upside journey but overall the moderate growth is expected. An expected lower number of Fed s rate hikes should be enough to take out money from dollar index. This year, we are not expecting the same performance of dollar index as it was in 2018 when it saw terrific upside of 5% despite all odds. It may help commodities to recover from the lows. A bottoming out in China s slowdown and reduced tensions on the trade-war front would also stimulate some buying in commodities. Economic indicators are not signaling solid growth, however, it is possible that low oil prices could stimulate demand. In nutshell, global growth should outweigh the uncertain geopolitical backdrop. Crude may find a better balance this year by maintaining production discipline among OPEC and Non OPEC countries while global demand should remain supportive. On higher side it can touch $75 while base should be maintained near $40. We may see smile on farmers face as lower acreage and supply tightness may make farm commodities dearer. If trade war continues then it may give some export opportunities to countries like India, Brazil etc. Additionally, we should not forget that the world's population has been growing at a rate of around 80 million each year which means that there are more mouths to feed each day. On trading side; we should not expect one sided move in commodities; frequent churning will be required in portfolio. Finally, I would like to thank the contributors and readers of Commodity outlook, for your interest in the newsletter and I encourage you to continue to send us your invaluable feedback and ideas for further improvement of your Newsletter. Happy Investing in Commodities (Vandana Bharti) SMC Global Securities Ltd. (hereinafter referred to as SMC ) is regulated by the Securities and Exchange Board of India ( SEBI ) and is licensed to carry on the business of broking, depository services and related activities. 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CHAIRMAN S INTERVIEW COMMODITY OUTLOOK 2019 Commodity Editorial team has taken an opportunity to talk to our CMD Mr. D. K. Aggarwal regarding the commodity market on the occasion of publication of our 11th Edition of Annual Commodity Outlook. He shared his precious view regarding the commodities outlook, trading development, launch of new tools. He also spoke on CTT and various mechanisms which can inject volumes in the futures trade. He also talked about the view on crude and Indian elections and how it will impact the market. Mr. D. K. Aggarwal CMD - SMC Capitals Ltd & SMC Investments & Advisors Limited Chairman - SMC Real Estate Advisors Private Limited & SMC Comtrade Limited Senior Vice President - PHD Chamber of Commerce & Industry Q : 2018 was a remarkable year for Indian Commodity Market in which we have seen introduction of options, new entrants like NSE and BSE, permission to subsidiaries of banks to become members of commodity exchanges with the effort of SEBI. Do you see more changes and reforms in 2019? A : The year gone by was the fabulous year for commodities market in which we saw many reforms, introduction of options and entry of two heavyweights NSE and BSE into the arena of markets; now all assets can be offered to clients under one roof. Approval of participation of Mutual funds in commodities market was like a year-end gift for the participants. By allowing custodial services in community derivatives, SEBI has taken one more step to strengthen the infrastructure of the commodity markets. In 2019, we can expect more reforms on warehousing and delivery side. The regulator also allowed subsidiaries of banks to become the clearing members of commodity exchanges but restricted them from trading on their own behalf. We may see introduction or reintroduction of more commodities in agri, metals and energy categories. Market has raised the requirement of weather derivative many times. We may see more options contracts in the trading list. Participation of Banks and PMS could be a game changer. Q : In line with the previous question; despite all efforts volume of commodities improved but not as per the expectation. What steps should be taken to improve the liquidity? A : India is one of the most important players in terms of agro produces, consumer, exporter and importer, regardless of that we are still price taker. Our exchanges have a full ecosystem of market infrastructure, products and participants in place. Few steps can enable it to become price setters. Yes, low volume is a major concern for the market. Many times the issue has been raised with authorities such as SEBI, Ministries etc. To increase the volume, the most important thing to do is to abolish the CTT or make this negligible. It is not going to hurt the revenue of Government as increase in the volume in commodities market, if it is uplifted will reverse its impact. Regulator should allow market making in commodities as it is permitted in equity. We have seen the positive result of LES (Liquidity Enhancement Scheme) in Gold option, where it helped to increase the liquidity in gold options. To increase liquidity in the commodity markets, there is a need to allow institutional participation such as banks, insurance companies, portfolio management schemes. Q : 2019 should an eventful year for commodities, be it trade war or general election; what would be the impact on Indian economy and of course on commodity market? A : We expect another volatile year in 2019, especially when political environment is unstable worldwide, be it trade war issue, OPEC and Non OPEC production cut, many elections viz. in US (2020)and India (2019), Brexit, Italy issue, fragile currencies, expectations of El Nino and many more. Undoubtedly, volatility will give opportunities to both buyers and sellers and frequent churning will be required. Metals and energy will keep investors on toes and agro commodities are likely to be more remunerative this year on account of lower production. If Government encourages exports then we may see higher prices of farm commodities this year. Q : High cost trading is a deterrent to the higher volume; even SEBI has raised the concern, what s your take on it? A : With CTT, transaction cost for a trader increased five times. To increase the depth of market and for the fair price discovery, government should abolish or atleast reduce the CTT to lower levels. The fact is that the Government is losing more revenue than it is collecting through commodity transaction tax. It s not fulfilling the revenue purpose of government and on the top of that it is not viable for exchange, brokers and the final traders. Losses of liquidity, and the consequent rise in the impact cost of trading, have possibly been encouraging traders to switch to international exchanges. If we talk about the volume, it is presently at one-third their peak levels touched in 2013. Turnover in the commodity derivatives market plummeted, from Rs.170 trillion in 2012-13, to Rs.101 trillion in 2013-14, Rs.67 trillion in 2015-16, Rs. 64 trillion in 2016-17, Rs. 60 trillion in 2017-18 and Rs. 45 trillion in 2018-19 (Apr-Nov). Abolishment of CTT will bring back the capital inflow in commodities, which will ultimately help in the integration of spot and futures market. Q : 2018 will be remembered as a volatile year for commodities, in which commodities prices saw wild swings; ex crude; do you see any price stability in crude? A : The entire world is still puzzled with the kind of move oil prices have seen in 2018. Crude market volatility has soared in the second half of 2018, with prices touching a four year high before entering their longest losing streak in three decades. Oil prices have fallen sharply since October on signs of an economic slowdown, with Brent losing almost 45% in value. The consensus on the cut of 1.2 million barrel per day is not pinning solid hope for sharp upside in crude because even with the recent cut market will remain oversupplied in 2019. But yes, crude may see some stable movement in 2019 as compared to 2018 on moderate demand. Health of world major economies may not demand for more crude in coming years, whether it is China or US. Now IMF is predicting recession for US in 2020. As per my view, this year crude prices can move in a range of $37-70 per barrel. 4
Past Performance & Future Events COMMODITY OUTLOOK 2019 Performance of range forecast given in our Annual magazine commodity outlook 2018 Commodity Range forecasted 2018 2018 (Annual Magz. '18) Low High Gold (COMEX) 1100-1450 1161.40 1365.40 Gold (MCX) 25000-35000 29061.00 32311.00 Silver(COMEX) 14-21 13.91 17.55 Silver(MCX) 33000-45000 34981.00 41698.00 Crude Oil (NYMEX) 42-75 42.36 76.90 Crude Oil (MCX) 2800-4500 2993.00 5669.00 Natural gas(nymex) 2.5-4 2.53 4.93 Natural gas (MCX) 150-300 162.50 358.70 Aluminium (MCX) 110-180 128.30 178.85 Copper (MCX) 350-540 402.55 493.25 Lead (MCX) 120-200 133.15 172.50 Nickel (MCX) 600-1000 750.60 1095.20 Zinc (MCX) 150-250 163.80 232.70 Cardamom 800-1500 818.50 1550.00 Jeera 13000-25000 14010.00 21760.00 Turmeric 5500-10000 6550.00 7876.00 Coriander 4500-8500 4186.00 6892.00 Cotton (CBOT) 55-95 73.03 96.50 Chana 3500-5000 3245.00 4791.00 Guar seed 3200-5500 3494.50 4869.50 Guar gum 8000-13500 8377.00 10510.00 Kapas 850-1200 967.50 1228.00 Wheat (CBOT) 320-460 413.25 593.00 Wheat (NCDEX) 1600-1800 1614.00 2162.00 CPO (BMD) 2100-3100 1940.00 2641.00 CPO (MCX) 510-680 483.40 673.00 Ref. Soy oil (CBOT) 30-40 26.88 33.86 Ref. Soy oil (NCDEX) 680-800 713.60 796.35 RM Seed 3600-4600 3727.00 4262.00 Soybean (CBOT) 900-1080 810.50 1071.00 Soybean (NCDEX) 2900-4000 3047.00 3895.00 Source: SMC Research FOMC and ECB meeting schedule for 2019 Months 2019 FOMC meeting ECB meeting January 29th and 30th 9th and 24th February - 6th and 20th March 19th and 20th 7th and 20th April 30th 10th May 1st 8th and 22th June 18th and 19th 6th and 26th July 30th and 31st 10th and 25th August - 7th September 17th and 18th 12th and 25th October 29th and 30th 24th November - 6th and 20th December 10th and 11th 5th and 12th Source: FOMC & ECB WGC Gold holdings (Top 10 Countries) Country Tonnes % of reserves 1 United States 8,133.5 73.9% 2 Germany 3,369.7 69.2% 3 Italy 2,451.8 65.5% 4 France 2,436.0 59.0% 5 Russia 2,066.2 17.6% 6 Mainland China 1,842.6 2.3% 7 Switzerland 1,040.0 5.1% 8 Japan 765.2 2.4% 9 Netherlands 612.5 65.5% 10 India 592.0 5.9% Source: World Gold Council (International Financial Statistics, January 2019*) World Interest rates of key Central Banks at present Central Banks Country Current interest rates Previous rate Date of change Federal Reserve(FED) US 2.50% 2.25% 19-Dec-18 European Central Bank(ECB) Euro 0.00% 0.05% 10-Mar-16 Bank of England(BOE) England 0.75% 0.50% 2-Aug-18 Bank of Japan(BOJ) Japan -0.10% 0.00% 1-Feb-16 Reserve Bank of India(RBI) India 6.50% 6.25% 1-Aug-18 People Bank of China(PBOC) China 4.35% 4.60% 23-Oct-15 Reserve Bank of Australia(RBA) Australia 1.50% 1.75% 2-Aug-16 Brazil Central Bank(BACEN) Brazil 6.50% 6.75% 22-Mar-18 Source: FX Street 5
Commodity Performance in 2018 COMMODITY OUTLOOK 2019 Return of Agri Commodities from Jan '18 till Dec '18 % Change Cardamom 37.97 Wheat Maize 28.65 28.37 Castor seed 17.94 Coriander Chana Kapas 12.80 12.46 14.77 Soybean (NCDEX) 8.89 Cotton oil seed cake Guar Seed 5.60 5.47 Mustard seed Refined soy oil (NCDEX) 1.01 0.21 Guar Gum -3.88 Cotton (CBOT) Soybean (CBOT) Crude palm oil (MCX) Sugar M 200-6.94-7.50-8.26-8.59 Mentha oil Crude palm oil (BMD) Turmeric Refined soy oil (CBOT) Jeera -11.86-14.74-16.15-16.42-18.23-30.00-20.00-10.00 0.00 10.00 20.00 30.00 40.00 50.00 Return of Bullions, Base Metals & Energy from Jan '18 till Dec'18 % Change Gold (COMEX) -3.39 Gold (MCX) 7.38 Silver (COMEX) -14.31 Silver (MCX) -4.00 Crude Oil (NYMEX) -24.27 Crude Oil (MCX) -15.89 Natural Gas (NYMEX) 26.07 Natural Gas (MCX) 32.71 Copper (LME) -16.63 Copper (MCX) -10.37 Aluminium (LME) -14.89 Aluminium (MCX) -7.62 Zinc (LME) -23.45 Zinc (MCX) -15.09 Lead (LME) -23.03 Lead (MCX) Nickel (LME) -15.01-13.66 Nickel (MCX) -6.65-30.00-20.00-10.00 0.00 10.00 20.00 30.00 40.00 6
Asset Class Comparison COMMODITY OUTLOOK 2019 2018 Performance of Assets Class in 2018 (Jan - Dec) % Change Natural Gas (NYMEX) 25.94% Bovespa 12.17% Dollar Index Baltic Dry Index 3.98% 5.03% Nifty 2.11% Japanese Yen/USD -1.28% Gold (COMEX) US Treasury Euro/USD -5.25% -5.28% -3.95% NASDAQ INR/USD Dow Jones CRB S&P 500 STRAIT TIMES Copper (COMEX) CAC FTSE DJ EuroStoxx Silver (COMEX) Hang Sang -8.72% -8.95% -9.53% -9.63% -9.95% -10.58% -10.79% -11.74% -12.57% -13.12% -14.07% -14.24% DAX -17.53% Shanghai Composite Crude Oil (NYMEX) -24.07% -24.27% -30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% Closing as on 24th December 2018 How various asset class performed in the year 2018. lobal economy has thrown some red flags caused by slowing activities in China, US. The trade war between the world's two biggest trading nations, Gcontracted GDP in Europe and other major economies, brought currency crisis in emerging nations. All these increased the volatility in the global financial market during 2018. The entire world was in grip of fear whether it be warlike situations between North Korea and US or trade war between US and many countries, sanctions on Iran. Slowing economic activities in China got reflected in its PMI, GDP, export import data s and ultimately investors pullout their money from this economy, which was strongly known as Growth Engine for the entire world. Last year will also be remembered for the poor currency performances for long, especially emerging economies. INR depreciated around 9%, which was the worst in past five years due to sharp surge in crude amid slowdown in economic activities in June-Sep quarter. Now the primary reason for the rupee s slowdown has been linked to rising uncertainty heading into the Lok Sabha elections, due in May 2019. Japanese Yen somehow closed the year in sideways territory. It was dollar index, which soaked the capital inflow on safe haven buying since the beginning of the year 2018. From the level of 90, it appreciated above 97 despite some question mark on economic health, many trade war issues and negative return in stock market. Taking a look on the major index, it was only Bovespa and Nifty, which offered positive return in 2018, while rest of the indices, whether it is of EU, US or emerging nations; all settled in red. Brazil has recovered from its deepest recession in decades, though it was gradual. To keep the growth intact, the central bank drove interest rates to all-time lows. Moreover, market jumped sharply after Far-right candidate Jair Bolsonaro won Brazil's presidential election following a divisive campaign. After hitting many years high, US equities entered into bear phase & now many people believe that economy is heading towards another recession. S&P performed the worst among all. Due to Mr. Trump s own policies, including an escalating trade war with China, a shutdown of the federal government and the fading effects of the $1.5 trillion tax cut Mr. Trump market gave up all their previous gain. Despite all odds Indian equity gave positive returns in 2018 by more than 2% as the world has considered India as new growth engine with its robust economic activities. Higher oil prices, the U.S.-China trade war, and global monetary tightening were the top three drivers of volatility on the international front while on the domestic front; increasing interest rates, concern over falling GDP, introduction of the long-term capital gains tax on equity, NBFC liquidity crisis, amid some political turbulence made market really volatile. Whereas EU was fragile once again and most of them traded weak on Brexit, Italy and other issues; Euro depreciated for the same reason. Volatile politics and slowing economic growth have sparked outflows from Europe last year. Energy counter was really interesting, as natural gas was on topmost on the charts when it comes to return whereas crude was the worst performer followed by Shanghai composite. Supply glut created by three major producers Russia, US and Saudi flooded the market amid some dent in demand. Iran sanction put another nail on the prices and from the high of $76.91 per barrel it touched $46 per barrel. It was only OPEC and non OPEC decision to 1.2 million barrel per day which gave some much needed support. Bullions couldn t take much advantage of safe haven buying appeal and lost the ground on weaker physical offtake; though the fragile gold silver ratio took the attention as silver performed weaker than gold on supply surplus amid weakness in both gold and base metals. Despite some slowdown in economic activities, shipping movements improved on increased activities in emerging nations. The global seaborne movement of dry bulk commodities reportedly reached record levels in the 3rd quarter of 2018 even with the trade war. Additionally, the combination of ship scrapping (over several years) and a slowdown in new buildings has improved dry ship utilization and buoyed freight rates. 7
Span Of Price Movement COMMODITY OUTLOOK 2019 Span of price movement (Agro Commodities) COMMODITY LIFE TIME HIGH LIFE TIME LOW 2018 HIGH 2018 LOW SPICES Cardamom 2097.00 206.10 1550.00 818.50 Coriander 13444.00 2570.00 6892.00 4186.00 Jeera 22360.00 4877.40 21760.00 14010.00 Turmeric 16350.00 1666.00 7876.00 6550.00 OTHER COMM ODITIES Chana 9380.00 1331.00 4791.00 3245.00 Castor Seed 6300.00 268.60 6300.00 3831.00 Cotton oilseed cake 2791.00 218.30 2043.00 1166.00 Guar Seed 29900.00 1015.00 4869.50 3494.50 Guar Gum 95920.00 3235.00 10510.00 8377.00 Cotton 24280.00 13970.00 24280.00 19400.00 Kapas 1377.50 490.00 1228.00 967.50 Maize 1870.00 940.00 1870.00 1196.00 Mentha Oil (MCX) 2570.30 342.00 1846.10 1106.00 Sugar 3953.00 1182.00 3361.00 2592.00 Wheat 2162.00 662.00 2162.00 1614.00 OILSEEDS Crude Palm Oil 673.00 154.20 673.00 483.40 Crude Palm Oil (BMD) 4486.00 424.00 2641.00 1940.00 Soybean 5064.50 1104.50 3895.00 3047.00 Soybean (CBOT) 1794.75 401.50 1071.00 810.50 RM Seed 5156.00 1586.25 4262.00 3727.00 Ref. Soy Oil (NCDEX) 817.00 337.70 796.35 713.60 * Closing till 24th December 2018 Span of price movement (Bullions, Metals & Energy) COMMODITY EXCHANGE LIFE TIME HIGH LIFE TIME LOW 2018 HIGH 2018 LOW Gold COMEX 1911.60 239.40 1365.40 1161.40 MCX 35074.00 5600.00 32311.00 29061.00 Silver COMEX 50.35 1.95 17.55 13.91 MCX 73600.00 7551.00 41698.00 34981.00 Crude Oil NYMEX 147.27 9.75 76.90 42.36 MCX 7784.00 1626.00 5669.00 2993.00 Natural Gas NYMEX 15.78 1.04 4.93 2.53 MCX 591.80 99.50 358.70 162.50 Aluminium MCX 178.85 62.20 178.85 128.30 Copper MCX 512.65 117.60 493.25 402.55 Lead MCX 175.70 40.50 172.50 133.15 Nickel MCX 2253.90 442.30 1095.20 750.60 Zinc MCX 232.70 49.85 232.70 163.80 * Closing till 24th December 2018 8
