Base metals
Financial markets are currently dominated by economic worries and sentiments are weak as the economic situation is deteriorating. The same goes with base metals, as demand for these metals is for industrial use and with a decline in industrial activity, demand has weakened. At the same time, inventories are rising sharply. Hence, base metals are going through a rough ride and are expected to remain volatile in the next quarters until some clarity over the recession comes through.

Aluminum inventories on the LME have risen sharply and crossed the three million tone mark. Going forward, we feel that inventories could rise further and put pressure on the metal. LME inventories for copper are also gaining tremendously as demand for the metal amid this recession has weakened. In the coming week, base metals could feel pressure on the downside as economic worries are rising.

Soybean
Soybean prices fell sharply during the first 3 days of the last week on profit booking in tandem with overseas market. However, it recovered towards the later part of the week on possibility of strike in Argentina, because Govt. of Argentina has still not responded to recent talks by farm group regarding soybean export tax reduction. The USDA’s week export inspections were 47.64 million bushels, slightly down from last week.

The National Oilseeds Processors Association (NOPA), January 2009 crush was 139.1 million bushels, up slightly from 134.8 mln bushels in December. As per USDA report, Argentina’s soybean production estimates of 43.80 million tonnes vs The Buenos Aires Grains exchange’s estimates of 40 million tonnes. Soybean prices are expected to move range bound. NCDEX Soybean (March Contract) has a support at 2080/2035 and resistance is seen at 2350/2400 levels in this week.

Black Pepper
Recovery is yet to be witnessed in Pepper Futures and physicals due to weak global and domestic demand, Pepper prices at the benchmark Kochi market were quoted at steady rates due to low buying interest by the buyers at the domestic market. Pepper prices at the domestic market are thus tracking futures.

In the weekend, Black pepper in physical markets continued to trade. At Kochi markets the prices remained steady were offered at Rs.11100 per quintal for garbled variety and Rs.10600 per quintal for ungarbled. Around 20 tonnes were sold for the arrivals of 21.2 tonnes. Weak demand at upcountry market limited the upward movement in the prices. Indian parity remained unchanged and was offered at $2313/tonnes, is most competitive at the international market while the Vietnamese origin was offered at $2450/tonne f.o.b. Pepper at the physical counter is likely to trade range bound during the days ahead. Meanwhile, the arrivals from the southern districts of Kerala have almost dried up as the growers are holding back their produce saying that the current price is not remunerative.

Pepper futures after making a low of Rs.10,634 are now trading in range of Rs.10,700- Rs.10,980/qtl. Slow trades at the domestic market may keep prices rangebound in the coming days.

Pepper production in the Indian subcontinent for the year 2009 being steady and the availability of Pepper being lower may support the prices once the fresh orders are placed from the overseas market. Fresh arrivals may gain pace by end of February. This may however, pressurize the prices during that period.

Turmeric
Spot prices at the benchmark spot markets of Nizamabad and Erode were quoted at steady to slightly higher rates due to improved offtakes. Turmeric domestic mandis will be closed from 21 February to 23 February, 2009. Thus, lower availability of turmeric for these days may support prices. In the short term (end of February 2009) prices may take cues from the fresh arrivals of the Turmeric in the domestic market. It is expected that the fresh arrivals may increase from Tuesday 24, February 2009. Once the fresh arrivals of turmeric gain pace in the domestic market prices may be pressurized and the effect may be seen in the futures.

Revised estimates of Turmeric production for the year 2009 is further lowered to 43 lakh bags as compared to 45 lakh bags projected earlier in January 2009. This may cap the downside in the long term (March end to April 2009). Prices may find support once the demand from the domestic and overseas market is placed is in good quantity. (1 bag=70 kgs). Turmeric futures have strong support at Rs.4,185/qtl and thereafter at Rs.3,985/qtl. Resistance can be seen at Rs.4,440/qtl and thereafter at Rs.4,700/qtl.

Jeera
Jeera prices in the Unjha markets were quoted at steady to slightly lower due to improved arrivals. There are lower stocks with the exchange and stockists. Lower production for the year 2009 will support the prices by mid of March 2009. Carryover stocks of jeera are around 3 lakh bags. Demand from the domestic as well as overseas market is expected to be placed by mid of March. This may support the prices to strengthen. Jeera prices have a support at around Rs.11,230/qtl and thereafter at Rs. 10,826/qtl. Resistance can be seen at Rs.11,700/qtl and thereafter at Rs. 12,000/qtl.

Sugar
Globally sugar Futures declined this week recording the biggest weekly decline since December on prospects of lower demand ahead. This is despite the fact that fundamentals are favouring a bullish trend in sugar due to lower production estimates in some countries like India in 2009.

Raw-sugar futures for May delivery fell 0.11 cent, or 0.8 percent, to 13.06 cents a pound on ICE Futures U.S. in New York. That marked the biggest weekly loss for a most-active contract since December 19.
Meanwhile, reports that India pubic sector MMTC Ltd had cancelled a major tender to import 35,000 tonnes because of the high prices quoted could also favour bulls in the near term.

Indian sugar market is steady because of good demand from retailers against lower supplies from mills. Buyers remained active to make fresh buying as the government ruled out any plans to impose stock limits on sugar. Also, concerns that production may dip below 17.5 MMt is also fuelling the market sentiment. While country’s domestic consumption is estimated at around 22 MMt. However, the duty-free import of raw sugar to improve domestic supply this year may have little impact on prices due to delay. The importers and sugar mills may not benefit out of relaxed norms as cane crushing season is coming to a close. Sugar quota for February stays unchanged at 1.6 mmt. NCDEX sugar M stocks rose to 23,497 Mt in their warehouses as of February. 18.

Drier, warmer weather through north India will favour the harvest of old crop and the planting of new crop. Weather is also suitable in other region.
(With analytical inputs from Angel Commodities, Mumbai)

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