Commodity Blog

Posts Tagged ‘India’

Crude oil fell on the speculation the spreading Europe’s crisis will slash demand. Germany auctioned its debt yesterday and it was considered a disaster as there was a significant lack of demand for the government bonds, reinforcing concerns about Europe’s economy. The US economy also showed sings of slowdown. January futures for crude oil dropped $2.25 to $95.76 per barrel before trading at $96.45 on NYMEX.

Sugar prices declined on the outlook for higher supply from Brazil. Luis Pogetti, chairman of the Copersucar SA, predicted that production will go up to 34 million metric tons in Brazil’s Center South next year. India is also expected to add to the global supply. March contract for delivery of raw sugar fell 1 percent to $0.2321 per pound on ICE after reaching $0.2316 — the lowest level since June 2.

US farmers may cut most of their breeding cows to reduce losses because of drought. Texas ranchers may sell or slaughter 500,000 beef cows as the dry weather made them to expensive to feed. The losses of the states’ farm may reach $5.2 billion as the past 11 months were the driest since 1985 in the region. December futures for delivery of cattle advanced 1.1 percent to $1.192 by 13:00 on CME.

India’s production of sugar may reach a highest level in four years. Analysts predict the output may total 25.83 million metric tons in the year starting October 1, compared with 24.2 million tons estimate for this year. The high production may prompt India to lift the limit on exports. The resulting boost of supplies on global markets can drive prices down. Sugar spot price fell 1.1 percent to $0.2760 from $0.2790.

Rice is expected to surge as the smallest increase of inventories in five years may create deficit on markets. Stockpiles increased only 1.1 percent this year, compared to 29 percent in the past four years. The estimates of the US Department of Agriculture predicts signal that supply, being 456.2 million metric tons, still exceeds demand (455.2 million tons). Yet market analysts predict that prices will jump 20 percent by the end of this year. So far, prices for rice advanced 15 percent from May.

Sugar fell today on the speculation that India will increase exports, causing supply to exceed demand. On the other hand, China and Indonesia are going to expand their purchases of the commodity, potentially supporting prices. October contract for delivery of raw sugar slipped $0.0022 (0.8 percent) to $0.2762 per pound as of 12:24 on ICE.

Sugar declined on the speculation that production will increase in Brazil and India. Fain Shaffer, the president of Infinity Trading Corp., said that the prices may fall even lower if prospect for the crops.

The Indian government said that the country is planning to export 500,000 metric tons of sugar this week. India’s DCM Shriram Consolidated Ltd. predicted that its sugar production may rise 58 percent this season. Research company Datagro forecast that output in Brazil’s Center South will advance from 33.5 million metric tons in 2010 to 35.1 million tons in 2011.

May delivery for raw sugar dropped $0.0102 (3.6 percent) to $0.2736 per pound by 14:00 on ICE. The prices reached $0.3608 on February 2, the highest level since November 1980. In London, May futures for delivery of refined sugar declined $16.40 (2.3 percent) to $702.60 per ton on NYSE Liffe.

Oil extended its rally for the fourth day as US stockpiles of crude decreased more than expected. Energy Department reported that crude oil inventories declined 2.15 million barrels to 333.1 million last week, compared to the expected decrease by 1.4 million barrels. The February contract for crude gained $0.3 (0.3 percent) to $92.16 per barrel on NYMEX.

Gold rallied on the signs of increasing imports in India. Ajay Mitra, the managing director for India and the Middle East at the World Gold Council, informed that India’s imports possibly have increased to 800 metric tons from 557 tons in 2009, exceeding its previous record. Spot price for gold was $1,381.90 per ounce in Mumbai yesterday.

Cattle futures reached the record and hogs rose to the highest level in eight months on the speculation that increasing feed costs will force farmers to cut supplies. Corn, the main ingredient in livestock feed, jumped to the highest price in 29 months as the government forecast for US stockpiles worsened. February futures for delivery cattle advanced $0.0175 (1.6 percent) to $1.102 per pound by 13:11 on CME. April futures for hog delivery rose $0.01875 (2.2 percent) to $0.87025 per pound.

Crude oil reached the highest level in more than two years after a report showed that US inventories of crude declined more than expected. The inventories dropped 5.33 million barrels to 340.7 million last week, while a 3.4 million-barrel decline was predicted. February delivery for crude oil gained $0.66 (0.7 percent) to $90.48 per barrel on NYMEX, the highest level since October 3rd, 2008.

