I&H Nov 2014 · Karvy Comtrade’s Volume 07 ... 3.3 percent in 2014―unchanged from 2013―and to...

Invest & HarvestA Comprehensive English Monthly Magazine on Commodity Futures

Karvy Comtrade’s

Volume 07 Issue 10 Hyderabad November 2014 Pages 36 `25/-

Crunch Time

Most base metal prices are expected to remain subdued due toglobal growth fears and slump in demand

November 2014 Karvy Comtrade’s Invest And Harvest 3

EditorSushil Sinha

Managing EditorTR Vivek

Executive EditorAurobinda Prasad Gayan

Sunil Kumar Singh

Research TeamIndrajit Paul

Jitendra K ParasharMadhu N.

Ramesh ChenchalaSarika R. Agarwal

Sonali PatnaikTapan Trivedi

ProductionVijayendra Kumar Ch.

DistributionShabna R. Iyer

Printed & Published by:Sushil Kumar Sinha

on behalf ofKarvy Consultants Limited.

Karvy House, 46Avenue 4, Street No-1, Banjara Hills

Hyderabad-500034. AP.

Printed at:Harshitha Printers

6-2-985, Yousuf BuildingAdj. Railway Gate,

Khairatabad, Hyderabad-500004

Editor: Sushil Sinha

With the recent fall in infl ation, the clarion call for RBI Governor Raghuram Rajan to cut interest rate to revive the economy is getting louder day by day. And at the

forefront of this initiative is none other than the Finance Minister Arun Jaitley himself. At the recent World Economic Forum’s India Economic Summit held in New Delhi, Jaitley made a case for the rate cut. “Currently, interest rates are a disincentive. Now that infl ation seems to be stabilizing somewhat, the time seems to have come to moderate the interest rates,” he said.

There are few who doubt a rate cut would benefi t the economy that is yet to show defi nitive signs of improvement despite a slew of rate cuts. The central bank’s hawkish stance on monetary policy refuses to fade away in spite of the fact that infl ation has dipped to a fi ve-year low, they argue. Having said that, one also needs to understand a high interest rate regime isn’t the sole factor responsible for the slowdown in economic growth and investment in India. The economic slowdown is primarily because of the uncertain policy environment and sluggish demand, and so just tweaking the interest rate won’t help much.

On the global front as well, a weak and uneven global economic recovery continues. The IMF forecasts global growth to average 3.3 percent in 2014―unchanged from 2013―and to rise to 3.8 percent in 2015. Given this background, our cover story this month focuses on the outlook of base metals that remains bearish in most cases because of lower Chinese demand and weak global demand sentiment.

The Indian mining and construction industry has evolved primarily on the basis of domestic demand and, analysts believe, mining equipment such as excavators, wheel loaders and dumpers will remain the biggest contributors in terms of value and volume in the medium term.

The demand for castor seed would be low while higher supply may keep the commodity undertone post mid-Jan to February month. We recommend buying the commodity on dips. There is another article where we do a comprehensive study on soy complex (soybean, soy oil, crude palm oil and mustard seed), its performance in 2 014 and future viewpoint. Besides, we bring out some strategies which could be utilised by the various segmented market participants. The article deals with one such strategy: Hedge Calls.

In ‘Commodity of the Month’ we’ve taken Chana this time. We anticipate chana futures to remain on the higher side and recommend buy.

EDITORIAL

Note: The data in all charts and tables have been sourced from Bloomberg, unless otherwise indicated.

Will A Rate Cut Be Enough?Will A Rate Cut Be Enough?


CONTENTS

Cover Story

Base Metals: Mixed Outlook 11

DisclaimerThe technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The report contains the opinions of the author(s) that are not to be construed as invest-ment advice. The author, directors and other employees of Karvy, and its affi liates, cannot be held responsible for the accuracy of the information presented herein or for results of the posi-tions taken based on the opinions expressed within. The opinions are based on the information believed to be accurate, and no assurance can be given for the accuracy of this information. There is risk of loss in trading in derivatives. The author, directors and other employees of Karvy and its affi liates cannot be held responsible for any losses in trading.Commodity derivatives trading involves substantial risk. The valuation of the underlying may fl uctuate, and as a result, clients may lose their entire original investment. In no event should the content of this research report be construed as an express or an implied promise, guarantee or implication by, or from, Karvy Comtrade that you will profi t or that losses can, or will be, limited in any manner whatsoever. The past results are no indication of future performance. The information provided in this report is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. We do not offer any sort of portfolio advisory, portfolio management, or investment advisory services.

Features & Updates

By Invitation

Hedge Calls 9

Special Feature

Mining Equipment Industry: Exciting Times Ahead 16 - Lucas D’Souza, MMR Bureau

Castor Seed: Prices Could Go Up 24

Do You Know: Commodity Trading 26

Chana: Buy On Dips 28

Soy Complex: Outlook Bearish 18


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Oct-13 Jan-14 Apr-14 Jul-14 Oct-141190

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1-Oct 7-Oct 13-Oct 19-Oct 25-Oct 31-Oct

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1-Oct 7-Oct 13-Oct 19-Oct 25-Oct 31-Oct

STATISTICS

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1-Oct 7-Oct 13-Oct 19-Oct 25-Oct 31-Oct265

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COMEX Gold (US$/oz) NYMEX Crude (US$/bbl)

Thomson Reuters Jefferies CRB Index MCX Aluminum Price Movement

Rogers International Commodity Index MCX Cardamom Price Movement

S&P GSCI Commodity Index NCDEX Soy Beans Price Movement

Major Global Commodity Index Performers of the month (MCX/NCDEX)


2.0

3.5

5.0

6.5

8.0

Sep-

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Nov

-13

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Feb-

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Mar

-14

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-14

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Oct-13 Jan-14 Apr-14 Jul-14 Oct-1458.5

59.6

60.7

61.8

62.9

64.0


STATISTICS

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Aug

-13

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Rupee Movement 10-year Bond Yield (%)

Infl ation (%) Index of Industrial Production (%)

DoE Inventory levels (October) Inventory level M/M change (%)

