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Gold

Daily comments as on Monday, June 20, 2022
Gold yesterday settled down by -0.3% at 50834 dented by a stronger dollar and hawkish policy signals from global central banks even as recessionary fears loom. Bullion's appeal was hit by aggressive tightening measures from central banks from around the world to curb inflation, with the U.S. Federal Reserve delivering its biggest interest rate hike since 1994. Inflation and economic uncertainties are usually supportive of gold, but higher interest rates increase the opportunity cost of holding non-yielding bullion. Global central bankers, who shared the limelight for skirting a pandemic-driven depression with quick action two years ago, are now stumbling through the aftermath as they try to quell an inflation surge none predicted or have been able to forestall. Discounts on physical gold in India narrowed, helped by some fresh buying from jewellers, while COVID-19 restrictions kept activity tepid in top consumer China. Indian dealers offered discounts of around $6 an ounce over official domestic prices compared with last week's $10 discounts. In China, gold changed hands at anywhere between discounts of $5 and $0.5 to premiums of $2 to $5 an ounce over global benchmark spot prices. In Hong Kong, gold was sold at anywhere between a discount of $1.8 an ounce to a premium of$1.50, while in Singapore, dealers charged premiums of $1.30-$1.70. Technically market is under long liquidation as market has witnessed drop in open interest by -3.35% to settled at 12681 while prices down -152 rupees, now Gold is getting support at 50707 and below same could see a test of 50579 levels, and resistance is now likely to be seen at 51071, a move above could see prices testing 51307.

Trading Ideas:
* Gold trading range for the day is 50579-51307.
* Gold prices declined dented by a stronger dollar and hawkish policy signals from global central banks even as recessionary fears loom.
* Dollar strength counters recession concerns
* U.S. manufacturing output unexpectedly weak in May

Silver

Silver yesterday settled down by -0.96% at 60937 as the dollar rose amid concerns persisted about a global economic slowdown. The Bank of Japan wrapped up a two-day meeting with no major changes to its ultra-low interest rates in contrast to the aggressive tightening of its peers. BOJ Governor Haruhiko Kuroda said in a press conference that the central bank would stick with its YCC and would not hesitate to ease policy further if needed to achieve the 2 percent inflation target. Production at U.S. factories unexpectedly fell in May, the latest sign of cooling economic activity as the Federal Reserve aggressively tightens monetary policy to tame inflation. The first decline in manufacturing output since January reported by the Fed followed news this week of a drop in retail sales last month as well as steep declines in homebuilding and permits. The weakness in production also reflects a shift in spending from goods to services. Investors were also reacting to comments by U.S. President Joe Biden that a U.S. recession isn't inevitable and that the country was "in a stronger position than any nation in the world to overcome inflation." Technically market is under fresh selling as market has witnessed gain in open interest by 7.35% to settled at 11377 while prices down -590 rupees, now Silver is getting support at 60618 and below same could see a test of 60298 levels, and resistance is now likely to be seen at 61489, a move above could see prices testing 62040.

Trading Ideas:
* Silver trading range for the day is 60298-62040.
* Silver dropped as the dollar rose amid concerns persisted about a global economic slowdown.
* BOJ wrapped up a two-day meeting with no major changes to its ultra-low interest rates in contrast to the aggressive tightening of its peers.
* Production at U.S. factories unexpectedly fell in May, the latest sign of cooling economic activity as the Fed aggressively tightens monetary policy to tame inflation.

Crude oil
Crude oil yesterday settled down by -6.99% at 8373 as interest rate hikes from major central banks fuelled worries about a sharp economic slowdown. Russia could continue cooperating within the OPEC+ oil production agreement beyond 2022, Deputy Prime Minister Alexander Novak said, after a surprise meeting with Saudi Arabia's energy minister. The global oil market continues to show signs of "turbulence", Russian Deputy Prime Minister Alexander Novak said at the St Petersburg International Economic Forum. Novak blamed the instability on uncertainties over oil production recovery in Libya, Iran and Venezuela and a lack of energy infrastructure. China added crude oil to storage tanks at the fastest rate in two years in May as the amount processed by its vast refining sector dropped by the most in a decade. China, the world's biggest crude importer, added about 2.23 million barrels per day (bpd) to commercial or strategic inventories in May, accelerating from the 2 million bpd seen in April, according to calculations based on official data. U.S. crude stocks and distillate inventories rose while gasoline inventories fell in the week through June 10, the Energy Information Administration said. Crude inventories rose by 2 million barrels in the last week to 418.7 million barrels, compared with expectations for a 1.3 million-barrel drop. Technically market is under long liquidation as market has witnessed drop in open interest by -0.7% to settled at 4694 while prices down -629 rupees, now Crude oil is getting support at 8091 and below same could see a test of 7809 levels, and resistance is now likely to be seen at 8884, a move above could see prices testing 9395.

