Commodity Trends: No ban on cardamom futures

With open interest in cardamom futures surging, rumors of a ban on the contract also started circulating until Forward Markets Commission clarified that there would be no ban on cardamom futures.

The excessive heating in the cardamom counter is borne by the rise in open interest - outstanding buy/sell positions - from May 7 despite a 15% margin being imposed on the buy side. The aggregate OI of the front month contract rose from 3,214 contracts on May 7 to 6,727 contracts intraday on Monday even as the price rose from Rs 1,409 to Rs 1,850 over the same period. Rising OI with rising price indicates buying interest.

POINTERS Stock exchanges can't hold more than 5% in national comexes The government has clarified that no single stock exchange can hold more than a five per cent stake in any national commodity exchange. And, in an amendment to the existing guidelines, the combined shareholding of all these stock exchanges in any national commodity exchange (NCE) is to be capped at 10 per cent.

Also, any single commodity exchange, along with persons acting in concert, cannot hold more than 15 per cent stake in an NCE. In addition, the cumulative shareholding of stock or commodity exchanges, along with those of persons acting in concert, cannot exceed 20 per cent in an NCE.As a result of the new rules, the National Stock Exchange will have to bring down its stake in the National Commodity and Derivatives Exchange (NCDEX) to five per cent from the existing 15 per cent.

Food Inflation to come down in two weeks Food inflation would come down substantially in the coming two weeks, Chief Economic Advisor Kaushik Basu said even as the prices of fruit and vegetables have gone through the roof.

He, however, cautioned that core inflation, which excludes food and fuel, was on the rise. Core inflation rose sharply to 8.6 per cent in June, more than double from 3.5 per cent in December 2009.

Food inflation continues to slow down and non-food inflation is on a slow pick-up... Food price inflation for the week ended July 29 will be substantially lower than the food inflation data released this week, Basu told reporters here. He added the food inflation had flattened since November 2009.

Ra for Rupee In keeping with India's growing economic might and its status as a major investment destination, the hitherto humble rupee is all set to get a distinct identity in the form of a new symbol. The Union Cabinet on Thursday gave its approval to the symbol which combines the Roman letter 'R' with the Devnagri 'Ra' .

The symbol will catapult the rupee into the company of four 'elite' currencies which have similarly distinct identities - the US dollar, euro, yen and British pound.

Food inflation falls to 12.81 % The annual food inflation, based on the Wholesale Price Index, rose 12.81 per cent for the week ended July 3, marginally above the previous week's year-on-year rise of 12.63 per cent. Fuel inflation eased to 14.27 per cent during the latest week, mainly due to a decline in prices of furnace oil, compared with a rise of 18.02 per cent for the week ending June 26.

Data released by the Commerce Ministry on Thursday showed inflation in pulses increased 29 per cent, and milk 16 per cent during the latest week, even as vegetables dipped by six per cent. The index for primary articles was up at 16.25 per cent compared with 16.08 per cent a week-ago, while the sub-index for non-food items was up 18.85 per cent from previous week's 18.6 per cent increase.

Tata Coffee to invest in Africa Tata Coffee Ltd., Asia's largest publicly traded grower of the bean, may invest 1.3 billion rupees ($27.7 million) in a factory to make instant coffee in Africa to meet rising global demand. The company, majority-owned by Tata Global Beverages Ltd., may build the plant in Uganda, Africa's biggest producer of the robusta variety, or Kenya, central Africa, Managing Director Hameed Huq said in an interview. Tata Coffee may also consider acquiring a company in the continent, he said. Bangalore-based Tata Coffee expects a global economic recovery to help boost demand for instant coffee, a market valued at $19.6 billion, according to researcher Euromonitor International. Starbucks Corp., the world's largest coffee-shop operator, in April raised its annual forecast after reporting second-quarter profit that beat analysts' estimates, helped by sales of Via instant coffee

Gold Precious metals complex weakened as Euro rebounded and US inflation declined on fall in energy prices. Gold prices declined to the lowest levels in two weeks as lower energy prices pushed US consumer prices lower for third straight month. Fresh outflow from SPDR trust also led to weakening of gold prices. Gold prices have fallen 1.8% this week.