Crude oil 356635 -6.09

Gasoline 208488 2.63

Distillate 28917 10.24

Refi nery Utilization (%) 89.8 3.70Note: DoE - Department of Energy; volumes in thousand barrel

LME Inventory levels (October) Inventory level M/M change (%)

Nickel 383442 7.70Aluminium 4435525 -4.00Copper 162600 6.59Zinc 700975 -6.71Lead 226525 0.55

Note: LME - London Metal Exchange; volumes in metric tonne

Exchange rate trendsOct 31,

2014Sept 30,

2014% Change 52 Week

High% Change from 52

Week High52 Week

Low% Change for 52

Week Low

Indian Rupee 61.365 61.758 -0.64% 63.908 -3.98% 58.335 5.19%

Euro 1.253 1.263 -0.84% 1.399 -10.49% 1.244 0.68%

Great Britain Pound 1.600 1.621 -1.34% 1.719 -6.96% 1.586 0.88%

Japanese Yen 112.320 109.650 2.44% 114.220 -1.66% 97.620 15.06%

Swiss Franc 0.963 0.955 0.79% 0.969 -0.68% 0.870 10.66%

Canadian Dollar 1.127 1.120 0.61% 1.139 -1.05% 1.041 8.26%

Australian Dollar 0.880 0.875 0.58% 0.954 -7.81% 0.864 1.79%

New Zealand Dollar 0.779 0.781 -0.24% 0.884 -11.85% 0.770 1.18%

Danish Krone 5.943 5.893 0.84% 5.983 -0.68% 5.334 11.42%

Norwegian Krone 6.751 6.426 5.06% 6.813 -0.90% 5.849 15.42%

Swedish Krona 7.393 7.214 2.49% 7.432 -0.52% 6.325 16.88%Note: All quotes are against the US dollar.


News Digest

Comeback for Russian wheat into the ex-port marketAfter being con-spicuous in its absence from the export mar-ket for several weeks, Russia has returned to the world wheat market, writes Brenda Mullan, Analyst, AHDB/HGCA Market Intel-ligence. Egypt’s state grain buyer, GASC, indicated this week that it bought Russian wheat at $256.43/t on a cost and freight basis, for shipment in late Novem-ber. The Russian wheat export market comeback has been attributed to the weakening of the Rouble, which has fallen by 13 per cent against the Euro since the be-ginning of July. This has also coincided with a period of rising global grain prices, allowing Russian wheat to edge back into a competitive position in the global market. The news is the latest in what has been a very eventful wheat export campaign for Russia to date. Some commentators described the beginning of Rus-sia’s wheat export campaign for 2014/15 as having a ‘sense of urgency’ and in only its fi rst four months, Russia sold a record amount of grain compared with the same period in the previous years. However, as the season has progressed, we have seen Russia exiting the wheat export market as its competitiveness in the world market waned -. With sizeable EU export sur-plus to shift, Russia’s return to the export market may come as unwelcome news, increasing the need for EU wheat to be competitive if large closing stocks are to be avoided. (Sources: Business line)

Large cardamom prices jump on lower productionLarge cardamom prices jumped Rs 400 to Rs 2,100 per kg this year as the new harvesting season began.

The spice is one of Nepal’s largest exports. It cost Rs 1,700 at this time a year ago. Stocked cardamom is dearer at Rs 2,400 per kg. Large cardamom stored two months ago has been priced at Rs 96,000 per mana (40 kg). Since stored cardamom is drier and weighs less, there are more pods per kilogram. For this rea-son, traders charge more for cardamom that has been stocked for a long period. Newly harvested carda-mom, which contains a certain level of moisture, used to be cheaper in the past. But things have changed with traders rushing to buy whatever type of carda-mom is available, fresh or stocked. According to the District Agriculture Development Offi ce (DADO), the production of cardamom has dropped this year due to several types of infections. Farmers started selling their products from mid-August this year but a ma-jority of them have not sold all their stock expecting a rise in prices. Cardamom prices have been climb-ing for the last three years. Many farmers used to sell their products at the beginning of the season at lower prices. However, since prices have started rising, most of them have been holding on to their stock, expecting price to rise further. As of now, cardamom is selling at Rs 84,000 per 40 kg, according to Pemba Bhotiya, vice-president of the Cardamom Traders Association. Traders said that though prices had been fl uctuating, there were slim chances of their falling amid reports of a drop in production. (Sources: Business line)

US mint silver-coin sales jump to 21-month highSales of American Eagle silver coins by the U.S. mint jumped 40 per cent in October to the highest in 21 months, defying a slump in New York futures to the lowest in more than four years. Sales surged to 5.79 million ounces, the most since January 2013, the month that set an all-time high at 7.5 million. To-day, sales jumped 33 per cent in one of the busiest times this year, Tom Jurkowsky, a spokesman at the Washington-based mint, said in an in-terview. Last month’s total was 4.14 million.


News Digest

Physical demand for Silver rose as prices along with gold plunged to the lowest since 2010 in the inter-national Spot markets, meanwhile the US Dollar rose to a four-year high against a basket of 10 currencies. (Source: Bloomberg)

Saudis cut crude prices to the US in De-cember amid shale boomSaudi Arabian Oil Co. lowered the cost of its crude to the US, where production is the highest in three decades, deepen-ing a selloff that sent prices to the lowest in more two years. The state-owned producer, known as Saudi Aramco, lowered the premium for Arab Light relative to US Gulf Coast benchmarks by 45 cents a barrel to the smallest since December. Medium and heavy grades were also down 45 cents and extra light oil 50 cents. Aramco increased the cost to Asia and Europe. Swelling supplies from producers outside OPEC drove oil prices into a bear market last month as global demand growth slowed. Middle Eastern producers are increasingly competing with cargoes from Latin America, North Africa and Russia for buyers, as well as with US production that has jumped 54 percent in the past three years. Saudi Aramco surprised traders last month when it trimmed crude levels, known as offi cial selling prices or OSPs, to six-year lows for buyers in Asia, a step interpreted as a shift in the stance of OPEC’s biggest producer to defending market share from supporting prices. (Source:

