Commodity Blog

Posts Tagged ‘India’

Gold dropped today from the highest price in six months after the stronger dollar decreased appeal of the precious metal as an alternative investment asset. The US currency gained as much as 0.2 percent versus the basket of six currencies today. Gold have tendency to move in an inverse pattern to the dollar. Gold also fell after some traders sold the metal to profit from high prices.

Gold prices previously surged on concerns about the global economic recovery. Outlook for the US economy is grim after dovish statement of the Federal Reserve this week, China’s economic expansion is slowing and Europe’s economy may be crippled by budget cuts. Actually, these concerns hadn’t gone away, so gold still has great potential. Considering increasing demand in Asia, especially in China and India, we can expand that bullion’s rally will continue.

December futures for gold delivery slid $2.30 (0.2 percent) to $1,214.40 as of 11:09 COMEX. Gold futures previously rose to $1,219.80, the highest price since July 1. The metal reached the record $1,266.50 level per ounce in June.

Hogs futures slipped today on forecast that high US pork prices may diminish retail demand. Meatpackers shipped 9.215 million pounds of pork last week, the worst week since late June. October futures for hog settlement slid $0.003 (0.4 percent) to $0.793 per pound at 9:42 on CME.

Raw sugar experienced a strongest decrease in almost two moths on speculation that supplies from Brazil and India, the world’s largest producers, would increase, erasing the global deficit. Production in Brazil’s Center South increased by 26 percent in the first half of July, while cane planting in India was boosted by rains, which were 2.5 percent above the 50-year average in July. October delivery for raw sugar slumped $0.0079 (4.1 percent) to $0.1861 per pound by 9:45 on ICE.

Coffee futures dropped the most in two weeks on speculation that the commodity rallied too much, considering the anticipated high supplies from Brazil, the biggest producer. Global coffee production may grow 12 percent to 135 million bags in the year starting October 1st. September delivery for Arabica coffee slid $0.0475 (2.8 percent) to $1.6775 per pound as of 10:04 on ICE.

Gold futures rallied today to the highest level in a week as the rising stocks and commodities signaled about expanding global economic growth, causing speculations that demand for raw materials will rise. The MSCI World Index of stocks climbed to the highest level since May 13 and Reuters/Jefferies CRB Index of 19 commodities headed for the biggest rally in almost a year. Crude oil jumped above $81 per barrel, while copper surged to the highest level in three months. An outlook for a seasonal increase of demand in such countries as India and Turkey also supported gold prices.

Euro’s rally prompted investors to sell the precious metal and buy the 16-nation European currency, limiting gains of gold. As McGhee of Integrated Brokerage Services said:

On the rallies, you’ve got some investors moving out of gold and back into euros.

December futures for gold delivery advanced $1.50 (0.1 percent) to $1,185.40 by 13:35 on COMEX, following the surge to $1,193.90. Speculators raised net-long position by 5.9 percent on COMEX in the week ended July 27th.

Gold gained today in New York after the prices touched the lowest level in almost three months, boosting appeal of the precious metal. Some economists say that glorious days of gold are over and it’ll be long time before we’ll see another surge of the prices. Other experts insist that the current decline is short-term and the prices will rally again in a month or two. In the latter case, the current low prices may be considered as buying opportunity.

The main supportive factor for gold prices is demand in Asia, particularly in China and India, which grew after prices fell. There are some religious holidays in India by the end of August, which may possibly fuel demand for gold jewelry.

December futures for gold delivery gained $1.80 (0.2 percent) to $1,163.60 by 11:05 on COMEX. Futures dropped yesterday as low as $1,160.80 per ounce, the most in more than three weeks, as a rally in global stocks damped demand for gold as an alternative investment.

Wheat reached 13-month high levels today as the weather troubles continue to remain a major concern of the main commodity suppliers across the world. It also looks unlikely that China or India will sell from their wheat stockpiles to satisfy the global demand.

Floods in Canada and droughts in Australia, France, Kazakhstan and Russia threaten the grain production in those regions. According to the market researchers, the wheat production in Western Australia is to fall by 9.5 million ton this year. Russian exports may be decreased by the government limits this year as the crops are falling there.

Despite the fact that the world consumers will have to buy more grain from the southern hemisphere this year, such big holders of the wheat stockpiles as China and India will probably refrain from parting with them. Analysts believe that the prices will stop rising so fast only if some other exporters will cover the supply deficit. Technical analysis factors support the bullish point of view.

Wheat went up from $586.25 to $599.50 as of 16:33 GMT on CBoT today, a spike to $609.75 was recorded earlier.

Sugar prices tend to be unpredictable, as they demonstrated at the first half of this year, slumping dramatically instead of rising, as traders expected. Recently the prices showed signs of some recovery, though. So, where do we stand now, what can we expect? In fact, sugar prices again show unpredictability as analysts provide completely different opinions on this matter. Such turn of event isn’t surprising, as the prices very dependent on weather, which itself quite hard to predict.

