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Copper

MCX Copper prices has traded bearish during the month of August, owing to rising dollar index and worries of delta virus in China. Moreover, worries continue to loom regarding the health of the global economy with the positive movement in the economic indicators have slowed down in the major country such as United States. Meanwhile the production and supply scenario continue to remain subdued in Chile and Peru that added worries to the prices due to strikes. By 31st August, MCX Copper futures closed at Rs.723.84/kg, lower by 4.81% compared to Rs.760.4/kg reported on 30th July.

Fundamentally for the coming month, we expect MCX Copper futures to trade bearish as headwinds continue regarding the global demand scenario as the international experts take cue of China, where a stimulus-fueled recovery is fading. Industrial output, fixed asset investment and retail figures over the past few weeks all came in below expectations, adding to nervousness about the potential spread of the Delta variant within the same country. China's refined copper imports fell for the fourth straight month in July and expected to fall for the month of August, adding to the sense of lost momentum, although the greater availability of scrap metal has been the hidden factor behind the same. Growth in China's factory activity likely to be cooled further in August month, based on expert poll showed recently, as COVID-related restrictions and high raw material prices continued to pressure manufacturers. As per International Copper Study Group, global usage for May’21 has reported at 2.092 million tonnes, lower compared to 2.142 tonnes of the previous month. In the case of World Refinery production, global production for May’21 has been reported at 2.093 million tonnes, higher compared to 2.056 million tonnes of Apr’21. The usage is currently lower than the production and is expected be supportive for Global copper prices inthe month ahead.

On a weekly time frame, MCX Copper (Sep) future has given a breakout of Ascending Broadening Wedge pattern, which supports the downward trend. In addition, the indicator MACD histogram is hovering in the negative territory with a declining trajectory which points to a weaker momentum. Moreover, the trend indicator Parabolic SAR is indicating a bearish trend. On a daily chart, the price has also shifted below the 21 Exponential Moving Averages after the breakout of Head & shoulder pattern which confirms bearish trend in the near future. Hence, based on above technical structure one can initiate a short position in MCX Copper (Sep) future at CMP 712.90 or arise in the price till 715 levels can be used as selling opportunity for the downside target of 670.50 . However, the bearish view will be negated if MCX Copper (Sep) future close above the resistance level of 735.

Castor Seed

NCDEX Castor Seed Futures traded bullish during the August month, owing to improved buying of the new crops from the states of Gujarat and Rajasthan with unlocking process in various APMC Markets of Deesa, Palanpur, Mesana, Kadi and Patan. Moreover, progressive sowing of castor seed in the major states of Gujarat and Rajasthan has been lower by 8% and 10% respectively compared to the previous year. By 31st August, NCDEX Castor Seed futures closed at Rs.5888/quintal, higher by 4.66% compared to Rs.5626/quintal reported on 30th July.

Fundamentally for the coming month, we are expecting NCDEX Castor Seed futures to trade bullish as the export demand for castor oil continues to remain strong amid the rise in industrial activities worldwide. Additionally, prices of other vegetable oils such as Crude Palm Oil and Soy Oil have remained steady even though there has been steep rise and fall in US Dollar Index. Major export destinations of castor oil and castor seed meal have been to China, US and Europe and is expected to rise in the months of September. Due to less availability of Hybrid Castor seeds the productivity this year is expected to remain down by 10%. Sowing of Castor Seed is expected to end by 15th September with forecasts of lower sowing by 5-10% in the earlier mentioned states. As per SEA associated agriculture research, the total production of Castor seeds for castor seed is down to 17.5 lakh tonnes, lower compared to 19 lakh tonnes earlier estimated in, which is anticipated to come down to 13-15 lakh tonnes in the year 2021-22. Moreover, NCDEX Castor Seed Futures can find strength, as monsoon continues to remain sluggish in North-western India and Haryana. Initially forecasts by IMD has indicated that the Indian monsoon for the year 2021-22 to be lower by 10% by 30th September, which could affect the overall yield of castor seed in the later months i.e. October to December.

On a weekly chart, after a long bullish rally NCDEX Castor Seed (Oct) future got rejection from higher level with Shooting star candlesticks, which indicate that the bears have taken control. In addition, the price has also been facing immediate hurdle of prior supply zone, which indicates a bearish reversal in the counter for near term. Moreover, an oscillator Stochastic RSI is also suggested negative crossover, which is again a downside confirmation. However, on a four hourly chart, the price has taken support of 21 Exponential Moving Averages, which indicates slightly recovery may possible in the counter till the level of 6150. Hence, based on above technical structure, we are recommending sell on rise strategy in NCDEX Castor Seed (Oct) future , so one can initiate a short position in NCDEX Castor Seed (Oct) future around 6140 or a rise in the price till 6210 levels can be used as selling opportunity for the downside target of 5500. However, the bearish view will be negated if NCDEX Castor Seed (Oct) future close above the resistance level of 6460.

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