Sugar gained today on speculation that India may delay new exports. India’s government will review its export policy at the end of January. March delivery for raw sugar climbed $0.0011 (0.3 percent) to $0.3313 by 14:00 on ICE.

Cotton dropped by the exchange limit on ICE today on speculation that demand may wane after prices rallied to a record. March futures for cotton delivery slipped as much as $0.05 (3.1 percent) to $1.5412 per pound as of 14:36 in New York. The price reached a record of $1.5912 yesterday.

Crude oil jumped to the highest level in two years after same-store sales in the US rose 4.2 percent last week. Oil also advanced as the Standard & Poor’s 500 Index went up. February delivery for crude oil rose $0.45 to $89.82 per barrel on NYMEX, the highest level since October 7th, 2008.

Concerns about tighter supply from Brazil boosted sugar prices. Adverse weather in Brazil helped the prices to jump 23 percent this year. March delivery for raw sugar gained $0.0006 (0.2 percent) to $0.3302 per pound by 13:46 on ICE.

Coffee futures also continued the rally to the 13-year record on speculation that adverse weather in Brazil and India may curb supplies. Commodities, including coffee, also gained on a weaker dollar. March delivery for Arabica coffee advanced $0.092 (4.1 percent) to $2.3385 per pound as of 14:00 ICE.

Sugar rose on concerns that adverse weather in India, the second largest producer in the world, would curb supplies. Sugar production in the state of Maharashtra, India’s biggest producer of refined sugar, declined 29 percent from October 1st to November 20th, compared to the same period in the previous year, as heavy rainfall slowed the harvest. Sugar declined previously on concerns about sovereign-debt of European countries and conflict between North and South Korea. March delivery for raw sugar rose $0.0083 (3.1 percent) to $0.2733 per pound as of 14:00 on ICE.

Cotton dropped to the lowest level in a month as China tightened rules for bank credit in order to make it hard to speculate on agricultural markets and as the dollar rose. China attempts to prevent hoarding of products and artificial inflation of prices. The dollar surged after North and South Korea exchanged artillery fire, spurring demand for the US currency as a safe haven. March delivery for cotton fell 0.06 (5.1 percent) to $1.1179 per pound by 14:44 on ICE.

Corn futures went up today on speculation that previous slump of prices would increase demand for the grain, used in production of fuel and to feed cattle. US gasoline inventories unexpectedly fell last week, increasing consumption of ethanol and also boosting demand for corn. December futures for corn delivery advanced $0.05 (1 percent) to $5.05 per bushel as of 13:15 on CBoT.

Wheat futures dropped today on forecast that rains in Russia and Eastern Europe would improve soil moisture, helping crops. Previously these regions suffered from dry weather and require more precipitation to recover. December futures for wheat delivery slipped $0.0125 (0.2 percent) to $6.835 per bushel by 13:15 on CBoT.

Sugar declined today on outlook for growing global supplies. India, the second largest producer of sugar in the world, expected to have a surplus of 7.5 million metric tons in the year starting October 1st, compared to 5 million this year. March delivery for raw sugar subtracted $0.0036 (1.4 percent) to $0.2493 per pound at 14:00 on ICE.

Gold prices declined this summer, which can be expected, as summer is traditionally bad season for gold (among some other commodities). What’s important, prices fell from the all-time high, but remained on very high level historically. Despite recent declines, most traders remain very bullish on bullion, and this outlook proves correct (at least for now) as the precious metal resumed its climb to higher level.

The first reason to be bullish is seasonal demand. The period from September through December always was strong period for gold historically and we have no reason to believe this year to be an exception. There are many holidays, which are favorable for the precious metal, including Islamic Ramadan, at the conclusion of which many Muslims buy gold for good luck. Then, there is wedding season in India, historically biggest market for gold. Moving to the West we’ll have later the New Year and Christmas, and returning to the East the lunar New Year.

For longer term, trader can consider other factors (which actually influence prices in short term too). The obvious upward driving force is the concerns for the global economic recovery, caused by troubles in Europe and US. In the same time, Asia becomes more prosperous, especially China and India. Gold historically has great appeal for the people of these countries, not just for its aesthetic value but also as a safe haven for hard times. This means that they tend to hoard gold, but aren’t inclined to part with it easily. And the demand for gold will only grow as the citizens of India and China are becoming richer.

So, where gold is heading? Obviously, higher. For the short term, it may rise $100 or $200 higher before pausing its rally, but for the longer terms it has potential to rise much, much higher. Of course, some correction may be possible, but level of $950—$1050 should be level of support.