IGI Logo

Gold
Gold yesterday settled up by 0.04% at 50865 as weak equity markets triggered some buying in the safe-haven commodity. Markets have priced half-point interest rate rises from the Fed this month and next, though uncertainty lingers about the outlook beyond. U.S. President Joe Biden met with Federal Reserve Chair Jerome Powell to discuss historic inflation that is draining American wallets. Euro zone inflation data was much higher than expected, a week before a crucial European Central Bank policy meeting. U.S. consumer confidence eased slightly in May as concerns about high inflation persisted and perceptions of the labor market softened a bit, a survey showed. The Conference Board said its consumer confidence index slipped to a reading of 106.4 this month. Data for April was revised higher to show the index at 108.6 instead of the previous reported reading of 107.3. The Federal Reserve needs to move interest rates much higher and soon if high inflation does not begin to subside, Fed Governor Christopher Waller said. "If inflation doesn't go away, that... rate is going a lot higher, and soon," Waller said. Minutes of the last FOMC meeting showed that most participants believed that 50 basis point rate hikes would be appropriate at each of the next two meetings. Technically market is under short covering as market has witnessed drop in open interest by -0.03% to settled at 14042 while prices up 18 rupees, now Gold is getting support at 50548 and below same could see a test of 50231 levels, and resistance is now likely to be seen at 51049, a move above could see prices testing 51233.

Trading Ideas:
* Gold trading range for the day is 50231-51233.
* Gold settled flat recovering from all losses as weak equity markets triggered some buying in the safe-haven commodity.
* Markets have priced half-point interest rate rises from the Fed this month and next, though uncertainty lingers about the outlook beyond.
* Euro zone inflation data was much higher than expected, a week before a crucial European Central Bank policy meeting.

Silver
Silver yesterday settled up by 0.74% at 61580 on short covering on concerns over higher inflation and the Federal Reserve's tightening cycle. U.S. treasury yields rose, with the benchmark 10-year yield touching 2.87 percent, as hawkish comments from Fed Governor Christopher Waller caused investors to trim expectations for a pause in the rate hike cycle after two 50 basis point hikes each this month and next. U.S. manufacturing activity picked up in May as demand for goods remains strong, which could further allay fears of an imminent recession, but a measure of factory employment contracted for the first time in nearly a year. The Institute for Supply Management (ISM) said on Wednesday that its index of national factory activity rebounded to a reading of 56.1 last month from 55.4 in April. Manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand, according to a survey which suggested consumers were switching their spending to tourism and recreation. S&P Global's final manufacturing Purchasing Managers' Index (PMI) fell to 54.6 in May from April's 55.5, its lowest since November 2020, but did come in ahead of a preliminary reading of 54.4. Technically market is under short covering as market has witnessed drop in open interest by -9.39% to settled at 13184 while prices up 455 rupees, now Silver is getting support at 60815 and below same could see a test of 60050 levels, and resistance is now likely to be seen at 62032, a move above could see prices testing 62484.

Trading Ideas:
* Silver trading range for the day is 60050-62484.
* Silver recovered on short covering on concerns over higher inflation and the Federal Reserve's tightening cycle.
* U.S. treasury yields rose, with the benchmark 10-year yield touching 2.87 percent
* U.S. manufacturing activity picked up in May as demand for goods remains strong, which could further allay fears of an imminent recession

Crude oil
Crude oil yesterday settled down by -0.14% at 9013 amid reports that some OPEC members are exploring the idea of suspending Russia's participation in an oil-production deal. However, downside seen limited amid expectations of firmer fuel demand from China, as Shanghai formally ended its two-month citywide lockdown and a private survey showed China's factory activity shrank less sharply in May than expected. Russian Foreign minister Sergei Lavrov met counterpart Saudi Prince Faisal bin Farhan Al Saud and both men praised the level of cooperation inside OPEC+, the Russian foreign ministry said. "They noted the stabilising effect that the tight cooperation between Russia and Saudi Arabia has on world markets for hydrocarbons in this strategically important sector," the ministry said in a statement. Top diplomats from Russia and the United Arab Emirates have noted close cooperation within the OPEC+ oil group to ensure the stability and predictability of global energy prices, Russia's Foreign Ministry said. Demand for U.S. crude and petroleum products rose in March to the highest since December, according to a monthly report from the U.S. Energy Information Administration. Demand rose to 20.5 million bpd, the EIA said. Demand for motor gasoline rose to 8.9 million bpd, the highest since December, the EIA said. Technically market is under long liquidation as market has witnessed drop in open interest by -1.64% to settled at 10049 while prices down -13 rupees, now Crude oil is getting support at 8895 and below same could see a test of 8776 levels, and resistance is now likely to be seen at 9134, a move above could see prices testing 9254.

