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Gold

Gold yesterday settled up by 0.05% at 50649 amid reports that some G7 member countries are planning to officially ban new bullion imports from Russia for its invasion of Ukraine. The UK, along with the US, Japan and Canada, considered the measure given London’s central role in the gold trade, in a move that could potentially have a global reach and negatively impact Moscow’s ability to raise funds. However, some argued that shipments between Russia and London have already dropped to nearly zero since western countries imposed sanctions on Moscow, and added that the measure only formalizes what the gold industry has been doing. Meanwhile, gold has come under pressure since March amid expectations that major central banks will continue to aggressively raise interest rates to target runaway inflation. The Group of Seven rich democracies will announce a ban on imports of Russian gold, as part of ongoing efforts to hold Russia accountable for its war in Ukraine and block attempts to evade Western sanctions, a senior U.S. administration official said. China's net gold imports via Hong Kong jumped about 58.3% in May from the previous month, Hong Kong Census and Statistics Department data showed. Net imports stood at 8.281 tonnes in May, compared with 5.231 tonnes in April, the data showed. Total gold imports via Hong Kong rose nearly 47% to 14.13 tonnes. Technically market is under short covering as market has witnessed drop in open interest by -0.46% to settled at 11770 while prices up 26 rupees, now Gold is getting support at 50490 and below same could see a test of 50330 levels, and resistance is now likely to be seen at 50895, a move above could see prices testing 51140.

Trading Ideas:
* Gold trading range for the day is 50330-51140.
* Gold jumped amid reports that some G7 member countries are planning to officially ban new bullion imports from Russia for its invasion of Ukraine.
* The dollar's weakness in international markets and lower Treasury yields also offered some support for the yellow metal.
* G7 to announce ban on import of new Russian gold- U.S. official
 

Silver

Silver yesterday settled up by 0.33% at 59946 tracking gains in base metals as some recession fears eased following China’s decision to lift Covid-19 curbs in Shanghai and relaxed testing mandates. The Federal Reserve hiked the Fed funds rate by 75bps and Chair Powell signaled a similar move is on the table at the next meeting, while the Bank of England raised rates for the 5th time and the Swiss National Bank raised borrowing costs for the first time since 2007. The ECB is expected to increase interest rates into positive territory in Q3, starting with a 25bps hike in July. At the same time, investors worry about global growth amid the war in Europe, and persistent supply chain issues. New orders for U.S.-made capital goods and shipments increased solidly in May, pointing to sustained strength in business spending on equipment in the second quarter, but rising interest rates and tighter financial conditions could slow momentum. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.5% last month, the Commerce Department said. It's a busy week for U.S. economic calendar, with reports on consumer confidence, personal income and spending and manufacturing activity awaited later in the week. Technically market is under short covering as market has witnessed drop in open interest by -26.58% to settled at 5849 while prices up 197 rupees, now Silver is getting support at 59655 and below same could see a test of 59363 levels, and resistance is now likely to be seen at 60484, a move above could see prices testing 61021.

Trading Ideas:
* Silver trading range for the day is 59363-61021.
* Silver gains tracking gains in base metals as some recession fears eased following China’s decision to lift Covid-19 curbs in Shanghai and relaxed testing mandates.
* New orders for U.S.-made capital goods and shipments increased solidly in May
* The ECB is expected to increase interest rates into positive territory in Q3, starting with a 25bps hike in July.