Performance of Fundamental calls COMMODITY OUTLOOK 2019 Performance of Metals and Energy Fundamental Calls (January - December) 2018 S.No Date Commodity Contract Trend Call Initiated Target Stop loss Remarks Given Price 1 2-Jan Gold Mini Feb Buy 29212.00 29600.00 29000.00 Book partial profit at 29247 2 3-Jan Copper Mini Feb Sell 458.40 444.00 465.00 Book partial profit at 457 3 8-Jan Copper Mini Feb Sell 452.2 447 458 SL hit 4 9-Jan Lead Mini Jan Buy 165.4 170 162.5 Book partial profit at 166 5 11-Jan Aluminium Mini Jan Buy 140.1 146 137 Book partial profit at 140.70 6 15-Jan Aluminium Mini Jan Buy 142.35 147 139 Book partial profit at 142.75 7 22-Jan Nickel Jan Buy 810.4 845 788 Book partial profit at 816.90 8 24-Jan Zinc Mini Jan Sell 216.75 211 220 SL hit 9 25-Jan Gold Mini Feb Sell 30311 29900 30550 Book partial profit at 30072 10 5-Feb Gold Mini Feb Sell 30167 29600 30500 Exit at 30426 11 12-Feb Copper Mini Feb Buy 439.3 450 432 Book partial profit at 444.8 12 15-Feb Crude oil Mini March Buy 3925 4070 3840 SL hit 13 16-Feb Gold Mini March Sell 30736 30250 31000 Book partial profit at 30595 14 20-Feb Natural gas March Buy 172.7 185 166 Book partial profit at 173.20 15 22-Feb Crude oil Mini March Sell 3975 3750 4120 Exit at 4115 16 23-Feb Natural gas March Buy 171.80 183.00 166.00 Book partial profit at 173.20 17 26-Feb Gold Mini March Buy 30581 30900 30300 Exit at 30385 18 5-Mar Copper Mini April Buy 451 460 445 Book partial profit at 454.20 19 9-Mar Copper Mini April Buy 447 460 438 Book partial profit at 449.50 20 14-Mar Lead Mini March Buy 157.1 163 154 Book partial profit at 158.30 21 19-Mar Copper Mini April Buy 444 457 436 Book partial profit at 449 22 27-Mar Copper Mini April Buy 434.4 425 450 Book partial profit at 436.00 23 4-Apr Copper Mini April Sell 440.25 425 448 Book partial profit at 438.35 24 5-Apr Crude oil Mini April Buy 4138 4260 4070 Book partial profit at 4160 25 5-Apr Aluminium Mini April Buy 130.1 135 127 Book full profit at 135 26 9-Apr Crude oil Mini April Buy 4054 4190 3980 Book partial profit at 4090 27 12-Apr Gold Mini May Sell 30935 30500 31250 Book partial profit at 30850 28 16-Apr Silver mini April Sell 38970 38300 39400 SL hit 29 19-Apr Gold Mini May Sell 31310 30950 31520 Book partial profit at 31230 30 25-Apr Crude oil Mini May Sell 4517 4370 4620 Booked profit near 4512 31 7-May Copper Mini June Sell 458.75 447 466 Book full profit at 450 32 8-May Crude oil Mini May Sell 4701 4500 4800 SL hit 33 11-May Copper Mini June Sell 462.5 469 450 Booked profit near 461.40 34 14-May Gold Mini June Sell 31395 31100 31600 Booked profit near 31345 35 15-May Nickel Mini May Buy 979 1020 960 Booked profit near 984.60 36 17-May Copper Mini June Sell 461.4 450 475 Exit at 462.50 37 23-May Silver mini June Sell 40474 39750 40850 Booked profit near 40330 38 4-Jun Gold Mini July Sell 30732 30300 31000 SL hit 39 7-Jun Natural gas June Buy 195.4 200 192.4 Book full profit at 200 40 15-Jun Copper Mini June Sell 481.65 468 490 Book full profit at 472 41 15-Jun Aluminium Mini June Buy 153.15 157 150.45 SL hit 42 20-Jun Nickel June Buy 1008.4 1030 993 Booked profit near 1018 43 21-Jun Copper Mini June Buy 457.8 470 445 Exit at 453 44 27-Jun Aluminium Mini June Buy 150.15 146.5 156 Book partial profit at 151.50 Note: Ÿ These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. 9
Performance of Fundamental calls COMMODITY OUTLOOK 2019 S.No Date Commodity Contract Trend Call Initiated Target Stop loss Remarks Given Price 45 29-Jun Silver mini Aug Buy 40016 40500 37725 SL hit 46 3-Jul Gold Mini Aug Buy 30512 31000 30220 Book partial profit at 30576 47 3-Jul Silver mini Aug Buy 39668 40400 39250 Book partial profit at 39813 48 6-Jul Copper Mini Aug Sell 439.3 430 445 Book full profit at 460 49 10-Jul Gold Mini Aug Sell 30650 30400 30800 Book partial profit at 30582 50 12-Jul Copper Mini Aug Sell 424.45 415 430 Book partial profit at 421.40 51 18-Jul Gold Mini Aug Sell 29745 29400 29950 Book partial profit at 29685 52 23-Jul Copper Mini Aug Sell 422.4 415 426 Book minor profit at 421.50 53 26-Jul Copper Mini Aug Buy 430.2 445 421 Book partial profit at 432.50 54 2-Aug Copper Mini Aug Buy 415.8 424 409 Book partial profit at 419.80 55 3-Aug Gold Mini Sep Buy 29679 30200 29450 Book partial profit at 29715 56 7-Aug Aluminium Mini Aug Buy 140.55 145 137.5 Book partial profit at 141.25 57 16-Aug Crude oil Mini Sep Buy 4576 4690 4500 Book partial profit at 4615 58 21-Aug Gold Mini Sep Buy 29523 29850 29320 Book partial profit at 29680 59 28-Aug Silver mini Nov Buy 38380 39000 38050 SL hit 60 3-Sep Copper Mini Nov Buy 422.75 431 418 Book partial profit at 424.40 61 4-Sep Crude oil Mini Sep Buy 5024 5150 4950 Book partial profit at 5066 62 5-Sep Gold Mini Oct Buy 30280 30600 30100 Book partial profit at 30317 63 7-Sep Aluminium Mini Sep Buy 147.2 151 145.3 Book partial profit at 147.65 64 10-Sep Silver mini Nov Buy 37370 38000 37050 Book partial profit at 37482 65 11-Sep Copper Mini Nov Buy 427.6 438 421 Book partial profit at 430.70 66 17-Sep Silver mini Nov Buy 37190 36800 37900 Book partial profit at 37305 67 21-Sep Gold Mini Oct Sell 30755 30400 30950 Book partial profit at 30645 68 27-Sep Silver Mini Nov Sell 38030 37300 38400 Book partial profit at 37762 69 1-Oct-18 Gold Mini Nov Buy 30697 31150 30600 Book partial profit at 37786 70 3-Oct Silver Mini Nov Sell 39015 38200 39400 Book partial profit at 38834 71 9-Oct Silver Mini Nov Buy 38884 39400 38550 SL hit 72 11-Oct Crude oil Mini Dec Buy 5364 5520 5200 SL hit 73 16-Oct Gold Mini Dec Sell 31805 31300 32320 Exit at 31906 74 22-Oct Aluminium Mini Oct Buy 149.05 155 144 SL hit 75 26-Oct Gold Mini Dec Sell 32043 31700 32320 Book partial profit at 31906 76 1-Nov Copper Mini Nov Buy 433.9 450 426 Book partial profit at 439.90 77 12-Nov Crude oil Mini Nov Sell 4436 4250 4550 Book partial profit at 4385 78 15-Nov Silver mini Nov Buy 36640 37300 36100 Book partial profit at 36740 79 21-Nov Crude oil Mini Dec Buy 3890 4080 3780 Book partial profit at 3940 80 26-Nov Copper Mini Nov Buy 430.15 445 425 Book partial profit at 432.20 81 5-Dec Crude oil Mini Nov Sell 3742 3590 3840 Book partial profit at 3690 82 6-Dec Silver Mini Feb Sell 37340 36640 37750 Book partial profit at 37184 83 7-Dec Gold Mini Jan Sell 30995 30700 31120 SL hit 84 12-Dec Gold Mini Jan Sell 31665 31150 32000 Book partial profit at 31525 Total calls : 84 Profitable : 65 Stop Loss : 19 Success Rate : 77% Note: Ÿ These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. 10
Performance of Fundamental calls COMMODITY OUTLOOK 2019 Performance of Agri Fundamental Calls (January - December) 2018 S.No Date Commodity Contract Trend Call Initiated Target Closing Remarks Given Price Stop loss 1 3-Jan Ref. Soy oil Feb Buy 736.90 742.00 733.00 Booked Full profit at 741.00 2 11-Jan Chana March Buy 3850.00 3940.00 3790.00 Booked partial profit at 3875.00 3 14-Feb Ref. Soy oil March Sell 740.85 736.00 744.00 Booked Full profit at 737.50 4 15-Feb Kapas April Sell 956.50 935.00 973.00 Booked Full profit at 945.00 5 19-Feb Kapas April Sell 934.00 912.00 950.00 Booked partial profit at 930.50 6 21-Feb Cotton MCX Feb Buy 20020.00 20260.00 19900.00 Booked partial profit at 20050 7 6-Mar Kapas April Buy 958.00 1000.00 930.00 Squared off at 929.00 8 13-Mar Ref. Soy oil April Sell 780.00 770.00 785.00 Squared off at 785.00 9 14-Mar Guar seed April Buy 4341.00 4450.00 4275.00 Squared off at 4262.00 10 20-Mar Kapas April Sell 897.00 865.00 920.00 Booked partial profit at 880.50 11 21-Mar Cotton MCX March Buy 20280.00 20400.00 20150.00 Booked partial profit at 20320.00 12 22-Mar Cotton MCX April Sell 20470.00 20300.00 20600.00 Booked full profit at 20290.00 13 23-Mar Jeera April Buy 14720.00 15000.00 14560.00 Squared off at 14560.00 14 26-Mar Ref. Soy oil April Sell 775.50 770.00 779.00 Squared off at 779.00 15 5-Apr Jeera April Buy 14645.00 14950.00 14450.00 Booked full profit at 14905.00 16 5-Apr Chana May Buy 3825.00 3880.00 3780.00 Squared off at 3772.00 17 6-Apr Guar gum May Buy 8925.00 9075.00 8825.00 Squared off at 8830.00 18 11-Apr Turmeric May Buy 6530.00 6650.00 6400.00 Booked partial profit at 6630.00 19 11-Apr RM Seed May Buy 3960.00 4000.00 3930.00 Squared off at 3930.00 20 11-Apr Cocud May Buy 1423.00 1480.00 1390.00 Squared off at 1393.00 21 25-Apr CPO May Buy 653.90 661.00 649.00 Booked partial profit at 656.50 22 27-Apr CPO May Sell 649.90 643.00 654.00 Booked full profit at 645.90 23 9-May Chana June Buy 3580.00 3690.00 3510.00 Booked Full profit at 3690.00 24 15-May Soybean June Buy 3755.00 3830.00 3700.00 Booked Full profit at 3829.00 25 25-May Chana June Buy 3660.00 3690.00 3720.00 Booked partial profit at 3672.00 26 1-Jun Cardamom July Buy 895.00 940.00 865.00 Squared off at 890.00 27 4-Jun CPO June Sell 645.60 638.00 651.00 Booked partial profit at 642.90 28 5-Jun RM Seed July Buy 4006.00 4075.00 4060.00 Booked full profit at 4075.00 29 8-Jun Cocud July Sell 1463.00 1400.00 1500.00 Squared off at 1503.00 30 11-Jun Turmeric July Buy 7204.00 7360.00 7085.00 Booked full profit at 7280.00 31 12-Jun CPO June Sell 637.00 630.00 642.50 Booked full profit at 630.00 32 13-Jun Soybean July Buy 3418.00 3500.00 3360.00 Booked full profit at 3470.00 33 18-Jun Soybean July Buy 3479.00 3550.00 3435.00 Squared off at 3425.00 34 19-Jun CPO July Sell 629.30 622.00 635.00 Booked partial profit at 627.50 35 21-Jun CPO July Sell 627.60 620.00 633.00 Booked partial profit at 625.80 36 26-Jun Castor seed July Buy 4166.00 4210.00 4140.00 Squared off at 4135.00 37 26-Jun Kapas April Buy 1152.00 1175.00 1136.00 Booked partial profit at 1161.00 38 27-Jun Ref. Soy oil July Buy 747.45 753.00 743.00 Booked full profit at 751.70 39 28-Jun Kapas April Buy 1161.50 1182.00 1145.00 Squared off at 1150.50 40 29-Jun CPO July Sell 638.50 632.00 642.00 Booked full profit at 634.80 41 5-Jul CPO Aug Sell 624.00 618.00 628.00 Squared off at 628.9 42 6-Jul RM Seed Aug Buy 4137.00 4215.00 4090.00 Booked partial profit at 4153.00 43 12-Jul Kapas April Buy 1155.00 1140.00 1175.00 Booked full profit at 1170.00 44 16-Jul Kapas April Sell 1165.00 1180.00 1142.00 Booked partial profit at 1163.00 Note: Ÿ These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. 11
Performance of Fundamental calls COMMODITY OUTLOOK 2019 S.No Date Commodity Contract Trend Call Initiated Target Closing Remarks Given Price Stop loss 45 17-Jul RM Seed Aug Sell 4091.00 4030.00 4135.00 Squared off at 4135.00 46 23-Jul Ref. Soy oil Aug Sell 746.00 740.00 750.00 Booked full profit at 740.00 47 24-Jul Kapas April Buy 1172.50 1192.00 1160.00 Booked full profit at 1192.00 48 30-Jul CPO Aug Buy 604.50 610.00 600.50 Booked partial profit at 606.00 49 1-Aug Ref. Soy oil Aug Buy 744.00 748.00 741.00 Squared off at 740.50 50 2-Aug Soybean Oct Buy 3433.00 3480.00 3400.00 Squared off at 3392.00 51 8-Aug CPO Aug Sell 592.00 595.50 586.00 Squared off at 595.50 52 9-Aug Chana Sept Buy 4210.00 4265.00 4175.00 Squared off at 4160 53 10-Aug Cotton MCX Oct Buy 24200.00 24600.00 23990.00 Squared off at 23900.00 54 20-Aug Cotton MCX Oct Buy 23400.00 23800.00 23200.00 Booked partial profit at 23570.00 55 21-Aug Cocud Dec Buy 1760.00 1820.00 1730.00 Squared off at 1725.50 56 23-Aug Ref. Soy oil Sept Sell 735.70 730.00 739.00 Booked full profit at 732.35 57 24-Aug Kapas April Buy 1145.50 1161.00 1137.00 Booked partial profit at 1151.50 58 27-Aug Chana March Buy 4111.00 4165.00 4075.00 Squared off at 4076.00 59 30-Aug Kapas April Sell 1137.00 1121.00 1150.00 Squared off at 1141.00 60 5-Sep Chana Sept Buy 3912.00 3960.00 3880.00 Booked partial profit at 3935.00 61 5-Sep CPO Sept Buy 606.80 611.00 603.00 Squared off at 600.20 62 6-Sep Chana Sept Buy 3926.00 3975.00 3900.00 Booked partial profit at 3937.00 63 7-Sep Cocud Dec Buy 1738.00 1770.00 1710.00 Squared off at 1710.00 64 17-Sep Ref. Soy oil Oct Buy 733.00 739.00 730.00 Booked partial profit at 734.15 65 19-Sep Kapas April Buy 1153.50 1170.00 1140.00 Booked partial profit at 1161.00 66 21-Sep Ref. Soy oil Oct Buy 731.85 736.00 729.00 Booked partial profit at 733.25 67 25-Sep CPO Oct Buy 593.00 601.00 589.00 Booked partial profit at 595.00 68 26-Sep RM Seed Oct Buy 4213.00 4255.00 4180.00 Squared off at 4180.00 69 27-Sep Cocud Dec Sell 1660.00 1615.00 1690.00 Booked partial profit at 1652.00 70 28-Sep Soybean Oct Sell 3239.00 3280.00 3180.00 Squared off at 3249.00 71 3-Oct Cocud Dec Buy 1644.00 1610.00 1690.00 Booked partial profit at 1654.00 72 3-Oct Castor seed Nov Buy 4758.00 4850.00 4700.00 Squared off at 4700.00 73 5-Oct Chana Nov Sell 4200.00 4140.00 4240.00 Booked partial profit at 4176.00 74 5-Oct Soybean Nov Buy 3269.00 3310.00 3240.00 Squared off at 3224.00 75 8-Oct Turmeric Nov Buy 6770.00 6850.00 6690.00 Squared off at 6690.00 76 9-Oct Chana Nov Sell 4182.00 4140.00 4215.00 Booked partial profit at 4162.00 77 11-Oct Cotton MCX Oct Sell 22330.00 22100.00 22500.00 Squared off at 22530.00 78 12-Oct CPO Oct Buy 585.50 592.00 582.00 Booked full profit at 592.00 79 15-Oct Mentha Nov Buy 1726.00 1740.00 1716.00 Booked partial profit at 1728.20 80 16-Oct RM Seed Nov Sell 4170.00 4125.00 4200.00 Booked partial profit at 4164.00 81 16-Oct Castor seed Nov Sell 5038.00 4950.00 5100.00 Squared off at 5120.00 82 17-Oct Soybean Nov Buy 3282.00 3380.00 3235.00 Booked partial profit at 3285.00 83 23-Oct Ref. Soy oil Nov Buy 763.90 768.00 760.70 Squared off at 759.40 84 29-Oct RM Seed Nov Sell 4178.00 4120.00 4220.00 Booked full profit at 4118.00 85 30-Oct CPO Nov Sell 570.00 564.00 574.00 Booked partial profit at 569.90 86 30-Oct Mentha Nov Buy 1787.00 1815.00 1780.00 Booked full profit at 1810.00 87 31-Oct Mentha Nov Buy 1812.00 1835.00 1805.00 Booked partial profit at 1820.00 88 31-Oct Cotton MCX Nov Sell 22350.00 22120.00 22520.00 Booked partial profit at 22260.00 Note: Ÿ These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. 12
Performance of Fundamental calls COMMODITY OUTLOOK 2019 S.No Date Commodity Contract Trend Call Initiated Target Closing Remarks Given Price Stop loss 89 2-Nov Cocud Dec Buy 1829.00 1875.00 1800.00 Booked full profit at 1875.00 90 6-Nov Ref. Soy oil Dec Buy 752.95 756.00 751.00 Squared off at 751.00 91 9-Nov Mentha Nov Buy 1765.50 1780.00 1755.00 Squared off at 1755.00 92 12-Nov Kapas April Sell 1206.00 1190.00 1216.00 Squared off at 1216.00 93 12-Nov Cotton MCX Dec Buy 22730.00 23030.00 22540.00 Squared off at 22540.00 94 13-Nov Ref. Soy oil Dec Sell 744.60 738.00 748.50 Booked partial profit at 739.50 95 14-Nov RM Seed Dec Sell 4157.00 4200.00 4080.00 Squared off at 4193.00 96 14-Nov Mentha Dec Buy 1797.50 1820.00 1785.00 Booked full profit at 1820.00 97 15-Nov RM Seed Dec Sell 4171.00 4100.00 4224.00 Booked partial profit at 4145.00 98 16-Nov Ref. Soy oil Dec Buy 739.40 734.50 742.00 Squared off at 735.35 99 19-Nov Turmeric Dec Buy 6478.00 6700.00 6390.00 Booked partial profit at 6490.00 100 21-Nov Cotton MCX Dec Sell 21730.00 21520.00 21870.00 Squared off at 21870.00 101 27-Nov Mentha Dec Sell 1695.20 1670.00 1705.00 Booked partial profit at 1685.00 102 28-Nov Soybean Jan Buy 3429.00 3510.00 3390.00 Squared off at 3388.00 103 29-Nov Coriander Jan Buy 6425.00 6800.00 6300.00 Booked partial profit at 6472.00 104 29-Nov Chana Jan Sell 4612.00 4525.00 4660.00 Squared off at 3388.00 105 30-Nov Castor seed Dec Sell 5366.00 5170.00 5470.00 Booked partial profit at 5336.00 106 30-Nov Cocud Dec Sell 1924.00 1850.00 1970.00 Booked partial profit at 1914.00 107 4-Dec Cocud Jan Sell 1895.00 1840.00 1930.00 Booked partial profit at 1872.50 108 6-Dec Guar seed Jan Buy 4413.00 4495.00 4375.00 Squared off at 4402.00 109 7-Dec CPO Dec Buy 493.00 502.00 487.00 Booked full profit at 503.40 110 11-Dec Mentha Dec Buy 1542.00 1560.00 1535.00 Booked partial profit at 1552.00 111 12-Dec Kapas April Buy 1200.00 1220.00 1185.00 Squared off at 1192.50 112 20-Dec Ref. Soy oil Jan Sell 729.00 723.00 732.00 Booked partial profit at 727.80 113 28-Dec CPO Jan Buy 512.30 515.00 510.00 Booked partial profit at 513.70 Total calls : 113 Profitable : 69 Stop Loss : 44 Success Rate : 62% Note: Ÿ These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. Performance of Commodity Technical Calls 2018 MCX Total Calls 592 Profitable calls 374 Loss 238 Strike rate 63% NCDEX Total Calls 159 Profitable calls 111 Loss 48 Strike rate 70% Note: Ÿ These technical calls are both positional & intraday. Ÿ It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot. 13
Economic Indicators COMMODITY OUTLOOK 2019 12.00 India Inflation % change 650000 Existing Home Sales - US in absolute numbers 10.00 600000 8.00 550000 6.00 500000 4.00 2.00 450000 0.00 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 400000 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Industrial Production YoY - US % change Non Farm Payroll - US in numbers 6.00 380000 5.00 330000 4.00 280000 3.00 2.00 230000 1.00 180000 0.00 130000-1.00-2.00 80000-3.00 30000 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 US Unemployment Rate % change Consumer Confidence Index - US in absolute values 5.50 105.00 100.00 5.00 95.00 4.50 90.00 4.00 85.00 80.00 3.50 75.00 3.00 Jan-16 Mar-16 May-16 Jul-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 70.00 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 14
Economic Indicators COMMODITY OUTLOOK 2019 3.50 US Inflation Rate % change 2500 Baltic Dry Index 3.00 2000 2.50 2.00 1500 1.50 1000 1.00 0.50 500 0.00-0.50 0 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 GDP - India & China (YoY) GDP - Euro Zone & US (YoY) % change % change 9.00 8.00 1.00 4.50 8.50 7.50 4.00 8.00 7.50 7.00 7.00 6.50 0.50 0.00 3.50 3.00 6.50 6.00 2.50 6.00 5.50-0.50 2.00 5.50 1.50 5.00 5.00 4.50 4.50-1.00 1.00 0.50 4.00 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 4.00-1.50 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 0.00 India GDP (YoY) China GDP (YoY) Euro zone GDP (YoY) US GDP (YoY) Comparison of Purchase Manager Index - US & China Absolute Values 59.0 53.0 57.0 52.0 55.0 53.0 51.0 50.0 49.0 51.0 49.0 48.0 47.0 47.0 46.0 45.0 45.0 Oct-18 Aug-18 Jun-18 Apr-18 Feb-18 Dec-17 Oct-17 Aug-17 Jun-17 Apr-17 Feb-17 Dec-16 Oct-16 Aug-16 Jun-16 Apr-16 Feb-16 Dec-15 Oct-15 Aug-15 Jun-15 Apr-15 Feb-15 Dec-14 Oct-14 Aug-14 Jun-14 Apr-14 Feb-14 Dec-13 Oct-13 Jul-13 May-13 Mar-13 Jan-13 Purchase Manager Index - US Purchase Manager Index - China 15
