Chana
Agri Commodities—Fundamentals November 17, 2014 Chana Highlights: High volatility noted for Agri commodities ahead of the weekend Holidays as most commodities traded bothways Guar failed to recover as high arrivals amidst weak demand kept market sentiments down Spices, Oil complex recovered moderately after the recent fall as demand picked up and arrivals fell in mandis; weakness in International markets however kept uptrend limited for Oil complex. Inside this issue: Reports of lower sowing for Chana and good demand from millers and Govt agencies had kept supporting the market sentiments. Raising the MSP from Rs 3100/Q to Rs 3175/Q added support to the prices in recent days. Fall in Canada crop production had been reported earlier. Continuous fall in rates over last few months has reportedly adversely affected the sowing. uptrend even as prices are considered to be on the lower side. However lower sowing reports are keeping prices up as of now. Expectations of improved crop sowing in states of MP, UP and Rajasthan could prevent strong According to Ministry of Agriculture, rabi pulses 2014-15 coverage till Nov.7 is down by 22.2% to 23.98 lakh ha. compared with 30.86 lakh ha. during the corresponding period of last year. Chana, main rabi pulses area is down by 32% to 16.15 lakh ha. compared with 23.78 lakh ha. during the corresponding period of last year As per 1st Advanced crop estimates for 2014-15 by Govt of India, India is likely to produce Kharif Foodgrains of 120.27 million tonnes, which is down by 8.97 million tonnes from the record 129.24 million tonnes achieved in Kharif 2013-14. NCDEX Cha na Dec cont ract Close 3199 S1 3170 S2 3144 R1 3220 R2 3248 Decline in area under Tur and Moong has also affected production of Kharif Pulses which is estimated at 5.20 million tonnes as against their production of 6.02 million tonnes during Kharif 2013-14. Tur production estimated at 2.74 million tonnes and Urad at 1.15 million tonnes. Mentha Oil Chana 1 Mentha Oil 1 Jeera 2 Turmeric 2 Guar 2 Ref Soy Oil 3 Soybean 3 RMSeed 3 Mentha continued to trade sideways last week as rates found some strong support at these lower levels. Expectations of a pick up in demand in coming weeks supported falling rates to some extent. But higher stocks and lack of strong demand as of now prevented any strong uptrend in price movement also. Prices continued to faced strong Resistance at near the 700 levels. However reports of current prices being on the lower side along with expected pick up in export and winter season domestic demand in coming weeks could ensure prices find some strong support here. Higher production and higher stock levels have been keeping market sentiments weak for quite sometime. Domestic pharmaceutical Industries demand are likely to rise in coming weeks. Banning of Gutka in some states continues having negative impact on Mentha Oil demand. Latest reports from Spice Board indicate that for the period AprilDecember last year, exports for Mint value-added products like Oil, Menthol and its crystals rose 94% in volumes at 17,850 tonnes and 39% in value at Rs 2202 Cr w.r.t. same period the previous year. Research Team Ajitesh Mullick +91120 6795530 [email protected] AVP-Retail Research Mahesh Choudhary +91120 6795529 [email protected] Sr Manager—Retail Research E-mail ID: [email protected] Disclaimer: http://www.religareonline.com/research/Disclaimer/Disclaimer_rcl.html MCX Me nt ha Oil No v cont ract Production this year expected higher at more than 60000 tonnes vs ~50000 tonnes last year Close 689 S1 683 S2 674 R1 696 R2 706 REL/RCL/CRD/TM/06/01 No strong movement was noted for Chana in absence of clear trend in mandis as prices stabilized at these levels after the recent fall in rates. Bearish news in International markets affected the market sentiments adversely. According to USDA, the expected pulses production in USA is up by 8% to 2,232,630 metric tonne during 2014 from last year. This could keep the import cost of Pulses under check and resulted in short term Bearishness for the commodity rate. Agri Commodities—Fundamentals Jeera NCDEX Jeera Dec cont ract Close 12215 S1 12135 S2 12020 R1 12360 R2 12480 Low arrivals, falling stocks, higher temperatures in growing areas and improved Export demand (aided by a firm Dollar vs Re) kept trend firm for Jeera last week before profit booking set in at the higher levels. A cool temperature would be needed for next few weeks for the crop to grow satisfactorily. The temperatures are a bit on the higher side as of now in Gujarat — as per market