Commodity Online
Barring sugar, all other agri commodities have turned bearish since the beginning of the new year, providing much needed relief to consumers and policy makers. Prices of agricultural commodities have declined by up to 11 per cent since January 1 which analysts attribute to a downward turn in the global markets. Also, fresh arrivals, including pulses, have provided relief to the government.
India surpassed China as the world’s biggest buyer of palm oil as rising incomes increased demand for fried and processed foods and drought reduced domestic cooking oil production. The country imported 7 million tonnes in 2009, more than China, data from the Mumbai-based Solvent Extractors’ Association of India shows.
A two-day international seminar on wheat and wheat products will be held at Ahmedabad from February 19, with the theme ‘towards millennium development goals'. Prof K.V. Thomas, Minister of State in the Ministry of Agriculture and Food, will deliver the valedictory address, organisers said.
Gold
Gold futures started the week at Rs 16911/10 grams, initially surged to 17014 levels on weakness in US dollar. Later, gold prices slumped sharply in middle of the past week, taking cues from the movement in the dollar, though managing to recover slightly towards the end of the week. Gold prices are expected to improve in coming days on expectations of further weakness in the dollar. It is the dollar factor that is primarily determining bullion prices. Officials of the Federal Reserve Bank stated last Thursday that lending rates in the US may remain low for as long as two years.
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The Federal Reserve has kept its target rate at zero percent to 0.25% since December 2008 to revive the economy. On the back of expectations of a lower interest rate in the US, the dollar is expected to weaken further. Weakness in the dollar will help gold prices as a weaker dollar will make the yellow metal look attractive for holders of other currencies. In 2009, the rise in gold prices was mainly backed by the weakness in the dollar. Gold prices could continue to witness an uptrend in prices and the bullish phase in the yellow metal could continue. MCX Feb Gold shall find a strong support at 16630/16425 levels and resistance at 17100/17250 levels for the coming week.
Copper
Copper prices moved southwards on concern that a slowdown in Chinese bank lending could dampen growth in the world’s third-biggest economy. But a weaker dollar could help to cushion prices on the international front. The People’s Bank of China will increase the proportion of deposits the country’s lenders must set aside as reserves in an effort to rein in growth. China’s economy is overheating as asset bubbles and inflation pressures build. China is the driver of base metals demand and slowing growth in China could lead to concerns for base metals. We expect prices to face downside pressure on the back of this data. MCX Feb Copper shall find a strong support at 333/326 levels and resistance at 350/358 levels for the coming week.
Crude Oil
Crude Oil prices fell sharply in the last week as a rise in oil inventories, milder winter in the US and CFTC regulations also added selling pressure in the commodities. Oil prices started witnessing downside pressure after supplies increased in the last week. Distillate fuel stockpiles rose for the first week in five last week. Heating oil and diesel stockpiles increased 1.35 million barrels to 160.4 million, 18% above the five-year average. Crude oil stockpiles climbed a second week, adding 3.7 million barrels or 1.1% to 331 million.