Crude oil

Crude oil yesterday settled up by 3.03% at 8638 as Libya's national oil company said it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production. Producer group OPEC+ trimmed its projected 2022 oil market surplus to 1 million barrels per day (bpd), down from 1.4 million bpd previously. Global surplus crude production capacity in May 2022 was less than half its 2021 average, as Western sanctions on Russia for its invasion of Ukraine took hold, the U.S. Energy Information Administration (EIA) said. The EIA estimated that spare capacity decreased by 80% in non-OPEC countries as of May from a year earlier, while surplus capacity from the Organization of the Petroleum Exporting Countries (OPEC) declined to 3.0 million bpd by May 2022 from 5.4 million bpd a year earlier. The EIA estimated that as of May, producers in non-OPEC countries had about 280,000 barrels per day (bpd) of surplus capacity, down sharply from 1.4 million bpd in 2021. It said 60% of the May 2021 figure was from Russia. Libya's National Oil Corporation (NOC) said it was considering declaring force majeure in the Gulf of Sirte area within 72 hours unless production and shipping resume at the oil terminals there. Technically market is under fresh buying as market has witnessed gain in open interest by 45.71% to settled at 6968 while prices up 254 rupees, now Crude oil is getting support at 8423 and below same could see a test of 8208 levels, and resistance is now likely to be seen at 8766, a move above could see prices testing 8894.

Trading Ideas:
* Crude oil trading range for the day is 8208-8894.
* Crude oil rose as Libya's national oil company said it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production.
* OPEC+ trims 2022 market surplus projection to 1 mln bpd
* Global surplus crude production dives in May, Russian oil cited – U.S. EIA

Natural Gas

Nat.Gas yesterday settled up by 3.07% at 507.7 as support seen after national demand will increase late in the week as the interior US warms into the 80s and 90s. However, upside seen limited on rising output and reduced demand expectations over the next two weeks, due partly to a drop in liquefied natural gas exports from the shutdown of Freeport LNG's Texas plant. The Freeport shutdown on June 8 should allow U.S. utilities to quickly rebuild low gas stockpiles for next winter, but will reduce the amount of U.S. gas available to the rest of the world. Freeport, the second-biggest U.S. LNG export plant, consumes about 2 billion cubic feet per day (bcfd) of gas, so a 90-day shutdown would make about 180 billion cubic feet (bcf) of additional gas available to the U.S. market. Data provider Refinitiv said average gas output in the U.S. Lower 48 states has slid to 95.1 bcfd so far in June from 95.2 bcfd in May. On a daily basis, however, output rose to 96.1 bcfd on Saturday, its highest since December 2021. With hotter weather coming, Refinitiv projected average U.S. gas demand including exports would rise from 93.9 bcfd this week to 96.3 bcfd next week. The amount of gas flowing to U.S. LNG export plants has fallen from an average of 12.5 bcfd in May to 11.2 bcfd so far in June due to the Freeport outage. Technically market is under short covering as market has witnessed drop in open interest by -5.57% to settled at 3594 while prices up 15.1 rupees, now Natural gas is getting support at 486.7 and below same could see a test of 465.6 levels, and resistance is now likely to be seen at 522.8, a move above could see prices testing 537.8.

Trading Ideas:
* Natural gas trading range for the day is 465.6-537.8.
* Natural gas gained as support seen after national demand will increase late in the week as the interior US warms into the 80s and 90s.
* However, upside seen limited on rising output and reduced demand expectations over the next two weeks.
* The Freeport shutdown on June 8 should allow U.S. utilities to quickly rebuild low gas stockpiles for next winter.

Copper

Copper yesterday settled up by 0.45% at 699.25 as the easing of COVID-19 restrictions in top metals consumer China raised hopes of a revival in demand, although fears of a global economic slowdown due to rapid interest rate hikes limited gains. Chilean state-owned Codelco, the world's largest copper producer, will adjust its strategy to produce more sustainable copper and meet the Andean country's growing environmental demands. Chilean state-owned copper miner Codelco, the world's top producer of the red metal, sees a firm copper price ahead despite a recent sharp fall, chairman of the board Máximo Pacheco told. The comments come as copper prices posted their biggest weekly fall in a year as investors worried that efforts by central banks to stem inflation will stifle global economic growth and reduce demand for metals. China's monetary policy will continue to be accommodative to support economic recovery, People's Bank of China Governor Yi Gang was quoted by state media as saying. China's real interest rates are pretty low considering inflation, Yi told China. China's outstanding green loans exceeded 18 trillion yuan ($2.69 trillion) as of March, while outstanding green bonds reached about 1.3 trillion yuan, Yi said a transcript of the interview posted on the central bank's website. Technically market is under fresh buying as market has witnessed gain in open interest by 2.06% to settled at 5738 while prices up 3.15 rupees, now Copper is getting support at 696.8 and below same could see a test of 694.3 levels, and resistance is now likely to be seen at 703.1, a move above could see prices testing 706.9.