Bloomberg)

Supply to fl ood copper market in 2015, weighing on pricesCopper prices face pressure next year due to growing global surplus, as tepid demand from top consumer China fails to soak up surging supply from new and existing mines, a Reuters poll showed. The average forecast for 2015 cash copper price from 25 market participants was $6,724.03 a tonne, down 0.5 per cent from a similar forecast in July. For 2014, analysts

expect prices to average $6,887.60 a tonne, down 0.2 per cent from a previous forecast and almost 6 per cent lower c o m p a r e d with aver-age prices in 2013. The out-look for copper prices has worsened due to expectations of increasing market surplus. Analysts predict this year’s surplus will be in the region of 94,300 tonne, before balloon-ing to 350,000 tonne in 2015. (Sources: Reuters)

OPEC output drops on fall in Nigeria sup-pliesThe oil supply of Organization of the Petroleum Ex-porting Countries (OPEC) in Octo-ber has fallen by 120,000 barrels per day (bpd) due to lower produc-tion in Angola and Nigeria, a survey found, although recovery in Libya and growth in Iraq kept output close to September’s two-year high. The Reuters survey also indicates Saudi Arabia and heavyweight Gulf producers are showing no sign of deliberately cutting exports to address oversupply and support prices that slipped to a four-year low be-low $83 a barrel this month. OPEC supply has av-eraged 30.72 million bpd in October, down from a revised 30.84 million bpd in September, according to the survey based on shipping data and informa-tion from sources at oil companies, OPEC and con-sultants. Note that September’s output was OPEC’s highest since November 2012, when it pumped 31.06 million bpd, according to surveys. The orga-nization pumps a third of the world’s oil and meets in November to set output policy for early 2015. (Sources: http://www.omantribune.com/)

Please read the Disclaimer carefully on page 4


FEATURE

Taking that forward, we bring out some strategies which could be utilised by the various segments of market participants. This article deals with one such strategy: Hedge Calls. An exclusive product of KCTL, Hedge Calls has been in vogue over the past two years and it makes some unique propositions which differen-tiate it from others.

Hedging is simply application of a fi nancial tool in various spheres of business to offset potential losses or gains from other investments you have made. It is the mechanism through which one tries to reduce the risk that arises out of volatility in price. This means, to pro-tect one decision you have taken (something bought or sold), you are to take another decision (hedging), so that your fi rst decision is safeguarded. In a broader sense, people choose to diversify their portfolio, whether re-lated to expansion of business or spreading the invest-ment in different segments or fi nancial products with the objective of ensuring protection during a downturn if any, in any of the business or investment. All busi-ness or investment can never give constant good up-ward returns all the time. Sometimes, you get positive returns and in some other times, you get negative or breakeven result. This diversifi cation strategy is the ba-

sic input of what we call here as Hedging. This same old basic principle has been utilised in our Hedge Calls.

As stated above, hedging basically means minimiz-ing risk related to the adverse price movements of an asset. It is one of the ways to minimize risk by limiting the likelihood of loss which could rise from fl uctua-tions in the price movement of an asset. We have seen that there is a risk associated with various trade recom-mendations and strategies. Any the recommendation will give you positive return can never be guaranteed and therefore, you always carry risk. That is why it is advised to use a stop-loss while trading in any asset class including commodities. However, sometimes, it might happen that a customer may trade on a particular recommendation and same gets stopped out. Therefore, for the customers, the strike rate is zero! There might be various reasons for a stop out, such as domestic or in-ternational news behind the sudden fl uctuation in prices of commodities.

Herein, we have come out with an innovative con-cept Hedge call, which can be basically treated as an alternative trading instrument to reduce the risk re-lated to any holding or fresh position by the client f or either intraday or short-term. It is important to under-

Hedge Calls

Segmentation has become a buzzword in commodities now and has been advocated by Mr. Sushil Sinha, Director, Karvy Comtrade Ltd. in his last few articles in this magazine (Please refer July and Sep 2014 issues of Karvy Comtrade’s Invest & Harvest).

Performance Of Hedging Calls In The Second Quarter Of FY14-15July August September

Commodity No of Calls Gross Profi t/(Loss) No of Calls Gross Profi t/(Loss) No of Calls Gross Profi t/(Loss)

Cardamom 0 - 1 1950 0 -

Cocud 1 3200 2 8700 1 3200

Gur 1 3250 1 4000 2 1750

Kapas 1 4800 2 6500 2 6200

Maize 1 3000 1 3500 1 3100

Mentha Oil 0 - 1 -7920 0 -

Sugar 0 - 2 -1300 0 -

Wheat 1 1300 2 3300 2 -1000

— Smita, Manager at Karvy Comtrade Ltd.



stand that larger percentages of clientele in the Indian commodity market are retail clients. In many cases, due to their insuffi cient awareness or understanding about market movement and also because of the fact that they are unable to invest suffi cient time towards the market, many retail customers stop participat-ing in commodity futures. In such scenarios, Hedg-ing Calls appears as a good investment option as it provides a wonderful opportunity for retail clients to hedge their risk and keep the interest alive for trading in commodity futures.

A question may arise in your mind on whether hedg-ing calls is like other market recommendations or calls? The answer is NO. These calls are different from other recommendation/strategies as mainly calls are made in only those commodities where the margin money for trading is very low i.e. Rs. 5,000-15,000 respectively. Thus, retail investors who do not have much money for investment can easily become a part of commod-ity trading and investment. This, therefore, motivates not only new participants to enter into the commod-ity market, but also those investors who left trading are encouraged to restart. Notable, Hedge Calls are purely

based on fundamental cues of a particular commod-ity and thus avoid any speculation. This explains why Hedge calls are not available all the time, and also, the duration of each call can get extended to three-four days on average.

The above differentiating factors make Hedging Calls unique and unparalleled.

The table show the number and types of hedge calls that generated in a particular month along with the Gross Profi t/Loss Generated out of the same during Jul-Sep period.