sources. This is creating apprehensions of likelihood fall in productivity The sowing progress in coming weeks would be important and determine the near term trend for the commodity. An expected pick up in sowing area could prevent too strong recovery for the commodity. Rains earlier this year in Gujarat and Rajasthan have improved moisture content of the soil and this can have a beneficial impact on the sowing of new crop that has started. However a cool climate would be needed for better crop productivity. Effect of Dollar vs Re would be important in medium term when exports pick up. But till that happens some more dips not ruled out Jeera production in India is expected to rise to 6.5-7 million bags of 55 kg each in 2014, from 4.5-5 million bags a year earlier, due to an expanded area under cultivation and favourable weather conditions. As per Spices Board of India statistics, India exported 96,500 tonne of cumin seed or Jeera during AprilDecember 2013, up from 50,944 tonne exported in similar period, previous year. Good quality arrivals have ensured Jeera rates are fetching premium w.r.t. International markets. Low stocks in global trade and political unrest in Turkey and Syria have pushed export demand to India. India will remain the primary exporter for this commodity as of now. Turmeric Profit booking set in at the higher levels for Turmeric after the recent rise as arrivals increased in mandis. Lower production possibilities and improved Export demand have kept sentiments firm for last few days. But demand reportedly got affected at these higher levels as traders wait for some more dips. to rise in coming weeks, it can support prices to some extent. NCDEX T urmeric Dec contract Close 6306 S1 6228 S2 6168 R1 6376 R2 6432 With harvesting still some months later, any demand has to be met from the current stock and this factor has been supporting the falling rates to some extent. Lower rains in AP and TN have already adversely affected sowing for the new crop there. As per reports from Spice Board of India, the estimated exports of Turmeric during April-December 2013 was pegged at 58000 MT, up by 17% same period previous year. In value terms, it was up by 45% at Rs 463.8 Cr. The demand is expected to pick up in coming days—lending some support to the prices. Traders anticipate prices are at very low levels and further downtrend may be limited. Last year production was low due to crop damage reports from AP and TN but stock levels from earlier years are high. However, with demand from North India and Export demand expected Guargum NCDEX G uarg um Dec cont ract Close 13820 S1 13640 S2 13400 R1 14100 R2 14280 Prices broke the psychological 5000 mark for Guarseed and 14000 got Gum as there was no let up in falling rates with increasing stocks amidst arrivals of the new crop keeping sentiments weak. Traders anticipate that with prices having fallen a lot, stockists would be unwilling to sell at such lower levels. But till exports pick up strongly, any strong recovery in the markets is unlikely as of now. Higher arrivals of the new and old crop in mandis had kept sentiments down. Exports demand too has reportedly slackened over last few days. Guar gum Stock rose more than by 3 times at NCDEX godowns to 3397 tons by 31st October 2014. Guargum millers are reportedly processing seeds for exports to China and Latin American countries. Pick up in exports in coming weeks could support prices As per First estimates advance estimates of Area, Production and Yield of Guar Seed by Rajasthan Government: Area: 3212965 Hectares, Production: 13.39 Lakh MT and productivity: 417 Kg. /Hectare. As per reports from APEDA, in the year 2013-14, India exported more than 6 lakh MT Guargum vs nearly 4 lakh MT in the previous year due to a significant fall in rates. However this also ensured a fall in Export realization which fell by 45% in Re terms. Agri Commodities—Fundamentals Ref Soy Oil NCDEX So y Oil Dec cont ract Close 586.9 S1 584 S2 581.4 R1 592 R2 595.5 Lack of strong demand in domestic markets along with weakness in International markets kept trend weak for Ref Soy oil as some more fall in rates expected in the near term. Prices continued to find strong psychological Resistance at the 600 level. India imported 11.62 million tonnes of edible oil during Sep-Oct 2013/14 compared to 10.68 million tonnes during the same period previous season, stated the Solvent Extractors' Association(SEA). were slightly lower at 7.29 Mn T against 8.29 Mn T last season. Sunflower oil imports were recorded at 1.51 Mn T against 