Spot gold prices traded in $1,185 to $1,189 range. US August gold fell 1.7% in the weekend to $1,188 per ounce.

The factors that led to fall of gold include euro's rebound that reduced demand for the precious metal as a haven against European-debt concerns. The euro was headed for the third straight weekly gain after topping $1.30 for the first time since May 10. Gold rose to a record $1,266.50 an ounce on June 21 and surged to all-time highs in euros, U.K. pounds and Swiss francs last month amid Europe's fiscal crisis.

Gold historically has moved in tandem with the euro as an alternative to the dollar. This year, as Europe's sovereign-debt woes unfolded, investors sold euros and bought gold and dollars as stores of value.

Precious metals with wider industrial applications fell on signs that the U.S. economic recovery is slowing, eroding demand for raw materials.

Silver futures for September delivery fell 57.4 cents, or 3.1 percent, to $17.788 an ounce on the Comex. The price was down 1.6 percent for the week. Platinum futures for October delivery dropped $21.60, or 1.4 percent, to $1,512.10 an ounce on the New York Mercantile Exchange. The metal lost 1.4 percent this week.

Palladium futures for September delivery declined $18.60, or 4 percent, to $448.60 an ounce on the Nymex, for a weekly decline of 1.8 percent.

India's gold collection under exchange-traded funds rose 76 percent in June from a year ago to 10.453 tonnes as the yellow metal hit its all-time high, data from the funds showed. MCX Aug Gold falls sharply to 18324, in bearish market. Support levels 18200/18090; resistance at 18470, 18630.

Base Metals US Copper futures have fallen the most in two weeks on concerns of slowing economy that is likely to limit demand for metals used in homes, cars and appliances. September delivery at Comex Nymex fell to $ 2.9295, the lowest closing since July 2. It traded in $3.03 to $2.925 range.

A series of data related to US was negative for base metals. US manufacturing contracted in June, consumer sentiment sank to all month low in July. Concerns of double dip recession also impacted market sentiments. China and US are the world's most metal consuming nations.

Copper prices have slumped 12 percent this yearConfidence among U.S. consumers tumbled in July to the lowest level in a year, according to the Thomson Reuters/University of Michigan index of sentiment. Consumer spending accounts for 70 percent of the U.S. economy.

LME Stocks have fallen 1300 tonnes to 426,425 down more than 100,000 tonnes from this Mid February. Comex copper inventories unchanged at 101,210. On the London Metal Exchange, copper for delivery in three months lost $195, or 2.9 percent, to $6,485 a metric ton ($2.94 a pound). Aluminum, zinc, nickel, lead and tin prices also fell.

MCX Aug Cooper weakened to Rs 306 from Rs 316 and is in range bound trade. Support levels are 303, 299 and resistance at 313 and 320.

Crude Oil Crude Oil prices fell on speculation that US economic recovery has slowed down, reducing fuel demand in the world's largest energy consuming country. Equity markets weakening also impacted market sentiments. Crude oil Aug contract at Nymex fell to $76, Brent Crude oil for September fell to $75.37 on ICE. Oil in New York traded in $71.09 to $79.38 range failing to test 200 day moving average of $77.48 and is likely to test $74.33 (the 50 day moving average).

An Energy Department report on July 14 showed that U.S. fuel demand dropped 4 percent to 18.8 million barrels a day last week. It was the lowest level since the week ended April 23 and the biggest drop since. Supplies of gasoline and distillate fuel-that includes the heating oil and diesel increased as crude oil stock piles dropped. OPEC has said that global crude oil demand will rise 1.05 mn barrels a day or 1.2% next year at 86.41 mn barrels.

Petroleum market has attained short run equilibrium and equity market sentiments are determing the movements in crude oil as economic recovery is central to both markets.

