3rd May 2017 Monthly Report On Guar, Kapas & Wheat May 2017
KAPAS Kapas futures Seasonal Index Historic returns of Kapas futures during month of May 1.06 1.04 1.02 1.00 0.98 0.96 0.94 0.92 0.90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 789 876 927 1014 1065 1152 1203 Kapas futures (April) is expected to fall towards 935 levels. Cotton output in Haryana, among the largest producers of the cash crop, is estimated to surge 106% on year to 2.04 million bales (1 bale = 170 kg) in 2016-17 (Jul-Jun) due to a better yield, according to the third advance estimate the state's farm department. The yield of cotton is seen rising to 609 kg per ha from 274 kg in 2015-16, the data showed. Cotton output in Punjab, among the largest producers of the fibre, is estimated to rise a sharp 220% on year to 1.26 million bales (1 bale = 170 kg) in 2016-17 (Jul-Jun) because of higher acreage and better yield, according to the third advance estimate shared by the state's farm department. Yield of the fibre is seen increasing to 750 kg per ha from 197 kg in 2015-16, the data showed. Meanwhile, cotton seed sowing has been delayed in Punjab by a week on account of non availability of canal water on April 15 which was the date fixed by The state agriculture department to begin sowing. In Madhya Pradesh, farmers will start sowing cotton from May end. Major buyers are not interested in procuring at prevailing rates in hopes of further decline in spot price. The poor offtake in the yarn market due to sluggish trade on the retail level is discouraging purchasing sentiment of major spinning mills in the bales market. As stated by the International Cotton Advisory Committee, India s cotton area is forecast to increase by 7% to 11.3 million hectares in 2017/18 as farmers are encouraged by better returns due to high cotton prices and improved yields in 2016/17. India s exports are projected to decrease by 30% to 886,000 tons. India's 2016-17 cotton imports are set to jump more than a third from a year ago to a record 3 million bales as the rupee's rise makes buying overseas cheaper. The strong rupee - now at its highest level in 18 months - has also braked cotton exports from the world's biggest producer of the fibre, a trend that has helped rival suppliers in Brazil, the United States and some African countries boost their own exports. Usually Indian mills import cotton in the second half of the crop year as domestic supplies dwindle. But this year they began importing in January as local prices jumped due to limited supplies. The fundamentals of cotton on the international market highlight that U.S. cotton acreage will rise by more than 20% for the 2017/18 season. The weather, through its influence on yield and abandonment, will determine the extent to which the expected increase in U.S. planting might correspond to an increase in production. Nonetheless, an increase of planting on this scale suggests that the prospect of a large U.S. harvest is certainly possible next crop year. 2
WHEAT Forward curve of Wheat futures Historic returns of Wheat futures during month of May 1,740.00 1,720.00 1,729.00 10% 8% 8.23% 8.80% 1,700.00 1,705.00 6% 1,680.00 1,660.00 1,661.00 1,681.00 4% 2% 0% 0.68% 3.01% 1,640.00 1,620.00 April May June July -2% -4% -0.52% -1.76% -2.26% 2010 2011 2012 2013 2014 2015 2016 1534 1584 1611 1661 1688 1738 1765 Wheat futures (June) is expected to consolidate in the range of 1550-1675 levels. As stated by the Food corporation of India, the government held 8.06 million ton wheat in its stocks at the beginning of the current marketing year, sharply lower than 14.54 million ton last year. However, stocks are likely to be replenished now that the government has already started wheat procurement for the current marketing year and aims to purchase 33 million ton against 22.9 million ton bought last year. The procurement is likely to be higher than previous year as the country is looking at record wheat output this year. The central government has set a target to procure 33.0 million ton of wheat for the current marketing season, up from 22.9 million ton a year ago. The government reported that it has procured 24.212 million ton wheat as on May 1, 2017, which is 5% up from the total grains procured in the last RMS 2016-17. The government is buying wheat from farmers at the minimum support price of 1,625 rupees per 100 kg to build its stocks and check any fall in prices during peak arrivals. The procurement was the highest in Punjab, where the government has purchased 10.756 million tons wheat so far, as compared to 10.649 million tons last year. In Haryana, another major producer of wheat, the government has bought 6.958 million tons of the grain, as compared to 6.752 million tons last year. The government has purchased 4.967 million tons wheat in Madhya Pradesh, against 3.992 million tons purchased last year. While in Uttar Pradesh, it has bought 0.821 million tons so far, higher than 0.797 million tons in the year-ago period. The arrivals across MP and UP markets are expected to pick up in early May. International Grains Council has pegged India's wheat output for the marketing year starting April at 95.5 million ton, up from the estimate of 86 million ton for the previous year. According to India's farm ministry, the country is likely to produce 96.6 million ton wheat in the current crop year ending June, up from 92.3 million ton a year ago. The absence of flour millers from the southern and western regions in the markets of UP, MP and Rajasthan is seen weighing on the prices. 3
GUAR SEED & GUAR GUM Forward curve of Guar seed & Guar gum futures Historic returns of Guar seed & Guar gum futures during month of May 4,250.00 4,200.00 4,144.00 4,209.00 8,616.00 8,700.00 8,600.00 20% 15% 14.75% 4,150.00 4,100.00 4,050.00 4,000.00 3,950.00 3,900.00 3,990.00 8,258.00 4,079.00 8,432.00 8,592.00 8,500.00 8,400.00 8,300.00 8,200.00 8,100.00 10% 5% 0% -5% -10% -15% 0.36% -10.77% -3.39% 0.86% -5.84% -1.25% -1.26% -6.61% -13.70% 3,850.00 April May June July 8,000.00-20% 2005 2006 2007 2008 2009 2010 2011 2014 2015 2016 3415 3655 3789 4029 4163 4403 4537 7461 7865 8180 8584 8899 9303 9618 Guar seed futures (June) may decline for the second consecutive month & will probably test 3580 levels. Guar gum futures (June) is expected to trade with a downside bias & may descend towards 7600 levels. Guarseed and Guargum are declining in key markets of Rajasthan due to sluggish domestic off take. IMD first monsoon forecast for the season has also weighed on market sentiments. India is likely to get a normal southwest monsoon rainfall for the second consecutive year in 2017 despite the threat of El Nino conditions developing over equatorial Pacific. Rajasthan government in second advance estimates for 2016-17 reduced guar seed production at 14.25 lakh tons, sharply down from 22.23 lakh tons last year. Earlier in first advance estimates the government estimated guar seed crop at 19.62 lakh tons. The fall in production number was mainly attributed to lower area as farmers shifted to pulses and oilseed crop due to poor realization in guar crop. In 2016-17 acreage under guar seed dropped to 35.8 lakh tons against 47.9 lakh tons previous year. According to third advanced estimates report released by Gujarat, guar production in the state in 2016-17 is pegged at 2.42 lakh tons. Guar gum manufacturers demand is poor since last few weeks due to slowdown in export inquiry due to higher prices and strength in rupee. Guar seed/guar gum may trade negative in the next few weeks and any major movement will now heavily dependent on weather progress. Stockiest are the major buyers in guar seed, but in limited quantity, whereas crushers have already procured sufficient quantity and now they are doing only need-based buying. Undertone in market is sluggish due to absence of any encouraging cues. Crude oil prices in the recent times had shown correction, which has also prompted buyers to wait-and-watch. 4
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