Commodity Returns Perspective - NICR

NCDEX Institute of Commodities Market and Research (NICR) has announced the commodity returns perspective. The weekly returns of select commodities, a set of agricultural, metals and energy products based on their spot prices are calculated to look at the performance of commodities as an investment alternative. There are a number of factors that affect the returns of the commodities which not only emanate from the domestic front but also reflect the global demand-supply equations. While it is true that the returns delivered in the past are not a reflection or indication of the returns that would accrue in the future, it is nevertheless interesting to compare the same and analyze these differences.

Returns

Soy complex emerged as the top price gainer in the week ending on 9th October. According to the Solvent Extractors’ Association of India, the export of oilmeals for the month of September 2010 is reported at 354,252 tons compared to 231,297 tons in September 2009 i.e. up by 53%. In first quarter export of oilmeals reported at 536,700 tons compared to 614,528 i.e. down by 13%, however, the export of oilmeals recovered in second quarter and reported at 839,509 tons compared to 619, 433 ton i.e. up by 36%, provided crushing parity and appreciation of FOB realisation lead to higher export.

Maize prices registered a fall of nearly 8 percent in the spot market of Nizamabad since the beginning of the October month. For Maize, about 75.84 lakh hectares sowing has already been completed by 7th October compared to 70.97 lakh hectares area during the same period last year. Thus, 4.87 lakh hectares more area has been covered in this Kharif season compared to last year and 4.64 lakh hectares more area coverage compared to 2008. According to the First Advance Estimates, Maize production for the current Kharif season is estimated at 14.06 million tonnes compared to 12 million tonnes last year. The fresh crop arrivals has started coming to the market in the state of Andhra Pradesh and Maharashtra.

Kharif crops have been sown in 1021.92 lakh hectares area so far. It is 64.34 lakh hectares more than the acreage by this time last year. It is also about 13 lakh hectares more than 2008, which was a record production year. The sowing of all major crops this year is more than that in the last kharif. For pulses, 18.27 lakh hectares more area has been covered in this Kharif season compared to last year whereas for oilseeds coverage is higher by just 0.57 lakh hectares in this Kharif season compared to last year.

Precious metals surged as weakness in dollar increased demand for alternative assets. While silver was seen trading at record high levels, gold maintained the price levels above Rs.19,000 per 10 grams.

Methodology

Weekly return for each commodity is calculated as ln (price on w/price on w-1) where w is the weekend day and w-1 is the weekend day of previous week.

Source : Equity Bulls

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