GOLD COMMODITY OUTLOOK 2019 RANGE MCX : 28000-34000 ( per 10gms) COMEX : 1150-1380 ($ per t. oz) Factors to watch: Ÿ The movement in dollar index and equity market Ÿ Central banks buying, which were net buyer in 2018 Ÿ Increase in buying in bars and coins and capital flow in ETF s Ÿ Hedge funds and SPDR funds flow coupled with central bank demand Ÿ Geopolitical tensions and US involvement with many countries Ÿ Jewellery demand Ÿ US and China trade war 40000 35000 30000 25000 20000 15000 10000 5000 Yearly price movement of Gold futures (MCX) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gold rally dented in 2018 after a firm recovery in 2016 and 2017. Last year, in a strange way, gold couldn t attract much safe haven buying despite the geopolitical tensions which gripped many countries throughout the year; whether it was North Korea and US warlike situation, US Iran tension, tensions in Middle East, higher crude prices, fragile currencies and many more. It was majorly trading lower on regaining strength in dollar index. Gold gained some strength when equity market took correction and investors preferred safe haven buying in gold. Dollar index took support near 90 levels and recovered sharply higher towards 97 in 2018. Gold prices on domestic bourses continued its recovery for third consecutive year that started in 2016 mainly aided by weak local currency rupee, which hit a low of 74.64. On MCX prices, climbed higher and faced resistance near 32200-32300. U.S. Federal Reserve hiked its benchmark interest rate four times by 25 basis points each in 2018. Fed raised its federal funds rate to a range of between 2.25 percent to 2.50 percent in December 2018. Fresh economic forecasts released recently showed that policymakers expect two rate hikes in 2019 and one in 2020, with the median forecast for the federal funds rate at 3.1 percent at the end of 2020 and 2021. December 2018 rate hike was the ninth increase since the Fed began normalizing policy in December 2015. Fed raised the interest rate as the US labor market has continued to strengthen and that economic activity has been rising at a strong rate. Gold is sensitive to higher interest rates because they tend to boost the dollar, making gold more expensive for buyers with other currencies. Unemployment has fallen to 3.7%, its lowest level since the 1960s, and inflation is near the Fed s 2% goal. But the economic health of world economy is indicating some concern, which could be a strong factor for upside in gold in 2019. International Monetary Fund cuts its global growth forecasts to 3.7% as trade tensions between the U.S. and trading partners have started to hurt economic activity worldwide. According to IMF threat of a slowdown among several big world economies could cause a sudden reversal in global risk appetite. Spurt in investment demand and safe haven buying amid Italy budgetary woes can give support to yellow metal in 2019. BREXIT and controversial budget in Italy can spark a financial crisis in Euro zone in 2019. Italy has sent the euro zone into meltdown and the euro currency floundering after announcing its spending plans which include a deficit target of 2.4 percent for 2019. Central banks buying were continued in 2018 as well, indicating lower confidence in currency and economy or alternatives. China, Russia and other countries are interested in alternatives to the U.S. Dollar and thus they invested heavily in gold. Turkey has also seen the gold futures volume doubling since the start of the currency crisis. Another currency under threat is the Iranian rial, where the demand for bars and coins increase significantly in 2018 compared to prior years. Central banks of Russia, Turkey, Kazakhstan and India propped up their purchases. Russia s central bank led the buying with 131.3 tonnes of gold till third quarter of 2018. Jewellery demand was also up 6% in Q3 2018, totaling 535.7 tonnes, according to the WGC, with India and China seeing solid increases based on lower jewellery prices. Growing geopolitical tensions supported the gold especially between western power, Saudi Arabia and Iran. Tension between the U.S. and Iran continues to mount as Iran stated that U.S. bases in Afghanistan, Qatar, the United Arab Emirates and American aircraft carriers in the Persian Gulf are within range of its missiles. Going forward in 2019, gold may keep investors on their toes throughout the year. Loads of factors viz; movement of greenback, fed monetary policy in 2019, investment and physical demand, central banks buying, performance of equity market and geopolitical tensions will give further direction to the prices. Currency play will be equally important in this counter and INR after depreciating sharply in 2018 by more than 17% from its low can witness some appreciation in 2019. If it appreciate towards 67-66 it will limit the upside in domestic bourses and vice a versa. Investors need to brace for rising volatility in Rupee if general election results surprise in 2019. Moreover current account deficit (CAD) and along with movement of crude oil prices will also impact movement of local currency. 16 In 2019, in the first half MCX gold is likely to take support near 28000. In the second half physical as well as investment demand may augment gold price towards the level of 33000-34000. In COMEX it may take support near $1150 and resistance appears near $1380.
SILVER COMMODITY OUTLOOK 2019 RANGE MCX : 33000-45000 ( per kg) COMEX : 13.4-19 ($ per t. oz) Factors to watch: Ÿ The movement in gold prices Ÿ Rising industrial demand Ÿ Movement of base metals Ÿ Global silver coins and bar demand Ÿ Jewellery fabrication demand Ÿ Technological uses for silver Yearly price movement of Silver futures (MCX) 85000 75000 65000 55000 45000 35000 25000 15000 5000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Silver followed the similar trading pattern of gold as gold is the leading indicator for silver and the prices saw decline after trading high in previous two years. Subdued base metals due to trade war concerns and surging greenback also weighed on the prices. Silver prices often follow the movement of gold and base metals as it has dual properties. It managed to trade in narrow range $13.86-17.57 in COMEX and in 35776-41698 in MCX. Silver managed to hold key support of $13.85 in 2018 and 35500 in MCX. Silver moved in narrow range on MCX as it faced resistance near 41500 in first half but fell lower in second half of the year below 36000 as appreciation in local currency and fall in base metals pack exerted selling pressure. According to GFMS the surplus in the global silver market will rise to 35.3 million ounces in 2018, an increase from 2.4 million in 2017. Following a drop of 1.5% in 2017, total silver supply is forecasted to rise by 0.3% to 998.4 million ounces. The increase is due to growth in mine supply, which is forecasted to grow to 865.5 million ounces from 852.1 million a year ago, thereby reversing a two-year decline. Global physical demand is expected to contract by 3% to 963 million ounces in 2018, compared to 992.8 million a year ago. Bar and coin demand will be the primary driver, contracting 12.2% to 124.8 million ounces. Industrial and technological uses for silver account for well over half of annual demand, spurred by the metal s strength, malleability and ductility. Global silver coin and bar demand has increased 123% from 56 Million ounces in 2007 to 125 Million ounces forecasted in 2018. Even though interest in precious metals has fallen over the past few years, investment demand is still the largest growth sector in the silver market. Silverware and jewellery demand were flat in 2018, but fabrication demand was actually up by 5% year over year. This trend is likely to continue upwards due to increase in usage of two technologies namely electric vehicles and photovoltaics. Electric vehicle demand will only go up, especially in China and India due to increased usage of alternative energy as the EV demand is expected to double in next decade. As electric vehicles need batteries (silver-zinc batteries) and circuit boards (silver paint) to operate, silver will be used to build these products. Electric vehicle demand goes hand in hand with photovoltaic demand because electric vehicles need to be powered via electricity. Solar panels will be in great demand to accommodate the charging of electric vehicles. Going forward in 2019, the rising demand of white metal from industrial applications, solar panel and silver inks will give some support to the prices. The global economic picture has come into question as an intensifying trade war between the U.S. and China, along with problems in the broader emerging markets, weighed on the silver market and the industrial demand outlook. Gold silver ratio: Silver underperformed gold as gold silver ratio zoomed higher from 76.5 to 86.5 in COMEX which is highest since last 25 years. The gold to silver ratio is again near the upper limit of a multi-decade resistance zone. The gold to silver ratio could dip lower from its multi-decade resistance zone within the next 6 to 9 months. Given the fact that "normal" level of 60 is average of last 20 years.therefore, silver can either out-perform gold as both metals may move higher in 2019 or fall less on a percentage basis. Silver will follow gold s reactions to macroeconomic & geopolitical factors and can outperform gold in 2019. As regards price movements, volatility can continue in white metal as it will get affected by base metals movements considering its dual properties. Trade war between US and China will continue to affect the metal prices in 2019 as well. Meanwhile shifting market expectations surrounding U.S. interest rates in medium term can cap momentum in the U.S. dollar thereby supporting bullion counter. Silver was laggard in 2018 as compared to gold despite the rally witnessed in base metals pack. Gold is the leading indicator for the precious metals complex as it tries to turn its bear market into a bull market, silver prices may regain strength. Investors may accumulate near the level of 33000-34000; on upside they may hold up to the level of 45000. In Comex, can rest near the level of $13.4 and can touch the higher side of $19. It may take longer to take action but when it starts moving in any particular direction it should be a very quick move. 17
Ratio & ETF holdings COMMODITY OUTLOOK 2019 Dow & Gold Ratio Gold (COMEX) & Crude oil ratio (NYMEX) 25.00 45.00 23.00 40.00 21.00 19.00 35.00 17.00 30.00 15.00 13.00 25.00 11.00 20.00 9.00 7.00 15.00 5.00 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 10.00 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 SPDR Gold Shares In $ ETF (GLD) Gold Silver Ratio (COMEX) In $ 170.00 90.00 160.00 85.00 80.00 150.00 75.00 140.00 70.00 130.00 65.00 120.00 60.00 55.00 110.00 50.00 100.00 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 45.00 Mar-13 Jan-13 May-13 Jul-13 Sep-13 Nov-13 Mar-14 Jan-14 May-14 Jul-14 Sep-14 Nov-14 Mar-15 Jan-15 May-15 Jul-15 Sep-15 Nov-15 Mar-16 Jan-16 May-16 Jul-16 Sep-16 Nov-16 Mar-17 Jan-17 May-17 Jul-17 Sep-17 Nov-17 Mar-18 Jan-18 May-18 Jul-18 Sep-18 Nov-18 18
CRUDE OIL COMMODITY OUTLOOK 2019 RANGE MCX : 2800-5800 ( per bbl) NYMEX : 35-80 ($ per bbl) Factors to watch: Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Trade relationship among OPEC and Non OPEC countries OPEC and Non OPEC countries production cut Global supply and demand US crude inventories, US shale gas production, movement of greenback Geopolitical tensions especially in Middle East US shale oil production and rig count data US sanctions on Iran US and China trade war 9000 8000 7000 6000 5000 4000 3000 2000 1000 Yearly price movement of Crude futures (MCX) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Crude prices caught the attention of the entire world with its wild swings with prices spiking to multi-year highs in October due to Trump s decision to reimpose sanctions on Iran. And the scenario in last quarter of 2018 completely changed with historic fall of more than 44% which sent it into bear category on increasing production in US, Saudi Arabia and Russia coupled with decline in global demand. Growing supply glut due to shale gas production was the key reason for the steep fall along with US and China trade tensions. Crude prices rose above 5660 in MCX and $76.9 in the month of beginning October 2018. The U.S. sanctions were imposed by Trump in response to Iran's nuclear program, which the White House says is designed to produce weapons, an allegation Tehran denied. Looming U.S. sanctions against Iran's oil exports and supply disruptions from places such as Venezuela and Africa triggered expectations of a tightening market which pushed the prices higher. During the last quarter prices nosedived by nearly 44% in NYMEX and nearly 45% in MCX. Crude oil prices in NYMEX went below $43 and MCX below 3100 as OPEC Secretary-General Mohammad Barkindo urged oil producing companies to increase capacities and invest more to meet future demand as spare oil capacity shrinks worldwide. The huge decline was also due to Trump administration, which announced it would issue waivers to eight countries, allowing them to continue importing Iranian crude for the next 180 days to eight importers namely China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. Meanwhile, U.S. output also hit an all-time high at 11.6 million bpd which kept pressure on prices. Saudi Arabia assured that markets would continue to meet customer demand for crude despite looming U.S. sanctions that are expected to reduce oil exports from Iran. In 2019, cocktail of factors will continue to impact the crude oil factors like OPEC decision regarding production and its compliance by member countries, US production, inventories and movement of greenback, geopolitical tensions in Middle East and performance of global economy. Heading in 2019, oil markets can expect to see slight declines in production from most OPEC countries and larger cuts from Saudi Arabia. But OPEC and its allies diverged on this compliance in 2018.In Nov 2018 OPEC countries compliance slipped to 111% and non OPEC adherence plunged to 17%. Nevertheless record high inventories will continue to keep lid on crude oil in 2019 as EIA Inventories rose to a five-month high of 432 million barrels. US rig count data also showed steady increase of oil rigs from nearly 742 rigs to above 887 in 2018. Energy companies have spent more in 2018 to ramp up production to capture higher prices in first three quarter of 2018. On 7th December 2018, OPEC and some non-opec producers including heavyweight Russia announced they would cut oil supply by 1.2 million bpd, with an 800,000 bpd reduction planned by OPEC-members and 400,000 bpd by countries not affiliated with the group. The OPEC-led supply curbs will be effective from January 2019. A variety of global economic indicators are signaling an impending worldwide economic slowdown that could push oil prices down in 2019. However, it is possible that low oil prices could stimulate demand. On demand supply front, according to the latest OPEC Oil Market Report Demand for OPEC crude in 2018 is estimated at 32.6 mb/d, 0.9 mb/d lower than the 2017 level. In 2019, demand for OPEC crude is forecast at 31.5 mb/d, around 1.1 mb/d lower than the estimate 2018 level. Meanwhile tiny, energy-rich Arab nation of Qatar announced in December that it will withdraw from OPEC in January 2019. Qatar produces only some 600,000 barrels of crude oil a day, As regards price action, Crude oil making it OPEC's 11th biggest producer. The loss of production, under 2 per cent of overall OPEC supply a prices in 2019 can take support near day, won't greatly affect the cartel's position in the market. $35 in NYMEX meanwhile 2800 will be Middle East tensions will also continue to weigh on crude oil prices in 2019. US President Donald Trump key support in domestic bourses. pulled out of an international agreement on Iran's nuclear program in May 2018 and reimposed sanctions Upside may remain limited in first half on Tehran. Meanwhile US China trade war will also limit the upside in crude prices in 2019. of the year on oversupplied situation. The next trigger could be the hurricane in US will affect the crude oil price movement in 2019 as we have witnessed two powerful storms that formed in its second half of 2018 namely- Hurricanes Florence and Michael. Any damage to the refineries during the hurricane generally reduces the crude oil demand. On the upper range of the prices might face stiff resistance near $75-80 and near 5500-5800 in MCX. 19
NATURAL GAS COMMODITY OUTLOOK 2019 RANGE MCX : 170-450 ( per mmbtu) NYMEX : 2.6-6 ($ per mmbtu) Yearly price movement of Natural Gas futures (MCX) 650 550 Factors to watch: Ÿ US weather related demand Ÿ US weekly inventory Ÿ Rig count data Ÿ US shale gas production Ÿ Exploration and exports of natural gas Ÿ Usage of alternative source of energy 450 350 250 150 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Natural gas has been the true outperformer among most of the commodities as its prices has rallied sharply higher in 2018. Natural gas prices remained silent in first three quarters of 2018 and moved in tight range but with the onset of winter in US stunning rally was seen on colder temperatures in major regions in US and very low inventory level in US. During the last quarter of 2018 prices spurted higher from $3 to above $4.92 that is jump of 64 per cent. In MCX also its prices rallied from 219.70 to above 358.70; the increase of nearly 63 percent. Low inventories coming out of past years, depressed prices of the past several years curtailing exploration-and-production investments, and the arrival of an early winter are all to blame for the spike in natural-gas prices. An uptick in demand has provided catalyst for the recent rally due to colder weather. The rally seen in natural gas recently is because of generational changes just starting to show their effects. In US scores of coal-fired power plants have closed, replaced with natural-gas-fueled successors. Exports are surging. and more and more gas production has moved onshore, where it can be disrupted by freezing weather. Those changes are starting to ease the market s chronic oversupply of recent years. Price movements depend upon more on weather when it comes to natural gas. Winter is the peak heating season while the summer is the peak cooling time of the year, both increase the demand for natural gas. However, when it comes to spring, withdrawals from storage turn to injections and the prospects for a sustained price rally decline. The substantial increase in natural gas production from various shale basins, both from wells drilled primarily to extract natural gas as well as associated gas production, has suppressed natural gas prices for several years. Looking ahead in 2019, demand for natural gas is also expected to strengthen from new demand from chemical and fertilizer sector. According to the EIA, natural gas production will continue to rise in 2019 to an average of 89.6 Bcf/d. The gas rigs have also shown steady movement in 2018 as it hovered in range of 177-200. Going forward in 2019, any sharp increase in gas rig count data will give cap the upside in prices. Proved reserves of natural gas the amount of gas that can be developed economically with existing technologies recently hit a record high in the US. On the one side increasing usage of natural gas as clean fuel considering stringent environmental norms across the globe can support the prices. Low natural gas prices and recent increases in the cost of generating electricity from coal have resulted in a significant shift from coal to natural gas over the past few years. While on the other side oversupply concerns amid shale gas production can limit the upside in 2019. Meanwhile natural gas consumption is also supported by a number of other factors such as higher nuclear outages. As there are a total of 7,700 MW of nuclear power generation offline in December 2018. Although the level of nuclear outages is declining, it still remains above the historical norm which also gives support to the prices. The oil drillers were the single largest source of new U.S. gas supply in 2018, via associated gas. (Natural gas is often a byproduct of oil production, because the same geologic formations that host oil deposits also typically contain gas. Associated gas from oil drillers made up the single largest source of new production in the U.S. gas market in 2018. Associated gas production in 2018 has exceeded the previous record high in 2014 by more than 70%. So due to falling crude oil prices less drilling will take place in 2019 thereby resulting in decline in US oil production and eventually decline in associated gas production also. 2018 stands already as the best year for global oil and gas exploration since 2015. Guyana, Russia and the United States top the list with major Natural gas prices could rise further discoveries. Natural gas historically has been very cheap as a byproduct of oil. Later, with growing usage of Natural gas and falling production of oil it has become a commodity produced for its own merits and priced accordingly. However, since shell oil revolution it was downgraded back to a byproduct. Oil producers have to sell it to avoid flaring which is limited by environmental concerns. This discourages production and depresses storage. As a result storage is rather tight and even moderate weather fluctuations can cause elevated price swings as seen recently. The US National Weather Service forecasts regarding temperatures need to be keenly watched as frigid weather especially in the U.S. East Coast and strong cold blast in the central United States, including areas of Texas and the South assisted the prices higher. 20 in 2019 due to the rise in natural gas exports and a rise in domestic natural gas consumption in US as weather related demand will be the key prices driver. Natural gas prices can face resistance near $6 in NYMEX and 450 in MCX. While key support is near 170 in MCX and $2.6 in NYMEX.