Note that commodities futures market is dynamic in nature and there is a lot of scope for innovations. Once commoditization picks speed, a new market space will get created, and at that time, importance of such prod-ucts will enhance and occupy a valuable space in the market. Risk will always be there and so will be the returns; however fi nancial tools must be improvised to cater to the burgeoning needs of the society.

Hedge Calls or any such products cannot guaran-tee a 100% strike rate and therefore stop-loss remains a valuable tool and would remain so forever. Keep learning!!

FEATURE


Base Metals: Mixed Outlook — Sarika R. Agarwal

The year of 2014, especially the second half of the year witnessed a global economic slowdown with IMF trimming the growth forecasts for the

world to 3.3% in 2014, unchanged from 2013, while raising it to 3.8% in 2015. Subdued economic activity in major important regions of the globe has led to huge scale off in commodity prices, mainly the industrial ones, across the globe. On the same note, amongst the major consumption-led economies like China, the IMF left its forecast for economic growth in 2014 unchanged at 7.4%. However it warned that the world’s second-largest economy faces a range of “near-term growth risks”, especially in real estate. Chinese GDP is pegged at 7.1% in the next year amidst anticipated tightening of credit and ongoing weakness in the property market. Other than economic side effects, broader markets also faced trouble due to a defl ated Euro zone economy and US Fed gradually closing down its QE3 asset purchase program which has led to much volatility in the non-agri commodities at large. The rising Dollar index during the year has also added to the woes of the already fading demand especially for the base metal complex.

LeadSince mid-2013, lead is seen to be steady and has al-most been a market performer which means that the metal has been performing in line with the LMEX In-dex at large. During 2012 much was spoken about the

tightening of supply for some mines of lead which were expected to have been reaching to point of depletion.

On a broader perspective, lead metal witnessed fall in September 2014, though the same was seen rising in past 3 months from June till August 2014 from $2173 MT to $2241 MT. The main reason behind the rise in prices for that particular time frame could be the low level inventory in the month of June of 0.192 Million MT, however the same was followed by rise in the LME inventory levels in July and August.

As of October 2014 the inventory level of lead at LME reached a high of 0.227 Million MT, highest since January 2014, with cancelled warrants ratio falling consistently from 37,375 to the recent level of 14,725. This indicates much weakness relating to the current demand of the metal. It should be noted the spread pre-mium for the LME Cash to 3M metal declined sharply during the year from $22.55 to $10.7 till October end.

Looking at other factors related to demand and supply, recent data provided b y ILZSG showed supply of the refi ned lead metal exceeded the demand by a marginal 11,000 MT from January to July 2014 mainly due to the increase in the global supply of 2.4%

COVER STORY

provided b y ly of tal d

%


from China, Belgium, Italy and Mexico. In China, de-spite a further increase in automotive output and an expansion in the construction of mobile phone base stations that require industrial lead-acid batteries for back-up power demand growth is expected to slow to 2.5% in 2014 and 2.9% in 2015. This is mainly due to a slowing of the increase of output of e-bikes that ac-count for a signifi cant portion of Chinese automotive lead-acid battery sales. As per the latest data from IL-ZSG, the demand for global refi ned lead is expected to exceed the supply by a modest fi gure of 38kt during 2014 and 23kt in 2015, thereby surging the prices up-wards in the medium term.

Adding a macro perspective, the year 2014 has been very bleak in terms of global economic growth. Apart from US major countries like Euro zone and China have been reporting a weak scenario. The rising Dol-lar index has also participated in the downward pres-sure on the base metals at large for most parts of the year. On the whole, the metal remained sluggish for the entire second half of 2014 facing downward pressure from global perspective, high inventory level followed by the rise in US dollar and, lastly, the negative ILZSG data. Overall, we expect lead to remain sluggish for 2014 and partly for 2015, though in case the demand exceeds supply for refi ned lead metal, we expect the metal to perform within the range only in lieu with the market.

ZincZinc has been as one of the best performers for this year. The metal has witnessed a total rise of 10% dur-ing this year. Even though the overall global market economic status went subdued, much effect was not seen on zinc mainly due to its very strong fundamen-tals of declining supply levels, which in turn is expect-ed to propel zinc prices skywards in the near future as well. A number of existing large mines of the metal have nearly reached the stage of shutdown pushing the commodity into defi cit and thus supporting pric-es. Zinc metal currently trades near $2300/MT mark while during the mid of the year, it also moved to-wards fresh three years highs around $2400/MT. Note that commodity has moved higher by around 25% since its 2011 closing around $1845 per MT and is one of the best performers during that period while other metals are just fl at-tish or lower.

Furthermore, the declining stock level at LME for zinc has substantiated the concerns over the metal running in defi cit in the current and following next year, making the

COVER STORY

Demand Supply Figures For Lead Till July 2014

000 Tonnes 2014

Jan Feb Mar Apr May June July

Mine Production 371.8 339.4 450 396.3 434.7 423.8 396.3

Metal Production 849.4 870.3 901.2 854.7 906.4 911.4 862.9

Metal Usage 880.1 848.6 902.1 851.5 904.6 924.6 843.3

Surplus/(Defi cit) -30.7 21.7 -0.9 3.2 1.8 -13.2 19.6(Source: ILZSG Data)

Demand-Supply Figures For Zinc Till July 2014000 Tonnes 2014

Jan Feb Mar Apr May June July

Mine Production 991 936.5 1158 1104.7 1194.3 1145.1 1185.1

Metal Production 1053.8 1056.2 1104.3 1091.7 1095.8 1125.6 1154.5

Metal Usage 1080.8 1021.9 1128.6 1165.3 1179.3 1177.4 1156.3

Surplus/(Defi cit) -27 34.3 -24.3 -73.6 -83.5 -51.8 -1.8(Source: ILZSG Data)


metal prices to surge. However, wider macroeconomic fears of global economic slowdown and a lower pace of demand have constrained zinc’s price performance in recent months with prices sliding down moderately in past few months.

