Soybean
Soybean (NCDEX December contract) futures opened the week at 2273 levels then witnessed a sharp rally towards 2347 levels and managed to close with a gain of 3% in the last week as compared to previous week. Prices surged on account of lower production estimates and better export figure of oil-meals in the month of October also provided support to bulls in the market. As per the 47th All India Convention of Kharif oilseeds by Central Organization for Oil Industry & Trade (COOIT) held at Indore on 1st November 2009, Domestic soybean production estimates declined to 85 lakh tonnes for this year from 89 lakh tonnes last year.

Domestic Kharif Oilseeds crop is estimated at 136.5 lakh tonnes for the year 2009-10 against 150.30 lakh tonnes last year (2008-09). Overall oilseeds yield has reduced to 780 kgs during current kharif crop from 815 kgs/ha last year. Higher export figures of oil-meals in the month of October also added bullish market sentiments. As per the Solvent Extractors' Association, India's oil-meal exports during October doubled to 3.10 lakh metric tons from 1.53 lakh metric tons a year earlier. However, oil-meal exports in the first seven months of the fiscal year (April to October) declined to 15 lakh tonnes from 27 lakh tonnes a year earlier. India exports oil-meal mainly to the South East Asian countries. NCDEX December Contract shall find strong support at 2270/2230 and resistance at 2400/2450.

Chana
Chana futures gained almost 7% in the last 2 weeks on the concerns of lower acreage under Chana in Rajasthan and firm prices of Kharif Pulses. Farmers in Rajasthan have so far completed sowing of Chana on 2.2 lakh hectares, down 39 percent during the same period last year. Rajasthan is the second largest Chana producing state in India and contributes almost 15% of the total acreage under Chana. The prices of Kharif Pulses are ruling high due to lower output estimates. According to the first advance estimates, Kharif Pulses output is expected to decline to 44.2 lakh tonnes against 47.8 lakh tonnes produced last year.

The government hiked the Minimum Support Price (MSP) of Chana by Rs 30 per quintal at Rs. 1760 per qtl as sowing for the Rabi season has begun. Chana prices are likely to remain firm in the short term (2 weeks) and could recover further by Rs. 100 per qtl on good demand for cheaper substitute and on lower acreage under Chana. However, in the medium term, no major upside is expected in the Chana prices as India is having huge stocks of Chana from the last year’s bumper harvest. NCDEX December Contract shall find strong support at 2660/2590 and resistance at 2770/2800.

Guar seed
Guar futures during the last week had broken its all time high (Rs 2445 per qtl) since its launch on NCDEX. The only fundamental reason for this break out is the drastic fall in Production (almost 60-65%) in the current year due to deficient rains. Guar production is currently estimated to be 35 lakh bags as compared to 85-90 lakh bags in the previous year. Arrivals have gathered momentum since last few weeks however, if compared with the last year the pace of arrivals is very slow due to drop in output. Daily fresh arrival of Guar seed stands at around 12-13 thousand bags all over India compared to 25-26 thousand bags during the same period last year. Whereas arrivals of old stocks are around 9-10 thousand bags. With crude oil hovering around $80 a barrel, the industry is hopeful of renewed demand for guar gum that is used in fracturing of oil and gas formation. Adequate carry-over stocks would partly offset the loss in the production. Still, in the short to medium term prices are bound to gain sharply due to supply tightness. NCDEX December Contract shall find strong support at 2530/2440 and resistance at 2675/2750.

Rubber
Spot rubber prices traded steady for most of the week, as traders waited for positive trading signals from consuming industries before making commitments with growers and buyers. RSS4 grade spot rubber prices ruled steady at Rs 109.50 per kg while November Futures traded in a narrow range between Rs 109-1110.80 while December Futures traded between Rs 110 and Rs 11.80.The weather forecasts on North-East monsoon and the uncertainties in the domestic scene kept most of the traders on the sidelines. The market seemed to have lost direction and appeared to approach a stand-still position. Meanwhile, 60% latex prices slumped on weak demand.

During April–August this year, production fell 13 per cent to 273,575 tonnes, but consumption increased by 2.1 per cent to 376,350 tonnes. In April–September, production dropped by 12.4 per cent, while consumption rose by 2.5 per cent.It is also estimated that India would require two million tonnes of NR by 2020.The main reason for the low growth in production is slow rise in acreage in Kerala, where 92 per cent of India’s rubber is grown. There is a problem in getting vast areas of land for plantation crops like rubber; fresh planting is also low in Kerala.

Stronger yen and slight downfall in crude oil prices led to weakening of futures at Tokyo Commodity Exchange this week after withnessing initial gains and on Thursday settled at 227 Yen per kg. Apart from oil rally, the supporting factors for rubber futures are Thailand’s fall in output from 3.1 tonnes last year to below 2.5 tonnes this year.

Pepper
The bull-phase for pepper isn’t over as prices rose 7% this week although pepper futures have fallen on profit taking and selling pressure towards weekend on availability of cheaper pepper reported from other major origins. The November contract at National Commodity and Derivatives Exchange lost Rs 275 to close at Rs 14798 while December contract lost Rs 274 to trade at Rs 14990 on Friday. The November contract had traded at Rs 15300 plus levels and December close to Rs 15600 levels this week but has fallen on reports of cheaper prices for Brazil, Vietnam and Indonesian origins. Indian origin is being quoted at $3,350 per tonne while Brazil is being quoted at $3000 thus capping the bull run in pepper spot and futures. On Friday, Spot pepper fell by over 13 rupees and ended at 14,991.8 rupees per 100 kg in Kochi, a major trading hub in Kerala. The prices were ruling at 15100 levels at the beginning of the week.

Next week, there could be a reversal of trend with prices climbing back to Rs 15100 levels as global stock and demand continues to be mismatched. Major Europe, US consumers need 15,000 tonnes monthly while total availability as of now is 45000 tonnes. Supply situation is expected to ease only by February when Vietnam harvest begins.

Wheat
Wheat futures witnessed two weeks of volatility aided by pre-dominant bullish sentiments as makets awaited the government announcement of minimum support price for wheat and on Tuesday  November futures at National Commodity and Derivatives Exchange rose to Rs 1443 per quintal but thereafter profit taking and lower than expected support price hurt market sentiments. Towards weekend, the November contract ended lower at Rs 1425 per quintal. Farmers were expected a support price of Rs 1180-2000 per quintal while the announcement fell far short at Rs 1100 as against prevailing support price of Rs 1080. Delay in release of buffer stock into open market aided bullish sentiments and kept prices from falling. The government paid farmers 1,080 rupees per 100 kg for the 2009 harvest. Some traders said they had expected the support price to be raised to 1,180 rupees and hence are expecting the government to offer a bonus above the support price to boost acreage and procurement.

India aims to raise wheat output by 2 million tonnes this year to 82.58 mn tonnes, India’s Agriculture Minister Sharad Pawar said recently.

The delay in release of 3 million tonnes for a 6-month period beginning October has also supported the recent rally in wheat. As on October 1, India had 28.18 million tonnes of wheat stocks, while the buffer norm was 11 million tonnes. At the beginning of the new marketing year in April 2010, stocks are estimated at 10 million tonnes. Wheat futures will go range-bound on inadequate support price and hopes of rise in rabi output. (With analytical inputs from Angel Commodities, Mumbai)