Trading Ideas:
* Copper trading range for the day is 694.3-706.9.
* Copper prices rose as the easing of COVID-19 restrictions in top metals consumer China raised hopes of a revival in demand
* Copper giant Codelco sees 'very firm' copper price ahead despite recent drop
* China's c.bank will continue to support economic recovery.

Zinc

Zinc yesterday settled down by -0.12% at 296.45 on profit booking after prices rose as the refined domestic zinc social inventory continued to drop to 199,900 tons, but the poor replenishment of the terminal to a certain extent weakened the positive effect of tight supply. London Metal Exchange (LME) zinc stocks have been raided, leaving available inventory close to depletion. The zinc price is unimpressed, LME three-month metal sliding to a fresh 2022 low of $3,361 per tonne in tandem with the broader sell-off across the metals spectrum. Beijing said it would allow primary and secondary schools to resume in-person classes and Shanghai's top party boss declared victory over COVID-19 after the city reported zero new local cases for the first time in two months. Shanghai will gradually resume dining-in at restaurants from June 29 in low-risk areas and areas without any community-level spread of COVID-19 during the previous week, a Shanghai government official said. A pair of U.S. central bankers said they supported further sharp interest rate hikes to stem rapid price rises, even as investors cheered economic data showing inflation expectations to be less worrisome than initially feared. The International Monetary Fund slashed its U.S. economic growth forecast as aggressive Federal Reserve interest rate hikes cool demand but predicted that the United States would "narrowly" avoid a recession. Technically market is under fresh selling as market has witnessed gain in open interest by 6.9% to settled at 1658 while prices down -0.35 rupees, now Zinc is getting support at 293.8 and below same could see a test of 291 levels, and resistance is now likely to be seen at 299.4, a move above could see prices testing 302.2.

Trading Ideas:
* Zinc trading range for the day is 291-302.2.
* Zinc dropped on profit booking after prices gained as the refined SHFE zinc social inventory continued to drop to 199,900 tons
* London Metal Exchange (LME) zinc stocks have been raided, leaving available inventory close to depletion.
* IMF slashed its U.S. economic growth forecast as aggressive Fed interest rate hikes cool demand but predicted that US would "narrowly" avoid a recession.

Aluminium

Aluminium yesterday settled up by 1.27% at 211.9 as aluminium ingot inventory dropped 5,000 mt to 746,000 mt with less arrivals last week. The aluminium billet inventory also dropped amid less arrivals and centralised restocking across the downstream. The market pessimism, triggered by aggressive rate hikes in Europe and the US as well as less-than-expected economic readings, has been digested to some extent. China's monetary policy will continue to be accommodative to support economic recovery, People's Bank of China Governor Yi Gang was quoted by state media as saying. China's real interest rates are pretty low considering inflation, Yi told China. China's outstanding green loans exceeded 18 trillion yuan ($2.69 trillion) as of March, while outstanding green bonds reached about 1.3 trillion yuan, Yi said a transcript of the interview posted on the central bank's website. The People’s Bank of China injected a total CNY 100 billion into the banking system, the largest daily injection since March 31, via seven-day reverse repurchase at a rate 2.1%. to ease pressure from rising cash demand toward the end of the first half of the year. With CNY 10 billion worth of such reverse repos due on Monday, the PBOC net injected CNY 90 billion on the day. The PBOC started pumping more cash into the financial system last Friday. Technically market is under short covering as market has witnessed drop in open interest by -1.26% to settled at 2820 while prices up 2.65 rupees, now Aluminium is getting support at 209.3 and below same could see a test of 206.6 levels, and resistance is now likely to be seen at 213.7, a move above could see prices testing 215.4.