As per the latest cues on the actual demand-supply side, January to July 2014 the global mine production for zinc increased by 2.3% whereas the metal refi ned production increased by 4% with the usage rising by 7.6% indicating a defi cit. Overall, as per ILZSG data zinc is forecasted to be in defi cit for 2014 by 403kt followed by a defi cit of 366kt in 2015. The LME stock levels for zinc also declined by around 25% during this year. The data indicates a defi cit for zinc which substantiates the forecasted defi cit of 403kt in 2014 for Zinc

Expectations that major mines would shut down in 2015-2016 pushed zinc metal prices higher. MMG Limited which is one of the largest zinc producers and also the owner of the Century mine in Queensland, Australia is expected to have a lower output within the range of 465,000 and 480,000 tonnes, compared to the output of 488,233 tonnes in 2013. While already some part of optimism over future defi cit is already in the price, probably blockbuster gains from here might not be possible until and unless the problems economies i.e. China and EU start recuperating. Broad bias con-tinues to be bullish as there is an absence of any new big supply of zinc pouring in the near future. We hold buying on declines outlook on the commodity over medium-term.

NickelAmongst the base metals, nickel which was termed as one of the worst performers of 2013 with prices declining continuously since the mid part of the year. However, 2014 Nickel turned the game and has been seen as one of the most volatile met-als amongst the base metal complex. The year started on a very positive aspect for Nickel with Indonesia, which is one of the largest nickel producers in the world, imposing ban on its exports.

The prices for nickel rose tremen-dously up to $21000 MT during the fi rst half of 2014 based on the supply concerns after Indonesia implemented its ore export ban for the commodity. It should be noted that Indonesia was source for raw material for nearly 60% of Chinese consumption of nickel ore. Markets

also got concerned that nickel exports from Philippines which is the next largest nickel ore producer albeit of a moderately lower quality might too come under stress.

Notwithstanding the cut in ore export, actual demand for the metal saw good volatility. Looking at the inven-tory levels at LME, they have continued to increase dur-ing the year as new mines supply, ramp up production from the existing ones whereas low fi nal usage of the refi ned metal continued to stay muted amidst weaker than expected economic expansion in China, slowdown in EU which indirectly hurts consumption for stainless steel and indirectly nickel commodity.

Increase in LME stocks was also prompted by higher than normal Chinese exports of nickel to LME after the Qingdao port fi nancing fraud in the fi rst half of this year. These cues also confounded against markets expecta-

tions of defi cit that could have been with In-donesia imposing the ban on exports of

Nickel ore. The stock level of Nickel at LME currently stands at 0.383 Million MT and throughout the year

continued to rise but at a slower pace. Above mentioned aspects had twin side

effects on the commodity wherein which we saw huge surge in prices during the fi rst

half of 2014; however later on prices have con-tinued to drift lower and even technically mov-

ing into a bear market sliding over 20% from this year’s high to the current rate near $16000 /MT.Looking at the other major demand-supply fac-

tors, the implementation of the Indonesian export ban on nickel ore has hurt production of NPI in China while prompted an increase in ore imports from the Philip-pines to around 27.1 million MT during the fi rst nine months of 2014. Even though during the year new mines have been set up, the production of NPI from China declined gradually partially due to the ban of high quality lateritic ores from Indonesia and partially because of the problems in Brownfi eld plants.

COVER STORY

LME Nickel Stock Levels

0

85000

170000

255000

340000

425000

Dec-04 Nov-06 Oct-08 Sep-10 Aug-12 Jul-14

future. We hold ommodity over

h was termed 3 with prices part of the game and ile met-e year ckel est g

do

Aeff

we sahalf of 2

tinued to ing into a b

year’s high toLooking at

tors, the implemon nickel ore hasprompted an incpines to around months of 2014


Apart from this, Philippines monsoon season is to start soon which might further cut the supply of nick-el ore to the country thereby disrupting the supply of the NPI to some extent in the short term. Neverthe-less, any sustained loss over NPI is actually a good aspect for the fi nal as NPI is utilized against nickel as a substitute.

If we look at the data from INSG, world primary nickel usage stood at 1.66 Mt in 2012 and increased to 1.78 Mt in 2013 and could reach 1.92 Mt in 2014. For 2015 INSG estimates an increase to around 1.97 Mt. Looking forward, in 2015 if China ebbs its supply of nickel Pig Iron which currently is marked around 25% of the global refi ned supply of Nickel, we should see consumption of fi nal commodity to ameliorate. As per recent statistics, China is planning to cut down on its NPI supply by 70,000 tonnes per year in order to reduce pollution while indirectly lead up to the Asia Pacifi c Economic Cooperation.

Additionally, according to a presentation by Wood Mackenzie at INSG, recent mined projects are yet to achieve a full utilization rate and the start ups are fac-ing delays due to the increased capital costs since 2006, however, the western regions do not depict any urgency for nickel usage in the medium term.

We continue to hold a bearish bias stance for nick-el in the short term on account of persistently higher stocks at LME, lower consumption in the immediate term which can be also seen through the maintained contango at the LME Cash-3M Forward prices. How-ever, if China actually implements its planned cut in NPI supply and Philippines is unable to match up to the production level of Indonesian Nickel ore exports in future, the prices of nickel might surge over the me-dium to long term time frame.

AluminiumAluminium which is the third most abun-dant element in the world revived this year after a terrible performance in 2013. Much to the relief of many, aluminium which has been in ample surplus for almost a decade now, was fi nally forecasted to be moderately in surplus of 235,500 tonnes this year fol-lowed by an anticipated defi cit of 4,444 tonnes in 2015. The benchmark aluminium LME prices surged around 27% during the fi rst half of 2014, however it has given up on some part of its gains still managing a total a gain of around 10%

up till October as equated to the end of 2013. As per the latest quote, 3M LME Aluminium is around $2040 MT.

The major factor that could have led to this surge in the price levels for the metal is the consistent decline in the stock levels at LME from record highs of 5.16 Million MT to a recent 4.43 Million MT level followed by a sharp rise in the cancelled warrants ratio which reached up to 3 Million MT during the fi rst half of the year. The physical premiums or charges to obtain phys-ical material also rose stupendously during the year by about $200 indicates a huge growth in the immediate demand of the metal. The rise in prices of the metal and the sharp rise in the physical premiums have been able to improve the fi nancial stance of many smelters who were in deep red last year.

