Weekly Agri-Commodities Update - Ritesh Kumar Sahu - Angel Commodities Broking

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

"During the current week, Mentha, Coriander and Cotton seed oil cake futures jumped higher mainly on improvement in domestic demand. Oilseed and edible oil futures baring Ref soy oil continue to recover slowly for the second successive week on expectation of festival demand and higher import duty on edible oil. However, Cotton futures closed in negative on account of higher acreage in the country.

The Mentha futures for August Delivery touched its highest levels in five and half year to close at 1,198.2 per kg. The prices have jumped more than 6.2% during the week, its second consecutive weekly gain. This price surge is supported mainly due to erratic rains in the mentha growing districts of Uttar Pradesh which have affected current season harvesting. Moreover, export demand is also driving the prices higher. According to industry sources, the export demand will be rising during the next three to four months. As per Department of Commerce data, the exports of essential oils of mentha increased by more than 60% to 926 tonnes during first 5 months on 2017 as compared to last years' exports of 578 tonnes.

The most active October delivery contract of Guar complex on National Commodities and Derivative Exchange (NCDEX), closed flat in the current week after surging higher for three consecutive weeks on reports higher acreage reported in Rajasthan and Gujarat. As on 15th Aug, 2017, guar seed area in Rajasthan is unchanged compared to last week at 28.26 lakh hectares, however up by 4.2% compared to last year area of 27.10 lakh hectares. While in Gujarat, the guar acreage as on 14th Aug is around 1.81 lakh hectares compared to 1.20 lakh last year.

The guar complex futures increase by about 22% since the beginning on July this year amid good export demand and reports of large scale damage to standing guar crop due to large excess rains in the major guar sowing districts of Western Rajasthan and Gujarat.. India's guar gum exports for first three month of FY 2017-18 i.e. Apr-Jun recorded higher by 54% at 145,775 tonnes compared to 94,585 tonnes a year ago, due to higher demand from the US.

Soybean and rmseed futures on NCDEX closed higher for the second consecutive week tracking good physical demand and reports of deficient rains in soybean planting districts of Madhya Pradesh and Maharashtra. The area coverage under soybean, as on 11th August, is reported down 9.22% at 101.59 lakh hectares compared to 111.91 lakh hectares at the same period last year, as per government data. Moreover, hike in import duty of crude and refined oil to 15% and 25% from 7.5% and 15% earlier respectively also support oilseed prices. However, the prices did not rise as expected 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.

MCX Cotton for October delivery is heading for first weekly loss in three weeks on mixed fundamentals of higher acreage and erratic monsoon in the country. Moreover, attack on pest also put some concern over the yield of cotton this year but higher carryover stocks and anticipation of much improved imports in coming season is pressurizing the prices. As per latest data from Agricultural Ministry, the area under cotton was at 117.1 lakh ha, up 18.3% on year. As per 4th Advance estimate in 2016/17, despite lower area coverage during 2016-17, higher productivity of cotton has resulted into higher production of 33.09 million bales (of 170 kg each) up 10.29% compared to 30.01 million bales during 2015-16.

Among other spices, NCDEX Jeera for Sep delivery contract closed higher by 0.72% or Rs. 140 to close at Rs. 19,660 per quintal. The prices have been trading at an average price of Rs. 19,500 levels in the last four weeks due to reports diminishing arrivals and good export demand.Turmeric futures for September delivery on NCDEX closed slightly this week on lower acreage, expectation of better physical demand and lower than expected rains in turmeric growing areas of Telangana and Karnataka. After good start to turmeric sowing in Telangana, acreage under turmeric, as on 16th August, down 1% to 44,411 hectares as compared to last year acreage of 44,919 hectares."

Source : Equity Bulls

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