Commodity Returns Perspective - October 11, 2010 to October 16, 2010 - NCDEX

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

Silver shining bright with positive momentum and trading at record high levels scored 7.4 percent weekly returns. Soy complex continued its positive move in the week ending on 16th Oct as well. According to the Solvent Extractors' Association of India, the import of vegetable oils during September 2010 is reported at 960,752 tons, (consisting of 942,257 tons of edible oils and 18,495 tons of non-edible oils) compared to 905,192 tons in September 2009 i.e. up by 6%. The overall import of vegetable oils during Nov.'09 to Sept.'10 is reported at 8,408,707 tons compared to 7,975,683 tons i.e. up by 5%. Current stock of edible oils as on 1st October, 2010 at various ports estimated at 790,000 tons (CPO 420,000 tons, RBD Palmolein 70,000 tons, Degummed Soybean Oil 225,000 tons, Crude Sunflowerseed Oil 72,000 tons and Cotton Oil 3,000 tons) and about 710,000 tons in pipe lines. Total stock both at ports and pipelines estimated at 15 kakh tons compared to 13.8 lakh tons as on 1 Sept 2010, up by about 1.20 lakh tons compared to previous month due to higher import during last two months and also domestic production has gone up due to increased processing of soybean seed and rapeseed. Rupee appreciation in last three months also supported the import of vegetable oils. The Soybean Processors Association of India (SOPA) conducted soybean crop survey in major states of the country (MP, Maharashtra and Rajasthan) from September 15 to 27, 2010. According to the SOPA report, the estimated national production of soybean during this year (2010) would be to 101.283 lakh MT resulting in 4.15% growth. The estimated yield is 1089 Kg/Ha against 1006 Kg/Ha in 2009.

Turmeric prices gathered momentum on improved demand in the spot market. Copper prices stepped up during the week mainly influenced by the global sentiments. Firm trend in copper and other base metals was noticed at the London Metal Exchange (LME), as the outlook for demand improved and weakened dollar raised demand for commodities. Copper prices rose with strong regional manufacturing data in the United States and expectations of further monetary easing from the US Federal Reserve.

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

Keywords