0.97 Mn T in 2012/13. India’s 2013/14 soyoil imports stood at 1.95 Mn T against 1.09 Mn T in 2012/14 season. Palm oil purchases Reports on apprehensions of India considering raising import taxes on crude and refined vegetable oils to protect local farmers and the refining industry kept trend firm in Indian markets In order to improve realizations for farmers and to bring in transparency in soybean selling, the Madhya Pradesh government has introduced sample-based auction for the commodity. The pilot project will be implemented at Ujjain, one of the biggest mandis (wholesale agricultural markets) in Madhya Pradesh, and once the new system is found to be successful, it will be extended to 10 other mandis. The sample-based auction will not only save post-harvest losses, but also encourage farmers to produce fair average quality commodities that ensure better return on their yield. Madhya Pradesh has been the biggest producer of soybean. Soybean NCDEX So ybea n Dec cont ract Close 3302 S1 3264 S2 3228 R1 3334 R2 3368 Soybean traded with high volatility last week as the initial uptrend was not sustainable with fall in international markets pressurizing the Indian market sentiments also. Improved International production forecasts are keeping sentiments weak there. Traders expect downtrend to be limited however as demand is expected to improve in coming weeks. 3,958 million bushels, up 31 million on higher yields. The soybean yield is projected at a record 47.5 bushels per acre, up 0.4 bushels mainly on gains for Iowa and South Dakota. Soybean supplies for 2014/15 are projected 1 percent above the October forecast. U.S. oilseed production for 2014/15 is projected at 117.2 million tons, up 0.9 million from last month on increased soybean, peanut, and cottonseed production. Soybean production is forecast at U.S. soybean exports for 2014/15 are raised 20 million bushels to 1,720 million reflecting the record pace of export sales through late October. Soybean crush is raised 10 million bushels to 1,780 million mostly due to increased soybean meal exports. es in the 2013/14 balance sheet. Soybean ending stocks are projected at 450 million bushels, unchanged from the previous forecast. Domestic soybean meal consumption is reduced slightly in line with chang- New crop arrivals continue in MP but are stated to be lower in Maharashtra. This is keeping sentiments firm Global oilseed production for 2014/15 is projected at a record 528.9 million tons, up 0.5 million from last month. Higher soybean and rapeseed production are only partly offset by a lower sunflowerseed forecast. Global soybean production is projected at a record 312.1 million tons reflecting the increase for the United States. RMSeed NCDEX RMSeed Dec contract Close 3873 S1 3856 S2 3838 R1 3916 R2 3956 A firm trend was noted for RMSeed last week even as a fall in other Oil complex prevented any strong recovery for the commodity rates. Reports of lower sowing area, lower stocks in warehouses and high demand from stockists are likely to keep supporting the prices in the near term. Global rapeseed production is raised to 70.7 million tons on a record EU harvest. Gains for EU are partly offset by a reduction for Australia where dry conditions in the southeast have reduced yield prospects. Global sunflowerseed production is reduced 0.4 million tons to 39.8 million on lower forecasts for to good rains in Oct and fields being unused, early sowing was possible there. UP area coverage in Rabi 2014-15 till 30th Oct was 4.91 lakh ha while it was nil in 2013-14 during this period. As fields this year were unused in kharif season, so farmers had sown Mustard early in UP. Russia and Kazakhstan As per Ministry of Agriculture, Rajasthan area coverage in Rabi season 2014-15 till 30thOct 2014 was 9.07 lakh ha vs 11.88 lakh ha in 2013-14. The fall in area was due to high temperature in Oct and lack of rains. Farmer are reportedly shifting to Barley and Wheat. Crops also faced germination problem due to the high Temperature. Haryana area coverage in Rabi 2014-15 till 30thOct was reportedly nil while it was 2 lakh ha in 2013-14 during this time. The reason is again the high temperature during Oct. MP area coverage in Rabi 2014-15 till 30th Oct. was 3.80 lakh ha while it was nil in 2013-14. Due Mustard area coverage in All over India is 18.64 lakh Ha during Rabi 2014-15 and 14.08 lakh ha in 201314, area coverage during Rabi 2014 -15 is higher by 4.56 lakh ha compared to corresponding period of Rabi 2013-14
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