The reason for the rise in the spot demand was the expectation of aluminium running into a moderate defi -cit next year as many smelters had to shut down their operations due to major losses faced by them during 2013. This shut down of operations restricted the ever-green abundant supply of the refi ned metal in the mar-ket, thereby leading to the supply concerns in the short term. However, in the latter half of 2014 some of the smelters especially in China have resumed their opera-

tions, easing off any sort of immediate supply crunch in the market for aluminium and pulling the prices to decline a tad.

Looking forward, the Indonesian export ban has had no immediate impact on the bauxite, alumina and

aluminum markets, due to adequate supplies and stockpiles of the mate-

rial. However, if the Indonesian ban con-tinues, we foresee a change in the bauxite

and alumina markets in the latter half of 2014. In the long term, the potential lack of adequate

compensation for the 20-25 million tonne loss of bauxite export into China from Indonesia could push Bauxite prices upwards.

COVER STORY

Aluminium Stocks and Price Levels at LME

1500

1700

1900

2100

2300

2500

-1.00

0.00

1.00

2.00

3.00

2009 2010 2011 2012 2013 2014E2015E

Primary Aluminum Net Surplus/(Deficit)Average Aluminum LME 3M Price

n-

-444

nium th fi t

,crup

riatinue

and aluIn the lon

ti



COVER STORY

If alumina production in China was affected by bauxite short-ages then this could result in refi nery production cuts, and there-fore China’s demand for imported alumina may increase, result-ing in a sharp rise of imports into China during the end of 2014. Indonesia previously accounted for 70% of Chinese bauxite im-ports. This might surge the prices of aluminium upwards in the medium to long term. For the short term we remain bullish bias for aluminium and recommend buying Al from lower levels.

CopperLast year copper was much talked about as the metal was run-ning on the expectation that for the fi rst time after 5 contin-uous years of defi cit, the red metal was expected to swing into surplus. The global growth in the mine produc-tion and the slower pace of usage of the refi ned metal instigated the prices to lower down for Dr. Copper. This year as expected the metal did wit-ness a surplus and is currently close to balance as the year 2014 comes close towards an end.

However, this expectation of copper swinging into a large surplus of around 6,000,000 MT as forecasted by ICSG late during 2013 was tarnished w i t h copper running into an extreme defi cit during the month of April especially when the metal saw a defi cit of 233,399 MT due to the rise of around 11% in demand for the refi ned copper from China. Later during the year 2014, ICSG has trimmed its forecasted sur-plus fi gure for copper down to 94,300 MT for the current year.

The year started with Copper being traded at $8165 MT and as of 31st October 2014 copper has declined to $6700 MT. One of the major events that have adversely affected copper is the Qingdao Port fi nancing fraud wherein copper had been used as a collateral to back up multiple loans, thereby inducing a scenario of supply shortage in copper for a very short period but later on the ample stock piles in China crushed the market sentiment and copper saw a downfall in its prices.

As per the latest data from ICSG, copper is expected to be in surplus for both 2014 and 2015. Though the surplus fi gures

Demand Supply Figures For Copper Till July 2014

000 Tonnes Jan Feb Mar Apr May

World Mine Production 16,052 16,688 18,101 10,190 10,516

Primary Refi ned Production 16,131 16,573 17,243 9,845 10,498

Secondary Refi ned Production 3,465 3,575 3,815 2,156 2,346

Total Refi ned Production 19,597 20,147 21,058 12,001 12,843

World Refi ned Usage 19,705 20,403 21,331 11,979 13,433

Surplus/ (Defi cit) -108 -256 -273 22 -590(Source: ILZSG Data)

have been trimmed down by ICSG to 94,300 MT in 2014 and around 350,000 MT during 2015, the commodity is still expected to be in surplus as the global mine production is ex-pected to grow by 3% to 18.6 Million MT over the last year followed by a rise in the global refi ned production by 5% to 22.1 Million MT over the prior year as well. In 2015, the world mine production is expected to grow by 7% and the refi ned metal production to grow by 4% to 23.1 Million MT.

This year the economic slowdown in major nations like China and Europe has adversely affected the consumption pattern and has lead to a decline in the demand for the metals at large. Since China is one of the largest con-sumers of copper concentrates and ores, an economic slowdown has massively impacted in the demand for copper, during this year leading to the surplus. If the global economic slowdown continues further towards a major

part of 2015 as well, surplus for copper might further broaden as new mines

boosting the output for copper are to begin from 2016.

The government of Chile which is one of the largest producer of mined copper has injected a total of $4 billion in Coldeco, a state

owned large copper mine to further boost the production to over 2

million MT. However, the risks associated to this forecast could be the rising troubles faced by both the miners and the smelters as well. On one hand, the new supply of copper ores has larger part of arsenic content which in turn is expected to raise the TC/RC charges by around 15-20% or $105 to $115 per ton, thereby increasing the cost level for miners.

On the other hand, smelters are facing a bottleneck regarding raw material supply as Indonesia implied a ban on its exports earlier this year and also the scrap component avail-ability has tightened due to the continuous fall in the price levels of copper. We hold a negative bias for copper in the short term and recommend selling from higher levels.

contin-swing

might fbo


The Indian mining and construction industry has evolved primarily on the basis of domestic demand generated over the various plan periods,

essentially on the basis of investments which have gone into mining, infrastructure development and the building and construction sectors.

The Planning Commission estimates that about $15 billion will be invested up to FY 17 in the mining sec-tor in India. The Indian mining industry has seen rough weather in the last one-and-half years due to regulatory changes and hurdles in land and environment clearanc-es, but moderate growth will still continue and this will drive demand for mining equipment. Mining equip-ment demand could consequently grow from about $430 million in FY 12 to about $600 million by FY 17.

Mining equipment encompasses a large gamut of equipment such as rope shovels, motor graders, rotary drills, large excavators (below 35 tonne), surface min-ers, long wall equipment, dragliners, continuous min-ers, dumpers, and dozers.