Trading Ideas:
* Crude oil trading range for the day is 7809-9395.
* Crude oil prices fell as interest rate hikes from major central banks fuelled worries about a sharp economic slowdown.
* China's crude oil stockpiling surges amid weak refinery output
* Russia could continue OPEC+ cooperation beyond 2022 -deputy PM

Natural Gas
Nat.Gas yesterday settled down by -6.46% at 543.1 on forecasts for lower demand and expectations the extended shutdown of the Freeport liquefied natural gas (LNG) export plant in Texas would allow utilities to quickly rebuild low U.S. gas stockpiles. That price decline came despite record power demand in Texas, forecasts for much higher U.S. gas demand in two weeks as the weather turns hotter, and small declines in U.S. gas output in recent days. Data provider Refinitiv said average gas output in the U.S. Lower 48 states slid to 94.8 bcfd so far in June from 95.2 bcfd in May. That compares with a monthly record of 96.1 bcfd in December 2021. With hotter weather coming, Refinitiv projected average U.S. gas demand, including exports, would rise from 92.5 bcfd this week to 93.5 bcfd next week and 98.4 bcfd in two weeks. The forecasts for this week and next week were lower than Refinitiv's outlook on Thursday. Power demand in Texas hit a new all-time high on Thursday and will likely break that record again on Friday and Monday as homes and businesses keep their air conditioners cranked up to escape a lingering heat wave. Technically market is under fresh selling as market has witnessed gain in open interest by 26.81% to settled at 4300 while prices down -37.5 rupees, now Natural gas is getting support at 523 and below same could see a test of 502.8 levels, and resistance is now likely to be seen at 578, a move above could see prices testing 612.8.

Trading Ideas:
* Natural gas trading range for the day is 502.8-612.8.
* Natural gas slid on forecasts for lower demand and expectations the shutdown of Freeport LNG export plant would allow utilities to quickly rebuild.
* That price decline came despite record power demand in Texas, forecasts for much higher U.S. gas demand in two weeks as the weather turns hotter
* Average gas output in the U.S. Lower 48 states slid to 94.8 bcfd so far in June from 95.2 bcfd in May.

Copper

Copper yesterday settled down by -1.27% at 741.15 amid mounting fears that a global economic slowdown triggered by an aggressive tightening from major central banks and persistent coronavirus outbreaks in China would dampen demand. Putting a floor under prices were upbeat industrial production figures from top consumer China, suggesting an uptick in economic activity. China's refined copper production in May 2022 rose 4.7% year on year to 0.91 million tonnes, data from the National Bureau of Statistics showed. On a daily basis, average copper output stood at 29,419 tonnes over the May period, according to calculations based on the official data. The global copper mines will release up to 164,000 mt (metal content) of new capacity in 2022 (Hydro-copper output has been excluded, the same below). Among them, it is expected that in 2022, the commissioning of Quebrada Blanca Phase 2 in Chile will add 40,000 mt of copper in metal content; the commissioning of Quellaveco in Peru will add 40,000 mt in metal content, and the Udokan copper mine in the Russian Federation will add 30,000 mt in metal content. Copper inventory across major Chinese markets stood at 109,900 mt, down by 5,800 mt from Monday and down by 2,500 mt from last Friday. Compared with Monday's data, the inventories in most regions of China increased, but only the inventory in Shanghai and Jiangsu decreased. Technically market is under long liquidation as market has witnessed drop in open interest by -4.27% to settled at 3834 while prices down -9.55 rupees, now Copper is getting support at 735.3 and below same could see a test of 729.4 levels, and resistance is now likely to be seen at 749.8, a move above could see prices testing 758.4.