Ratio, Spread & Rig Count COMMODITY OUTLOOK 2019 Brent-WTI Crude Oil Spread MCX Lead & Zinc Spread 24 30.00 20.00 19 10.00 0.00 14-10.00-20.00 9-30.00-40.00 4-50.00-60.00-1 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18-70.00 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 NYMEX Crude Oil - Natural Gas Ratio US Natural Gas Rig Count 35.00 Rigs 500 450 30.00 400 350 25.00 300 250 20.00 200 15.00 150 100 10.00 50 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 Nov-18 Sep-18 Jul-18 May-18 Mar-18 Jan-18 Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 Nov-16 Sep-16 Jul-16 May-16 Mar-16 Jan-16 Nov-15 Sep-15 Jul-15 May-15 Mar-15 Jan-15 Nov-14 Sep-14 Jul-14 May-14 Mar-14 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 21
COPPER COMMODITY OUTLOOK 2019 RANGE MCX : 370-520 ( per kg) LME : 5500-7200 ($ per tonne) Factors to watch: Ÿ Global copper demand supply pattern Ÿ LME Stock positions and cancelled warrants Ÿ US and China trade war concern Ÿ China housing sector and PMI data Ÿ Performance of global equities markets Ÿ Labour actions and strike concerns in mines 550 500 450 400 350 300 250 200 150 100 Yearly price movement of Copper futures (MCX) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The year 2018 will be known for the Trade war between US and China and one of the major victims of this tension is base metals counter, which saw sharp downfall for the same reason amid slowdown issues in China and other countries. Red metal Copper often viewed as leading indicator of economic health failed to continue its good recovery in the year 2018 as trade war concerns between US and China kept the prices under in range. Dwindling Chinese growth, rise in production and Italy budgetary concerns also impacted the global demand of red metal. Moreover emerging market weakness, US dollar index strength, coupled with lack of labor strikes and low disruption rate has kept the upside capped in copper. As regards price movements, copper dipped lower in first two quarters of 2018 as sharp slump in the global stock markets amid rise in dollar index and rising yields kept the prices under pressure. Prices recovered in third quarter as supply concerns rose amid strike in Lumina Copper's Caserones mine in Chile and as Beijing vowed to pursue a more 'vigorous' fiscal policy, including cutting taxes, as authorities stepped up efforts to support growth amid rising economic headwinds. But it failed to hold on to the gains above 450 and again tumbled below 412 in last quarter of 2018 on escalating US and China trade war concerns and China slowdown concerns. Copper stockpiles in LME have been steadily falling since March 2018 but its prices did not get enough support from declining stocks. Stocks started the year 2018 at 550,000 tonnes in LME, peaked at just over 900,000 tonnes at the end of March 2018 and have since been falling, reaching 462,000 tonnes in December 2018. Copper held in the warehouses of the major metal-trading markets in the U.S, Britain and China has been disappearing much faster than it could be consumed. In 2019, there is still optimism about global copper demand as the copper intensity of ex-china growth moving higher, and the Electric Vehicles and electrification trend may remain strong. According to the International Copper Study Group, world mine production is expected to grow by 2.5% in 2018. In 2019, copper prices may be driven mainly by the impact of policy-driven scrap shortages in China, which in turn may lead to scrap-to-refined substitution and strong refined apparent demand of copper. Sustained growth in copper demand is expected to continue because copper is essential to economic activity and even more so to the modern technological society. On positive side, infrastructural development in major countries such as China and India will continue to sustain growth in copper demand. India has the potential to boost consumption of copper as its economy expands over the next two decades and more people flock to its cities. India is also expected to benefit from the electric vehicle. Overall prices can continue its recovery in 2019 on increasing usage of the metal in electric vehicles, solar and wind power sectors. According to International copper study group World mine production is estimated to have increased by about 3% in the first eight month of 2018, with concentrate production rising by 3% and solvent extraction-electrowinning (SX-EW) by 3.8%. World refined copper balance for the first eight months of 2018 indicates a deficit of about 260,000 tonnes. In the first eight months of 2018, the world refined copper balance adjusted for changes in Chinese bonded stocks indicated a market deficit of around 300,000 tonnes. Meanwhile strike concerns can impact the prices in the 2019 as workers can hold strikes in mines to get better share of profits in form of wage hikes. Workers for Unionized workers at Codelco's Chuquicamata copper mine in Chile threatened to go on strike in August of 2018 thereby supporting prices higher. In 2019 also any strike concerns in key mines like Escondida copper mine in the Atacama Desert in Northern Chile and Collahuasi copper mine can boost the red metal higher. Copper treatment and refining charges (TC/RCs) trend will give further direction to the prices in 2019. Chinese copper smelter Jiangxi Copper and miner Antofagasta have agreed 2019 copper treatment and refining charges (TC/RCs) at $80.80 a tonne. Miners pay the TC/RCs to smelters to process their concentrate into refined metal, offsetting what the smelters pay the miners for the concentrate. TC/RCs typically fall when concentrate supply declines or smelting capacity rises, with the level agreed playing a large role in the profitability of both sides. US and China trade relations, India growth story, monetary policies, inventories, currency play, economic health of EU and US elections in 2020 will keep the prices volatile. Copper prices may find support near 370 in MCX while 520 will act as a resistance. In LME, prices can get support near $5500 while $7200 can act as a resistance. 22
NICKEL COMMODITY OUTLOOK 2019 RANGE MCX LME : 550-1250 ( per kg) : 9500-15800 ($ per tonne) 2500 2300 2100 Yearly price movement of Nickel futures (MCX) Factors to watch: Ÿ Global Nickel demand supply pattern Ÿ LME Stock positions and cancelled warrants Ÿ US and China trade war concerns Ÿ Chinese demand and growing usage Ÿ Mining activity in Philippines,Indonesia and China Ÿ Nickel pig iron production and Stainless steel demand 1900 1700 1500 1300 1100 900 700 500 300 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Nickel the key ingredient of steel ended on mixed note in 2018. In first two quarters prices saw massive jump while in the last two quarter prices nosedived on trade war issue. Its prices surged higher in first half of 2018 due the expectations that market deficits will widen in the future and supported by stainless steel demand growth that exceeded 9 percent in the first half of 2018. But its prices nosedived sharply lower in second half of 2018 amid fall in steel prices and restart of closed mines kept the prices under pressure amid trade war which started from the month of June. Meanwhile, the two world's biggest economies, the United States and China, are locked in a trade war which is threatening to slow global growth and battering investor sentiment. If any tensions increase after 90 days truce then we may see further pressure on nickel prices. Nickel, which is primarily used for the production of stainless steel, is already one of the world s most important metal markets at over $20 billion in size. As regards production datas; according to International Nickel study group (INSG) Nickel pig iron (NPI) production in China recovered in 2017 and is projected to increase further in 2018 and 2019. In Indonesia, NPI production increased in 2018 and is also expected to grow in 2019, due to the ramp up of new projects. The Filipino government announced in August 2018 that 23 of 27 mines reviewed for compliance with state regulations will continue to operate. World primary nickel production was 2.070 million tonnes in 2017 and is projected to increase to 2.204 million tonnes in 2018 and to 2.389 million tonnes in 2019. There is a degree of uncertainty in these figures, especially with regard to Chinese and Indonesian NPI production. World primary nickel usage was 2.184 million tonnes in 2017. The INSG forecasts an increase to 2.350 million tonnes in 2018 and to 2.422 million tonnes in 2019. Going forward in 2019, China can relax its credit policies and introduce measures to stimulate growth that would underpin steel demand which support the prices of Nickel. Supply disruptions at Eramet s mines in New Caledonia and China s planned pollution controls in 40 cities, coupled with slow output growth in Indonesia, could also support a recovery in nickel prices in 2019. Slower production increases in leading supplier Indonesia and continued growth in stainless steel demand are forecast to extend a supply shortage in the global nickel market, supporting price gains through 2019. Nickel-containing batteries production, notably for electric vehicles, has increased and this trend is expected to continue resulting in positive effects on nickel usage in 2019. The projected growth in EV battery demand will support Nickel as it is used in Lithuim ion battery along with cobalt. Moreover nickel prices will get affected by crackdown by Chinese and Indonesian environmental regulators in several key nickel producing regions. Vale Indonesia is working on obtaining environmental permits for the proposed 40,000-tonne smelter which will process ore extracted using high-pressure acid leaching (HPAL) in 2019. The Philippines environment ministry stated that nine suspended mines will be allowed to resume operations in 2019 if they rectify previous violations of environmental regulations, a move that could boost nickel output in the major supplier of the metal. Any re-opening of the nine mines - six of which are nickel - could improve the nation s output of ore going forward, after the disruptions caused by the crackdown that began in 2016. Several global metals producers have set their sights on Indonesia s nickel reserves to tap an expected surge in demand for the metal for electric vehicle batteries. Major nickel producers are taking a closer look at Indonesia whose large nickel laterite ore reserves are already prized for nickel pig iron used in stainless steel production. Indonesia s nickel ore has largely been overlooked by battery producers, as extracting the high purity nickel they need from it requires plants that are more costly and difficult to operate than conventional nickel smelters. Electric Vehicles market could represent growth opportunities in Indonesia and attract interest from Chinese battery makers. Usage of nickel in global stainless steel will influence its prices in 2019. In terms of global Nickel prices have key resistance of nickel use in stainless steel production; the nickel in scrap component will climb from 904,000 tonnes in 1250 in MCX and $15800 in LME while 2017 to 945,000 tonnes this year and perhaps 983,000 tonnes in 2019. 550 are the key support in MCX and The share of the battery sector, which is putting nickel on a new journey given the growing popularity of electric vehicles, is increasing each year. Nickel is a vital ingredient for the lithium-ion batteries used to power electric vehicles, where demand is set to accelerate over coming years. $9500 in LME. 23
ZINC COMMODITY OUTLOOK 2019 RANGE MCX : 140-240 ( per kg) LME : 2000-3600 ($ per tonne) Factors to watch: Ÿ Global Zinc demand supply pattern Ÿ LME Stock positions and cancelled warrants Ÿ News related to mine closure and restart of closed mines Ÿ Global galvanizing demand and steel prices Ÿ Inventories in Shanghai Futures Exchange warehouses Ÿ Treatment and refining charges 290 240 190 140 90 40 Yearly price movement of Zinc futures (MCX) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Zinc, the galvanizing metal witnessed sharp rally in 2016 and 2017 peaked in first quarter of 2018. In the first quarter of 2018 prices hit high of above 232 in MCX but fell lower in rest of the quarters as it failed to hold on to its gains amid trade war concerns and declining stainless steel prices. Some key upside factors like improved demand amid strict supply as China's crackdown on pollution could hurt the smaller zinc miners supported the prices. The report that top Chinese smelters planned to cut output by 10 percent to address low prices and treatment charges of the metal used to galvanise steel also supported the sentiments. Global crude steel output, a gauge of economic health, rose 4.6 percent in the first half of 2018 versus the same period in 2017, also supported the prices. On the downside the prices remained under pressure on back of overhang of huge jump in inventories in Shanghai Futures Exchange warehouses in 2018. Zinc was also pressured by a slide in Chinese steel futures China's output-cut plan stated that the environment ministry may allow Northern provinces to set their own production curbs over winter. New Century Resources entered into a $40 million debt facility with NAB for expansion funding of its Century zinc mine, 250km northwest of Mt Isa, Queensland. Going forward in 2019, stringent pollution norms in China will continue to support the zinc prices China s Hebei province, the country's biggest steel producer, will force all its mills to comply with strict new emissions standards by 2020 as part of its campaign against air pollution. The provincial environmental protection agency stated that newly built steel producers will be forced to comply with "ultra-low" emissions restrictions starting from 2019, while existing firms will be given until October 2020 to meet the new standards. According to ILZSG, the global market for refined zinc metal was in deficit by 305 000 tonnes over the first nine months of 2018 with total reported inventories decreasing by 64000 tonnes over the same period. World zinc mine production rose by 1.2%, mainly influenced by increases in Australia, Peru and the United States. Meanwhile, global zinc usage fell 0.3%, primarily due to decreases in China, South Africa and Taiwan. European usage increased 1.3%, led by upticks in Poland, France, Belgium and the Russian Federation. Lower processing capacity in China has exacerbated an existing shortage of refined metal - reflected in the lowest zinc stocks in a decade at exchanges in London and Shanghai - along with production issues at plants elsewhere in Asia. These includes lower production by Hindustan Zinc Ltd last quarter, job cuts and the suspension of a plant in Australia, and a potential environmental-related shutdown at a plant in South Korea. It is estimated that mined zinc capacity outside China will increase by 700,000 tonnes in 2019, with Gamsberg, the Century Zinc mine and the Lady Loretta mine acting as major contributors. China s zinc output is set to expand by 150,000 tonnes, citing increased output from Hunan, Yunnan province. This increased supply from mines may cap the upside zinc prices in 2019. Zinc, the fourth most mined metal in the world, has seen its demand steadily increase for decades. The metal is primarily used to galvanize steel, but its use in agriculture as a fertilizer to increase the productivity of soil has increased markedly in recent years. As more people consume greater quantities of resources every year, the search for profitable zinc mines will intensify in 2019. With consumers in India and China buying more cars that use rustproof galvanized steel, which is made using zinc its demand could continue to outstrip supply in 2019. Supply concerns due to cut in production in China, US and China trade war and their policies will guide its movement in 2019. The new Indian government focuses on economic growth, which will in turn help the country's zinc demand surpass global and Chinese growth rates by 2020. Treatment charges have also surged on rapidly rising mine supplies in Australia and South Africa, which had been lured onto the market by the strong zinc prices that prevailed through 2017 and into early 2018, when prices hit a 10-year peak near $3 600 in LME. This higher treatment charges indicates the extent of the backlog at smelters in China. So going forward in 2019 the treatment charges will also influence zinc prices as higher treatment charges are positive for zinc prices. In 2019, Zinc will face key support of $2000 at LME and 140 in MCX while key resistance will be $3600 in LME and 240 in MCX. 24
LEAD COMMODITY OUTLOOK 2019 RANGE MCX LME : 110-190 ( per kg) : 1700-2800 ($ per tonne) 190 170 Yearly price movement of Lead futures (MCX) Factors to watch: Ÿ Global Lead demand supply pattern Ÿ Labour action in Lead mines Ÿ Global battery demand from electric vehicles Ÿ LME Stock positions and cancelled warrants Ÿ News related to mine closure and restart of old mines 150 130 110 90 70 50 30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The battery metal Lead failed to hold on to its gains of 2016 and 2017 as trade war concerns and ample supply kept the prices under pressure. Lead prices made high of above 170 in first half of 2018 but fell below 135 in second half of 2018 in MCX. In the first half of 2018, expectations of seasonally strong battery demand and the likelihood of shortages over the winter months spurred investor buying in the metal. The severe cold snap in the US refocused interest in lead. Plunging temperatures raised the prospect of a surge in car battery failures leading to a spike in replacement battery demand. China accounts for about 40 percent of global lead demand estimated at around 12 million tonnes in 2018. More than 80 percent of global lead consumption is for batteries mainly for autos. Global battery demand will continue to give direction in 2019 as batteries are widely used for purposes such as energy storage, powering electronics, and as a source of power back-up in industries such as oil and gas, railways, mining, automotive, manufacturing, and healthcare, education, retail, and pharmaceuticals. Globally, 85% of lead is primarily utilized in batteries for passenger cars, trucks, motorcycles, and solar power storage. Demand for passenger vehicles has increased considerably and is anticipated to rise further in the near future. This, in turn, is creating high demand for lead acid batteries. The use of electric power in vehicles is increasing due to the production of new hybrid and electric vehicles across the globe. Also, government initiatives (such as subsidies for electric vehicles in countries such as the US, Japan, and China) undertaken for encouraging eco-friendly transportation due to growing awareness about environmental protection among people is driving the demand for batteries in vehicles. In the first half of 2019, top consumer China can see environmental crackdown on polluting industries thereby affecting lead supply. Physical availability in China is being disrupted by Beijing's rolling environmental inspections on the secondary lead processing sector. Smelters producing refined metal from scrap have been closed in Guizhou, Jiangxi and Guangdong provinces in 2018. Lead prices can be fuelled by worries about shortages in China due to rolling environmental inspections on the secondary lead processing sector that can result in some smelter closures in 2019. On the demand side, according to the ILZSG the global demand for refined lead metal is forecasted to rise by 0.2% to 11.71 million tonnes in 2018 and 0.7% to 11.79 million tonnes in 2019. In 2018, nevertheless Chinese apparent usage is expected to fall by 0.6%. A further 1.3% fall in apparent usage in China is anticipated in 2019. European usage is forecast to increase by 1.4% in 2018 and 1.8% in 2019. In the United States, a reduction of 0.6% in 2018 followed by a 2.5% rise in 2019 is anticipated. On the supply side, ILZSG estimates that world lead mine supply to fall by 0.4% to 4.58 million tonnes in 2018, and then to increase by 4.1% to 4.77 million tonnes in 2019. In 2018, lower output of lead concentrates in Australia, China, Kazakhstan and the United States is expected to balance increases in Cuba and India. Some of the new mining projects coming on-stream, including Coeur Mining's Silvertip mine in Canada and Vedanta's Gamsberg operation in South Africa, are not scheduled to be commissioned until the third and fourth quarters of 2018 and will therefore have a greater impact on 2019 output. Production in 2019 will benefit from higher output in Europe and the United States where output is forecast to grow by 3.9% and 2.4% respectively. Refined lead supply in Australia, China, India and the Republic of Korea is also expected to increase. In 2019 'electric vehicle fever' in India can be supportive for lead prices. The global electric bikes market growth is driven by government support and stern rules in favor of electric bikes coupled with growing consumer inclination toward use of e-bikes as an eco-friendly and efficient solution for commute and increasing fuel costs. On the flip side, a constant fluctuation in the prices of the raw material used, coupled with growing penetration of the lithium-ion batteries, is expected to be a major challenge for the lead-acid battery industry in 2019. Downside risks in 2019 include slower-thananticipated demand from China and greater-than-expected production including the restart of idled capacity and an easing of production restrictions in China. Lead has a key support of 110 in MCX Zinc and Lead spread: Zinc and Lead spread indicates the relative performance between the two metals. and $1700 in LME and key resistance Zinc rallied at faster pace till Feb. 2018 as zinc lead spread tested 63 but thereafter lead rallied more swiftly of 190 in MCX and $2800 in LME. than zinc as the spread narrowed down to below 32 in Aug 2018.It again recovered in last quarter of 2018 to above 52. This spread can move in range of 30-65 in 2019. 25