Over the last 5 years, competition in the Indian min-ing equipment sector has increased. Companies from overseas have entered in India and led to far reaching

changes across products, services (e.g. fi nancing) and customer expectations, regarding the purchase experi-ence as well as service levels. With the changing com-petitive scenario and customer preferences, new trends are emerging in the mining equipment sector in India.

However, slow growth in mining sector has adversely affected the mining equipment sector. Thus, while the construction equipment industry is growing at a steady pace, the mining equipment industry is growing slowly.

Changing technology expectationMining equipment such as excavators, wheel loaders and dumpers will remain the biggest contributors in terms of value and volume in the medium term. How-ever, products such as dragliners, surface miners and long wall equipment will experience higher growth. The entry of several multinational OEMs has led to signifi cant upgradation in technology-driven product features, such as remote access devices, automatic controls to maneuver machines, more effi cient (Tier 3) engines, and cabin air conditioning. These are gaining popularity among customers.

Some recent product launches feature several ad-

Mining Equipment Industry: Exciting Times Ahead— Lucas D’Souza, MMR Bureau

FEATURE


ditional functionalities, includ-ing service enablers such as the capability to send problem logs by SMS to the nearest service point, and downloading historical data regarding engine, hydraulic systems, fuel consumption and the expected life of critical com-ponents. Increasingly, operators attach value to equipment with smooth controls and air condi-tioning. Users of mining equip-ment expect the OEM to track component life and inform them about the required replacement or servicing of parts. Customers are becoming increasingly cautious on the need to invest in operator comfort to retain skilled opera-tors. With a wide production ca-pacity base, India is perhaps the only developing country, which is totally self-reliant in such highly sophisticated equipment.

In recent years, the core sector of the Indian economy, particular-ly the mineral and mining indus-try, has made signifi cant progress. The abundant mineral resources available in the country have led to the growth of the mining industry. This industry is basically labour intensive and can provide job op-portunities for many. Mechanized mining operations have become popular in the recent years. Today, more and more companies en-gaged in open-cast mining resort to high mechanization in order to maximize the output of coal and

other minerals. As a result, there is a marked trend in the introduction of large capacity and higher sized mining machines.

In the case of mining equip-ment, the technology depends on the mining operations prevailing in the country. In India, open cast mining is much more popular than underground mining. Hence, for the equipment required for open cast mining like dumpers, dozers, shovels, draglines and excava-tors, the level of technology of the equipment manufactured is at par with international standards except with respect to usage of electronic controls, hydraulic systems and engines adhering to the latest emis-sion norms.

The Indian mining equipment in-dustry is poised for exciting times ahead and the future prospects of this industry is directly linked to the Indian economy and it is ex-pected that the Indian economy will do well in the future.

Global industry to surpass $104 bn in 2017The global mining equipment market is primarily driven by factors such as the increase in mining activities and the rising demand for metal and mineral commodities. The mining market is witnessing substantial growth after the economic crisis in 2010. Some other factors such as the enhanced demand for technically advanced solutions especially in developing countries is bolstering the growth of the global mining equipment market. Asia Pacifi c region dominates the global min-ing equipment market owing to tremendous growth of mining ac-tivities in China.

A new report from consult-ing fi rm Lucintel estimated that the worldwide market for mining equipment will increase by a com-pound annual growth rate of 7.5 percent over the next fi ve years, surpassing $104 billion in revenue by 2017. The report explained that this is primarily driven by the need for next-generation equipment that incorporates new and improved technologies.

The Asia Pacifi c region will ex-press the strongest demand, repre-senting about 55 percent of the en-tire market, according to the report. This aligns with China’s projected increases in mining and manufac-turing. The nation is targeting 7.5 percent economic growth this year, according to a government work report delivered in a session of the 12th National People’s Congress recently. China’s manufacturing industry has been hampered by a lack of innovation, competition for low-end products and a lack of key equipment and technologies. In the coming years, China will need new products that can improve effi cien-cy, reduce resource consumption and curb environmental pollution.

“Urbanization, technological innovation, new energy develop-ment, energy-saving efforts and emission reduction will become a driving force for China’s growth over the next decade,” said Chin Qihua, vice president of Caterpil-lar, Inc., in the report.


FEATURE


Soy Complex: Outlook Bearish — Indrajit Paul

In 2014, CBOT soybean prices fell by 25% till date owing to record high production in US soybean crop which is projected to in-

crease by 17% from previous year at 106.870 million tonnes. In the month of April 2014, soybean prices touched $15/ bushel on exports demand for US soybean crop and tight supply situation which led the agriculture department to raise their production and acreage outlook.

The soybean cultivation area in US rose by 9% at 33.752 million ha in 2014 compared to the previous year. The soybean yield is project-ed at 47.1 bushels per acre, up 0.5 bushels from September. The carry forward stock stood at 2.50 million tonnes down by 35% from previ-ous year. The appreciation in dollar index by

In this article, we do a comprehensive study on soy complex (Soybean, Soy oil, Crude Palm Oil and mustard seed), its performance in 2014 and future viewpoint.

Soybean

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5800

Jan-14 Apr-14 Jul-14 Oct-14

NCDEXCBOT

Indian Balance Sheet

YearsTotal Supply (Million Tonnes) Total Demand (Million Tonnes)

Beginningstocks Imports Production Exports Consumption Ending

Stocks

2009-10 0.658

9.7 0.015 8.77 1.57

2010-11 1.57 9.8 0.018 10.85 0.505

2011-12 0.505 11 0.039 11.17 0.292

2012-13 0.292 11.5 0.099 11.475 0.218

2013-14* 0.218 11 0.15 10.475 0.593

2014-15* 0.59 11 0.15 10.90 0.54Source: USDA & KCTL Research

8% since January till date is also a factor which led to fall in the soybean prices. NCDEX Soybean prices fell by over 18% till date in 2014 owing to weak sentiments in the international soy-bean prices and mostly due to poor soybean meal demand from the exports front. Indian soybean sowing area declined by 10% at 11.02 million ha due to erratic monsoon rains. The revival of monsoon was poor in the initial part which led to fall in acreage.