Trading Ideas:
* Copper trading range for the day is 729.4-758.4.
* Copper dropped amid mounting fears that a global economic slowdown triggered by an aggressive tightening from major central banks
* Putting a floor under prices were upbeat industrial production figures from top consumer China, suggesting an uptick in economic activity.
* China's refined copper production in May 2022 rose 4.7% year on year to 0.91 million tonnes

Zinc

Zinc yesterday settled down by -1.49% at 311.35 amid worries that rising interest rates would dent global economic growth. Zinc stocks in LME-approved warehouses are at their lowest in more than two years due to shortages in Europe where record-high power prices have led to production cuts of the metal. The market worried again about the economic development in the long run although the metals market rebounded shortly after the US Fed raised the interest rate as expected. Total zinc inventories across seven major markets in China stood at 223,600 mt as of June 17, down 9,000 mt from June 13 and 8,200 mt from June 10. Overall, the inventory in the seven markets decreased slightly. In Shanghai, when the zinc prices moved in a downward trend, most downstream enterprises restocked actively, driving down the inventory in Shanghai. In Tianjin, due to the resurgence of the pandemic in Inner Mongolia, the arrivals in the Tianjin market decreased, and inventory in Tianjin market dropped amid stable purchases. In Guangdong, the arrivals decreased slightly in the market after the maintenance at Mengzi smelter, and the fall in zinc prices encouraged downstream companies to restocking, leading to the decrease in the inventory of Guangdong. Technically market is under long liquidation as market has witnessed drop in open interest by -18.03% to settled at 991 while prices down -4.7 rupees, now Zinc is getting support at 308.3 and below same could see a test of 305.3 levels, and resistance is now likely to be seen at 316, a move above could see prices testing 320.7.

Trading Ideas:
* Zinc trading range for the day is 305.3-320.7.
* Zinc dropped amid worries that rising interest rates would dent global economic growth.
* Investors feared sharp rate hikes tipping economies into recession.
* Zinc stocks in LME-approved warehouses are at their lowest in more than two years due to shortages in Europe.

Aluminium

Aluminium yesterday settled down by -0.21% at 215.35 amid muted demand and soaring production. Concerns about slowing global growth coupled with high levels of inflation and skyrocketing borrowing costs dented demand from the construction sector, particularly from top consumer China, where persistent coronavirus outbreaks continued to hit economic activity. On top of that, China’s monthly aluminum production reached another record high in May amid an easing in power consumption curbs. Meanwhile, aluminum smelters in Europe continued to curtail production due to high energy costs exacerbated by the Russian invasion of Ukraine. Aluminium social inventory totalled 785,000 mt as of June 16, down 68,000 mt from last Thursday and down 138,000 mt from the end of May. Market transactions were active this week with falling aluminium prices. The inventory dropped the most in Wuxi, Foshan and Shanghai. Some sources were moved out of the social warehouses with the influences of the previous aluminium pledge scandal, and the downstream also purchased actively after aluminium prices dropped below 20,000 yuan/mt. Beijing on Thursday declared an initial victory in its latest battle with COVID-19 after testing millions of people and quarantining thousands in the past week to stem an outbreak prolonged by a sudden wave of cases linked to a bar. Technically market is under long liquidation as market has witnessed drop in open interest by -13.05% to settled at 2785 while prices down -0.45 rupees, now Aluminium is getting support at 213.3 and below same could see a test of 211.1 levels, and resistance is now likely to be seen at 217.3, a move above could see prices testing 219.1.

Trading Ideas:
* Aluminium trading range for the day is 211.1-219.1.
* Aluminum prices dropped amid muted demand and soaring production.
* Concerns about slowing global growth coupled with high levels of inflation and skyrocketing borrowing costs dented demand
* China’s monthly aluminum production reached another record high in May amid an easing in power consumption curbs.

Mentha oil
 

Mentha oil yesterday settled down by -1.11% at 1038.1 on profit booking 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 -22.1 Rupees to end at 1149.7 Rupees per 360 kgs.Technically market is under long liquidation as market has witnessed drop in open interest by -1.93% to settled at 710 while prices down -11.7 rupees, now Mentha oil is getting support at 1029 and below same could see a test of 1019.8 levels, and resistance is now likely to be seen at 1051.7, a move above could see prices testing 1065.2.