ALUMINIUM COMMODITY OUTLOOK 2019 RANGE MCX LME : 100-200 ( per kg) : 1700-2600 ($ per tonne) 190 170 Yearly price movement of Aluminium futures (MCX) Factors to watch: Ÿ US and China trade war concern Ÿ Global aluminum demand supply pattern Ÿ LME Stock positions and cancelled warrants Ÿ Global auto sales figures and movement of crude oil Ÿ Demand from packaging, aerospace, automobiles, construction and power Ÿ Chinese alumina production and strike concerns in key mines 150 130 110 90 70 50 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 The trading pattern of aluminum was same as other metals in the base metals complex. In 2018, it saw decline after two year of strong rise. Its prices started the first quarter of 2018 on slightly weaker note but rallied higher in second quarter of 2018 and gained higher towards 178 in April 2018 due to US sanctions on Rusal. Aluminum prices rocketed sharply higher in April 2018 on concerns that sanctions by the United States on aluminum giant Rusal could hamper trade in some seven percent of the world's annual supply of the metal. Rusal s annual alumina production of 11.5 million tonnes was also about 7 percent of the global total. In April 2018 United States imposed sanctions against Russian businessmen, companies and government officials, striking at associates of President Vladimir Putin in one of Washington's most aggressive moves to punish Moscow for a range of activities. US imposed a 10 percent tariff on aluminium imports, including from China as U.S. President Donald Trump sought to protect U.S. metal makers. The US levied tariffs on imports of steel and aluminium from the EU, Canada and Mexico in a move set to provoke retaliation and take the Trump administration further down the path of a trade war with some of the US s longest standing allies. During the second half of 2018 prices dipped below 135 in MCX as Aluminium premiums across Europe, Asia and the United States were broadly lower with the backwardation in forward spreads on the London Metal Exchange putting significant pressure on the market. Aluminium premiums in Rotterdam were at their lowest levels in 2018 due to the persistent backwardation in LME forward spreads. China will continue to be prime driver of Aluminium prices in 2019 as China has become the world s largest producer of aluminium. China imports of U.S. aluminum scrap are falling following the trade war between the two countries, generating speculation that more U.S. scrap would be sold in Europe. China's imports of aluminum scrap are also being reduced because of the impact of its new environmental protection control standards which took effect in March 2018. Strike concerns in key mines will support the prices in 2019. The Chinese market filled gaps in the market in 2018 when Alcoa workers went on strike at its refineries in Western Australia throughout the summer months. A drop in demand for alumina and supply from new projects coming on stream in 2019 will put Chinese alumina prices under pressure in 2019. Multiple factors including the suspension and relocation of operations, over-winter production cuts will lead to reduced production of aluminium in China in 2019. At the same time, Chinese alumina producers are bringing new alumina operations on stream at home and abroad. China s winter cuts policy, which requires aluminium plants to reduce output during the country s heating season from mid-november 2018 to mid-march 2019 will result in reduced output throughout the first quarter of 2019. Global demand for primary and recycled aluminium is being fuelled by the trend towards lightweight construction in the automotive industry. Global demand for aluminum is set to increase in 2019. Aluminum market is projected to grow significantly on account of increasing demand from major end uses such as transportation, building & construction, and industrial machinery. The primary factors driving growth of the market are the rising use of the light weight vehicles and ever increasing demand of the product from construction industry. The construction industry is expected to grow due to better lifestyle and increase in disposable incomes of the population of both developed and developing economies. The packaging industry is also one of the major end-users of the aluminum market and it is expected that this industry will grow significantly. China s exports of aluminium in all forms grew by 21 percent to 5.3 million tonnes in the first 11 months of 2018.The trade war concerns between China and US will be in limelight in 2019. After 90 days of truce after G20 meeting, how the two countries will manage the trade is really important. As of now they are working cordial way, China reduced import duty on imported cars and placed consignment for soyabean. Moreover, US extended its deadline for winding up contracts with Rusal, which accounts for about 7% of the world s alumina supply, again to January 27, 2019 having originally imposed sanctions on the Russian producer in April 2018. Lower level buying should be a good strategy in aluminum for the upside target of 170. 26 Aluminum prices is expected to take key support near 100 in MCX and $1700 in LME and resistance will be 200 in MCX and $2600 in LME in 2019.
SOYBEAN COMMODITY OUTLOOK 2019 RANGE NCDEX : 3000-4200 ( per quintal) CBOT : 8-10.50 ($ per bushel) Factors to watch: Ÿ Hopes on the higher oil meal demand from countries such as China and Iran Ÿ U.S-China talks to end the trade war in 2019 Ÿ Ÿ Ÿ Ÿ Rupee factor impacting the competitiveness of Indian oil meal in the international market Rebounding production of oilseeds Sowing intentions of soybean in Kharif season Impact of monsoon on the domestic crop 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 Yearly price movement of Soybean futures 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Soybean took a great start by rising from the lows of 3047 to 3880 in just a span of two months. This bullishness was seen mainly due to shrinking supplies, topped up by the import duty hike in crude and refined soy oil with export sops for soymeal. The increase in the export incentive from 5% to 7% enhanced the crushing operations & played a significant role in boosting soymeal exports mainly to European countries. The government also raised import duty on soybean to 45% from 30%. Worries over a likely fall in production & lower stocks in the country added fuel to the prices. The government estimated India s soybean production at 109.81 lakh tons during 2017-18 (Oct-Sep), as against 131.59 lakh tons a year ago, while the Soybean Processors' Association of India also lowered the country's soybean output estimate for 2017-18 (Oct-Sep) to 83.50 lakh tons from 91.50 lakh tons pegged earlier. Soybean on CBOT coming out of the 2017 consolidation zone to make a high of $10.71 a bushel & being able to cross the key resistance of $9.83 levels was a major factor behind this rally. But then all gains started to reverse when U.S & China declared Trade War. The first heat of the combat was felt in the agri space in April when China said it will levy an additional 25% tariff on imports of 106 U.S. products including soybeans. With no respite, an one sided fall was witnessed in U.S soybean from $10.26 to $8.58 a bushel after U.S. announced tariffs on $50 billion of imports from China, with Trump threatening more if China retaliates. Taking negative cues from the international market, domestic soybean also followed the bearish path, plunged by nearly 19% from yearly high of 3894 & stabilized near in the range of 3150-3200, well below the MSP. Despite of the negative factors, soybean giving positive returns on back of higher oilmeal exports, riding on rupee making all time low against dollar induced the farmers to shift from pulses and cotton, mainly in parts of Madhya Pradesh and Maharashtra. Farmers planted more soybeans in 2018-19 due to an increase in minimum support prices of the commodity and assurance from the government of higher procurement. The Centre fixed minimum support price of soybean at Rs.3,399 per 100 kg for marketing year that started on Oct 1, up from Rs.3,050 per quintal last year. The Soybean Processors Association of India (SOPA), in its first survey of soybean crop for the season of 2018-19, has estimated total production of soybean crop for all India for the year 2018 is 114.83 lakh tons, which is higher by 31.33 lakh tons as compared to Kharif 2017. Even the first advance estimates of production for 2018-19 pegged soybean production at 134.59 lakh tons against 109.81 lakh tons in 2017-18. The reason for higher output is being attributed to the market participants, including farmers since they saw the U.S-China trade war as an opportunity, opening up Chinese market for India taking advantage of geographical proximity. In this regard, recently, many soybean processing plants in India were inspected by concerned authorities such as the Export Inspection Council India, for preparedness to avail export opportunities to China. To understand the impact of oil meal exports on the sowing intentions of soybean, one must know that the real money lays in crushing where 80-82% is from de-oiled cake and extractions, also called meal, the balance is 18-20% oil content. During the oil year 2018-19 (Oct-Sep) the exporters are pinning hopes on the demand from countries such as China and Iran in the current oil year 2018-19 even as production of the oilseed in the current kharif season is seen rebounding this year. The future direction of export sales will depend more on local demand and the competitiveness of Indian oilmeals in the international markets. Overall, the total supply is expected to be 111.83 lakh tons (including carryover of 1.50 lakh tons & 2 lakh tons of import), while 104.300 lakh tons would be available for crushing, direct use and exports. Coming to forecasting yearly trend of U.S soybean, everything will depend on U.S-China talks to end the trade war in 2019. If the peace flag is waved, then there will be a lot of room for soybean prices to run up. Without it, farmers would opt for more corn and wheat acres owing to gloomy picture of soymeal exports to China. 28 In the present scenario & looking at the forward curve, U.S soybean will possibly get stuck in the range of $8-10.50 a bushel and won t be able to recover the previous year losses. Analyzing the fundamentals & staying optimistic over the outlook of India exporting oilmeals to China & Iran in 2019, soybean futures on the domestic bourse is looking bullish to test 3900-4200 taking support in the range of 3000-3100 levels.
EDIBLE OILS COMMODITY OUTLOOK 2019 RANGE Ref. soy : 680-800 ( per 20kg) CBOT : 22-35 (cent per pound) CPO : 470-600 ( per 20kg) BMD : 1940-2700 (MYR per ton) Factors to watch: Ÿ Import duties of domestic edible oils Ÿ Rupee making imports cheaper or costlier Ÿ Expectation of higher domestic consumption of edible oils Ÿ Steps to be taken by Malaysia to reduce the burden of palm oil stockpiles Ÿ Trade talks between U.S-China impacting U.S soy oil Ÿ Focus would be on the planting intentions of soybean in U.S Ÿ Higher ending stocks of U.S soy oil in 2018/19 800 700 600 500 400 300 200 100 Yearly price movement of Ref. soy oil & CPO futures 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CPO Ref. soy oil Historically, refined soy oil & crude palm oil have always shown same trend over the years. The edible oils on CBOT & BMD showed a similar price pattern and ended their bearish ride down nearly 14%. By end of the year, the factors of rising production in Malaysia & 18 year high inventories at 3 million tons pushed down palm oil prices to two year low of 1940 ringgit on BMD & yearly low of 483.40 on MCX. US soybean oil futures fell to near three-year low of 26.88 cents per pound as it got caught up in the U.S.-China trade tensions. However, it was not the same on the domestic bourses as last year it was completely a new occurrence with soy oil giving a positive return of 2% & CPO a negative of 7%. Rupee declining to all time low against dollar & lower domestic soybean production acted a catalyst & fueled the edible oil prices in the Indian markets as well. Due to these diverse fundamentals in the international market, at home, the spread gap between palm oil and its main competitor soybean oil widened from almost doubled from Rs.100 to 200 per 20kg during the second half of the year. However, imposition of higher import tax moderated inflow for veg oil imports from overseas & kept the downside limited. In the oil year 2017-18 (Nov-Oct), import of refined edible oil fell sharply to 2.14 million tons from 2.87 million tons a year ago, imports of crude edible oil were reported at 12.38 million tons, compared with 12.21 million tons the previous year, palm oil imports plunged to 8.70 million tons from 9.29 million tons the previous year, while soft oil imports rose to 5.82 million tons from 5.78 million tons. As of Nov 1, India had 8,95,000 tons of edible oil lying at ports, with another 1.43 million tons in the pipeline. Going ahead, the major trigger for palm oil isthe cut in import duty by India as per the norms of the Malaysia India Comprehensive Economic Cooperation Agreement (MICECA) in October 2010& its impact on imports. According to MICECA, the threshold limit import duty of crude palm oil (CPO) and refined edible oil, would not be more than 40% cent and 45% respectively.the provisions of this agreement are effective from January 1, 2019. Abiding the norms, India lowered the duty on crude palm oil imports to 40 per cent from 44 per cent, while a tax on refined oils was cut to 50 per cent from 54 per cent. This move would definitely make India a dumping ground as Malaysia & Indonesia are sitting on a massive stockpile of nearly 8 million tons. The impact of huge imports would definitely give negative cues to the domestic palm oil prices. But along with this the currency movement of Malaysian ringgit & Indian rupee together should also be taken into account as it makes imports cheaper or costlier. In 2018-19 (Nov-Oct), India s total supply of soybean oil is being estimated at 5.262 million tons including 3.40 million tons of imports & 1.692 of domestic output against the consumption of 4.95 million tons, leaving behind a surplus of 3,07,000 tons. Similarly, total supply of palm oil in India during 2018-19 is expected to be 10.918 million tons as compared to 9.298 million tons in 2017-18. The domestic consumption is likely to be higher at 10.60 million tons and hence the closing stock would be 3,18,000 tons, similar to last year. Taking a look of the U.S soy oil demand-supply scenario, the focus would be on the planting intentions of soybean during the ongoing trade-war & accordingly demand from the crushers. USDA estimates show that the ending stocks in 2018/19 will be 8,69,000 tons, lower by 4% as compared to 2017/18. Despite of a higher conversion of soybean to soy oil, the industrial and domestic consumption may see a rise. This disequilibrium shall give soy oil futures support near 25 cents per pound. On the contrary, bearish oil prices coupled with expectation of a next level trade war to continue in 2019, if not settled on March 1 might keep the counter below 35 cents per pound. Palm oil prices on the Bursa Malaysia Derivatives may witness recovery towards 2400-2700 MYR/ton taking support near 1940 levels. The move towards B10 palm biodiesel will also help reduce stock levels and support palm oil prices. Exports are also expected to rise next year as markets open in other countries in Southeast Asia, Africa and central and Eastern Europe. The major event Palm and Lauric Oils Price Outlook Conference & Exhibition 2019 (POC2019) to be held annually in Kuala Lumpur, Malaysia from 4 to 6 March 2019 will give further direction to the prices. Analyzing closely, the edible oil prices in the domestic market will get more influenced by the macro economic factors such as import tariff, volatility in rupee against dollar, outcomes from trade talks between U.S-China & Dollar Index apart from its seasonality. The chances of El-nino s occurrence affecting the monsoon & domestic oilseed production may also give positive cues to the counters. Production of domestic edible oils has not kept pace with the growing demand, necessitating huge imports. Rising population and income levels are fuelling the demand for edible oil in India. The current annual vegoil requirement is about 23 mt. The increase in the demand estimates by the Ministry assumes a per capita consumption of about 22 kg by 2022 from the level of 19 kg per person per annum during 2015-16. To meet this, the government of India has set an ambitious target to raise edible oilseed production by nearly 20% to 45 million tonnes to reduce India s reliance by 15% of its increased import of 32 million tonnes by 2022. Taking into all the above mentioned factors, a smart recovery towards 600 can be seen in CPO futures, taking support near 470 levels. While, soy oil on the national bourse is expected to trade on a positive note in the range of 680-800 levels. 29
MUSTARD COMMODITY OUTLOOK 2019 RANGE NCDEX : 3600-4650 ( per quintal) 5800 5300 Yearly price movement of Mustard futures Factors to watch: Ÿ Estimates of higher production this season Ÿ Expectations of India exporting mustard meal to China Ÿ Elevated inventories of palm oil, giving this oilseed a stiff competition Ÿ Nafed auction Ÿ Stiff competition from palm oil, especially after customs duty cut on the edible oils. Ÿ Seasonal demand 4800 4300 3800 3300 2800 2300 1800 1300 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 A steady year with a decent return of 14% from low of 3727 to high of 4262 for mustard futures is attributed to drop in output during 2017/18 crop year due to absence of requisite soil moisture in key producing regions because of below-normal monsoon rains. Also, growers shifted from mustard to chana & wheat, lured by better returns. Acreage of mustard seed in Rajasthan had declined to 2.09 million hectares in 2017-18 compared with 2.56 million hectares a year ago. Following the estimates of lower output & news of procurement of 500,000 tons of mustard from Rajasthan by NAFED for the 2018-19, mustard futures started the year on a positive note, taking support near 3795. However, by end of March, mustard prices entered its correction phase due to lower crushing along with turned around fundamentals of higher crop. Production of mustard in India in 2017-18 (Jul-Jun) was estimated at 7.2 million tons, up from 6.9 million tons the previous year, according to a joint survey by the Central Organisation for Oil Industry and Trade, and the Mustard Oil Producers Association. Seeing the prices falling below the MSP of Rs.4,000 per quintal, HAFED decided to procure 237,250 tons of fair average quality (FAQ) mustard seed at minimum support price. The Centre also approved the procurement of 800,000 tons mustard in Rajasthan. But this happiness was short lived because the by end of April prices crashed to yearly low on tepid purchases from oil millers and rising arrivals of fresh crop in spot markets. In the second quarter of the year, starting from May till July, prices bounced back to 4240, when the export demand for meal came to rescue, supported by rupee making all-time lows against dollar. But in August, the Government decision on selling mustard seed stocks to maintain adequate supplies in local mandies, became a deterrent factor. Since then, this oil seed struggled to hold the upside & 4200 level became a strong resistance for mustard futures. Even China lifting of ban to import rapeseed meal from India after a gap of six years couldn t be a catalyst to push up the prices. This euphoria fizzled out due to China very strict norms, which was right to destroy or return the shipments carrying mustard meal from India, if it failed to comply with quality requirement. Amidst all, another factor that has made the market participants cautious is the cultivation for 2018-19 (Jul-Jun) season which has taken a great start. The latest statistic released by Agriculture Ministry show that the sowing area for Rabi season 2018-19 is still holding up with the planting on 59.556 lakh hectares as compared to 59.36 lakh hectares in 2017-18, getting attracted by higher MSP. The Centre has fixed the minimum support price for mustard at Rs.4,200 per 100 kg for 2018-19 compared with Rs.4,000 the previous year. The initial estimates forecast that production of mustard seed in the country in 2018-19 (Jul- Jun) is seen at 8.49 million tons, against 8.32 million tons the previous year. In days to come, the weather conditions in the month of January will hold the key to the crop's output size. A good crop will certainly dent market sentiment, while any losses occurrence amid adverse weather may provide bulls an edge. On the demand side, the major trigger would be China opening oilmeal import doors to India. Indian oilmeal exporters have still kept high hopes from the Chinese market. The SEA stated that indications were coming from Ministry of Commerce and Export Inspection Council of India that China will resume import of rapeseed meal from India. Those five units already approved by General Administration of Customs of the People s Republic of China, GACC (formerly AQSIQ) will able to resume the export of rapeseed meal to China once their registration with Chinese ministry of agriculture (MoA) is done. Apart from this, mustard will also face a stiff competition from palm oil. The stockpiles of palm oil are at the highest in at least 18 years at 3 million tons & if imports are higher, then it might reduce the demand for the mustard oil. The upside in mustard prices is also likely to remain capped due to NAFED consistent selling in the market & higher inventories of stocks still with farmers, processors and stockists at 1.1 million tons. For information, NAFED had procured 8.78 lakh tons of the commodity at various centers of Haryana and Rajasthan in the Rabi season 2017-18 at MSP under Price Stabilization Scheme (PSS) with prices ranging between Rs.3,851 and Rs.3,920 per quintal.. By the end of the year, NAFED had liquidated around 4.11 lakh MT, leaving a balance stock of 4.67 lakh MT. 30 Regarding price outlook, based on these fundamentals, the long term picture of mustard futures is looking bleak as it will possibly remain trapped in the consolidation zone of 3600-4650 levels.
