Commodity Online
India’s agricultural growth has fallen from 3% to 2.45 in the first quarter of 2009 on a year-on-year basis even as agricultural contracts helped propel growth in commodity exchanges in the country.

Agriculture contributes 18 per cent to the GDP and though the sector recorded 3 per cent growth in the first quarter last year, the overall growth for the year was a modest 1.6 per cent.

The three national commodity exchanges recorded a staggering performance in August despite uncertainty over recovery in global economies forced participants to play safe and hold back their investment and trading plans.

The three exchanges including the Multi Commodity Exchange (MCX), the National Commodity & Derivatives Exchange (NCDEX) and the National Multi-Commodity Exchange (NMCE) witnessed 45.40 per cent rise in turnover at Rs 6,17,484.83 crore in August 2009 as compared to Rs 4,24,666.28 crore in the corresponding month last year. Total agri business of the three exchanges shot up 119 per cent to Rs 121619.44 crore while non-agri business also rose 34.33 per cent to Rs 495865.40 crore.

Meanwhile, economic recovery concerns mount as US saw a staggering 216,000 job losses pushing the unemployment rate to 26 year high. The jobless rate has shot up in August from 9.4 per cent in July.

Bullion
Gold prices have climbed to near $1000 levels last week due to concerns about global recovery. On Thursday, gold prices inched to $999 per ounce while on Friday the prices marginally declined to $995 levels at Comex division of Nymex.Sluggish equity markets, weak dollar also diverted money to safe haven gold buying in most markets. The week began with gold at $960 levels with most analysts predicting range-bound trade. However, gold crossed all those ranges to come close the psychological $1000 mark.

The US jobless rate in August jumped to 9.7 per cent, the highest since 1983. A firming trend in the US markets, which normally set price trend in Asian region including India, drove the gold prices in India to its record high levels amid brisk buying by stockists and jewellery makers for the ensuing marriage and festival season. In Delhi, gold per 10 gm rose to Rs 16,000 last week as against Rs 15,180 levels in the beginning of the week. According to World Gold Council, India’s gold imports have risen 7.6% to 41 tonnes in July and the trend was up in August which is quite abnormal in these months. Jewellers and stockists were buying ahead of the Shradh, an inauspicious fortnight for buying gold.

Bullion prices could witness a sharp uptrend in the near-term as worries on the global economic front could drive demand for the traditional form of investment. Profit-booking due to higher prices cannot be ruled out but the overall trend could remain up. The G-20 meet is expected to take place later this week and markets could remain wary ahead of that. As it is, there are various concerns in the financial markets and the G-20 meet could highlight what global leaders feel about future growth. Expect corrections soon after a fast paced rally due to profit booking.
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Base Metals
The volatile copper market made minor gains towards weekend while Zinc and lead fell from multi-month highs following doubts about economic recovery generated by US data as unemployment rose to 26-year high.Copper for December delivery at NYMEX ended up 0.15% at $2.8665 a pound. Copper prices have gained since January on record China imports and analysts are still bullish on this metal for the near to medium term.
The recent rally in lead resulted in prices appreciating by 30% in the past two weeks as supply concerns from China after polluting smelters were shut down as a result of poisoning incidents added to market sentiments. The upside gains were limited by news reports that smelters might reopen next month.

The MCX rally in Lead is expected to continue as supply concerns persist. The metal could test Rs 120 levels in the near-term and may aim for Rs135-Rs140 further. Fresh supply issues in the case of Tin from Indonesia will drive prices higher. However, the upside in other base metals could be limited as concerns over China’s curb in industrial capacity and tight lending norms. Base metals could be in for correction due to weak fundamentals as global recovery concerns persist and tighter China monetary policies.

Energy
Crude oil prices hovered above $70/bbl in the beginning of the week but US Crude Futures settled slightly above $68.22 after declining on Thursday on US data. US Data released on Thursday showed contraction in the services sector had eased in August with a gauge of activity hitting its highest point in 11 months, a further suggestion that a modest economic recovery was under way. But a separate U.S. government report on Thursday showed initial claims for state jobless benefits fell by 4,000 to 570,000 last week, hinting at only a marginal slowing in the fast pace of layoffs. Speculation that OPEC will maintain its output and with gasoline demand slowing as US summer driving season comes to an end also weighed on the pries.Though crude oil inventories declined last week, markets are not very positive with the data as prices did not show strength yesterday. Only confirmed evidence of rise in demand could help prices further. Rising natural gas inventories would continue to put downside pressure on prices. The near-term trend in natural gas looks down. Since supply of natural gas remains very high, we feel that prices will continue to slide down in the near-term until any evidence over demand is found. OPEC is expected to keep output rates steady in its next meeting on 9th September.

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