Agri Commodities & Fundamental Report - Dec 29
Transcription
Agri Commodities & Fundamental Report - Dec 29
Agri Commodities—Fundamentals December 29, 2014 Chana Highlights: Jeera, Turmeric continued hitting upper circuits on good demand amidst falling stocks and expectations of lower crop Chana, Guar recover strongly as demand continued rising on the domestic front for Chana and on the export front for Guar Hike in Edible Oil import duty keeps Oil complex firm. Inside this issue: Bearish news in International markets affected the market sentiments adversely. As per USDA, expected pulses production in USA is up by 8% to 2,232,630 metric tonne during 2014 from last year. Reports from Canada indicate chickpea production there expected to fall to 0.14 million MT in 201415—down from 0.18 million MT in 2013-14due to lower yield. Reports from Australia indicate a 22.5% fall in Pulses production and more than 30% fall in Chick Peas production in 2014-15 vs that in 2013-14. In Indian markets, reports of lower sowing due to prevailing low rates, good demand from millers and Govt agencies and a rise in MSP from Rs 3100/Q to Rs 3175/Q had supported prices. Latest report from AP Agri Dept indicate Rabi Pulses sowing down 8.7% from 5.98 lakh ha as on 19.12.2013 to 5.46 lakh ha as on 19.12.2014. Rajasthan Agri Dept for Rabi Pulses indicates sowing indicates area at 15.36 lakh ha as on 19.12.2014, vs 15.28 lakh ha as on 19.12.2013. MP Agri Dept indicates Rabi Pulses sowing at 35.81 lakh ha as on 19.12.2014 vs 42.44 lakh ha previous year—down by 15.6%. As per Ministry of Agriculture, rabi pulses 2014-15 coverage till Dec 26 is down to 124.16 lakh Ha as compared with last year’s area coverage of 134.72 lakh hectare during the corresponding week. The area planted under chana is also down to 77.81 Lakh ha against 90.66 lakh ha in same corresponding week during last year. NCDEX Cha na Jan co ntract Close 3478 S1 3444 S2 3424 R1 3516 R2 3560 As per 1st Advanced crop estimates for 2014-15 by Govt of India, India is likely to produce Kharif Foodgrains of 120.27 million tonnes, which is down by 8.97 million tonnes from the record 129.24 million tonnes achieved in Kharif 2013-14. Mentha Oil Chana 1 Mentha Oil 1 Jeera 2 Turmeric 2 Guar 2 Ref Soy Oil 3 Soybean 3 RMSeed 3 Moderate firm trend persisted for Mentha Oil as it traded with high volatility. Prices found some strong support at the lower levels as closure of International markets for Christmas and New Year adversely affected the export demand that had picked up recently. However, domestic demand from pharmaceutical Industries in Indian markets may support the falling rates in coming days. High stocks are keeping uptrend limited. Exports expected to pick up in Jan 2nd week as International markets open. Reports of current prices being on the lower side along with expected pick up in export and winter season domestic demand in coming weeks could ensure prices find some strong support here. Higher production and higher stock levels have been keeping sentiments weak for sometime. Domestic pharmaceutical Industries demand are likely to rise in coming weeks. Banning of Gutka in some states continues having negative impact on Mentha Oil demand. Production this year expected higher at more than 60000 tonnes vs ~50000 tonnes last year Latest reports from Spice Board indicate that for the period AprilDecember last year, exports for Mint value-added products like Oil, Menthol and its crystals rose 94% in volumes at 17,850 tonnes and 39% in value at Rs 2202 Cr w.r.t. same period the previous year. Research Team Ajitesh Mullick +91120 6795530 [email protected] AVP-Retail Research Mahesh Choudhary +91120 6795529 [email protected] Sr Manager—Retail Research E-mail ID: [email protected] Disclaimer: http://www.religareonline.com/research/Disclaimer/Disclaimer_rcl.html MCX Me nt ha Oil Ja n cont ract Close 723 S1 712 S2 704 R1 732 R2 738 REL/RCL/CRD/TM/06/01 Trend remained strong for Chana as Festive season demand rose in the mandis. Reports of lower sowing further supported the prices. Further uptrend likely in coming days as market sentiments remain firm. Fall in Rabi sowing area for Rabi Pulses too is having a Bullish impact on the prices. Lower production prospects in International markets would make import costlier. Agri Commodities—Fundamentals Jeera NCDEX Jeera Jan co ntract Close 15080 S1 14965 S2 14740 R1 15220 R2 15320 Till 17.11.2014, 60,900 ha have sown as compared to 74100 ha last year. The sowing area during the current year likely to go down in Gujarat and Rajasthan growing regions due to lower price as compared to the Coriander. Area may shift to Coriander and Fenugreek seed. Total Jeera area is likely to go down by 25 -30% during the current period as per trader estimates. Jeera rates shot up strongly as improved Export demand amidst reports of a fall in production supported the prices. International markets closed for the Christmas and New Year Holidays. But exports are likely to pick up as markets open after 1st week of January. Lower production expected this time but improved climate in growing states are reportedly