CARDAMOM COMMODITY OUTLOOK 2019 RANGE MCX : 1100-2200 ( per kg) 2300 2100 Yearly price movement of Cardamom futures 1900 Factors to watch: Ÿ Prediction of evolving El Niño in 2019 Ÿ Negligible carryover stocks Ÿ Anticipation that there would be disequilibrium due to shortage of supply. Ÿ Behavior of the ensuing summer over the crop Ÿ Export commitments ahead of festival seasons Ÿ Export commitments ahead of festival seasons from the month of November to February 1700 1500 1300 1100 900 700 500 300 100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cardamom started its journey by opening near 1100 levels & posting decent gains in January. The buying support from domestic market as well as exporters, fear of depleting inventories of quality material in the upcountry markets with season s peak harvesting time getting over led to rise in prices. But the up move was short lived & prices plunged for 5 consecutive months & made low of 818.50, almost near to the cost of production of around Rs.800 per kg. This bearish trend evolved from the month of February following estimates of higher output due to good rains. Indian cardamom production in 2017-18 stood at around 30,000 tons against 17,990 tons in 2016-17. Tightening of checks on pesticide residue by Saudi Arabia took a toll over Indian small cardamom exports. However, from mid-june the price trend took a U-turn buoyed by the high-intensity southwest monsoon which created a wreaked havoc in the plantation sector of Kerala. In June itself, the state has received 497 mm of rainfall, 29% above the normal weighted average of 385.9 mm for the period, according to data from the weather department. It was reported that about 1,230 hectares of cardamom plantation witnessed damage & also fungal disease attacked the crop in the state of Kerala. It was then estimated that the production declined by nearly 40% on-year at 18,500 tons for 2018-19 (Jul-Jun). Despite of the peak harvesting season, prices of cardamom flared up because of lower output. Out of six rounds of piking, crop from two rounds were washed away out due to floods. A study carried out by the Indian Institute of Spices Research (IISR) reported that the production loss in cardamom was estimated at 6,600 tonnes valued at 679 crore. By September, the maximum price quoted at the auction at the Spices Park, Puttady, under the Spices Board of India crossed Rs.2,000 per kg. The memories of rocketing cardamom prices will always be engraved in the memories of the market participant s alongwith the bizarre scenarios of floods. The first ever highest rate recorded in the history of Cardamom market price at the auction held at Puttady Spices Park was set at Rs.2227 and average rate at Rs.1323. Taking positive cues from the spot markets, by the end of the year, cardamom futures on the national bourse made a high of 1550, giving a return of 89%, the highest among all the spices. Coming to this year, lot will depend on the arrival date of monsoon & its movement over the major growing regions. This season, the growers, stockiest, traders & the auctioneers will definitely be more cautious after getting hit by the rain havoc last year. But 2019 may be different as weather models are showing a prediction of evolving El Niño. In a press release in early December, the Indian Meteorological Department stated that the latest forecasts from global climate models indicate strong probability of weak El Niño conditions to develop during the winter season. For understanding, it is important to know that the monsoon is weaker than normal during the warm phase of ENSO (El Nino) while stronger than normal during the cold phase of the ENSO (La Nina). The intensity decides the amount of the impact. The pre-monsoon rainfall and temperature plays a pivotal role in the cardamom cultivation & on the yield of the crop. Cardamom needs periodic rains for growth of the plant during Jan-Jun, followed by good monsoon rains during the flowering and fruit formation stage till August. If El-Nino occurs then, prolonged dry spells and high temperatures in April-June though may damage plantations, leading to delayed harvesting and plucking and a potential crop loss. Last year, the flood conditions in major growing states have led to a condition of very negligible carryover stocks to the next season. The next crop can be expected only after June and that too depending on the behaviour of the ensuing summer. Year ahead, estimating a steady demand from the domestic as well as from the exporters, it is highly anticipated that there would be disequilibrium due to shortage of supply. This season, the stockiest might absorb whatever material will arrive at the market & buying spree will be seen amongst the exporters to fulfill their export commitments ahead of festival seasons from the month of November to February. It is closely observed from the since 2011, every alternate year, cardamom futures has given positive returns. The year 2011, 2013, 2015 & 2017 were a bearish, whereas 2012, 2014, 2016 & 2018 were years with positive return. This year, its going to be an exclusive year as the trend is bullish amidst estimates of crop shortage. Taking this opportunity & judging by the market conditions, lower level buying can be initiated in the range of 1100-1200, eyeing a target of 2000-2200 levels. 31
TURMERIC COMMODITY OUTLOOK 2019 RANGE NCDEX : 5800-8000 ( per quintal) 19000 17000 Yearly price movement of Turmeric futures Factors to watch: Ÿ Seasonal demand Ÿ Supply scenario, with the onset of harvesting season Ÿ Lower carryover stocks Ÿ Contango forward curve Ÿ Disequilibrium in the demand-supply figures. Ÿ Expectation of higher demand during festival & winter season 15000 13000 11000 9000 7000 5000 3000 1000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Last year, turmeric gave a negative return of 21% and was the only worst performer among the bouquet of spices. There was a one sided fall in the prices as it never looked back the yearly high of 7876 made in January, but rather saw a low of 5978. The softness in price was owing to improved prospects of output in Andhra Pradesh, Telangana and Maharashtra. The estimates showed that the supply side was heavier. The total supply in 2017-18 (Jul-Jun) was estimated at 6.62 lakh tons, comprised of 5.60 lakh tons of production and 1.02 lakh tons of beginning stocks, against the consumption of 5.30 lakh tons, leaving behind 1.32 lakh tons of carryover stocks. The fresh crop from the harvest of the nine-month crop, started to enter the market in mid-january. Since then there was pressure of arrivals and exports didn t pickup as per market expectations. The Nizamabad market set a new record with turmeric crop arrivals by receiving 10.60 lakh quintals, the highest feat of 85 years' history. The reason being, with the GST implementation, this year the difference in price at Sangli and Nizamabad was minimal due to which the market yard was receiving a high quantity of turmeric. On the demand side, this also happened for the first time that only one bag of turmeric was sold at the Erode Cooperative Marketing Society. The prices of the yellow spice also faced a tough time in Kerala because low-priced turmeric arrived from neighbouring States and was preferred by curry powder-making units resulting in poor demand for the high-range. Till the time of sowing in October for the next crop, the major cultivating areas had received sufficient rains. As a result, the trend for output seemed to be increasing. There was abundant availability of water sources at the disposal of the farmers to cultivate turmeric. The farmers switched from other non-lucrative crops such as maize in Erode and sugar in Maharashtra, and opted turmeric, which led to a further rise in acreage of the yellow spice. According to the Telangana state Agricultural University, the sowing has been completed in Telangana as on 26th September 2018, the area covered under turmeric was 47888 hectares as against 44956 hectares in the corresponding period of last year. Among major turmeric growing districts, Nizamabad has reported 13965 hectares acreage under turmeric as against 12800 hectares in last year. Jagtial has so far reported 13250 hectares as against 12378 hectares during last year and Warangal (Rural) has reported 5521 hectares of acreage compared to last year s 4250 hectares. The same in Andhra Pradesh was reported as 17914 hectares as compared to 14830 hectares in the corresponding period of last year. This year, the turmeric growers may get a reason to cheer as there might be disequilibrium in the demand-supply figures. For 2018-19, the beginning stocks is reported around 1.32 lakh tons and production is estimated at 4.76 lakh tons, bringing the total supply to 6.08 lakh tons. The domestic consumption and exports is likely to be 5.37 lakh tons. The point here to be noted is that the closing stock is only 0.71 lakh tons as compared to 1.32 lakh tons in 2017-18. The current market price is almost 2.5 times of its cost of production. According to an economic analysis of production and marketing of turmeric in Guntur district of Andhra Pradesh (Paladugu Praveen Kumar, Dr. Nahar Singh, Jayant Zechariah, Deepthi Patluri and Vidya Sagar M, 2018), the cost of production is Rs. 2621 per quintal Now coming to the seasonality, this current year new crop supply likely to enter from first week of February from Mysore region to Erode market, followed by Anthiyur, Bhavani, Gobi, Sathyamangalam, Thondamuthur, Kodumudi and Modakurichi regions respectively till June. The produce from all these regions during this period will give a supply pressure on the spot markets at Erode. The correction mode would continue till the month of August due to selling pressure from heavy arrivals and also market participant s trade on a cautious note as the sowing process begins. This period can be utilized for creating long positions taking advantage of lower level buying near the support zone. The past year records show that every year in the month of August, turmeric prices make a yearly low & thereafter starts to rally with the onset of festival & winter season. 32 Regarding price forecast, the forward curve is in contango, in other words the far month contract is quoting higher than the current month contract. This gives a picture that an upside momentum can be seen in turmeric futures may regain 8000-9000 levels, taking support near 5800 levels.
JEERA COMMODITY OUTLOOK 2019 RANGE NCDEX : 14000-22000 ( per quintal) 28000 Yearly price movement of Jeera futures Factors to watch: Ÿ Lower estimates of production & carryover stocks Ÿ Condition of the weather & its impact on the domestic crop during development stage Ÿ Weather condition when the crop will enter the development stage Ÿ The progress of monsoon and Syrian crop are also to be watched for Ÿ China s import would play an important role in deciding the price trend Ÿ Price tends to move upward from June, as the crop arrival season concludes in India 23000 18000 13000 8000 3000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 In the first quarter, jeera prices nosedived as it faced pressure of heavy arrivals during the harvest period which started around February-March. Also, tempted by the high prices in December and January, stockists sold four to seven year old stocks of jeera. The preliminary estimates showed that India's jeera output in 2017-18 (Oct-Sep) ranged from 275,000 tons to 450,000 tons, against 385,000-480,000 tons earlier, mainly driven by the rise in acreage in Gujarat and Rajasthan. But later, by mid-march the market participants started making downward revisions in estimated output to 357,500 tons on the back of adverse climate in producing states like Gujarat and Rajasthan during the fruit development stage of the spice in Feb-Mar. Talking about the demand side, at the time, when Indian prices were on a continuous decline exporters took full advantage of the situation and bought more and more from India. The countries such as China, Bangladesh, United Arab Emirates, US, Brazil, West Asia, Nepal, and Malaysia were the top importers of Indian jeera. Last year, there are good enquiries from China and they were buying whatever quantity is coming to the market. India's unprecedentedly dominated the international jeera market due to the political unrest in Syria and waning stocks in Turkey. Due to rains, Syrian crop of 20,000-25,000 tons had gone discolored, turned black & the oil content had gone away, leaving no buyers for the Syrian variety. Turkey had also produced 8,000 tons but rains have damaged 25% of the crop. The small surplus available with Turkey was too expensive to compete in the international market. Being in advantageous position, India exported 1.25 lakh tonnes so far this year and there is a possibility of it touching a record 1.75 lakh tonnes by the end of this fiscal. The highest export volume was recorded at 1.55 lakh tonnes in 2014. All the aforesaid factors pushed up the counter a U-turn from its low of 14010 & acted as a catalyst to make a yearly high of 21000. Now coming to this year, before finding answers to the most pertinent question, whether prices will again skyrocket or not, we need to analyze many factors ranging from past year monsoon, soil moisture, famers intention to sow other competitive crops & finally the figures of demand-supply. In 2018-19 season, it seems that the area under cultivation is likely to be lower, the reason being is that the major growing areas Saurashtra and Kutch received 34% lesser rains, while southwest monsoon rainfall was 28% below normal in Gujarat. The farmers who used to be able to store water for irrigation until last year could not this year due to deficient rains. Poor soil moisture means lower rate of germination and an adverse effect on yields as a result. The average productivity in Gujarat is 886 kg/ha compared to that of Rajasthan at 368 kg/ha and India (616 kg/ha). Overall, the market expects India s jeera acreage in 2018-19 (Oct-Sep) to fall at least 30% from the previous year s 780,950 ha. Also, the higher returns last season may lure farmers to shift from coriander and castor. As the crop will enter the development stage, the condition of the crop will also be major factor to watch for because the cumin crop faces severe weed competition at all stages of crop growth because of slow growth and short stature. The carryover stocks of jeera are seen at 200,000-300,000 bags (1 bag = 55 kg), way less than the desirable 500,000 bags. The new crop will only start arriving in February. Jeera prices generally remain pressurized in the beginning of the year from February onwards amid arrival of fresh crop in the market and as stockist sell off their produce ahead of the onset of the jeera harvesting season in the country. Here, a lower level buying can be initiated near 15000 levels. Price tends to move upward from June, as the crop arrival season concludes in India. India s harvest enters the global market (March and April) before Syria, Turkey and Iran (July). Thus, the Indian crop holds a major advantage in the international markets. Stockist buying and lack of supply from other countries also support this uptrend in prices which continues till August September when prices start retreating once again with fresh jeera supply coming from Syria and Turkey. The progress of monsoon and Syrian crop are also to be watched for. The export enquiries have been good as India is the only jeera supplier to the world market currently. China s import would play an important role in deciding the price trend as it is the largest importer from India because it consumes around 100,000 tons annually. China accounts for 40% of the total exports of jeera from India. The current market conditions and the export prospects are hinting a bull-phase in jeera to test of 22000 levels. 33
CORIANDER COMMODITY OUTLOOK 2019 RANGE NCDEX : 5000-9000 ( per quintal) 15000 Yearly price movement of Coriander futures 13000 Factors to watch: Ÿ Arrival of new crop will increase from mid-february Ÿ Estimates that the production this year could fall more than 1/3rd Ÿ There might be a shortage of around 125,000 tons Ÿ Expectation of higher demand from spice powder-making industries Ÿ Export demand Ÿ Monsoon will also play a major factor on sowing which will commence from mid-october 11000 9000 7000 5000 3000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 In the first half, prices nosedived by almost 30% amid selling pressure followed by entry of new crop in heavy quantities. The second advance estimates released by the Ministry of Agriculture showed that during the year 2017-18, coriander production in India is likely to be 9.23 lakh tons as compared to 8.83 lakh tons in 2016-17. Arrivals in the benchmark Kota market started increasing because farmers liquidated their old stock before the entry of new crop. The domestic demand in spice was hand to mouth as the buyers avoided any bulk deals on anticipation that the prices will decline. Coriander made a low of 4186 in the month of May because at that time imports were higher. Moreover, the total availability of stock (both old and new) at various market yards was at around 60 lakh bags (1 bag = 40 kg), the farmers had with them about 40 lakh bags & in addition there were 37 lakh bags of opening stocks, making a total of more than 1 crore bags, which was enough to make the prices crash down. Last year, farmers didn t show much interest in growing this spice as just before the sowing the prices touched 4 year low, as a result of which anticipations came flowing in that acreage in 2018-19 (Oct-Sep) is likely to halve due to weak prices throughout the year. The sowing was also affected amid lower rainfall, high temperature and water shortages in Rajasthan and Gujarat. Based on these trade estimates, coriander prices witnessed a single side bull run during the second half of the year & gave 59% return from its low of 4186, making a high of 6664. Coming to this season 2018-19, since beginning the sowing has been threatened by scanty rains in Rajasthan, Gujarat and Madhya Pradesh. According to the India Meteorological Department, monsoon rains in Rajasthan were 6% below normal, and in Gujarat 28% below normal. There were hardly any postmonsoon rains in both the states that could help Rabi sowing. The absence of moisture in the soil required due to this weather phenomenon has left no option for the farmers, but to barren their lands. The crop requires a cool climate during the growth stage and warm dry climate at maturity. The additional factor which has negatively affected the farmer s intention to sow coriander is the larger quantity of imports from Eastern European countries such as Russia, Bulgaria and Ukraine. Last but not the least, this year the crops such as chana & wheat are giving a stiff completion due to their respective higher returns & hence the farmers are opting a shifting to these lucrative crops. Also, both (wheat and chana) the crops offer guaranteed procurement. In Gujarat, the second largest producer of the spice, farmers have sown coriander over 29,112 hectares so far, as compared to 68,784 hectares in the previous Rabi season according to the state agriculture department. Though official data on sowing in Madhya Pradesh and Rajasthan are not available, sources said acreage in Rajasthan has halved and that in Madhya Pradesh 20 percent lower despite normal rains. Overall, the preliminary estimates show that the coriander production this year could fall more than 1/3rd to around 2,40,000 tons. The season is expected to begin with a carryover stock of 1,20,000 tons, taking the total supply to 3,60,000 tons. Considering an annual consumption of 480,000 tons, there will be a shortage of around 125,000 tons. In India, the masala companies and large traders generally purchase good quality stocks from March 15 to April 15. These arrivals recede later, and the lowest arrivals are seen in August and September. Amidst all, monsoon will also play a major factor in deciding the direction of prices as sowing which will commence from mid-october, will depend on the soil moisture received from the quantum of rainfall. In the last quarter of the year, an upside momentum can be seen in the counter, as there would be a gap between the demand-supply which will support the prices. The major buyers of coriander seeds from Rajasthan are spice powder-making industries located in the Southern states like Tamil Nadu, Andhra Pradesh and around Delhi. Nearly 90% of the coriander produce is The supply pressure would possibly consumed in the country & plays an important spice crop with a critical role in flavouring food. An amazing pressurize the prices to 5500-5000 fact of this spice is that all parts of the plant are edible, but the fresh leaves and the dried seeds are the parts levels till the harvest gets over by Jultraditionally used in cooking. Aug. Here, a lower level buying can Regarding price outlook, the trend seems bullish till the arrivals hit the markets as this year there might be shortage. New crop arrivals will increase from mid-february as the standing crop is almost ready for harvesting in major producing belts. 34 be done keeping a target of 8000-9000 levels.