Trading Ideas:
* Mentha oil trading range for the day is 1019.8-1065.2.
* In Sambhal spot market, Mentha oil dropped  by -22.1 Rupees to end at 1149.7 Rupees per 360 kgs.
* Mentha oil settled down 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 down by -0.51% at 7866 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. The arrivals of New season turmeric are diminishing and exports demand is improving as season progresses. 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 8276.55 Rupees gained 59.45 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 0.68% to settled at 16915 while prices down -40 rupees, now Turmeric is getting support at 7802 and below same could see a test of 7736 levels, and resistance is now likely to be seen at 7946, a move above could see prices testing 8024.

Trading Ideas:
* Turmeric trading range for the day is 7736-8024.
* Turmeric dropped 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
* For the period of Jan-Mar 2022, exports are only down by 1.15% y/y at 36,750 tonnes.
* In Nizamabad, a major spot market in AP, the price ended at 8276.55 Rupees gained 59.45 Rupees.
* However, downside seen limited amid low production this season and improving demand post-pandemic.

Jeera

Jeera yesterday settled down by -0.73% at 21070 as Cumin exports dropped by 60.58% in March 2022 to around 13406.43 tonnes as against 33203.08 tonnes in March 2021. However downside seen limited because of lower production of the spice in the country, partly because many farmers shifted to more lucrative commodities. 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 -91.25 Rupees to end at 21441.85 Rupees per 100 kg.Technically market is under fresh selling as market has witnessed gain in open interest by 0.08% to settled at 14340 while prices down -155 rupees, now Jeera is getting support at 20950 and below same could see a test of 20835 levels, and resistance is now likely to be seen at 21230, a move above could see prices testing 21395.

Trading Ideas:
* Jeera trading range for the day is 20835-21395.
* Jeera dropped as Cumin exports dropped by 60.58% in March 2022 to around 13406.43 tonnes as against 33203.08 tonnes in March 2021.
* 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 -91.25 Rupees to end at 21441.85 Rupees per 100 kg.

Cotton

Cotton yesterday settled up by 0.08% at 47260 as there were reports of 18 per cent less area under cotton sown than last year in Punjab. Despite the Punjab government setting a target to have 4 lakh hectares under cotton to reduce land under paddy, the state has witnessed an 18 per cent decrease from last year, when about 3.03 lakh hectares of the then targeted 3.25 lakh hectares were under cotton. Till now, cotton was sown on only 2.48 lakh hectares of land; the cotton sowing is almost over. USDA for 2022/23 raised its global production estimates. The 2022/23 world cotton balance sheet includes slightly higher production and slightly lower consumption projections compared with the previous month, and ending stocks are virtually unchanged. Global consumption is 450,000 bales lower, with the largest declines in Mexico, Bangladesh, and Vietnam. Beginning stocks for 2022/23 are also lower this month as a 1.5-million-bale decline in 2021/22 global production more than offsets a 1.25-million-bale decline in projected consumption. A 1.0- million-bale drop in India’s crop accounts for most of the production change, with lower yield expectations in Brazil accounting for the remainder. Consumption is projected 500,000 bales lower in both China and India, with smaller declines for Mexico and Vietnam. In spot market, Cotton gained by 290 Rupees to end at 48250 Rupees.Technically market is under short covering as market has witnessed drop in open interest by -3.26% to settled at 2225 while prices up 40 rupees, now Cotton is getting support at 46900 and below same could see a test of 46550 levels, and resistance is now likely to be seen at 47540, a move above could see prices testing 47830.

Trading Ideas:
* Cotton trading range for the day is 46550-47830.
* Cotton gained as there were reports of 18 per cent less area under cotton sown than last year in Punjab.
* The 2022/23 world cotton balance sheet includes slightly higher production and slightly lower consumption projections
* Consumption is projected 500,000 bales lower in both China and India, with smaller declines for Mexico and Vietnam.

-www.kediaadvisory.com

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# In spot market, Cotton gained  by 290 Rupees to end at 48250 Rupees.