Trading Ideas:
* Crude oil trading range for the day is 8776-9254.
* Crude oil dropped amid reports that some OPEC members are exploring the idea of suspending Russia's participation in an oil-production deal.
* Russia and Saudi ministers praised level of cooperation in OPEC+, says Moscow
* Russia, UAE see OPEC+ cooperating to stabilize energy prices

Natural Gas
Nat.Gas yesterday settled up by 3.99% at 674.9 as preliminary data showed a drop in output and power demand in Texas hit monthly record highs. That price increase came despite forecasts for lower gas demand over the next two weeks than previously expected. Data provider Refinitiv said average gas output in the U.S. Lower 48 states rose to 95.1 billion cubic feet per day (bcfd) in May from 94.5 bcfd in April. That compares with a monthly record of 96.1 bcfd in December 2021. On a daily basis, however, output dropped by 2.8 bcfd to a preliminary 92.9 bcfd on Wednesday. That would be the biggest one-day drop since early February, but traders noted first of the month declines are often revised higher. Refinitiv projected average U.S. gas demand, including exports, would rise from 84.8 bcfd this week to 86.4 bcfd next week. Those forecasts were lower than Refinitiv's outlook. The average amount of gas flowing to U.S. LNG export plants rose to 12.5 bcfd in May from 12.2 bcfd in April. That compares with a monthly record of 12.9 bcfd in March. The United States, which will not be able to produce much more LNG anytime soon, has worked with allies to divert exports from elsewhere to Europe to help European Union countries and others break dependence on Russian gas after Russia's invasion of Ukraine. Technically market is under fresh buying as market has witnessed gain in open interest by 13.38% to settled at 5975 while prices up 25.9 rupees, now Natural gas is getting support at 645.5 and below same could see a test of 616.2 levels, and resistance is now likely to be seen at 692.8, a move above could see prices testing 710.8.

Trading Ideas:
* Natural gas trading range for the day is 616.2-710.8.
* Natural gas jumped as preliminary data showed a drop in output and power demand in Texas hit monthly record highs.
* That price increase came despite forecasts for lower gas demand over the next two weeks than previously expected.
* EIA data showed US natural gas stocks rose by 80 billion cubic feet (bcf) last week

Copper
Copper yesterday settled up by 0.65% at 779.65 as optimism about Shanghai coming out of lockdown supported prices while lingering concerns over a global economic slowdown limited upside. China's factories struggled in May with the official manufacturing managers index showing contraction for a third month. Adding to growth worries, Asia's factory activity slowed in May as China's heavy-handed coronavirus curbs continued to disrupt supply chains and dampen demand. CHILE: April's copper output in Chile, the world's largest producer of the metal, fell 9.8% to 421,742 tonnes year-on-year, the country's statistics agency INE said. A fire broke out in Peru's massive Las Bambas copper mine, amid clashes between police and an indigenous community that has occupied space there for more than a month. MMG Ltd's mine, which accounts for about 2% of global supply, had to suspend operations last month after two neighboring communities settled in it, pressing accusations of unfulfilled commitments. Global copper smelting activity ticked higher in May as a rebound in China offset declines in Europe and elsewhere, data from satellite surveillance of metal processing plants showed. Increased raw material shipments to China boosted activity there despite COVID-19 restrictions, though European operations were hit by closures, according to a joint statement from commodities broker Marex and SAVANT, the satellite analytics service Marex launched with Earth in 2019. Technically market is under short covering as market has witnessed drop in open interest by -6.25% to settled at 3659 while prices up 5.05 rupees, now Copper is getting support at 773 and below same could see a test of 766.2 levels, and resistance is now likely to be seen at 783.6, a move above could see prices testing 787.4.

Trading Ideas:
* Copper trading range for the day is 766.2-787.4.
* Copper prices gains as optimism about Shanghai coming out of lockdown supported prices while lingering concerns over a global economic slowdown limited upside.
* China's factories struggled in May with the official manufacturing managers index showing contraction for a third month.
* Blaze at Peru's Las Bambas copper mine as tension rises

