Published on 19/05/2017 9:51:08 AM | Source: Angel Commodities Pvt Ltd

Cotton futures are expected trade sideways - Angel Commodities

Posted in Commodities Reports | #NCDEX #Commodity Tips #Angel Broking Pvt Ltd


Agri-Fundamentals

Soybean

Soybean Jun futures closed lower on Thursday tracking weak International prices and higher stocks in the Country. As per SPOA, about 54 lt of soybean has been crushed and estimate of 46 lt of soybean is available in the country. In crop year 2016/17 till end of April about 59 lt arrived Vs 58 last year. Physical demand has been steady as 60% of soybean mills in Madhya Pradesh reported to have shut down because of subdued demand for soymeal and lower prices of soyoil. IMD forecast for near normal monsoon than previous forecast in April may keep the prices under pressure.

CBOT soybean futures fell nearly 3.2% on Thursday on weak Brazil’s currency which may encourage Brazilian farmers to sell large crops threatening U.S. soy exports. Brazilian real BRL= tumbled more than 7% following corruption allegations against Brazilian President. Brazil just completed the harvest of its largest-ever soy harvest, estimated by the USDA at 111.6 mt. But farmers had sold only about half of it by early May, compared with the five-year average of 65%.

 

Refine Soy Oil

Refined soy oil futures closed lower on Thursday due to drop in international prices. However, spot prices have increase slightly driven by good physical demand and increase in the tariff value for May. Government increases the tariff value for crude soyoil for the second half of May by $13 to $793 per tonnes. Imports of soyoil is lower this oil year starting last November According to SEA, during Nov.’16 – Apr.’17, import of soy oil has been lower to 13.50 lt from 22.44 lt in the same period of last year. Moreover, Import of soy oils during April 2017 is reported at 3.04 lt compared to 3.50 lt in April 2016 - down by 12.4% however, the imports increase 32% m-o-m.

 

Crude Palm oil

MCX CPO closed lower tracking firm International prices and amid good physical demand and increasing tariff value. As per SEA, During Nov.’16 – Apr.’17, Import of crude oil decreased to 56.3 lt from 61.8n lt tons during the same period of last year. The government cut the base import prices of Crude palm oil by $9/tonne and RBD by $6/tonne for 2 nd half of May.

Malaysian palm oil fell on Thursday tracking weaker soyoil on the CBOT and other related edible oils on China's Dalian Commodity Exchange. Market is expecting limited fall on good demand. Exports of Malaysian palm oil products for May 1-15 rose 8.9% shipped during Apr. 1-15, as per intertek. The MPOB data showed April production rose 5.7% to 1.55 mt. The growth was below market expectations.

 

Outlook

Soybean futures are expected trade under pressure on limited demand and slower crushing. There is supply pressure as stockists are selling as good monsoon forecast indicates another bumper crop. The prices of Ref Soy oil and CPO may trade higher on good demand and increase in tariff value. 

 

Sugar

Sugar Futures closed unchanged on Thursday due to good supplies and steady demand from the physical market. There are reports of rebound of sugarcane production in the next year due to higher acreage. According to USDA, India’s production is forecast to rebound by 18% to 25.8 mt due to higher area and yields. Imports are forecast lower while consumption is forecast to edge higher to 26.0 mt. Maharashtra government seeks differential pricing for sugar where industrial buyers have to pay more while retail consumer pays less. Moreover, government extends curbs on holding of sugar stocks by six months for the sugar dealers and traders.

ICE Raw sugar futures fell sharply on Thursday, pressured by an 8% slump in the Brazilian currency following corruption charges on President of the Country. However, the prices may gat some support on reports of heavy rains in Center-South Brazil slowing the pace of crushing. El Nino may bring wetter conditions in the early stages of the 2017-18 harvesting. Moreover, lower crushing data from Brazil and produced 1.12 mt of sugar during the second fortnight of April, down 38.1% from 1.81 mt produced a year ago.

 

Outlook

Sugar futures may trade sideways on mixed fundamentals of higher supplies and improvement in physical demand from industrial buyers. However, balanced demand and supply levels in the physical market may keep prices range bound.

 

Cotton / Kapas

Cotton futures on MCX traded under pressure tracking weak International prices. There are ample supplies this season through imports and good stocks available with the farmers. According to trade sources, India’s cotton imports have touched an all-time high of 30 lakh bales this season. USDA forecasts India cotton production for 2017/18 at 6.01 mt, up nearly 6% while area is forecast at 11.5 mhac, up 10% from last year. The domestic cotton arrivals in April are higher by 49% on year at 2.64 lakh tonnes (lt) compared to 1.77 lt last year, as per Agmarknet data.

ICE cotton futures fell on Thursday due to drop in weekly export sales in the US and favorable weather in top growing regions. Weekly export sales data from the USDA showed net upland sales for the 2016-17 crop last week totaled 120,700 running bales (RB), down 25% from the week before.

 

Outlook

Cotton futures are expected trade sideways on steady physical demand, reports of higher stock levels, normal monsoon and anticipation of higher sowing acreage in the country may pressurize prices. Moreover, lower exports prospects and higher imports keeping prices under pressure. 

 

Spices (Jeera & Turmeric)

Jeera Jun futures close with little change on Thursday and continue its sideways movement. The arrivals have now slowed down in the physical market. As per Agmarknet data, about 4,316 tonnes of jeera arrived in May (1-14) compared to 17,494 in April (1-14). On the export front, country the exports increase by 29.6% to 1,08,513 tonnes in first 11 month of marketing year 2016/17 as per the data release by Dept of commerce, GOI. The stock levels in the NCDEX warehouse is about 2,092 tonnes, higher by 117% as compared to stocks on 1 st May. The stocks were only 964 tonnes in the begin on the month.

NCDEX Turmeric closed lower on profit booking pressurized by steady demand in the physical market against higher stock levels. There was lower demand all season from industrial buyers. Turmeric arrivals in the country are lower in first 15 days of May at 36,489 tonnes compared to 73,824 tonnes during April (1-15), as per the Agmarknet data. The lower arrivals are due to poor realization by the farmers. On the export front, country exported about 97,596 tonnes during April-Feb period, up by 26.6% compared to last year exports of 77,087 tonnes, as per government data. There are expectations of improved demand in coming weeks as prices are lower.

 

Outlook

We expect Jeera futures to trade sideways to lower on anticipation of higher supplies and steady physical demand. Turmeric to trade sideways as there is sufficient stocks and lower demand from the industry. The supplies have been lower due to lower prices and there is some increase in demand which may keep the prices supported. 

 

To Read Complete Report & Disclaimer Click Here

 

Click here to open demat account                              

 

For More Angel Broking Pvt Ltd Disclaimer http://www.angelsecurities.in/disclaimer.aspx                           

 

Views express by all participants are for information & acadamic purpose only. Kindly read disclaimer before refering below views. Click Here For Disclaimer