good for the standing crop. Short term trend continues to be determined by these 2 factors even as a fall in sowing area could impart long term Bullishness to the prices. As per latest Govt reports, in Gujarat, normal area for Jeera crop is approximately 388,000 hectares. The latest report from Spice Board of India indicates a pickup in exports during April-Sept 2014 period at 87500 tonnes (up from 70243 in April-Sept 2013) – a rise of 25% in Quantity and 2% in value (due to fall in rates during that time). The targeted Export for 2014-15 period is 1,00,000 tonnes. With Indian produce being of superior quality, they fetch a premium w.r.t. International market producing countries. Adverse reports from International producers would be beneficial for the Indian markets in the long term. The exports have already shot up 40% during the 1st half of the quarter. It is expected to remain high in coming months too – which could create a Bullish sentiment in the long term for the commodity. Finally a fall in area as reported amidst adverse weather conditions in growing areas could help keep market sentiments firm in the medium term. Turmeric NCDEX T urmeric Ap r cont ract Close 8932 S1 8844 S2 8768 R1 9040 R2 9188 Bullish trend persisted for Turmeric as falling stocks amidst rise in Festive season domestic and export demand and lower production reports kept trend positive. Demand is expected to pick up further in coming weeks. Falling stocks too are likely to support the prices. A fall in sowing area in Tamil Nadu and Karnataka due to the cyclone in October amidst delayed Monsoon could affect the production adversely—as per market sources. Even as area in Andhra Pradesh goes up, overall production is expected to come down—lending medium term support to the prices. from the current stock and this factor has been supporting the falling rates to some extent. However, with demand from North low due to crop damage reports from AP and TN but stock levels from earlier years are high. India and Export demand expected to rise in coming weeks, it can support prices to some extent. As per reports from Spice Board of India, the estimated exports of Turmeric during April-September 2014 was pegged at 43000 MT, up by 10% same period previous year in quantity and 15% in value terms, same period in 2013. Lower rains in AP and TN have already adversely affected sowing for the new crop there. The demand is expected to pick up in coming days—lending some support to the prices. Traders anticipate prices are at very low levels and further downtrend may be limited. Last year production was With harvesting yet to pick up strongly, any demand has to be met Guargum NCDEX G uarg um Ja n co ntract Close 12850 S1 12640 S2 12500 R1 13120 R2 13280 With prices finding very strong support at these lower levels, reports of pick up in exports supported the rates for Guar. Firmness in Crude Oil rates further supported the market sentiments. Exports are expected to pick up again as International markets open in January. High stocks, weakness in Crude oil price resulting in low export demand, poor quality arrivals had kept pressurizing prices. However with rates having fallen a lot, exports are likely to pickup in coming weeks. With farmers unwilling to hold onto the poor quality stocks, this has resulted further in prices coming down with increased arrivals. Exports demand has reportedly slackened over last few weeks due to a fall in Crude Oil prices. Any pick up in rates for Crude Oil in coming days could be an additional supporting factors for the exports to rise. As per trader estimates however, production this year is expected 43% lower at 12.5 MMT due to erratic rains. Total arrival is around 1.25 lakh bags,0.4-0.5 lakh bags down from previous year. This could support prices in medium term when exports pick up. As per First estimates advance estimates of Area, Production and Yield of Guar Seed by Rajasthan Government: Area: 3212965 Hectares, Production: 13.39 Lakh MT and productivity: 417 Kg. /Hectare. As per reports from APEDA, in the year 2013-14, India exported more than 6 lakh MT Guargum vs nearly 4 lakh MT in the previous year due to a significant fall in rates. However this also ensured a fall in Export realization which fell by 45% in Re terms. Agri Commodities—Fundamentals Ref Soy Oil NCDEX So y Oil Ja n co ntract Close 635.3 S1 628 S2 624 R1 642.4 R2 648 Trend remained firm for Ref Soy Oil as Import Duty on Crude Edible Oil hiked from 2.5% to 7.5% and on Refined Edible Oil to 15% from 10%.Trend likely to remain firm as domestic demand also remained strong. Fall in International markets had so far kept pressure on the market sentiments while domestic markets traded firm. Rates however continue to find strong psychological Resistance at the 600 level. Total U.S. oilseed production for 2014/15 is projected at 117.0 million tons, down slightly due to a small reduction in cottonseed. Soybean exports are increased 40 million bushels to 1,760 million reflecting the record export pace in recent weeks and prospects for additional sales and shipments ahead of the South American harvest. India’s 