Commodity Online
Will the India futures market in commodities become a round-the-clock operation? ICEX, the newly approved comex has claimed in its brochure that it will enable “trading beyond midnight” which has been objected to by markets regulator, Forward Markets Commission. Meanwhile, the largest bourse, MCX has asked FMC to consider extending trading beyond midnight in some global commodities such as bullion and energy. At present, comexes open at 10 am and close by 11.30 pm.

The combined turnover of 22 commodity exchanges surged by 31 per cent to Rs 36,59,787 crore till October this fiscal compared with Rs 27,94,879 crore in the corresponding period last year.

The Dow industrials suffered its worst slide since July on Friday on concerns that the economic recovery won't be robust enough to sustain the seven-month stock rally, while financials sank on renewed worries about Citigroup's balance sheet. Investors unloaded shares across the board on the day that marked the end of the fiscal year for many mutual funds, putting the S&P 500 on the brink of a correction. Wall Street's favorite measure of investor fear, the CBOE Volatility Index, soared 24 percent -- its biggest one-day percentage gain since October 2008 -- and the Dow had its worst day since July.

India’s inflation rose fastest in six months to stand at 1.51 per cent for the week ended October 17, primarily due to rising oil prices on a year-on-year basis.The headline inflation rate, as measured by the Wholesale Price Index (WPI), stood at 1.21 per cent for the previous week ended October 10, and was 10.82 per cent during the corresponding period in 2008.

Bullion
Spot Gold prices have gained around 3.7% in the month of October and the yellow metal touched a high of $1,070/oz in the same period. Weakness in the dollar contributed to the rise in gold prices as fundamentals were still subdued. 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.

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The US Federal Reserve is not expected to raise interest rates at next month’s meeting. Hence, in the short-term the dollar could continue to witness downside. This factor could provide support to gold prices. At the same time, gold prices may not witness new highs as markets could now become wary of Fed’s interest rate decision. Interest rates may not rise in the immediate meeting but we could see that happening by the year end. Until then the weaker dollar will remain a catalyst to the rise in gold prices. In the coming week, Spot Gold prices have support at S1 $1,019 S2 $997 and face resistance R1 $1,062 R2 $1,078. Gold prices on the MCX will find support at S1 Rs15,810 S2 Rs15,540 and face resistance at R1 Rs16,050 R2 Rs16,250.

Base Metals
Copper prices have gained 7.2% in the month of October and this sharp rise in prices was backed by weakness in the dollar, industrial threats and strikes at mines coupled. Copper prices could rise in the near-term as the following factors could fuel the upside – 1) strong Chinese economic data should support base metal prices as demand prospects improve, 2) the outlook for base metals is starting to improve significantly as market balances finally start to tighten and 3) supply disruption at Chilean copper mines will continue to provide support.

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.

US GDP grew in the third quarter for the first time in more than a year, expanding at a 3.5% rate from July to September. The data was positive and showed that the economy returned to growth, thereby reducing the US currency’s safe-haven allure and sending investors to higher-yielding assets for better returns. Demand prospects for base metals will improve as the world’s largest economy comes out of the recession. In the coming week, we could witness bulls take charge of the base metals complex. Positive economic growth could lead to improvement in demand from the Western world in the coming year.
Fundamental prospects in the case of base metals could turn brighter as US reports positive economic growth. This news is expected to provide upside to base metals in the near-term. The dollar could weaken as risk appetite in the financial markets could rise and lead to increase in demand for higher-yielding and riskier investment assets. In the coming week, copper prices on the MCX will have support at S1 Rs303 S2 Rs291 and face resistance at R1 Rs319 R2 Rs332.

Crude Oil
Oil prices gained a whopping 12.6% in the month of October despite poor demand situations. A weaker dollar made the dollar-denominated commodity look attractive for holders of other currencies. 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. But the upside could be capped in the coming week if oil inventories continue to rise. In the coming week, crude oil prices will have support at S1 $76.40 S2 $73 and face resistance at R1 $82.40 R2 $82.50. On the MCX oil prices will have support at S1 Rs3670 S2 Rs3550 and face resistance at R1 Rs3810 R1 Rs3920.

Soybean
Soybean (NCDEX December contract) futures witnessed a rally during the last week. Prices opened the week at 2191 levels, initially fell slightly but found strong support at 2178 levels. After making a low of 2178 levels prices surged northwards and made a high of 2266 levels and gains 4% in the last week as compared to previous 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. As per Soybean Processors Association of India (SOPA), estimates for soybean production for 2009 declined to 97.25 lakh tonnes (down 10%) compared to 108 lakh tonnes last year.

