Commodity Online
The country's largest commodity exchange, MCX, on Wednesday launched futures contracts in four farm commodities -- wheat, chana, guarseed and turmeric.The turmeric contract is available for November delivery, chana for January 2010, guarseed and wheat for February 2010 delivery,

The annual rate of inflation, as measured by the wholesale price index (WPI), touched a 20-week high of 1.21% for the week ended October 10 after a marginal increase in the costs of food and manufactured items, a government release on Thursday showed. Inflation was 0.92% the week before.

Spice exports registered a 5.7 per cent drop in volume and a 5 per cent decline in value during the first half (April-September) of the year compared with the same period last year. They had declined 10 per cent in volume and 9 per cent in value last year. This slowdown, in terms of percentage, signals a recovery in the sector, which will be a boon for the next half of the year.
Futures trading in farm commodities has boosted business at 22 commodity exchanges as the combined turnover of these bourses has shot up by 29.91 per cent to Rs 33,63,845 crore till September this financial year, the Forward Markets Commission (FMC) said.

The turnover of the exchanges stood at Rs 25,89,289 crore in the year-ago period, it said. In the first six months of the current financial year, the business from agri-futures increased by 60.70 per cent at Rs 526,999 crore, due to the removal of ban on a few agri items, commodity market regulator FMC said in its report.

US stocks fell on Friday, with the major indexes slipping for the first week in three, as industrial companies' weak results overshadowed robust earnings from tech and retail heavy-weights. The blue-chip Dow average finished below 10,000 for the second time this week. A stronger US dollar hit commodity prices, hurting the energy and materials sectors, while an analyst's comments on a major railroad's stock hit the transports sector

Bullion
Spot Gold prices have gained around 1% in the last week, touching a high of $1,067/oz. Prices are trading higher on the back of a weaker dollar which is making the yellow metal look attractive of holders of other currencies. Rising crude oil prices are also pushing Gold prices higher as they raise concern over inflation, which in turn leads to higher demand for gold as a hedge against inflation. The Dollar Index has lost 0.5% last week and it is hovering in a range of 75-76.

Gold prices have strong support on the downside in the form of a weaker dollar. In the near-term, we expect this factor to support prices. Prices have raced too far too fast as the weakening condition of the dollar made the yellow metal look attractive for holders of other currencies. Also, uncertainty over the pace and strength of the economic recovery has led inventors to purchase the metal as a traditional safe-haven asset. We expect gold prices to remain firm in the near-term. We expect spot gold prices to trade in the range of $1,049 - $1,069/oz and MCX Dec in a range of Rs 15,840 – Rs 16,220 per 10 gram in the coming week. Silver prices are expected to move northwards in the coming week with a strong support (MCX Dec contract) at 26750 levels and resistance at 27960 levels.

Copper
The red metal has gained almost 7% on the LME in the last week and touched a high of $6,686. Copper prices could rise in the near-term as the following factors could fuel the upside – 1) today’s Chinese economic data should support base metal prices, 2) the outlook for base metals is staring to improve significantly as market balances finally start to tighten and 3) supply disruption at Chilean copper mines will continue to provide support.

Explore Commodity Online Mobile Services

China’s economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. Chinese economy surged 8.9% in the third quarter and retail sales and other indicators were robust in September. China’s economic growth has shown steady recovery in the past three quarters, as the GDP grew by 6.1 percent in the first quarter and 7.9 percent for the second quarter. Though the data has come in below market expectations, we feel that it could have a positive impact on base metal prices. The Chinese government said that it will maintain stimulus measures, though they have still not provided any clarity on this front. The trend in Copper prices remains up for the near-term. In the coming week, we expect copper prices to trade in the range of $6,250 - $6,840 on the LME and Rs 290 – Rs 318 per kg on MCX.

Crude Oil
Oil prices have gained 3.5% this week and have comfortably found support around $80/bbl. A weaker dollar is making the dollar-denominated commodity look attractive for holders of other currencies. But, fundamentally the price rally in crude oil may not be justified because during this season US refiners shut down their refineries for maintenance. Hence, it is bearish for oil prices.

Oil prices have managed to cross the psychological mark of $80/bbl as a weak dollar is supporting prices on the upside. If the dollar continues to remain weak then oil prices could continue to receive upside support. Oil prices may feel pressure on the downside as the Organization of Petroleum Exporting Countries (OPEC) will agree to increase production at a December meeting. The 12-member group is expected to meet on 22nd December in Luanda, Angola to review output targets. OPEC accounts for around 40% of the world’s oil production and the members agreed in September 2008 that the 11 countries with quotas would trim output by 4.2 million barrels a day to 24.845 million.

Though increasing output by the OPEC is bearish, we feel that oil prices could rise in the near-term on the back of economic recovery coupled with a weaker dollar. For the coming week, we expect crude oil prices to trade in the range of $79 - $83/bbl on the NYMEX and Rs 3,677 – Rs 3865 on the MCX. The trend in crude oil prices remains up for the near-term.

Soybean
Soybean (NCDEX November contract) futures opened the week at Rs 2092 a quintal, initially moved southward on account of harvesting pressure of new crop and found strong support of Rs 2031 per quintal. Then prices recovered sharply northwards in tandem with soybean futures on Chicago Board of Trade and made a high of Rs 2110 per quintal in the last week. As per Government officials, India is planning to allow the export of 10,000 metric tonnes of edible oil in the marketing year starting November. Lower availabilities of old crop in domestic market as new crop is not fit for crush yet due to higher moisture contents also provided support to bulls in the market for short term.

The USDA’s weekly exports sales figures released on Thursday, which was supportive for soybean prices. Net soybean sales were 987,300 tonnes. As of October 15th, cumulative soybean sales stand at 62.7% of the USDA forecast versus a 5 year average of 38.1%. Sales need to average just 289,000 tonnes each week to reach the USDA forecast. Net meal sales were 115,700 tonnes which pushed cumulative meal sales to 41.3% of the USDA forecast for 2009/2010 versus a 5 year average of 26.4%. Sales need to average 104,000 tonnes each week to reach the USDA forecast. Net oil sales were 23,300 tonnes. Cumulative soybean oil sales stand at 43.0% of the USDA forecast for 2009/2010 versus a 5 year average of 16.4%. Sales need to average 17,000 tonnes each week to reach the USDA forecast. In the coming week, prices are expected to trade range bound on lack of fresh fundamentals with strong support at 2050/2000 and resistance is seen at 2150/2200 levels.

  Continued...