Weekly Agri-Commodities Update | Angel Commodities Broking

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

"MCX Cotton Oct futures expected to close higher this week on reports of lower than expected domestic production forecasted by the government. As per latest data from Agricultural Ministry, the area under cotton across the country was at 122 lakh ha in 2017, up nearly 18.7% on year. Cotton area is higher than the normal of 114.9 lakh ha for the period, based on the average of last five years.

Futures contracts of most of the components of the edible oil basket, fell during the week on the domestic exchanges tracking losses in international markets.

Futures contracts of soybean on the National Commodity and Derivatives Exchange (NCDEX) is expected to close 4% lower this week on expectation of increase arrivals of new season crop and reports that government has permitted states to extend the limits on stocks of oilseeds and edible oils with traders and mills till September 30, 2018. Moreover, weakness in most active contracts on the Chicago Board of Trade also weighs on domestic prices. Prices on the international exchange fell due to likely rise in yields of soybean in the US.

Similarly, mustard futures on NCDEX closed lower for the week due to higher stock levels in the country despite good physical demand from the oil mills. As per SEA data, we see improved mustard meal exports in first 5 month of FY 2017/18. Country exported 216,258 tonnes mustard meal during this period which is 122% higher on year. India's mustard meal exports for the month of July also rose 56.4% on year to 50,649 tonnes. Due to higher availability of mustard seed in the country, mustard oil imports for period Nov-Aug down 21% to 2.40 lt in current oil year compared to 3.00 lt in the previous year.

Edible oil prices on Futures exchange too fall this week taking clues from the International prices. International Soyoil has been under pressure since the U.S. Environmental Protection Agency on Tuesday said it was seeking comment on a proposal to reduce 2018 biodiesel blending requirements. While crude palm oil also traded weak during the week on anticipation of lower export demand from China and India due to good inventories in the respective countries.

Futures contracts of all spices traded lower on domestic exchanges due to weak demand and increase in supply in the physical markets. Futures contracts of jeera on the NCDEX is expected to fall for the second consecutive week on weak physical demand as exports are usually lower during the months of September, October and November. Moreover, there are assumptions that the area under jeera may increase by more than 30% in coming rabi season due to higher prices.

The most active Turmeric contract for Oct delivery heading for third consecutive weekly fall in anticipation of rise in supply as AP Markfed is expected to auction about 48,500 tonnes of turmeric procured under the price stabilisation scheme to support farmers in October. For 2017/18, turmeric sowing in Telangana, as on 27th Sep, down 1.5% to 44,956 hectares as compared to last year acreage of 45,633 hectares. In the 3rd advance estimate for 2016/17 season, the production estimate of turmeric is pegged at 11.32 lakh tonnes, higher from 9.43 lakh tonnes in 2015/16.

Futures contracts of cardamom on the MCX heading for biggest weekly fall in three and half months on higher supplies in the auction centre. During the week ending 24th Sep, total arrivals stood at 774 tonnes, which is highest for the new season and 40% higher compared to last week arrivals. Market participants are expecting higher arrivals from the third picking in Kerala, which is also the peak arrival season.

The most active October delivery contract of Guar gum on NCDEX, increase for the second consecutive week but most of the gains have corrected as guar seed prices have fallen. The peak arrivals of guar seed is expected during the last three month of the current year. First advance estimate by Rajasthan Government pegged guar seed production is pegged at 16.75 lakh tonnes, up 19.6% compared to last year production. However, the physical traders are expecting the production loss of about 15-20% compared to last year production due to lower acreage and erratic rains in the guar growing districts of Rajasthan. Exports so far during the new financial year have been encouraging and saw an increase of 69% on year to 178,119 tonnes during the first four months."

Source : Equity Bulls

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