Commodity Online
India’s growth rate is expected to clock 6.4 to 7% in 2009-10 as most Asian economies are expected to rebound from the financial crisis which is positive for both equity and commodity markets. Commodity exchanges in the country have already witnessed their combined turnover rise by 32.92 per cent till September 15 this fiscal over the same period last year, even as bullion trade dipped marginally, the commodity market regulator Forward Markets Commission (FMC) said.
BSE Sensex has climbed above !7000 levels for the first time since May 2008 on hopes of better quarterly earnings, banking, infrastructure stocks.

Poor demand in consuming countries have led to 20% fall in India’s coffee exports while global sugar prices are rising on Nagging worries over the impact on sugar supplies from top producer Brazil due to persistent and excessive rain, combined with expectations of further demand by Mexico, the US and India, have fuelled bullish sentiments in sugar.

According to data released by the Coffee Board, for the crop year ending September 30, 2009, India’s coffee exports stood at 1,81,069 tonnes as against 2,27,779 tonnes in the previous year, a decline of 20.5 per cent.
Export earnings were Rs 1,978 crore for the year, down over 17 per cent compared with the previous year. Unit value remained flat at around Rs 1 lakh per tonne.

Precious Metals
After initial weakness followed by marginal gains gold bounced backed to regain $1000 on Wednesday and managed to stay close to the $1000 mark as dollar retreated over news of deeper than expected US job losses in September. In the global market, gold rose above $1000 on Friday while in India prices dropped by Rs 50 per 10 gms at Rs 15,590. Earlier in the week, crude oil rally and geopolitical tensions supported dollar’s upward moves.

Gold prices are in for weakness as lower oil prices curbs demand for safe haven investments. Easing inflationary pressures does not augur well for gold. December Gold futures rose $3.60 at $1004 an ounce in the comex division of New York Mercantile Exchange. In the near to medium term, inflationary pressures and trends in dollar are major factors affecting bullion prices. The gold-to-oil ratio hs risen to 14.40 towards weekend from 14.17 previously. Spot Gold had risen to $ 1006 per ounce on intra-day trading on Tuesday.

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The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its holdings stood at 1,095.327 tonnes as of Oct. 1. As of Sept. 30, it was up 1.22 tonnes from the previous business day. MCX December gold had strong support at 15452 and ended with a profit of RS 63 at Rs 15598. However, the trend looks downward while global prices are likely to hover close above $1000 mark next week.

Base Metals
Base metals face downside pressure on the back of bad economic news coupled with Chinese holiday. Copper prices ended the week on a negative note, losing almost 2% the last week. Poor US unemployment figures coupled with a long holiday in China kept the world’s largest copper consumer away. US non-farm payrolls revealed a loss of 263,000 jobs in September, while the market had braced itself for a lesser decline of 179,000 jobs.

The unemployment rate, however, met expectations at 9.8 percent. US carmakers watched sales drop 23.3 percent year-on-year to 721,378 vehicles in September, leaving the market reeling after the cash for clunkers incentives program ended in August. Though we have witnessed a downside in copper prices due to absence of China we feel that prices could rise by the end of next week as investment funds could buy ahead of return of the Chinese players in the market. Trading in the Shanghai markets will commence on 9th October, which is a Friday. Factor that could prevent a sharp upside by the end of next week in base metals could be a stronger dollar which has now found some strength on the back of poor US economic data.

Economic data from the US has raised concern that the situation still remains bleak. Overall, the employment scenario is still disturbing and the rally in base metal prices ahead of actual economic improvement may be threatening from the short-term perspective. We hold the view that, the slight improvement that is being witnessed in the economic data across the globe is mainly linked to the stimulus and other financial measures. If economies were left aside without stimulus measures, we could not have witnessed this change in economic figures. Hence, the rally in base metals remains under threat of a correction as demand needs to show strong improvement. Prices have raced ahead of their fundamentals; hence profit-booking at higher levels cannot be ignored. In the coming week, copper prices are expected to find support at 281.35/276.85 and face resistance at 294.50/303.15.

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