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. Recent USDA’s weekly exports sales figures were supportive for soybean prices. Prices are expected to move slightly higher on lower stock of old crop and firm overseas market amidst tight supply. However, for long term, soybean prices are expected to move southwards on account of poor export demand soy meal and higher global production estimates of soybean this year as compared to last year. As per the latest Monthly Supply & Demand Report (USDA), Global oilseed production for 2009/10 is projected at 423 million tons, up 7.36% as compared to 394 million tonnes in 2008-09. Global soybean production is projected at a record 244 million tons this year, up 16% as compared to last year. NCDEX December Contract shall find strong support at 2190/2125 and resistance at 2300/2350.

Jeera
Spot prices at Unjha were quoted at steady to slightly lower rates due to fall at the futures. Demand from the domestic is expected to improve ahead of winter season. Daily arrivals at the domestic market are in a range of 6000- 8000 bags against similar offtakes. Indian Jeera prices in the international market were quoted at competitive rates at around $2440/tonne whereas Syria and Turkey were quoted at higher rates at $2700/tonne. Thus, overseas buyers are expected to be place their orders in India.

This may provide support to prices in near futures. Further, at the domestic market there are lower stocks of Jeera till the fresh crop arrivals in the month of March 2010. Prices touched a high of Rs. 13,050/qtl, dipped by Rs.625 and currently trading in range-bound manner. Prices in the short term are likely to trade in sideways to up manner due to price supportive fundamentals. Prices are likely to find support at 12,400/12,100 levels and resistance has seen at 13,050/13,500 levels.

Pepper
Pepper futures had risen six percent in the previous week and therefore, traders seemed eager to book profits this week. Spot markets also witnessed brisk activity at Indore, Gwalior, Jaipur, Kochi, Mumbai among other centres.Pepper futures continued to be bullish this week with prices gaining upto 5% on Thursday when the bench market November contract at National Commodity and Derivatives Exchange of India (NCDEX) touched the 14963 mark. On Monday, the pepper futures had broken the second circuit levels to end at Rs 14788 per quintal.But towards weekend the market was set for correction on profit booking and weak demand at higher levels. The November contract closed at Rs 14,860 a decline of Rs 143. Market is now entering a ‘wait-and-watch mode. The December contract fell to Rs 15025 while the January contract slipped to Rs 15,187. With the Brazilian pepper quoting lower, there is global pressure on prices. Lower stocks and firm demand is limiting losses, therefore, a firm trend is indicated in near-term.

Rubber
Rubber futures in India and TOCOM were trading on a bullsh note as upside in crude oil prices and supply concerns due to north-east monsoon weighed on market sentiments although the week began on a depressing note with spot prices slipping to Rs 109 per kg. Traders are staying back from the market following predictions on the onset of the north-east monsoon.Spot RSS 4 ended the week at Rs 110 per kg while the NMCE November futures at National Multi-Commodity Exchange of India (NMCE) was trading at Rs 111 levels. Increasing crude oil prices are giving firm support for natural rubber, analysts said. April Delivery Rubber rose to 233 yen last week in TOCOM after initially fallen to 227 yen levels on falling crude prices. Weakening yen against the dollar also raised the appeal for yen-denominated contracts.

Wheat
India wheat futures crossed the crucial Rs 1400 per quintal level past week on expectations of government announcing a higher support price and delay in release of government stocks. The November wheat contract at National Commodity and Derivatives Exchange (NCDEX) roseto Rs 1426 per quintal before settling at Rs 1417 with a gain of 1.07% on Friday.

Positive factors that led to bullishness in wheat were the government announcements of release of 3 million tonnes of wheat for the six months beginning October 2009 although the stocks are yet to be released thereby supporting price levels. The prices may attain Rs 1500 mark if minimum support price is raised to encourage farmers to plant more rabi crop. Rabi crop sowing will begin in the first week of November.The government on Tuesday said that it has revised its wheat output target by 4% to 82 mn tonnes in 2009-10 as unseasonal rains have raised soil moisture that could boost yield. s 2009/10 wheat output target by almost 4 percent to 82 million tonnes, a top official said.

At the beginning of October the country 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 are expected to maintain trend and remain bullish.

Chana
Improved spot market demand and firm prices of kharif pulses have supported chana futures in National Commodity and Derivatives Exchange in the past past although sufficient stocks and expected increase in sowing were limiting gains. Futures prices had gone upto 2504 levels but on Wednesday slid on reports of ample stocks but thereafter rose sligh. The November contract fell marginally to Rs 2471 on Friday while December contract fell to Rs 2561 from a high of Rs 2601 in the beginning of the week.

Chana, a rabi crop is priced lower than kharif pulses like tur, urad and moong, but follows their trend as consumers tend to buy the cheaper substitute. Two major factors limiting upside gains are imports from Australia and Tanzania due for delivery in November and December. (With analytical inputs from Angel Commodities, Mumbai)