Commodity Online
India’s food prices inflation has risen to 19.05 percent for the week ended November 26. This is the highest level in a decade and is close to 20% last attained in 1998. Food price inflation, which is generally attributed to supply side pressures and not amenable to management through policy action, may be returning to haunt India. By spilling over to the rest of the economy, it could force demands for higher wages from drivers to electricians and has the potential to push up overall inflation, including for industrial products. Food inflation was at a low of 10.48% a year ago.

The turnover of 23 commodity exchanges in the country surged by 42.63 per cent to Rs 47,29,971 crore till November this fiscal on the back of significant improvement in agricultural and other commodities segment, the Forward Markets Commission (FMC) said. The turnover has increased to Rs 47,29,971 crore during April-November from Rs 33,16,206 crore in the same period last year, Over 90 per cent growth in agricultural and other commodities segment has pushed up the total turnover. Besides, the launch of the fourth bourse ICEX also contributed to better figures, it said.

In Chicago wheat prices rose, paring this week’s loss, on speculation cold weather will harm crops in Ukraine and Russia because of inadequate snow cover. The countries are among the top five exporters of the grain. Freezing temperatures next week may damage plants in Russia, Ukraine and Belarus after recent above-normal temperatures melted protective snow cover.  Parts of the region have received less than 50 percent of normal rainfall the past 45 days, increasing crop stress, the forecaster said.

National Collateral Management Services Ltd (NCMSL), a management and warehousing arm of the National Commodity & Derivatives Exchange (NCDEX), has got approval from the government of Rajasthan to set up modern warehousing-cum-market yards in eight locations, with facilities not seen so far in India.

It is looking to extend this to other states. The new warehouses will be in partnership with National Warehousing Corporation (NWC), also its shareholder, which is promoted by Netherlands-based Agricore. Each warehouse, with a storage capacity of up to 40,000 tonnes of food grains, will entail an investment of Rs 20 crore, spread over 30 acres.

Precious Metals
Gold futures have started rebounding after showing weakess for continous sessions both in Indian and US markets after a big rally. US gold futures dropped 8% since December 3 when Comex futures touched a high of $1227.50 an ounce. Gold has already gain 27% this year thanks to its safe-haven status rising on account of weakness in dollar and inflationary fears. The most actively traded February contract at MCX fell to a low fo 17035 before rising again to 17180 levels. Some analysts have predicted gold to rise above 17300 near term although range bound trading is more likely in 16690-17200 levels with weak dollar supporting. Globally, gold is unlikely to get back to $1200 levels before the end of this year. Silver prices are tracking gold and has fallen to $17.24 in New York.

Base Metals:
Base metals traded on a mixed note during the last week but announcement of positive economic data from China on Friday led to positive sentiments. Aluminum prices could trade with a positive bias on news that that the global aluminum surplus will narrow by 54% in 2010 from this year in China. The surplus of primary aluminum will narrow to 1.19 million tons from 2.57 million tons. Aluminum prices could continue to trade with a positive bias today. As year-end trade begins to surface, investors may book profits and base metals may remain vulnerable to further price moves in both directions. Upbeat Chinese Economic Data: A flood of Chinese data showed that the world's third-largest economy is recovering healthily.

Commodity Data that you can use

China reported today that industrial production in November accelerated to 19.2% from a year earlier. This is the fastest pace since June 2007. Base Metals could take positive cues from this data. In the coming week we expect base metals to witness an upside as positive Chinese economic data indicates higher demand for base metals in the coming years. We are bullish on the Chinese growth front and expect base metals to trade with a positive bias in the coming week. But profit-booking ahead of the year end could put prices under pressure as traders liquidate their long positions ahead of the long holiday. MCX Copper February Contract shall find a strong support at 316/310 and resistance at 333/340 levels in the coming week.

Energy
In the early part of the week, oil prices declined as concerns over demand from the US put prices under pressure. But latest data from China helped to support the upside in oil prices on Friday. China’s industrial production and crude refining output increased, adding to signs of an economic rebound in the world’s second largest energy user. Oil, which has fallen 10 percent in the last eight days, pared some of the losses after China’s industrial production beat estimates and oil processing reached a record.

China’s refiners boosted their output last month, underscoring how demand for crude outside of developed economies is supporting oil prices. The country’s oil processing rose 21 percent from a year earlier to 33.4 million metric tons, or about 8.2 million barrels a day, in November. But demand worries in the US, the world’s largest oil consumer continue to raise concerns. Demand figures reported by the EIA were unable to support the case for prices to move higher, showing consumption in the US is still failing to recover despite the economic upturn. But oil prices could trade with a positive bias as latest Chinese data is positive for the commodity. But a sharp upside in prices will be capped as demand concerns in the US, the world’s largest consumer still lingers on. MCX Crude December Contract shall find a strong support at 3200/3000 levels and resistance at 3450/3540 levels in the coming week.

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