2013/14 soyoil imports stood at 1.95 Mn T against 1.09 Mn T in 2012/13 season. Palm oil purchases were slightly lower at 7.29 Mn T against 8.29 Mn T last season. Sunflower oil imports were recorded at 1.51 Mn T against 0.97 Mn T in 2012/13. With crush unchanged, soybean ending stocks for 2014/15 are projected at 410 million bushels, down 40 million from last month but still the highest since 2006/07. India imported 11.62 million tonnes of edible oil during Sep-Oct 2013/14 compared to 10.68 million tonnes during the same period previous season, stated the Solvent Extractors' Association (SEA). Soybean NCDEX So ybea n Jan co ntract Close 3402 S1 3368 S2 3340 R1 3438 R2 3480 Hike in import duty on Edible Oil had a Bullish impact on the Oil complex sector even as International markets remained closed. Indian markets remained firm however as good demand continued. USDA raised its forecast for global production, and expects inventories to reach an all-time high. Bigger global grain and oilseed supplies have pushed world food costs to a 4-year low. Soybean futures are heading for second straight annual losses, the longest slides since 1999. The market analysts are of the opinion that even with record demand, the leftover supply of soybeans before next year’s harvest will be record large. Brazil’s government forecast agency Conab raised its outlook for the domestic crop to a record 9.58 crore tons. That’s bigger than the USDA estimate for 9.4 crore tons. Expectation of fall in soymeal export from April 14 to March 15. Soymeal export likely to fall by 29 % to 20 lakh ton. Last year export 28 lakh ton Low export may pressurize the sentiments. Global oilseed production for 2014/15 is projected at a record 530.7 million tons, up 1.8 million tons from last month. Foreign oilseed production accounts for most of the change on increases for soybeans, rapeseed, and sunflowerseed. based on the latest survey results from Statistics Canada. Global soybean production is projected at a record 312.8 million tons with gains this month for Canada, Ukraine, and Paraguay. Global rapeseed production is projected at a record 71.9 million tons, up 1.2 million mainly on increased production for Canada, which is estimated at 15.6 million tons Global oilseed trade for 2014/15 is projected at 135.3 million tons, up 0.8 million from last month. Soybean exports account for most of the change with higher projections for the United States, Paraguay, Ukraine, and Canada only partly offset by reductions for Argentina and Brazil. Global oilseed ending stocks are projected at 104.1 million tons, up 1.1 million from last month and 23.5 million above year-earlier levels. Increased rapeseed stocks in Canada and higher soybean stocks in Brazil and Argentina are only partly offset with lower soybean stocks in the United States. RMSeed NCDEX RMSeed Jan cont ract Close 4327 S1 4274 S2 4244 R1 4368 R2 4416 An overall firmness in Oil complex along with good demand for Mustard Oil kept trend Bullish for RMSeed also. Reports of crop damage from parts of Rajasthan from recent rains also kept prices firm. Demand rose further for Mustard Oil amidst falling stocks ahead of the Festival season. Cool weather in growing states keep production prospects good though reports of damage to crop in some areas in Rajasthan from the recent rains supported the market sentiments. A fall in other Oil complex and bearishness in International markets prevented strong upside movement though. Demand for Mustard Oil remained strong in the domestic markets and could prevent prices from falling a lot in coming weeks. European Union rapeseed output rose to 22.5 million tons this year from 20.9 million tons,data from the 28-nation bloc show. Gains for EU are partly offset by a reduction for Australia where dry conditions in the southeast have reduced yield prospects. Global sunflowerseed production is reduced 0.4 million tons to 39.8 million on lower forecasts for Russia and Kazakhstan As per Ministry of Agriculture, Rajasthan area coverage in Rabi season 2014-15 till 17th Nov was 24.24 lakh ha vs 25.16 lakh ha in 2013-14. The government has set a target of 29 lakh for this year. The fall in area was due to high temperature in Oct and lack of rains. Farmer are reportedly shifting to Barley and Wheat. Crops also faced germination problem due to the high Temperature. Haryana area coverage in Rabi 2014-15 till 30thOct was reportedly nil while it was 2 lakh ha in 2013-14 during this time. The reason is again the high temperature during Oct. MP area coverage in Rabi 2014-15 till 30th Oct. was 3.80 lakh ha while it was nil in 2013-14. Due to good rains in Oct and fields being unused, early sowing was possible there. UP area coverage in Rabi 2014-15 till 30th Oct was 4.91 lakh ha while it was nil in 2013-14 during this period. As fields this year were unused in kharif season, so farmers had sown Mustard early in UP. Mustard area coverage in All over India is 18.64 lakh Ha during Rabi 2014-15 and 14.08 lakh ha in 201314, area coverage during Rabi 2014 -15 is higher by 4.56 lakh ha compared to corresponding period of Rabi 2013-14