International Perspective
The commodities segment made substantial gains in the last week, with natural gas prices being the exception. Base metal prices continued to lead the rally in the commodities segment, whereas gold prices also rebounded after falling drastically in the earlier weeks.
Zinc prices were the top performers in the base metals pack, gaining more than 4.5% on the MCX in the last week. The metal prices were supported by improving inventory scenario on the LME coupled with decline in zinc output in China. Zinc experienced the sharpest production decrease among all the base metals in June, posting a drop of 26,000 tonnes from the previous month. LME zinc inventories declined in all the sessions of the last week.
Lead prices continued to post strong gains for a third consecutive week, gaining more than 4% in the last week. Lead prices touched a 14-week high of Rs 102.80/kg, mainly helped by the weakness in the US dollar index (DX). However, long-term fundamentals for lead continue to remain mixed. China's June lead output rose by 14.29 percent from the previous month. Estimates from International Lead and Zinc Study Group (ILZSG) suggest that the lead mine production will total 4.2 million tons in 2010; 5% greater than the previous year.
Natural gas prices lost more than 8% in the last week on reports that natural gas drilling rigs rose by 11 rigs to 983 rigs in the last week. Despite expectations of hot weather increasing demand for the commodity, the ample supplies in the US storage seem sufficient to meet the needs. Natural gas storage increased by 29 bcf as against the previous of 28 bcf in the w/e July 30th.
Agri Perspective: Soybean and refined soy oil gains substantially in agricultural commodities in the last week. Soybean prices surged sharply on account of continuous rise in overseas market due to dry and hot weather in USA and US Department of Agriculture's weekly export sales figures of soybean was well above trade expectation. As per Solvent Extractors Association of India (SEAI), India's oil meal exports in July 2010 increased 39% to 241,182 metric tonnes from 173,329 tons a year earlier also provided support to the bulls.
Refined soy oil surged in tandem with overseas market. Crude Palm Oil (CPO) futures at Bursa Malaysia Derivative Exchange surged due to increased demand of edible oil from Muslim countries ahead of Ramadan (fasting month). Also, cheaper prices of CPO compared to other edible oils, added bullish market sentiments as India is a major importer of Palm oil. India is likely to import 5.5 to 6 lakh tone of Palm Oil for August. India is the world's second-largest vegetable oils consumer after China, may purchase more palm oil in the next two months than soy oil, as palm oil discount has widened.
Maximum fall was witnessed in NCDEX Turmeric, Jeera, Pepper, Chana and Guar Seed.
Turmeric Prices slipped more than 4 % due to higher production estimates for 2010-11 and poor demand from overseas market.
Jeera prices witnessed downtrend due to lower quotes offered by Syria in international markets. Syria is one of the major producing nations of Jeera.
Black Pepper prices closed in red in last week due to harvesting progress and fresh arrivals in Indonesia. Lower quotes by Indonesia in international market are also pressurizing prices in the domestic market. Indonesian origin was being offered at $3,950-$4,000/tonne whereas Indian origin was offered at $4,400-$4,450/tone.
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