COTTON COMMODITY OUTLOOK 2019 RANGE MCX ICE : 18400-26000 ( per bale) : 65-90 (cent per pound) 25000 23000 Yearly price movement of Cotton futures (MCX) Factors to watch: Ÿ Crop shortage Ÿ China looking towards India for import of cotton Ÿ New Agriculture export policy Ÿ Impact of trade War on U.S cotton Ÿ Opportunities and risks related to cotton in the international market Ÿ Forecast of El Niño conditions by the NOAA (National Oceanic and Atmospheric Administration) 21000 19000 17000 15000 13000 2011 2012 2013 2014 2015 2016 2017 2018 During 2018, cotton was the only crop in which the domestic markets as well as the hedge funds in the international market were bullish. At home, since start, the news of production cuts, better demand from mills & anticipation of higher exports amid weaker rupee made cotton to make a new yearly high of 24280 on the national bourse. However, it was totally an entire different scenario in the international market, since the gains were erased by the fumes of trade war between U.S & China. No matter, it made a 4-year high of 96.50, opening near 78 cents but settled making yearly low of 73 cents. The U.S. exports were doing better than expected, the U.S. economy poised strong, and there s was optimism of selling more cotton products. Demandsupply numbers looked favorable and the market had discounted the over-production number factor of 2017 when U.S. production topped 20 million bales. The market participant s optimism were running high, but then came the Trump Administration s tariffs, which dimmed almost all commodities across the board started crumbling down the hill. Back at home, cotton s stellar performance came on the back of crop woes due to water shortage, unfavourable weather and persistent menace of pink bollworm. Overall, the CAI has projected total cotton supply up to 30th September 2018 at 416.00 lakh bales which consists the arrival of 365.00 lakh bales up to 30th September 2018, imports the Committee has estimated at 15.00 lakh bales and the opening stock at the beginning of the season as on 1st October 2017 which the Committee has estimated at 36 lakh bales. Further, the Committee has estimated cotton consumption for whole crop year (12 months) from October 2017 to September 2018 at 324 lakh bales (27 lakh bales per month) while the shipment of cotton up to September 2018 has been estimated at 69 lakh bales. The stock at the end of September 2018 is estimated at 23.00 lakh bales including 18.00 lakh bales with textile mills while the remaining 5.00 lakh bales are estimated to be held by CCI and others. Looking on the export front, last season, the weaker rupee proved to be a major positive factors for exporters. Against dollar, the local currency weakened by 17% from 63.54 & touched a low of 74.48 by mid-october. The statistics showed that during the timeframe April to September, exports of cotton textiles--raw cotton, yarn, fabrics and made-ups grew by 26.8% as compared to in the same period last year. Before coming to the outlook of this year, we need to look upon the crop size, factors affecting the price & most importantly the closing inventories. The projected yearly balance sheet for the season 2018-19 drawn by the CAI has estimated total cotton supply till end of the season i.e. upto 30th September 2019 at 390.25 lakh bales of 170 kgs. each which includes opening stock of 23 lakh bales at the beginning of the season, cotton crop for the season at 340.25 lakh bales and imports of 27 lakh bales which are estimated to be higher by 12 lakh bales compared to the import figure of 15 lakh bales estimated for the 2017-18 crop year. The CAI has estimated domestic consumption for the season at 324 lakh bales while the exports are estimated to be 53 lakh bales which are This year, various additional factors estimated to be lower by 16 lakh bales compared to the exports of 69 lakh bales estimated during the last other than crop shortage, would year. The carry-over stock at the end of the 2018-19 season is estimated by the CAI at 13.25 lakh bales. mainly be on trade war, its impact The other factors that would give direction would be the minimum support price for 2019-20, monsoon & also the new Agriculture export policy which will seek to integrate the Indian farmers with the global value chain. The opportunities and risks related to cotton in the international market would also play a major role in giving the market participants clarity over price direction. The risk is the expectation of more cotton acreage to be planted in 2019 may give signal to weaker prices this year. The forecast of El Niño conditions by the NOAA (National Oceanic and Atmospheric Administration) of 70% chance of wetter-than-normal conditions this winter means farmers will be less likely to abandon cotton acres. The actual impact of the demand-supply numbers will be seen over cotton futures as early as April or May when WASDE numbers will be confirmed by USDA. over rupee & China looking towards India for import may take the cotton prices to new high s of 25000-26000, taking support near 19000-18400 levels on MCX. Overall, more of a downside is seen in U.S cotton futures towards 65 cents, while the upside may get restricted near 90 cents. 35
MENTHA OIL COMMODITY OUTLOOK 2019 RANGE MCX : 1200-2200 ( per kg) 2700 Yearly price movement of Mentha oil futures 2200 Factors to watch: Ÿ Farmers may shift to crops such as wheat & potato Ÿ Higher Stock/Use ratio Ÿ Supply of synthetic menthol Ÿ Supply deficit of mentha oil in the upcoming season Ÿ Estimates that the production for 2019-20 is likely to be in lines with previous year Ÿ Increase in demand from oral care, and confectionery sectors & pharmaceutical companies 1700 1200 700 200 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mentha, a commodity known for its fragrance ended is last year journey by giving a decent return of 67%, because of lower carry forward stocks. In 2018-19 mentha oil season (Feb-Jan), the total supply was about 40,272 MT (including opening stock of 1522 MT) & the market was under supplied. Considering the total consumption of 36,318 MT from domestic and export market, the overall carryover stocks were merely 3953 MT. Looking at the price chart, the movement was exactly divided into two halves by its seasonality. During cultivation time in the first half of the year, mentha oil prices made six months low near 1100 levels. The bearishness was mainly mirrored in the June and July as the harvest was in full flow. Demand from overseas buyers like China and US were not picking up and exports are not very promising at that time. Later during the year, as the harvest came to an end & growers eyed a shortage ahead, farmers started to hold back stocks in anticipation of earning good profits by the start of the next season. The end users relying on synthetic mentha supply had to cover positions and henceforth the price skyrocketed as stockiest also joined the bandwagon. Hence, supply side concerns amid robust demand kept the prices in a higher territory & touched a high of 1846. During the last two months all the gains were erased as prices crashed on the back of exports getting badly hit due to stronger rupee. Coming to this year, mentha will definitely face stiff competition against wheat & potato. The growers may shift their option towards the grains & tuber crop due to monsoon vagaries. Mint is a shallow rooted, high water demanding crop. Its active growth period coincides with the pre-monsoon hot summer months when the soil moisture is inadequate and soil and air temperature is high. The estimated production for 2019-20 is likely to be in lines with previous year on about 4.52 lakh hectares. According to a research Socio-Economic Aspects of Menthol Mint Cultivation in the Districts of Uttar Pradesh in 2017, it was found, that the farmers had got an average 100 kg of Menthal mint oil from one hectare of land. At this point, it is to be noted that the average production of 36,968 MT productions seen in between 2013-2018. If, the monsoon gives an early start, it may have negative effect on recovery of mentha oil from the blooming plants. Mint plants are ready for harvesting about 100-120 days after the sowing. Production of mentha oil depends on the availability of roots, irrigation and also land availability by farmers. Hence the production of mentha oil is dependent on various factors and not just the price for farmers to attract towards sowing. On the demand side, in 2019, again we will be entering the new marketing year where the stocks to use ratio will be more tight. The trend in the commodity is mostly defined by the end stocks or carryover lefts for the season. The tight the end stocks to use ratio more is the bullish trend in the commodity. The initial estimates give a picture that the end stock ratio indicates we will be again having a watertight year from supply front. The opening stock of mentha oil in 2019 is likely to be 3953 MT, as compared to 1522 MT in 2018. The Stock/Use ratio is also expected to be bit higher at 10.88% against 4.20% in 2018. (Stock/Use ratio is the ratio at which we are expected to move in with the end stocks in the new season.) Apart from this, supply of synthetic menthol to will play a pivotal role and if there is delay in synthetic menthol production we may see fireworks continue this season as well. Regarding price outlook, from the beginning of the year profit booking from higher levels can t be ruled out as the farmers would start liquidating their stocks in order to meet their financial requirement for sowing of crop. During this period, one should keep a vigil over the sowing intentions & on the estimates of production as it would impact the prices strongly. Looking at the long term picture, demand for oral care, and confectionery sectors will continue to grow. Prior to the winter season, pharmaceutical companies will definitely increase their purchases on a large scale to make cough syrup & other medicines. There are no substitutes for mint based products and demand is rising steadily with an average of 10% or so per annum. 36 Overall, the supply deficit of mentha oil for the season is likely to drive prices towards Rs.2,200 and above this season. A lower level buying around 1200 levels could be used for accumulation.
CHANA COMMODITY OUTLOOK 2019 RANGE NCDEX : 3700-5000 ( per quintal) 10000 9000 Yearly price movement of Chana futures Factors to watch: Ÿ Government policies to control pulses prices Ÿ Activeness of Nafed selling chana in the market Ÿ Lower estimates of output in Rabi season Ÿ Figures in Government advance estimates Ÿ Possibilities of El-Nino occurrence Ÿ Tight demand-supply situation arising from higher domestic consumption and restricted imports 8000 7000 6000 5000 4000 3000 2000 1000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 In India, the food platter in daily life cannot be imagined without a Dal, in different forms. It is a major source of protein for a majority of Indians, particularly the vegetarian population. The pulse market is essentially driven by India s domestic market situation. Looking back, the bearish trend of chana in 2017 continued to stay till the first half during last year. In 2018, chana on the national bourse receded to low of 3245 from the high of 6428 witnessed during August last to last year. This downfall was on the back of large imports & the bumper harvest of chana on rise in Rabi acreage, thanks to the extended rains over the major growing areas. The farmers opted this less water-intensive crop as compared to wheat and mustard. As per the government data, the country has imported 50.8 lakh tonnes of pulses during April 17-December 17 of fiscal (Apr 17-Mar 18), while it has 1.8 million tonnes of pulses in its buffer stock. In order to protect the farmers & eyeing a record production of pulses (Kharif & Rabi) to nearly 25.23 million tonnes in 2017-18 including 11.23 million tonnes of chana, the government at the beginning of the year itself raised import duty to 60% as it wanted to contain inward shipments. The demand from millers had taken a hit amidst rising operational costs, forcing many units to either operate at a lower capacity or stop their operations. It was reported that in Madhya Pradesh itself, where there are over 750 dal mills, at least 250 had to shut down. By the end of first quarter, chana prices on the spot markets were 17-18% below the minimum support price, inclusive of a bonus of Rs.4,400 rupees per 100 kg, amid a supply glut. To take control, the government's announced of a 7% duty credit incentive on export of Bengal gram, or desi chana for a period of three months till June 20, 2018 to help in export of substantial quantities of chana. Also, it capped the import of yellow peas, used largely as a substitute for chana, at 100,000 tons for Apr-Jun, later extended restrictions until the end of September. The import policy of urad and moong in split and other forms were also restricted in addition to urad and moong with annual import quota of 3 lakh tonns for all. These actions including procurement by NAFED helped chana prices to recover from the yearly lows & traded at 4384 near the MSP price. Madhya Pradesh s decision to exclude chana and masur, two major lentils grown in the state from the muchtalked about Bhawantar Bhugtan Yojana (BBY) also lead to the price increase. However, these gains were gains short lived and correction was seen towards 3754 after NAFED started selling its procured 2.74 million tons chana during the Rabi season from Uttar Pradesh, Gujarat, Madhya Pradesh, Rajasthan, Maharashtra, Andhra Pradesh, Karnataka and Telangana. By the end of the year, the price scenario turned bullish with the start of sowing for Rabi crop. Chana futures on the national exchange made a yearly high of 4971, and 4631 on the spot market of Delhi. Weak prices of the pulses last year and insufficient procurement have given farmers second thought in growing this annual legume crop despite of higher MSP. The latest statistics show shrinkage in pulses area of more than 10% so far this year. In 2018-19, the area sown under gram is 77.27 lakh ha, while lentil has been cultivated on 13.95 lakh ha, lower by 13.12% & 5.55% respectively as compared to 2017-18. Already, the total production of Kharif pulses is estimated at 9.22 million tons lower by 0.12 million tons than the last year s production of 9.34 million tons. This Rabi season, the Agriculture Ministry s production target for chana for 2018-19 is 10.5 million tons. Overall, this season there is a shortfall in production of Rabi pulses. The 90% of pulses growing regions being dependent on natural rainfall for cultivation in India, the possibilities of El-Nino occurrence may raise a question mark on comfortable supplies. Regarding price scenario, for the time being, we may see a correction due to arrivals of other pulses & selling pressure from NAFED. Black gram arrival in various markets has begun & Kharif green gram crop & other pulses are yet to arrive in major markets. In months to come, the market participants would be closely watching the figures in advance estimates, which might show lower production, along with the peak arrival of chana during the period March April. During this phase, lower level buying in the range of 4000-4100 can give good return to long term investors as the outlook is bullish for 5000 levels on the back of tight demand-supply situation arising from higher d o m e s t i c c o n s u m p t i o n a n d restricted imports. The seasonal demand from stockiest to millers at the time of festive followed by m a r r i a g e s e a s o n w o u l d g i v e additional support to the prices. 37
GUAR COMPLEX COMMODITY OUTLOOK 2019 RANGE Guar seed : 3800-5400 ( per quintal) Guar gum : 7200-10500 ( per quintal) Factors to watch: Ÿ Ÿ Ÿ Ÿ North American oil sector leaning towards slick water and friction reducer The shale gas revolution, reducing the demand for guargum Lower carryover stock of guar seed & impact of monsoon during the sowing phase Descending guar gum and guar seed ratio 12000 10000 8000 6000 4000 2000 Yearly price movement of Guar Seed & Guar Gum futures 2014 2015 2016 2017 2018 Guar Seed Guar Gum In 2018, guar gum had rocketed from the lows of 7200 to high of 10510, but all the gains were erased by the reversal in oil prices in the international market, battered by supply concerns and global politics. In early October, the price of Brent crude oil reached a four-year high above $86/bbl, reflecting the legitimate fears of market tightness. But, since October the fundamentals took a U-turn & made the supply side heavier. Thanks to the top-three producers the United States, Russia and Saudi Arabia, as these countries pumped more than a third of global consumption. The crisis of oil prices were not exclusively linked to oversupply, demand also tapered off amid more efficient fuel technology getting adopted by many countries. As a result of all the above aforesaid factors, guar gum exports rose merely by 5%, less than market expectations to 265,195 tons in 2018 (Apr-Sep) as compared to same period in 2017. Also, demand for guar gum as a hydraulic fracturing agent dropped in recent times after crude oil prices started falling. On the contrary, guar seed managed to close in the positive territory near 4230 levels led by water scarcity in guar growing regions of Rajasthan and Haryana, owing to deficient monsoon. Shortage of rainwater in canals for this rain fed crop forced the farmers to shift towards soybean and moong noting the sharp rise in minimum support price of these commodities. Going forward, it might be a bearish year for guar complex, the reason being lesser demand amid intensifying competition from China. North American oil sector is leaning towards slick water and friction reducer from China which is cheaper than guar gum. Moreover, the shale gas revolution, enabled by the wedding of hydraulic fracturing with horizontal drilling has reduced the demand for guargum. Big Oil companies are seen investing more in U.S. shale, not less, after the recent tumble in crude prices. If this trend continues, exports in FY19 will be less by 10-15%. Accordingly, more of bearishness will be seen in guar gum futures and shall face resistance near 11000 levels. However, despite of all the negative factors it shall not break the support of 3 years near 7285 levels. Also, in 2018-19 season (Oct-Sept) guar seed output is seen higher, up to 125-135 lakh bags (1 bag = 100 kg), as compared to 100 lakh bags in 2017-18 due to rise in acreage. In Rajasthan, the major producing state guar seed production is likely to rise by nearly 43% year-on-year at 17.78 lakh tons, according to the first advance estimates released by the state agriculture department. This season, the crop is higher due to rise in yield to 520 kg per ha as compared to 363 kg per ha in 2017-18. Carryover stock of guar seed is seen at 10 lakh tons at the beginning of October, lower than 13 lakh tons in the year ago period. Apart from these figures, monsoon factor will the most important factor to watch for during the sowing phase (June-July) owing to prediction that El Niño scare may make a comeback. The India Meteorological Department has indicated an increase probability of El Nino conditions from February next year, probably resulting in above-normal summer temperatures. A recent probability forecast for El Niño and La Niña (ENSO) by the IMD indicated maximum probability for ENSO neutral conditions (neither an El Niño event nor a La Niña event October to February next year. Thereafter, increased probability for El Niño conditions is seen from February to July, the forecast said. Propensity towards a deficient monsoon is more during El Nino conditions & if the forecast turns to be true, then it will hamper the output of guar in 2019-20 (Oct-Sept), and positive signal to the prices. In 2019, an important indicator that should be looked upon is the guar gum and guar seed ratio. Last year, it has descended to 2.0 from 2.20 in 2017. In 2019, this ratio can decline towards 1.92, lowest since 2016. This denotes that the underlying demand of guar gum might be discouraging due lower than expected export demand & on the contrary guar seed may witness a rise owing to more demand for cattle feed called korma and churi. In recent times, it is being observed that guar korma is emerging as a substitute of soy meal. Hence, a hedging strategy can be adopted of buying guar seed & on the other hand sell guar gum. 38 Analyzing all the above mentioned factors, the yearly outlook of guar seed is optimistic on the national bourse as is likely to take support near 3800, while the upside may get extended towards 5400 levels. Overall, guar gum is expected to face resistance near 10500. However, the downside may remain capped near 7200 levels.
