Commodity Online
Turnover in India’s commodity exchanges continue to grow at a healthy pace despite the slowdown, thanks to increased trade in gold. Turnover of commodity exchanges in the country soared by 31.6% to Rs 4,160,260 crore in current financial year till January, against Rs 3,161,092 crore in the same period last year.

Gold bullion at Rs 2,304,151 crore was the market leader followed by agricultural commodities at Rs 5,00,207 crore during the period under review. Bullion trade surged by 81% in the fist 10 months of FY09.

Meanwhile, the Union Government presented the Interim Budget for 2009-10 to Parliament which had put special focus on what the governemnt did for agriculture but major announcements for commodity sector including lifting of ban on four more items, the commodity transaction tax in view of the impact it may have on the electorate. Inflation growth has been completely reversed which augurs well for the government, however, the economic downturn continues to have its impact on major commodities although recovery was visible in Rubber and Sugar market was steady.

Precious Metals
Gold prices continued their bullish trend in the last week, as rising risk aversion amidst weakening global economy increased safe haven demand, leading to sharp rise in precious metal prices. Risk trend continues to drive movement in Gold and Silver prices. Pure Gold prices in Mumbai, the major gold hub in India, touched an all time high of Rs. 15,700/10gm on Thursday. Prices have risen sharply over the past few weeks on the back of strong investment demand as the global economic scenario continues to remain grim.

SPDR gold trust, largest gold ETF increased its gold holding above 1000 tons. Gold and silver prices are likely to gain further in coming days amidst growing economic troubles and increased risk aversion among traders. Market is still skeptical over the success of stimulus package offered by US. Trillions of dollars of government spending is coming which could spur inflation once economies start reviving, leading to further buying & boosting the metal’s appeal as a hedge against accelerating prices. Physical demand at these prices can remain subdued but investment demand will be robust. After breaching key resistance level of $932 per ounce, strong buying has emerged in gold. In the short term spot gold prices can face resistance around $990/1030 levels, whereas crucial support is seen at $950/930. MCX April Gold can face resistance around Rs.16045/16440 levels, whereas support is seen at Rs. 15310/14920 per 10 gram.

Crude Oil
Crude Oil prices extended their losses in the last week, as falling demand, strong dollar and weakening global economic outlook put prices under pressure. Prices managed to recover towards the end of week, after weekly inventory report showed unexpected fall in Crude Oil stocks for the first time in 2009. Rise in refinery utilization rate and fall in oil imports led to decline in oil stocks. Fuel demand during the past four weeks in US averaged 20 million barrels a day, down 0.1 percent from the average over the same period last year. Even though inventory data showed drop in oil stocks, the bearish picture for Crude oil consumption is still in place. With economic conditions are worsening across the major oil consuming nations, demand is unlikely to increase in the medium term.

All major oil organizations are reducing their demand forecast for this year, also signifies the fact that world economy can take longer than expected time to recover from current crisis, keeping bears in favor. Firm dollar against major currencies can also put pressure on oil prices. Grim economic data across major nations is raising concern over the health of global economy. OPEC is pondering of another oil supply cut in the next month; is the only factor which can support oil prices at lower levels. NYMEX April Crude Oil prices are expected to trade in the range of $35 and $48 in the short term. MCX March Crude Oil futures have support at Rs. 1870/1780 and resistance is seen at Rs. 2110/2240 per barrel.

Rubber
Both natural Rubber spot market and Futures have shown signs of recovery from the beginning of this week. On Friday, rubber gained in the spot market on covering purchases and shortfall in supply The physical rubber market made further gains on Friday. Covering purchases continued to lift the prices to higher levels taking advantage of the dip in arrivals.

In Tokyo Commodity Exchange, the weekend trend was mixed. Despite opening higher, short covering was dominant on early trades amidst gains in oil and Gold futures. But sentiments weakened later as buying dried out limiting the morning gains following signs of weakness in oil on late trades. The slump in Japanese currency Yen also proved attractive to investors. Futures in Tokyo gained as much as 2 percent, recovering from a two-month low reached recently.. A weaker yen is positive for the price of futures as rubber trades globally in dollars Rubber for July delivery, the most-active contract, added 1.7 percent to 134.2 yen a kilogram ($1,431 a metric ton) on the Tokyo Commodity Exchange.

In the domestic market, certain major manufacturers were active on sheet rubber during the session. The grade moved up sharply to Rs 71 from Rs 69.50 on sustained demand. The market made all-round gains but the volumes were still low.
The March futures for RSS 4 firmed up to Rs 71.10 (70.79), April to Rs 72.10 (71.82), May to Rs 73 (72.82) and June to Rs 73.25 (73.42) a kg on National Multi Commodity Exchange (NMCE).

With automobile manufacturers slashing production and crude oil still not fully recovered could put downward pressure on prices for some more time to come.

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