Trading Ideas:
* Aluminium trading range for the day is 206.6-215.4.
* Aluminium dropped as aluminium ingot inventory dropped 5,000 mt to 746,000 mt with less arrivals last week.
* PBoC makes biggest daily cash injection in 3 months
* China's c.bank will continue to support economic recovery

Mentha oil

Mentha oil yesterday settled down by -2.24% at 1025.6 as synthetic Mentha supply remains uninterrupted. Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry. However downside seen limited amid low production this season and improving demand post-pandemic. The harvest is expected to be almost the same as last year's in Barabanki area but harvesting this year is expected to be delayed. Crop growth is poor this year compared with last year despite use of fertiliser. The plant is about 25% less than the total crop, water is being felt after every three days. The production of Mentha oil was historically high in 2020-21, the area remained almost similar last year but the yields were lower which affected the production. In the current year we forecast production to fall to around 46,238 MT due to sharp fall in area and loss in yields following severe summer heat. which will come closed 14% down in the year 20-21. Germany's BASF said it would have to stop production if natural gas supplies fell to less than half its needs, as the world's largest chemicals group warned of the damage to its operations from Europe's power crunch. In Sambhal spot market, Mentha oil dropped by -37.4 Rupees to end at 1122.5 Rupees per 360 kgs.Technically market is under fresh selling as market has witnessed gain in open interest by 5.88% to settled at 1207 while prices down -23.5 rupees, now Mentha oil is getting support at 1010.7 and below same could see a test of 995.9 levels, and resistance is now likely to be seen at 1042.6, a move above could see prices testing 1059.7.

Trading Ideas:
* Mentha oil trading range for the day is 995.9-1059.7.
* In Sambhal spot market, Mentha oil dropped  by -37.4 Rupees to end at 1122.5 Rupees per 360 kgs.
* Mentha oil dropped as Synthetic Mentha supply remains uninterrupted
* Many states have seen gutkha and pan masala ban which have seen a lower demand from the pan masala industry.

Turmeric

Turmeric yesterday settled up by 0.95% at 7858 as arrivals of New season turmeric are diminishing and exports demand is improving as season progresses. However upside seen limited amid reports of sufficient stocks and good sowing progress in south India is pressurizing the prices. As per latest export figures, turmeric exports in Mar 2022 jumped higher 27.4% y/y at 15,750 tonnes vs 12,360 tonnes while for the period of Jan-Mar 2022, exports are only down by 1.15% y/y at 36,750 tonnes. In FY 2021/22, exports were down 16.7% y/y at 1.53 lakh tons but higher by 10% compared with 5-year average. Traders and exporters are expecting the prices to remain stable as Maharashtra and Andhra Pradesh turmeric arrivals have also increased. Kocha arrivals are good at markets in Sangli, Hingoli and Nanded regions in Maharashtra. Due to aggressive coverages by oleoresin companies, prices were steady during the month. Panangali arrivals have started in Salem, Erode and Gundalpet markets. Turmeric harvesting in Indonesia is likely to start during June – July 2022. Crop is reported to be normal. Domestic demand reduced particularly with the new season crop supplies from Marathwada region of Maharashtra during April. Turmeric all India production for 2022 is estimated at 4.67 lakh tonnes, revised after crop damage due to excessive rainfall in Maharashtra, Andhra Pradesh and Telangana during October and November. In Nizamabad, a major spot market in AP, the price ended at 8108.3 Rupees gained 34.1 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -1.06% to settled at 15455 while prices up 74 rupees, now Turmeric is getting support at 7760 and below same could see a test of 7662 levels, and resistance is now likely to be seen at 7916, a move above could see prices testing 7974.

