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Weekly Agri-Commodities Update - Angel Commodities Broking

Posted On: 2017-09-02 08:58:39

Views of Mr. Ritesh Kumar Sahu (Fundamental Analyst - Agri Commodities, Angel Commodities Broking):

"Among agri-commodities, only Cardamom, Mentha, Chana and cotton trade on positive note while all other commodities are heading for weekly losses. Cardamom futures is heading for its 6th weekly rise in last 7 weeks on anticipation of good demand in coming months coupled with unlikely surge in arrivals because of erratic weather conditions while chana futures sees 5th consecutive weekly rise on expectation of good festival demand and government's import restriction on pulses. Moreover, Moreover, erratic distribution of monsoon rains in key pulses growing states also support higher prices. Guar complex and soybean prices see highest one week fall in more than one year due to higher domestic stocks and expectation of good production in coming season.

The most active October delivery contract of Guar complex on National Commodities and Derivative Exchange (NCDEX), see steep fall this week on reports of improved weather conditions in guar producing districts of Rajasthan and Gujarat. Moreover, market participants are worry about the export prospects for the guar gum in coming months as Crude oil production likely to be affected due to Hurricane Harvey. Due to vast devastation by hurricane, the refining capacity in the US severely affected resulting in higher crude oil stocks.

During the current week, October guar seed on NCDEX plunge Rs. 396 or 9.4%, to trade at Rs. 3,838 per quintal, lowest in two weeks today while guar gum fall Rs. 725 or 8.2% to trade near Rs. 8,110 per quintal.

In the domestic market, reports of good weather conditions in the guar producing districts in Rajasthan and Gujarat may result in good production despite lower areas this season. As on 17th Aug, 2017, guar seed area in Rajasthan is 28.26 lakh hectares, almost similar to last year area of 28.4 lakh hectares. While in Gujarat, the guar acreage forecasted down by 11.7% as on 28th Aug to 1.66 lakh hectares as compared to previous week estimates. According to market sources, acreage in Haryana is lower as farmers have shifted to cotton due to better remuneration. The downward revision in Gujarat is due to reports of large scale damage to standing guar crop due to large excess rains in the major guar sowing districts of Gujarat.

The most active Soybean futures for October delivery on NCDEX is heading for its largest weekly loss in more than 16 months tracking weak physical demand on rising input cost put pressure on margins of soybean crushers. On NCDEX, soybean futures fell more than Rs. 195 or 6.0% during the week to trade at Rs. 3,082 per quintal. Despite lower area under soybean this year - due to a fall in acreage in Madhya Pradesh, the prices have been in pressure this week. Good rains in soybean planting districts of Western Madhya Pradesh, Rajasthan and Maharashtra during the week ending 30th August increase the prospects of good production also put pressure on prices.

The area coverage under soybean, as on 25th August, is reported down 7.3 % at 104.9 lakh hectares compared to 113 lakh hectares at the same period last year, as per government data. As per SOPA, arrivals of soybean were at 74 lakh tonnes (lt) in Oct-Jul, up from 54.5 lt a year ago, while stocks with farmers are at 30.9 lt, up from 796,000 tn a year ago.

During the current week, edible oil prices in the futures recovered during the last two days due to good demand in the physical market coupled with reports of increase in tariff value for the crude soy oil and palm oil for the first half of September by government. However, the soy oil futures are still trading lower compared to last week closings of Rs. 663.9 per 10 kg due to higher imports of edible oil during the month of July. According to the industry data release, vegetable oil imports rose 34% during July to 15.25 lakh tonnes due to higher shipments of cheaper refine palm oil and soy oil.

Among spices, NCDEX Jeera for Sep delivery contract heading for first weekly loss after two weeks of positive closing mainly on profit bookings by the market participants as the arrivals have increased during August compared to July. The near month contract (Sep 17 delivery) is traded at premium than the two far month contracts which indicates improvement in near term physical demand from the market participants. The sellers (hedgers) are exiting from the contracts at good profits while buyers got the actual delivery from exchange. As per Agmarknet, jeera arrival during August up 81% to 7,078 tonnes as compared to 3,912 tonnes during July.

Turmeric futures for September delivery on NCDEX closed higher this week trading in a narrow range on reports of good rains in Turmeric growing areas during week ending 30th August. The production estimate of turmeric for 2016/17 is pegged at 11.32 lakh tonnes by government in 3rd advance estimate higher from 9.43 lakh tonnes in 2015/16. For 2017/18, turmeric sowing in Telangana, as on 16th August, down 1% to 44,411 hectares as compared to last year acreage of 44,919 hectares.

MCX Cotton for October delivery is heading for second consecutive weekly gains despite reports of higher production amid improved acreage but erratic monsoon coupled with pest attacks is supporting the prices above Rs. 18,600 per bale in the country. According to Cotton Corporation of India (CCI), total production for the season is likely to touch 370 lakh bales as against 345 lakh bales for the previous season as cotton acreage is higher this year. As per latest data from Agricultural Ministry, the area under cotton was at 119.7 lakh ha, up 16.7% on year. International Cotton prices to hit a fresh three-week high as the market remained wary of the impact of Tropical Storm Harvey, in the US which caused catastrophic flooding in top cotton producing state Texas. There are reports that as much as 300,000-500,000 bales could have been lost during the winds and flooding over the last week."

Source: Equity Bulls

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