Commodity Online
With Sharad Pawar, India Minister for Agriculture ruling out any immediate plans for exporting the surplus wheat in the country, the wheat futures at National Commodity and Derivatives Exchange which was riding high last week on hopes of export news, suddenly slumped to near contract lows. Sharad Pawar said surplus wheat lying in the godowns may be used for allocating more quantities to those Above Poverty Line (APL) families. The most active NCDEX April Wheat contract when down to Rs 1,135 per quintal on Friday, near to contract low of Rs 1,126.6. Government procurement of wheat will begin in April with India’s wheat stocks as on March 1 at 18.4 mn tonnes ahead of the targeted 8.2 mn tonnes. Total crop size this year is expected to exceed a record 82 mn tonnes on good rabi harvest.

POINTERS:
BSE Sensex set to gain : It looks like the BSE Sensex is set for solid gains in 2010 on the back of earnings optimism, robust economic growth although at a slightly slower rate than last year, a Reuters report said. Around 1,800 companies on the Bombay Stock Exchange (BSE) are trading at or near their 52-week highs, as fund managers and investors bet on the next multi-bagger stocks. Large-cap stocks have been moving in a narrow range for nearly six months, prompting weary investors to look to mid-, and small-cap shares for better returns even if the risks are higher

Analysts expect the 30-share BSE Sensex to rise 3.6 percent by mid-year and by nearly 11 percent by end-2010 from Tuesday's close at 17,383, the Rueters report added.

US Stocks retreat : U.S. stocks declined, ending an eight-day winning streak for the Dow Jones Industrial Average, as India’s unexpected interest rate boost spurred speculation withdrawals of economic stimulus will curtail global growth. Exxon Mobil Corp. and Dow Chemical Co. dragged energy and raw-material producers to the biggest losses in the Standard & Poor’s 500 Index as oil fell below $80 a barrel. Financial shares dropped after Goldman Sachs Group Inc. cut estimates for banks and brokerages. Palm Inc. plunged 29 percent after forecasting sales that trailed analysts’ estimates and Canaccord Financial Inc. cut its share-price estimate to zero

Sovereign Wealth Fund for oil industry :Oil PSUs in India has appealed to the government to set up the nation’s first sovereign wealth fund to compete with China in the race to secure global energy assets, according to government and industry officials. The discussions under way between the oil and finance ministries to set up a sovereign investment fund were at an early stage, the officials said, and no deadline had been set

Reserve Bank may hike interest rates :In a move interpreted as a precursor to hike in interest rates in monetary policy to be announced in April 20, thee Reserve Bank of India has moved to stem inflationary pressures by raising its key policy rates – repo and reverse repo – by 25 basis points each with immediate effect. The repo rate (the rate at which banks borrow funds from the RBI) and the reverse repo rate (the rate at which banks park funds with the RBI) have been hiked to 5 per cent and 3.50 per cent respectively.

S&P Outlook for India at stable :Rating agency S&P has upped its outlook on India to stable from negative. Usually this means yields on Indian corporate bonds in the secondary market should move lower and Indian companies should be able to raise forex loans more cheaply.

Copper scrap shipments to China :Copper scrap shipments to China may fall in April as a new customs rule to fight duty evasion takes effect and demand falls as the government tries to cool a construction boom.The rule, effective April 1, requires importers to provide grades of metal scrap content on customs documents based on specifications in the international market, a circular posted on the Chinese Customs website showed. (www.customs.gov.cn). Traders said the new rules may prompt more refined copper demand by the world's top consumer as scrap dealers consider their costs anew.

Cotton futures down on dollar gains :Cotton futures at major global exchanges have declined on dollar strength eroding the appeal of commodities as alternative investments. The price of gold, weak equity markets are having an influence on cotton trade than the industry’s own fundamentals.Cotton for May delivery fell 0.03 cent to 82.18 cents a pound on ICE Futures U.S. in New York. This week, the most- active contract gained 2.1 percent as rising global demand depleted inventories. The price has jumped 92 percent in the past 12 months.

Nickel may drop in Q2 : Nickel may drop 8 percent in the second quarter, eroding its lead as this year’s best-performing metal, on concern that demand won’t accelerate fast enough to drain stockpiles, according to a Bloomberg report. Prices will average $20,944 a metric ton in the next quarter, down from yesterday’s $22,760 close, according to the median in a Bloomberg survey of 13 analysts. Nickel rose 23 percent on the London Metal Exchange since January, extending last year’s 58 percent jump.
The metal is having its best start to a year since 2007 as stainless-steel output, the biggest source of demand, exceeds analysts’ expectations. That advance may falter as supply from new mines adds to stockpiles already at more than three times the five-year average, Bloomberg quoting analysts said..