TECHNICAL CORNER COMMODITY OUTLOOK 2019 GOLD On monthly charts, since Aug 2013 MCX Gold prices are stuck in a wider range of 24500-34500 & forming lower high lower low formation. The SMA (50) is trading at 28715 and going ahead in 2019, this SMA would be immediate first support for gold. From Dec 2016 to Dec 2018 prices are trading in the channel range of 27400-32300, which also confirms the previous pattern. Monthly Price Chart On monthly charts triangle pattern to be seen in recent years which is part of the major corrective channel since 2013. Visibly, there was a breakout from the correction in 2018. On MCX, the upside for Gold remains capped at Rs. 34500 (closing basis) and prices can find support around Rs. 27400 (closing basis) which has provided strong support to prices in the past. Buying for this counter would be suggested in range of 28500-29000 for a longer horizon. SILVER Price action based on monthly charts indicates that MCX Silver stuck in a wider range of 34900-42000. Currently, the counter is trading below the important 50 & 100 SMA & well above 200 SMA. Presently silver is in a consolidation phase & likely to break the resistance of 42000. If happens, the rally could be seen towards 38.2% & 50.0% of Fibonacci (48270 & 53110). Monthly chart forecast that there is plenty of room to the upside as it holds strong lower slope of upward slanting trend-line. Meanwhile, if it fails to sustain above 42,000, silver prices may resume its downfall towards 32,700-34,000. Monthly Price Chart On MCX, the downside for silver remains capped at 32,700 (closing basis) where strong support to be seen for prices in the past. Buying for this counter would be suggested in range of 35000-35500 for a longer horizon for the upside level 48270. CRUDE OIL Crude oil plummeted more than 41% from the high of Oct 2018. The counter also breached the important 50, 100 & 200 SMA respectively. Further prices may move towards the 61.8% Fibonacci retracement level, break below 61.8% may take support near 78.6% retracement levels which is 2631.90. Based on the current chart pattern, the market is expected to continue on bearish trend. The bearish rally could be approached all the way down to 2650-2800 levels. On MCX, Crude could further slide towards 2800, a move below it can take the counter near 78.6% retracement level (2631.90) where prices could find strong support. If the support holds strong near 2630 then the market might have chances to witness the reversal. Since the Crude oil has taken a formation of Bullish ascending wedge pattern in monthly charts, buying would be suggested in the range of 2650-2800 for a longer horizon. Reversal could possibly test up to 5500-5800 levels. NATURAL GAS Natural Gas is the biggest gainer among all commodities; rallied over 40% after showing a long consolidation since Jun 2016. The counter is trading well above 50, 100 & 200 SMA, reinforces the bullish momentum. Price movements depend more on weather when it comes to natural gas. Winter is the peak heating season while the summer is the peak cooling time of the year, both increase the demand for natural gas. The major trigger for the eye-catching rally was colder weather among shrinking inventories, which is now below fifteen years. Market should get ready to see a wide trading range for this commodity once again in 2019. Support appears between the ranges of 160-190. MACD (moving average convergence divergence) histogram prints in the green with an upward slanting trajectory which points to high prices for natural gas. Once it trades above 230 levels comfortably then it may see further rally upto the levels of 360-430. Monthly Price Chart Monthly Price Chart 39
TECHNICAL CORNER COMMODITY OUTLOOK 2019 ZINC MCX Zinc prices were declined by more than 13% in 2018. In a longer time frame since 2013, prices grew by 62.8% & continued to be in up-trend till the beginning of Q1 2018. Looking back, since Feb 2010 prices traded in ascending channel pattern, but in Nov 2016 prices breached the resistance of channel & rose towards 240 levels, breaking the previous all-time of 208.30. In Jan 2018, after the prices reached 12 years high, Zinc retraced towards the Fibonacci level of 38.2% which is 163.65. Going forward further it can fall towards the 50% retracement which is 140. Monthly Price Chart On MCX, the downside for Zinc remains capped in range of Rs. 140-163.65 where prices could find strong support while face resistance around Rs. 206-210. In long-term breaking above 210 can take the counter towards 240. Hence, buying would be suggested in range of 155-160 for a longer horizon. LEAD MCX Lead futures declined more than 14% in 2018, after encountering the key resistance of 172. The counter witnessed selling pressure at higher levels. MCX Lead formed the higher high and higher low formation since Dec 2008. Meanwhile, on monthly charts technical indicators retain their bullish bias. The fact that the commodity remains well above 50, 100 & 200 SMA, reinforces the bullish outlook. Moreover it is trading in upward slanting channel where it s taking support in range of 125-132 & facing strong resistance at 175. Monthly Price Chart On MCX, the downside for Lead remains capped in range of Rs. 125-132 where prices could find strong support & on the contrary face resistance around Rs. 172. In long-term; breaking above 172 can take the counter towards 190. Hence, buying would be suggested in range of 127-128 for a longer horizon. COPPER On monthly charts, Copper has formed an ascending channel pattern. After striking low of 291.50 on Jan 2016, (slope line of the up-wards channel) copper prices on MCX soar towards 493.25 in June 2018. Based on current chart pattern it may take support in a range of 365-380, further, if it breaches the mentioned levels, an extended downside could be seen towards the 61.8% Fibonacci retracement level (281.50). MACD histogram prints in the red with a downward sloping trajectory which further confirms the fall. An additional scenario indicates that if the support (365-380) holds strong then the market might have a chance to retest the upper slope line of channel pattern; near 493. On MCX, looking ahead in 2019, copper could face support near 38.2% of Fibonacci retracement (365-380) level. Once it trade below 365 levels, then it may turn bearish and may give opportunity for range trading between 280-365 levels. ALUMINIUM Aluminium plunged more than 24% from the all time high made in Apr last year.; it is fourth straight negative month. After the prices touched the all time high of 178, it retraced towards the Fibonacci level of 38.2 %( 134.30), further it remain on negative trajectory and is now eyeing towards 50.0% & 61.8% Fibonacci (120.50 & 106.80) levels. MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices for Aluminium. Meanwhile, if price take support near 106-115, we may witness a rally towards 175-190 levels. Monthly Price Chart Monthly Price Chart On MCX, the downside for Aluminium remains capped in range of 106-115 where strong support to be seen for prices in the past. Buying for this counter would be suggested in range of 118-120 for a longer horizon; one should eye the upside level of 175-190. 40
TECHNICAL CORNER COMMODITY OUTLOOK 2019 NICKEL Based on Monthly chart pattern Nickel is in bearish trend; supported by good volumes. Since Nov 2007; Nickel traded in wider range of 500-1350, in between it also find hurdle at 690 levels, which remains the key support zone for counter. Failure to hold 690 will indicate the selling pressure & resumes the fall towards previous long term support; which is near 500. Nickel is also trading below key 50,100 & 200 SMA which reinforces the bearish momentum. If it holds the support of 690 with strong volume will negate the trend prolongation of the uptrend with limited upside upto 1280. Monthly Price Chart On MCX, Nickel is in bearish trend any rise would be the selling opportunity. SOYBEAN Based on Monthly charts, Soybean has given a sharp rise of over 26% in early 2018, after hitting high of 3895 contracts has made low of 3149 in Oct 2019. After tumbling from trend line resistance prices have shown consolidation in range of 3280-3400, a level where prices hold strong support in past. As of now, resistance is seen near previous support at 3600, whereas if prices decline decisively below important level 3280 it can fall towards 2680-2640 low of June 2017. The sharp fall in the international soybean has additionally weighed on domestic prices. Momentum is negative as the MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. Going ahead in 2019, prices likely to trade in a range bound with an upside bias. A bounce from 3280 and a subsequent break above 3450 can trigger a corrective rally towards 3900-4250. CPO CPO plunged over 24% since May 2018, taking negative cues from the Malaysia crude palm oil that hit 2-year lows. Strong surge in inventory in the international market has dragged the prices lower. CPO formed a higher-high, higher low formation, where support holds near 480-450 levels & resistance at 675-720. Also, the sharp fall in the crude oil price have additionally weighed on this edible oil counter. The downtrend is probably going to stay unblemished for the time being. In any case, long term support (480) is coming up which may can possibly end the current downtrend. As long as prices hold above 480; it can take the rally all the way up to 555-670-760. On the contrary, if prices decline below the support level of 480, it can fall near crucial long-term support of 430-380. Going ahead in 2019 buying would be suggested for this counter near 470-480 range. REF. SOYOIL On monthly charts, Ref. Soyoil has formed an ascending channel pattern. After striking low of 605.40 on Apr 2017, (slope line of the up-wards channel) prices on NCDEX soar towards 796 in March 2018. Inside Channel, prices find strong resistance 790 level; break above can trigger a corrective rally towards 915-1050. An additional scenario indicates that if the resistance (790) holds strong then the market might have a chance to retest the lower slope line (625) of channel pattern. The RSI has deteriorated slightly after hitting the overbought trigger level of 70 which could foreshadow a correction. Momentum is negative as the MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices. On NCDEX, we may see wild swings on both side, which may give opportunities to both bulls and bears. Looking ahead in 2019, Ref. Soyoil could take support near 650-610 level. Sharp volatility is expected. Monthly Price Chart Monthly Price Chart Monthly Price Chart 41
TECHNICAL CORNER COMMODITY OUTLOOK 2019 RM SEED On monthly charts, RM Seed has stuck in range of 3600-5150. After hitting high of 5156 in Oct 2015 prices on NCDEX contract has made a low of 3462 & approaching the trend line support 3200. Although prices shown consolidation in range of 3650-4200. Last few months ended up bearish in trend along with some corrections above the trend line support, where the market is expected to continue on the bearish trend. The continuation of the trend will be confirmed once the prices break below the key support holding at 3320. Monthly Price Chart The negative rally could be extending all the way to 3000-2760 levels going ahead in 2019. On other hand, an alternative scenario indicates that if the key support holds strong then the market might have a chance to retest the same 5150 and revise the trend to bullish, break above 5150 can test 5340-5580. COTTON On monthly time frame; Cotton price rises since the end of Nov 2017. In Aug 2018 triple top formation is formed on charts and from there cotton prices plunge more than 15% on MCX. The prices currently trading well below 50(21724.20), 100(20803.20) SMA & continue to fall towards 200(19149.05) SMA. Based on current chart pattern; it may take support at 200 SMA. Further, if it breaches the mentioned levels, an extended downside could be seen towards the 61.8% Fibonacci retracement level (18514.50). On the other hand, a strong bounce is from 19150(200 SMA) could negate the trend and pushes the prices upwards. Chart is advocating that if it sustains above the mark of 19150; it may reach in unchartered territory of 25250-26500. Monthly Price Chart Going ahead in 2019 the downtrend is likely to remain intact selling would be suggested for this counter near 23200-23500. CHANA Chana monthly chart has formed Ascending broadening channel pattern. Inside Channel, prices could find resistance at 7050 level, whereas takes support well above the slope line of channel pattern 3230. Since June 2004 slope line works very well in case of Chana, prices are always trades above this support line. Immediate support for Chana holds at important 100 SMA (3640). Momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. Monthly Price Chart At present, the RSI has deteriorated slightly after hitting the overbought trigger level of 70 which could foreshadow a correction in near future. Any correction should be utilized to accumulate between 3400-3600 ranges for an upside of 5500. Looking ahead in 2019, Chana may trade with upside bias with support of 3230. MENTHA OIL Mentha Oil is stuck in a wide range of 1100-1850 and will continue to trade in same range going ahead in 2019. After a long consolidation in range of 675-1080 during the period of 2013-2017, a breakout was seen towards 1991.90. Currently, the contract is trading near 1500 after straight 2- months fall which is over 21% from Oct 2018 high. MACD histogram prints in the red with a descending slanting trajectory which further affirms the fall. In spite of the fact, the prices currently trading above 50 (1100), 100 (1164.50) & 200 (923.40) SMA, so prices could take support near these levels in the next few months. Monthly Price Chart If this counter witness a bounce back from the second support level of 1100 and sustains above it, then we may see a possible reversal of the current downtrend; towards 1850-2000. Going ahead in 2019, buying on dips suggested from 1200 levels. 42
TECHNICAL CORNER COMMODITY OUTLOOK 2019 JEERA Jeera monthly chart has formed rising channel pattern along with some correction within the channel. Momentum is negative as the MACD (moving average convergence divergence) histogram is printing in the red with a downward sloping trajectory which points to lower prices. The RSI has deteriorated slightly after hitting the overbought trigger level of 70 which could foreshadow a correction. Monthly Price Chart Based on current price action Jeera prices continue to trade in same range going ahead in 2019, where prices could take support near lower trend line of channel 12770. It may find resistance near upper trend line 22800; break above can approached all the way to 24800-26200. Going ahead in 2019, Jeera may trade within channel where buying opportunity arises near lower trend line & selling near upper trend-line. TURMERIC Turmeric monthly chart has formed rising broadening channel pattern. After tumbling from channel trend line resistance prices have shown consolidation in range of 5500-8000 a range where prices hold strong support in past, break above 8000 can trigger a corrective rally towards 10500-12200. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the green with an upward slanting trajectory which points to higher prices. Monthly Price Chart As of now, resistance is seen near 8795, whereas if prices decline decisively below important level 6500 it can fall towards 5200-4400. The RSI has rebounded slightly after hitting the oversold trigger level of 30 which affirms upside move for counter. Looking ahead in 2019, Turmeric may trade with upside bias with support of 6500. DHANIYA Dhaniya on monthly charts structure remains unclear due to lengthy consolidation zone. Prices hold 4330 support strongly in past; as long as it is trading above major support, prices could approached all the way up to 8860-13500. The key decision zones for prices are the trend lines and Fibonacci levels: a bullish breakout above the 100% Fibonacci level can take rally towards Fibonacci 127.2 & 141.4 (15990-17310), whereas a bearish breakout can take rally near previous low of 4000. Monthly Price Chart The RSI has rebounded slightly after hitting the oversold trigger level of 30 which affirms upside move for counter. Going ahead in 2019, Dhaniya may trade with bullish bias as momentum is positive where buying opportunity arises only after breaking trend line. TR/CC CRB INDEX The Thomson Reuters/Core Commodity CRB Index is a commodity futures price index. It currently is made up of 19 commodities as quoted on the NYMEX, CBOT, LME, CME and COMEX exchanges; Aluminum, Cocoa, Coffee, Copper, Corn, Cotton, Crude Oil, Gold, Heating Oil, Lean Hogs, Live Cattle, Natural Gas, Nickel, Orange Juice, Silver, Soybeans, Sugar, Unleaded Gas and Wheat. Based on Technical analysis, the Index is in bearish trend; since July 2008. As of now, it formed the lower-high lower-low formations on charts. The index is trading below key 50,100 & 200 SMA which reinforces the bearish momentum. Presently, the Jan 16 low 155.33 is major support level for TR/CC CRB Index, whereas if prices beached the mentioned level then may fall towards 120 levels. Based on current chart patterns reversal could be seen from 135-145 levels which can take the corrective rally towards 195-235-280. Going ahead in 2019 strong volatility is expected in the Index. Monthly Price Chart 43
Glimpse of SMC participating in "6th International Convention on Commodities" organised by Commodity Participants Association of India (CPAI) on 16th June, 2018 at Hotel Le Meridien, New Delhi. Mr. D K Aggarwal (CMD - SMC Capitals Ltd & SMC Investments & Advisors Limited, Chairman - SMC Real Estate Advisors Private Limited & SMC Comtrade Limited, Senior Vice President - PHD Chamber of Commerce & Industry) during 15th India International Gold Convention held at Hotel Le Meridien, Kochi between 3rd to 5th August, 2018. Mr. VN Bansal (CFO, SMC Comtrade Ltd.) & Mr. Prem Nath (VP, SMC Comtrade Ltd.) receiving the award "Best Bullion Broker of the year - 2018" during ASSOCHAM's 11th International Gold Summit held at Shangri-La's Eros Hotel, New Delhi on 19th September, 2018.
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SMC Commodity Team with Mr. D. K. Aggarwal CMD - SMC Capitals Ltd & SMC Investments & Advisors Limited, Chairman - SMC Real Estate Advisors Private Limited & SMC Comtrade Limited Senior Vice President - PHD Chamber of Commerce & Industry and Mr. Ayush Aggarwal (Director, SMC Real Estate Advisors Pvt Ltd).
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