Commodity Online
Global rice trade is set to rice by 6% this year to a 3-year high of 30 mn tonnes, according to International Grains Council. The global wheat production may decline by 2.37 per cent to 659 million tonnes (mt) in 2010, while output in India, the world's second-largest producer of the grain, is expected to remain stable at last year's level.

A recent report of the Council said that rice trade would be higher than the five-year average due to a rebound in shipments to Asia Deliveries to Far East Asia are forecast to rise 20%, to 8.1 million tonnes, due to strong imports by Bangladesh and the Philippines.

After almost close to two years of the ban on export of non-basmati rice in the wake of fears of domestic shortage of rice from early 2008, the Government has partially lifted the ban on export of non-basmati rice by permitting its exports to Sri Lanka and Nepal with a ceiling on diplomatic grounds to keep the friendly ties with neighbours.

Ahmedabad-based commodity bourse NMCE will shortly go into fund raising mode to shore up its paid-up equity capital from Rs 16.7 crore in keeping with the regulatory stipulation of at least Rs 50 crore equity capital for a bourse which has completed five years of operations.

The bourse plans to raise equity through a combination of a fresh sale of shares to domestic and foreign investors and a rights issue, according to news reports.

Food inflation rose marginally to 17.87% for the week ended February 20 on the back of higher prices of milk, wheat, rice and vegetables. The figure in the previous week was at 17.58%. On an annual basis, price of rice increased 10%, wheat 14%, pulses 35%, onions 11% and potatoes 28%.

Inflation in fuel, power light and lubricant group was 9.59%, slightly lower than 9.89% in the previous week. However, it is expected to surge significantly next week when the impact of the fuel price hike would be reflected in the index

National Mineral Development Corporation (NMDC) is planning to raise long-term contract prices of iron ore by 40-50 per cent, effective April 1, 2010. On January 1, the company had raised iron ore prices by Rs 270 per tonne across all grades, which works out to 6-15 per cent depending on the variety of iron content.

Gold
Spot Gold prices gained last week as the dollar index weakened and it made an attractive towards the yellow metal as an alternative investment. However, sharp gains in the yellow metal faded towards the end of the week on mixed economic data updates from the US. Consumer spending in the US in January increased 0.5% as against a previous of 0.3% in December 2009 which reflected signs of economic recovery in the world’s largest economy. The February non –manufacturing PMI index in the US increased to 53 as against forecasts of 51. Data reveals that the US companies have cut the fewest jobs in February in two years, increasing confidence in the economic recovery.

The US Department reported yesterday that jobless claims dropped by 29,000 to 469,000 last week. The unemployment claims declined from a three month high last week reflecting some improvement in the labor market. Moreover, factory orders rose by 1.7% in January as against a previous of 1.5% in December. However, Manufacturing PMI in US showed less than forecasts results in February at 56.5 as against previous of 58.4 in January. Manufacturing PMI was forecasted to increase to 57.7 in February. The US dollar could strengthen as markets still remain concerned over the pace of economic recovery.

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Mixed economic data could lead to demand for the dollar and risk aversion ahead of the weekend. Gold prices may come under pressure if the dollar strengthens on the back of risk aversion in the markets. The US dollar could trade with a positive bias as concerns over Greece’s debt situation still persists and the European union has not yet come up with a concrete plan to aid the country. Spot gold have a strong support at 1110/1087 levels and Resistance at 1150/1165 levels. MCX April Gold has a strong support at 16670/16425 levels and resistance at 17160/17330 levels.

Base Metals
Base metals gained in the earlier sessions of the week taking cues from the positive economic updates and sentiments in the financial markets from the US and the weakening dollar. Moreover, decreasing inventories on the LME also supported the prices of metals. However sharp gains in the metal prices were wiped out towards the end of the week after mixed economic data coupled with crisis in the Euro-zone saw investors flocking towards safer investments.

Copper prices gained sharply on the LME in the beginning of the week as a massive earthquake hit Chile in the earlier weekend increasing concerns over supply from the top copper producing economy. However, prices retreated back after production units opened up shortly. Nickel prices gained sharply last week and breached the $23,000 mark on the LME on Thursday but could not sustain the prices on the back of rebound of the dollar. Mixed economic data from the US and economic concerns in the Euro-zone are putting pressure on the prices of metals. Concerns over Greece may lead to risk aversion in the financial markets. This could lead to strength in the US dollar and thereby put pressure on metal prices. MCX April Copper shall find a strong support at 332/325 levels and resistance at 351/357 levels for the coming week.

Energy
Crude oil prices came under pressure towards the end of the week as the stronger dollar exerted pressure on crude oil prices. Crude oil prices had climbed to a seven-week high on Wednesday, breaking the crucial $80/bbl-mark on the back of reports indicating that refineries in the US had operated at the highest level since October 2009. However, the sharp trigger of prices was capped on the upside as the US Energy department reported that crude inventories rose by 4.1 million barrels in the world’s largest consumer.

Crude inventories have been rising for couple of weeks which is exerting pressure on the prices from upside. Crude oil prices will take cues from the movement in the dollar. The dollar may strengthen as economic concerns may re-emerge. Rising oil inventories also pose a matter of concern but sharp downside in crude oil prices will be cushioned on the back of data which showed that refineries in the US operated at the highest level since October 2009. MCX March Contract shall find a strong support at 3600/3540 levels and resistance at 3740/3785 levels for the coming week.

Soybean
 Soybean (NCDEX April contract) futures improved slightly on short covering and fresh buying at lower levels in the last week. The April contract recorded weekly low and high of Rs 2031 & 2095.50 a quintals respectively. The USDA’s weekly export sales released on Thursday, which revealed that export figures were about in line with trade expectations. China was absent on the buy side in soybeans and there was a cancellation of 141,100 tonnes in soybeans. Net weekly sales for soybeans were 370,400 tonnes. As of February 25, cumulative soybean sales stand at 94.2% of the USDA forecast for 2009/2010 versus a 5 year average of 81.7%. Net meal sales were 88,900 tonnes.

Cumulative meal sales stand at 82.7% of the USDA forecast for 2009/2010 versus a 5 year average of 57.1%. Net oil sales came in at 15,900 tonnes. Cumulative soybean oil sales stand at 74.9% of the USDA forecast for 2009/2010 versus a 5 year average of 47.3%. In Census Bureau soybean oil stocks for January came in at 3.224 billion pounds this morning, up from 3.110 at the end of December. In the coming week, soybean prices are expected to trade slightly higher on account of short covering after a continuous fall from last 3 months. NCDEX April contract shall find a strong support at 2030/1990 levels and resistance at 2110/2150 levels for the coming week.

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