Rice Prices to soften : Rice prices are likely to soften in view of improving global harvests and slowing demand, especially with significant imports by India, to overcome the production fall in the kharif season, being ruled out.A Commodity Outlook by Standard and Chartered Bank said the prospects of large rice import bill have receded. It also cut the expected average price for Thailand B grade 100 per cent rice this season to $544 a tonne from $593.

Gold in demat form: National Spot Exchange (NSEL), an electronic spot market promoted by Financial Technologies India (FTIL) and National Agricultural Co-operative Marketing Federation of India Limited (NAFED), launched a unique investment product in the form of demat gold on its platform. The segment which is similar in functionality to the cash segment in equities, offers commodities in the demat form in smaller denominations (e.g. 1, 2 3…… gms). This is expected to be a big hit with the retail investors, who have waited a long for an investment product in commodities. On the first day of its launch, the contract recorded a unit volume of 43,438, valued at Rs 7.40 crores. This product is designed to reach the masses across the country. Investors can now trade and invest in gold of 1 gm denomination and multiples thereof, just like shares.

Singapore exchange to launch robusta coffee contract :Singapore Exchange (SGX) (SGXL.SI) would launch trade in a new robusta coffee futures contract on April 22 to capitalise on Southeast Asia's top market status for the commodity.

Palm oil set to zoom in 2010-11 : According to vegetable oil industry expert, Dorab Mistry, palm oil prices may trade at a premium over soyoil in 2010-11 as record output in soyoil and decline in soymeal demand could hurt prices while palm oil prices may gain on demand and supply concerns.. So far, palm oil has been traded at a discount, up to 32 per cent, over soyoil. In rupee terms, the discount is even wider.

India’s Sugar Output up : India’s sugar production may cross 17 million tonne (mt) in 2009-10 season, 2-3 mt higher than the earlier estimates, however imports will not be curtailed with higher duties. Agriculture Minister Sharad Pawar said said the initial estimates for the season was 14-15 mt

Rabi oilseeds output up: Oilseeds production during rabi may have increased 2.3 per cent but the overall production for the oil year ending October is likely to be 9.2 per cent lower, according to estimates made by the Central Organisation for Oil Industry and Trade (COOIT).According to the estimate made public at the 31 {+s} {+t} All-India Rabi Seminar of Oilseeds, Oil Trade and Industry, rabi oilseed production is likely to be 94.6 lakh ones (lt) against 92.3 lt last year.

Bullion
Spot Gold prices gained in the beginning of the last week on the back of weakness in the dollar coupled with positive sentiments in the financial markets. The US dollar weakened after the US Federal Reserve held interest rates steady and said that rates would continue to remain low. This factor is negative for the currency as it is currently making a low-yield and will continue to do so as rates remain low. The Fed also said that the economy had continued to recover and the labour market is showing signs of stabilizing but spending on non-residential construction declined and housing starts had been flat at best. However the dollar revived back after slipping below the crucial 80-mark towards the end of the week as Greece’s concerns re-emerged in the markets which affected the investor sentiments towards high yielding and riskier investments.

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Greece’s bailout issue currently looks unlikely considering the apprehension shown by Germany over the same. In the coming week, the yellow metal could wipe out earlier gains as the currency factor could lead to downside pressure. There was no major economic data to be released from the US at the end of the week. This may allow the dollar to remain strengthened till the markets receive fresh updates to revive. Spot gold have a strong support at 1100/1085 levels and Resistance at 1140/1152 levels. MCX April Gold has a strong support at 16400/16150 levels and resistance at 16900/17100 levels.

Base Metals
Base metal prices gained in the early sessions of last week taking cues from the weaker dollar. The prices gained mainly on the back of weakness in the dollar as US fed offered no surprises by leaving interest rates to zero. However, prices were capped on the upside on concerns of Chinese government raising interest rates. Investors are expecting that the government may increase interest rates to tame inflation and rising real estate prices. If China increases interest rates, it may reduce demand from the world’s largest consumer of metals. China's rising industrial and inflation figures renewed concerns it would start raising rates sooner rather than later, causing growth in the world's third top economy to slow. This dampened sentiment in broader markets; lackluster US trade data and weekly US jobless figures provided little in the way of relief. Moreover, the dollar revival towards the end of the week also pressurized the metal prices.

In the coming week, metal prices would continue to be under pressure as the dollar is expected to remain strong till any fresh news arrives in the markets. Re-emergence of Greece’s concerns and the Chinese monetary measures would also weigh on the metal prices. MCX April Copper shall find a strong support at 332/326 levels and resistance at 348/352 levels for the coming week.

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