Zinc
Zinc yesterday settled down by -0.85% at 330.8 as the US dollar index rebounded, while domestic demand failed to pick up significantly as of now. The LME zinc inventory decreased by 1,100 mt, including 1,450 mt in Singapore warehouse, 150 mt in Bilbao, and 500 mt in Kaohsiung warehouse. China exported more refined zinc than it imported in April for the first time since 2014. The country's imports collapsed over the first four months of this year with exports rising despite a 15% tariff on outbound shipments. The sharp shift in the country's trade dynamics speaks to the disconnect between east and west in the global zinc supply chain. Stuttering demand in China, particularly from important end-use sectors, such as construction and automotive, has seen Shanghai Futures Exchange zinc stocks nearly triple to 170,850 tonnes since the start of January. London Metal Exchange (LME) inventory, by contrast, has fallen by 58% this year with almost half of the 84,675 tonnes remaining cancelled in preparation for load-out. Physical premiums in Europe and the United States are holding at record highs as smelter outages reduce availability. European zinc availability has been hit by the closure of Glencore's Portovesme smelter in Italy and fluctuating run rates at other plants trying to cope with high energy prices. Technically market is under long liquidation as market has witnessed drop in open interest by -15.52% to settled at 1192 while prices down -2.85 rupees, now Zinc is getting support at 328.2 and below same could see a test of 325.7 levels, and resistance is now likely to be seen at 334, a move above could see prices testing 337.3.

Trading Ideas:
* Zinc trading range for the day is 325.7-337.3.
* Zinc prices dropped as the US dollar index rebounded, while domestic demand failed to pick up significantly as of now.
* LME zinc inventory fell by 1,100 mt, warehouse in Singapore contributing the highest decrease
* China a net exporter of zinc for the first time since 2014

Aluminium
Aluminium yesterday settled down by -1.72% at 231.25 as China's factory activity shrank less sharply in May as COVID-19 curbs eased and some production resumed, a private sector survey showed, improving from a 26-month low in April. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 48.1 in May from 46.0 the previous month. May's contraction was the second-sharpest slump since February 2020, suggesting the recovery remains fragile. A sub-index for new orders fell for the third consecutive month in May but at a slower pace. The gauge for new export orders also shrank less but remained in contraction for the 10th straight month. On the macro front, the Fed governor Waller's delivered hawkish stance that the Fed should be prepared to raise rates by 50 basis points at each of the following meetings as a way to curb inflation. Asia's factory activity slowed in May as China's heavy-handed coronavirus curbs continued to disrupt supply chains and dampen demand, adding to woes for some of the region's economies that are already under strain from surging raw material costs. Manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand, according to a survey which suggested consumers were switching their spending to tourism and recreation. Technically market is under fresh selling as market has witnessed gain in open interest by 4.23% to settled at 3180 while prices down -4.05 rupees, now Aluminium is getting support at 228.6 and below same could see a test of 225.8 levels, and resistance is now likely to be seen at 235.8, a move above could see prices testing 240.2.

Trading Ideas:
* Aluminium trading range for the day is 225.8-240.2.
* Aluminium prices dropped as China's factory activity falls at slower pace on easing curbs
* Asia's factory activity slows in May as China COVID curbs weigh
* Manufacturing growth in the euro zone slowed last month as factories faced supply shortages, high prices and a fall in demand

Mentha oil
Mentha oil yesterday settled up by 0.57% at 1057.1 amid low production this season and improving demand post-pandemic. Support also seen with Rupee weakness export demand is going to be firm also post pandemic global demand is improving. However, upside seen limited as Synthetic Mentha supply remains uninterrupted. 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. Prices gained on reports that due to poor prices farmers has shifted to other crops resulting lower production. 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. Mentha farming has lost its allure in Uttar Pradesh as farmers struggle without stable price, MSP and government support. High input costs and lack of support price have drastically brought down the return of farmers who have already been struggling to increase their incomes. In Sambhal spot market, Mentha oil dropped by -17.5 Rupees to end at 1182.3 Rupees per 360 kgs.Technically market is under short covering as market has witnessed remain unchanged in open interest by 0% to settled at 998 while prices up 6 rupees, now Mentha oil is getting support at 1050 and below same could see a test of 1043 levels, and resistance is now likely to be seen at 1062, a move above could see prices testing 1067.

Trading Ideas:
* Mentha oil trading range for the day is 1043-1067.
* In Sambhal spot market, Mentha oil dropped  by -17.5 Rupees to end at 1182.3 Rupees per 360 kgs.
* Mentha oil prices dropped on profit booking after prices seen supported amid low production this season and improving demand post-pandemic.
* Synthetic Mentha supply remains uninterrupted.
* With Rupee weakness export demand is going to be firm also post pandemic global demand is improving.