In another report, the Labor Department said the U.S.Consumer Price Index dipped 0.1 percent last month, after falling 0.2 percent, on lower energy costs.MCX Aug Crude gains marginally at 3594 after peaking to 3667. Support levels at 3530, 3460, resistance 3665, 3735.

Rubber Rubber prices in Indian spot markets fell from Rs 185 levels to Rs 180 on buyer resistance even as analysts predict that prices are set to soften in two months on increased supplies and rise in domestic arrivals. NMCE August contract fell from Rs 181.70 to Rs 173.80 while Tocom July contract gained from 350 yen to 355 yen.

The trade bodies representing rubber-based industries in India have pressed for a reduction in the import duty of natural rubber (NR), to help bail out the industrial units struggling with the exorbitantly high prices.

These industries have been demanding a reduction in duty by 10 per cent, on a par with the import duty on rubber-based finished goods like tyre. At a hearing with the government-appointed panel, chaired by the Rubber Board chairman, they pointed to the need to be on an equal footing with Chinese manufacturers in accessing NR at cheaper global rates.

Data and estimates from the Association of Natural Rubber Producing Countries (ANRPC) indicate global supply of natural rubber will grow this year at a slower rate that previously anticipated. Forecasts based on preliminary estimates and reports available up to mid-June point to a 5.2 per cent growth, lower than the 6.3 per cent rate anticipated in March and 6.1 per cent rate anticipated in May.

When the 6.3% output growth for this year was anticipated in March, the ANRPC cautioned this to be an optimistic rate and pointed out a host of constraints in attaining this. Two major constraints in the list were existing yielding rubber trees in major producing countries were largely planted during 1980s and they have now reached senile stage having low yield; and the anticipated rate assumed a favourable climate during the whole year. The association cautions that the revised 5.2 per cent rate may be subject to further downward revisions. Provisional full-year figures estimate 2010 global natural rubber will reach 9,384,000 tonnes, up 5.2 per cent on 2009.

Soybeans India's soy complex gained during the weak with soybean, soyoil hiting contract highs bolstered by rally in overseas markets, weak rains in Madhya Pradesh and drop in edible oil imports. US Soybean rose 2% on Thursday on strong US export sales and worries about hot weather that could threaten yields in Midwest.

Farmers in India's top soybean producing states accelerated sowing in the past week after good rainfall, but further progress would depend on monsoon rains.India's vegetable oil imports fell an annual 6 percent in June, dropping for the six straight month but not as sharply as market expectations as farmers held back oilseed sales anticipating higher prices later.

India's vegetable oil imports fell 6% in June dropping for sixth straight month. NCDEX Aug soybean rose from Rs 1949 to Rs 2006 while soyoil rose from Rs 457 levels to Rs 465 levels while Aug rapeseed contract rose from Rs 531.4 to Rs 537 levels on drop in vegetable oil imports and reports that farmers may sow in lesser area due to fall in prices this year while cotton acreage is set to improve. Among other factors, improved spot demand for Malaysian palm oil also support market bulls. Edible oil demand rises during monsoon season and ahead of the festival season of August and September.

NCDEX Aug Soybean has support at 1990 levels while Aug soyoil has support at Rs 450 levels and Aug Rapeseed contract has support at Rs 528. Progress of monsoon and spot market demand to be vital factors for soy complex in the coming weak.

Chana Chana market has gained this week on lower rainfall in major kharif pulses growing regions and improved spot demand. Pulses demand rises during monsoon as short supply of vegetables pushes up prices and markets anticipate rise in demand ahead of festival season. NCDEX July contract rose from Rs 2222 to RS 2234 while NCDEX August rose from Rs 2303 to Rs 2311. Among the positive factors include strong millers demand, Kharif pulses acreage is expected to rise 15-20 % this season on the back of rising prices during the past few years. With lower rainfall reported in major growing regions, chana prices have support at 2210 for July and Rs 2200 for August contracts.