Trading Ideas:
* Turmeric trading range for the day is 7662-7974.
* Turmeric gains as arrivals of New season turmeric are diminishing and exports demand is improving as season progresses.
* However upside seen limited amid reports of sufficient stocks and good sowing progress in south India is pressurizing the prices.
* As per latest export figures, turmeric exports in Mar 2022 jumped higher 27.4% y/y at 15,750 tonnes vs 12,360 tonnes

Jeera

Jeera yesterday settled up by 1.19% at 21320 because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities. Support also seen as because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities. Cumin exports dropped by 60.58% in March 2022 to around 13406.43 tonnes as against 33203.08 tonnes in March 2021. On daily basis Jeera arrivals in Unjha market were around 5,000 bags, Saurashtra and Gondal market around 800 t0 1,000 bags are arriving. Similarly, in Rajasthan also daily arrivals have remained weak, in Jodhpur market around 1,500 bags, at Nagaur 500 bags and other centres 500 bags arrivals noted. In Rajasthan, the new crop of cumin in the current year has come only 60% i.e. around 30 lakh bags as compared to last year. The arrival of cumin in Rajasthan has been only 50% in the peak season in the current year as compared to the previous years as the crop was less. There was a drought in Turkey and Syria and due to state tensions, the sowing of cumin seeds has been reported to be very low. Export demand for cumin seeds is expected to increase for the rest of the season due to reports of very low harvests in Turkey, Syria and Afghanistan. In Unjha, a key spot market in Gujarat, jeera edged down by -20.8 Rupees to end at 21387.15 Rupees per 100 kg.Technically market is under short covering as market has witnessed drop in open interest by -7.61% to settled at 11796 while prices up 250 rupees, now Jeera is getting support at 21070 and below same could see a test of 20815 levels, and resistance is now likely to be seen at 21470, a move above could see prices testing 21615.

Trading Ideas:
* Jeera trading range for the day is 20815-21615.
* Jeera gained because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities.
* In Rajasthan, the new crop of cumin in the current year has come only 60% i.e. around 30 lakh bags as compared to last year.
* Export demand for cumin seeds is expected to increase for the rest of the season due to reports of very low harvests in Turkey, Syria and Afghanistan.
* In Unjha, a key spot market in Gujarat, jeera edged down by -20.8 Rupees to end at 21387.15 Rupees per 100 kg.
 

Cotton

Cotton yesterday settled up by 0.44% at 41510 as Cotton sowing fall nearly 14.76% with 31.83 lakh hectares of area sown against area of 37.37 lakh hectares in 2021. There is a rush among farmers in Gujarat for sowing cotton in anticipation of good returns. Kharif cotton sowing for the season in Gujarat is likely to increase by at least 15% compared to the previous season amid a rush to sow the crop well ahead of its schedule. Farmers had got good prices for cotton in domestic and international markets last season. Indian Meteorological Department (IMD) in its forecast for next five days has said gradual maximum temperature is likely to rise by 2-4 degree centigrade over most parts of northwest India and Madhya Pradesh. Between June 27 and 29, scattered to fairly widespread rainfall is likely over peninsular India and east India, while there could be an increase in rainfall over northwest and central India, it said. The Cotton Association of India (CAI), is bullish about the sowing prospects this kharif season. “Sowing will increase by 12 per cent and go up to 133-135 lakh hectares from last year’s 120 lakh,” said Atul Ganatra, President, CAI. In spot market, Cotton dropped by -720 Rupees to end at 45170 Rupees.Technically market is under fresh buying as market has witnessed gain in open interest by 11.8% to settled at 1592 while prices up 180 rupees, now Cotton is getting support at 40740 and below same could see a test of 39970 levels, and resistance is now likely to be seen at 42240, a move above could see prices testing 42970.

Trading Ideas:
* Cotton trading range for the day is 39970-42970.
* Cotton gained as Cotton sowing fall nearly 14.76% with 31.83 lakh hectares of area sown against area of 37.37 lakh hectares in 2021.
* Sowing will increase by 12 per cent and go up to 133-135 lakh hectares from last year’s 120 lakh – CAI
* There is a rush among farmers in Gujarat for sowing cotton in anticipation of good returns.
* In spot market, Cotton dropped  by -720 Rupees to end at 45170 Rupees.

-www.kediaadvisory.com

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