Turmeric
Turmeric yesterday settled down by -0.03% at 7916 due to good arrivals from new crop and less demand. 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. Currently, export demand is normal but is expected to pick up. As per latest export figures, turmeric exports in Feb 2022 were lower by 17% y/y at 10400 tonnes vs 12,575 tonnes while in FY 2021/22 (Apr-Feb), exports down 20% at 1.37 lakh tons compared to last year but higher by 8.3% compared with 5-year average. Domestic demand reduced particularly with the new season crop supplies from Marathwada region of Maharashtra during April. Export demand too reported sluggish despite report of some queries from Bangladesh. 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 8274.15 Rupees dropped -108.15 Rupees.Technically market is under long liquidation as market has witnessed drop in open interest by -2.75% to settled at while prices down -2 rupees, now Turmeric is getting support at 7842 and below same could see a test of 7770 levels, and resistance is now likely to be seen at 7984, a move above could see prices testing 8054.
Trading Ideas:
* Turmeric trading range for the day is 7770-8054.
* Turmeric settled flat due to good arrivals from new crop and less demand.
* Traders and exporters are expecting the prices to remain stable as Maharashtra and Andhra Pradesh turmeric arrivals have also increased.
* Turmeric harvesting in Indonesia is likely to start during June – July 2022 and crop is reported to be normal.
* In Nizamabad, a major spot market in AP, the price ended at 8274.15 Rupees dropped -108.15 Rupees.

Jeera
Jeera yesterday settled down by -1.13% at 20955 as the selling of cumin by the farmers increases after the onset of monsoon. Due to this, there is a perception that the arrival of cumin seeds will increase after the onset of monsoon. The demand for cumin seed for exports have improve after easing of supply chain disruption due to covid restrictions in China. Traders expect jeera production in 2021/22 sharply lower at 5.0-6.0 mln bags (1 bag = 55 kg) from 8.0-8.5 mln bags the previous year. As per govt data, jeera exports in Feb 2022 down by 23.6% Y/Y at 14000 tonnes compared to 18300 tonnes while exports for FY 2021/22 (Apr-Feb) period is also down by 23% Y/Y at 2.02 lt compared to 2.62 lt last year. The production of cumin in Rajasthan is estimated to be 30 to 32 lakh bags. Considering the present arrivals, the production of cumin will be the same as the earlier estimate. So far 15 to 15.50 lakh bags have arrived in Rajasthan. 50% of the total cumin crop has arrived and 50% of cumin seeds are yet to arrive. Production of 15 lakh bags of cumin is estimated in Gujarat and 12 to 13 lakh tonnes of old carry forward stock is estimated. In Unjha, a key spot market in Gujarat, jeera edged down by -209.9 Rupees to end at 21418.4 Rupees per 100 kg.Technically market is under long liquidation as market has witnessed drop in open interest by -3.31% to settled at while prices down -240 rupees, now Jeera is getting support at 20810 and below same could see a test of 20670 levels, and resistance is now likely to be seen at 21155, a move above could see prices testing 21360.

Trading Ideas:
* Jeera trading range for the day is 20670-21360.
* Jeera dropped as jeera exports in Feb 2022 down by 23.6% Y/Y at 14000 tonnes
* The selling of cumin by the farmers increases after the onset of monsoon.
* The production of cumin in Rajasthan is estimated to be 30 to 32 lakh bags.
* In Unjha, a key spot market in Gujarat, jeera edged down by -209.9 Rupees to end at 21418.4 Rupees per 100 kg.

Cotton
Cotton yesterday settled down by -1.84% at 45270 due to the high price of cotton, the Spinners' Association of South India has announced the closure of the mills, due to which most of the smaller mills have closed down and the demand for cotton will be seen to decrease due to decrease in production in the big mills. In North India's states of Punjab, Haryana and Rajasthan, the water from canals will be released late, which will lead to late sowing of cotton, but there is no report of the possibility of very low sowing. Cotton sowing in North India is expected to increase by 15% from last year. Texas, had concerns about production due to lack of rainfall, but with good rainfall in Texas for the past one week, there is no problem with U.S. cotton production. Cotton sowing in China has increased, but with only one to two percent increased, the crop is unlikely to grow much. Similarly, in Pakistan, production is also expected to increase due to increase in sowing from last year. The USDA in its latest report lowered U.S. production by one million bales as the drought situation in Texas is predicted to reduce harvested acres. In spot market, Cotton dropped by -100 Rupees to end at 47650 Rupees.Technically market is under fresh selling as market has witnessed gain in open interest by 0.76% to settled at 2898 while prices down -850 rupees, now Cotton is getting support at 44870 and below same could see a test of 44460 levels, and resistance is now likely to be seen at 45890, a move above could see prices testing 46500.

Trading Ideas:
* Cotton trading range for the day is 44460-46500.
* Cotton dropped due to the high price of cotton, the Spinners' Association of South India has announced the closure of the mills
* The Telangana government is likely to encourage the cultivation of cotton crop on large scale this kharif
* The USDA in its latest report lowered U.S. production by one million bales
* In spot market, Cotton dropped  by -100 Rupees to end at 47650 Rupees.

- Kedia Advisory

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