On the positive side, we had dry weather in June, import levy in India and outlook for stable demand. Drought might damage crops in Thailand, reducing yield by 10–15 percent. Some experts say that adverse weather may harm next-year harvest in Brazil too. Even in case of big harvest, Brazil may experience problems with delivering it to foreign importers, as it’s currently unable to load sugar on all ships waiting in ports. India may impose 40 percent tax on imports, supporting the price. India may actually keep its supplies from global markets to meet the local demand.

On the negative side, outlook for growing supplies makes it unlikely for sugar price to rise significantly. Indian tax, while supportive for the price, unlikely to boost it higher than current level. India expected to produce about 26 million metric tons of the sweetener, from which around 500,000 tons might be exported. Forecast for Brazilian harvest for the most part shifted from promising lower supplies to predicting higher output. Brazil’s output may climb 14 percent to as high as 41 million tons. Economists say that global deficit would shift to surplus of about 5 million tons in the next season.

All in all, there is no reason to expect major upswing of sugar prices. The prices expected to remain for the most part in the $0.15-$0.18 range. Price of $0.13 can be considered a good buying opportunity.

Cotton and soybeans dropped today on signs of increasing output. U.S. farmers planted cotton on the area, 19 percent wider compared to the previous year. The soybeans seeded area will be 1.8 percent wider compared to the last year and will reach the all-time record, while combine output of Brazil and Argentina will grow by 37 percent. December delivery for cotton slid $0.0051 (0.7 percent) to $0.7762 per pound as of 9:50 on ICE. November futures for soybean delivery slipped $00325 (0.4 percent) to $9.0875 per bushel by 11:03 on CBoT.

Raw sugar climbed to the weekly high level on forecast that output in India would be reduced by adverse weather. Production in Thailand may also fall; it expected to decline by 13 percent. October delivery for raw sugar rose $0.0041 (2.7 percent) to $0.1569 per pound as of 11:50 on ICE Futures U.S.

Copper rebounded today as the concern for the global recovery eased after the report about the increased manufacturing in the U.S. Chicago PMI index value of 59.1 in June indicated an increase, as figure above 50 signals about growth. September futures for copper delivery gained $0.0165 (0.6 percent) to $2.947 per pound at 12:20 on COMEX.

Copper dropped today on concerns that economic growth in China may slow. With Europe’s troubles and signs of slowdown of the U.S. economic growth, China remained the main source of optimism on markets. And even it might go away. September futures for copper delivery slid $0.159 (5.1 percent) to $2.9305 per pound on COMEX.

Concern for China’s economic growth also hit sugar futures, which also fell on a notion that the prices rallied too much. The supply picture is mixed, as harvest in India expected to beat estimation, but adverse weather in Thailand can curb output. October delivery for raw sugar dropped $0.0054 (3.4 percent) to $0.1528 per pound on ICE.

Wheat futures slid today as harvest in the U.S. accelerated due to favorable weather. The prices also fell as speculative investors increased their short positions. September futures for wheat delivery went down $0.0625 (1.3 percent) to $4.5875 per bushel by 9:57 on CBoT.

Sugar prices went up today in New York for the first time in three days on prediction that harvest may be hurt by low precipitation in India, sugar’s biggest consumer. In the week that ended June 23 India’s monsoon, the main source of nation’s irrigation, was 21 percent below average. October delivery for raw sugar rose $0.0038 (2.4 percent) to $0.1619 per pound on ICE.

Wheat futures rose today for the first time in a week also on outlook for adverse weather. As much as 12.5 million acres of grain were prevented from being planted in Canada because of rainfall. The output from the U.S. and Russia may also be lower because of adverse weather. September futures for wheat delivery gained $0.0175 (0.4 percent) to $4.775 per bushel on CBoT.

Copper prices gained today as government reports signaled that demand may be higher then economic indicators previously suggested. Cores durable goods orders rose by 0.9 percent in May and unemployment claims dropped from 476,000 to 457,000 last week, suggesting that the U.S. economic recovery strengthens. On the negative side we have unexpected plunge of new home sales from 446,000 to 300,000, which may curb gains of the metal prices. September futures for copper delivery added $0.0695 (2.4 percent) to $3.024 per pound on COMEX.

Sugar prices declined, but some analysts expect the rebound. Bullish forecasts say that global sugar inventories will decline to 32 percent of total consumption, 52.8 million metric tons, in the year to September 30th. While sugar prices decline after reaching the record level, the inventories still need to be resupplied and current low prices may help in this, which, in turn, may drive prices up. With civil unrest in Thailand and South Africa’s exports being lower than expected demand may exceed supply.

Bears point out on signs of increasing supply. Thailand’s government claims that it has restored order. India may turn from the largest consumer in the world to a net exporter, while Brazil’s output continues to grow. This expected to cause global sugar supplies to turn to surplus in the year from October.

July delivery for raw sugar fell 4.9 percent to $0.1419 per pound last week on ICE Futures U.S. in New York. Thus, prices resumed their bearish trend, which was reversed this month.