Outlook
The overall trend in base metals remains down as the global economic situation is weak and the recessionary impact is felt across the globe. We expect base metals to remain range bound and consolidate further as a major back-up has come by way of the Chinese stimulus package. This could be implemented in the coming year and may help in providing a respite to the weakening market.

Though inventories are rising the coming quarters could witness a pick up in physical buying from China if the stimulus package is implemented for infrastructure development. Fundamentally, we feel that production cutbacks by miners coupled with an expected pick-up in physical buying from China could help the complete base metals pack revive. But this could be seen in the coming year as we start feeling the impact of production cutbacks and physical buying. Until then, markets are expected to remain volatile.

Black Pepper
Pepper prices at the spot markets in the previous week were quoted at firm rates but declined on Thursday on selling pressure by the market participants at the Futures. There are lower stocks of Pepper with the stockists as well as Indian exchanges. Further, fresh picking is expected to be delayed. There are also reports that the Pepper crop for the year 2009 would be lower in Wayanad and Iddukki district of Kerala which account for 80% of Pepper production in India.

This may support the prices to strengthen in the short term due to buying by the domestic buyers. Indian Pepper prices at the international market are quoting at competitive levels. But, overseas buyers are reluctant to place fresh orders due to global financial crisis. If, overseas orders are placed in good quantity prices may find support and strengthen. Pepper Futures December contract have a strong support at Rs.11,375/quintal and strong resistance at Rs.11,710/quintal.

Sugar
Sugar prices had continuously fallen since last 2 weeks due to the delivery pressure in the near month contract which expired on 20th November 2008. Prices traded in the range of Rs. 1798-1765 per qt. during the last week. Total deliveries touched 32,000 tonnes as on 17th November, compared with 10390 MT delivered last month. Prices have shown some signs of recovery towards the weekend ahead of a High Court hearing on cane purchase price in Uttar Pradesh.

We are not expecting a firm outcome from the hearing, which may delay large-scale cane crushing in UP, the country's second-biggest producer, leading to a shortfall in the sweetener. We expect Sugar prices to further recover in the coming week due to delay in crushing in UP and lower Sugar production estimates in the global markets.

Rubber
In recent months there has been a sharp fall in rubber prices due to the economic slowdown. Sajan Peter, Chairman, Rubber Board pointed out the other day that weaknesses in global automobile industry is reflected in the weaker demand for natural rubber. The falling crude oil prices has made synthetic rubber cheaper as it is a petroleum product that can partly substitute natural rubber in tyres. Throughout the week, rubber prices were weak.

On Tuesday, rubber prices made heavy losses as major consuming industries kept off from trade. This resulted in panic selling by growers and traders putting further downward pressure on prices. Negative cues as a result of heaving selling pressure in rubber futures at Tokyo Commodity Exchange only compounded the agony. Sentiments were hit badly by sharp declines in oil futures.

Rubber prices couldn’t recover during the weakend on negative report from TOCOM and absence of buying support from domestic industries.. RSS 4 closed at Rs 63 (65) a kg after hitting an intraday low at Rs 62 a kg on early trades following moderate selling from dealers and growers.

Meanwhile the Union government has started a unique rubber cultivation scheme in a predominantly tribal area, where Naxalite activity is on the high. The scheme was launched at Rampachuodavaram in East Godavari district of Andhra Pradesh by the Minister of State for Commerce & Power,Jairam Ramesh. He said the scheme was designed to provide livelihood and income security to aboriginal tribal families.

Crude Palm Oil
Weakness in Malaysian BMD CPO futures was reflected in the Indian market throughout the week with mixed to steady sentiments prevailing. Government’s decision of allowing export of edible oils lent support to the market. The government had increased export tax on crude palm oil to a maximum 10% in September. CPO exports declined to 618,000 tonnes in September from 960,000 tonnes in August. The Indian edible oil industry has sought 30% import duty on crude palm oil and 27.5% import duty on refined soy oil to protect the interest of the farmers and refiners.

Palm oil constitutes more than 75% of the import basket. India is allowing the exports of edible oil in small branded packages of 5 kilograms with immediate effect. Exports will be allowed till October 31, 2009 and the volume has been fixed at 10,000 metric tonnes during the period. It has also allowed the exports of fish oil without any condition. Crude Palm oil is likely to trade range bound with a weak bias in near term. (With analytical inputs from Angel Commodities, Mumbai)