However, the later part of monsoon is boon for the soy crop and the crop was reported to be in good to excellent condi-tions. Last year, the sowing area increased but due to excess rains in the growing season, the quality of crop is deteriorated. There was less availability of quality crops due to which very less suppliers are available for delivery at NCDEX accredited warehouses. Due to lower availability of quality soybean sup-ply the prices of soybean rose due to which soybean meal is

SPECIAL FEATURE


Palm Oil

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MCXBMD

quoted at a higher rate. Owing to higher soybean meal rate the importers shifted to other countries and as a result exports of soybean meal plunged down by 87% from April-Sept, 2014 pe-riod as compared to the same period previous year. The nega-tive crush margin in soybeans is also a factor which led to fall in the soybean prices.

With current weak prices of palm oil and soya oil, Indian crushers are facing a diffi cult situation. Farmers will refuse to sell their oilseeds at low prices and crushers will not be able to run their plants. According to Ministry of Agriculture (MOA) statistics as of October 10, 2014, total soybean acreage dropped 10% to 11.02 million hectares as compared to last year. More-over, soybean acreage fell in major growing states, such as Ma-harashtra and Madhya Pradesh (acreage fell by 3% and 13%), because many farmers switched to other crops on expectations of higher profi t margins. Recently, Soyabean Oil Processors As-sociation (SOPA) pegged domestic soybean output at 10.4 mil-lion tonnes higher by 10% from previous year production fi g-ures. The increase in output is higher on account of rise in yields per hectare. The crop survey conducted by SOPA recently in Madhya Pradesh, Maharashtra and Rajasthan pegs the all India yields for Kharif 2014 at 959 kg/hectare against 788 kg/hectare a year ago.

OutlookGlobal oilseed production for 2014-15 is projected at 528.4 million tonnes, up 4.6% from last year as higher soybean, pea-nut, and cottonneseed production more than offset reduced sunfl ower seed and rapeseed production. Global soybean pro-duction is projected at 311.2 million tonnes, up 9% from pre-vious year. Small reductions in soybean production for China and Russia partly offset increases for the United States and EU. US soybean production is projected at 106.87 million tonnes, up 17% from previous year.

Global soybean consumption is likely to increase by 5% to 284.33 million tonnes which is behind the increase in produc-tion rate. Meanwhile, the total supply of soybean is calculated

Global Balance Sheet



Stocks

2009-10 43.119 86.817 260.503 91.44 238.052 60.947

2010-11 60.947 88.76 263.888 91.702 251.589 70.304

2011-12 70.304 93.456 239.694 92.157 257.748 53.549

2012-13 53.549 95.876 267.833 100.518 259.904 56.836

2013-14* 56.836 108.895 285.012 113.386 270.869 66.488

2014-15* 66.488 112.50 311.201 115.20 284.33 90.67Source: USDA & KCTL Research

at 490.19 million tonnes which is well above the total demand of 399.52 million tonnes. Therefore, we expect an oversupply situation in 2014-15 which might weigh on soybean prices. Now, talking about the price outlook, we believe CBOT soybean prices might gain by 5-6% in the next couple of months. While, NCDEX soybean prices are also expected to gain in the short term with demand from the solvent processing plants and soybean meal exports demand. Thereafter, prices are likely to fall as the South American nations com-mence their soybean harvesting activity and US plans out their new soybean planting es-timates. Overall, we believe soybean prices might trade on a bearish note in the medium to long term.

Global palm oil production is estimated at 63.29 million tonnes in 2014-15 which is likely to increase by 6% with

favorable weather conditions across the key producing nations. Consumption is likely to rise by 7% with demand from the importing countries and the implementation of B7 man-date across Malaysia.

SPECIAL FEATURE


However the ending stock is projected to increase by 10% on good production prospects. BMD CPO prices fell by 16% since January owing to high stockpiles in the major producing countries of Malaysia and Indonesia with increase in production of palm fruits and the non performance of bio diesel consump-tion targets by Indonesia. Malaysia also delayed the nationwide implementation of its biodiesel mandate to the end of the year.

The concern of occurrence of El Nino developed in the ini-tial part of the year which if occurred was supposed to ham-per the palm crop outlook thereby supporting the prices. But the weather remained favorable for the crop and production reached its peak in month of August. Meanwhile, the record high US soybean crop production also weighed on palm oil prices as the substitute i.e. soy oil is available at cheaper pric-es. Soybean oil’s premium to palm has averaged about $50-60 a ton this year from $244 in 2013. However, exemption of export duty by Malaysia in the month of September acted as a game changer and surge is witnessed in the prices after palm prices fall to fi ve years low. In August 2014, Malaysian CPO production increased by 22% at 2031750 MT and it is consid-ered that it reached the peak. Stockpiles increased by 26.7% to 1134310 MT from previous month. Global palm oil production is estimated to increase by 6% to 62.84 million tonnes in MY 2014-15 as compared to MY 2013-14.




Stocks

2009-10 5.16 35.42 46.11 36.57 44.56 5.56

2010-11 5.56 36.49 48.84 37.46 47.14 6.29

2011-12 6.29 38.99 52.11 40.07 49.92 7.39

2012-13 7.39 41.82 55.97 43.42 54.49 7.27

2013-14* 7.27 40.54 59.60 42.42 56.97 8.01


The major producers of palm oil i.e. Malay-sia and Indonesia which accounts for around 85% of the total production is projected to increase their production by 5% and 8% re-spectively. The FFB yield increased by 2% to 13.81 tonnes/hectare from January to Septem-ber 2014 as compared to the corresponding period previous year. While the crude palm oil yield during January to September period stood at 2.84 tonnes/hectares, up 4% from pre-vious year at the same period.

India is one of the leading importers of palm oil with a share of 21% on global imports. For the marketing year 2014-15, palm oil imports are likely to increase by 11% to 8.75 million tonnes. The reason being the declination in production of total oilseeds in India by 3.4% to 36.5 million tonnes owing to fall in acre-age of the major oilseeds due to late revival of monsoon. MCX CPO futures fell by 20% since January till date owing to bearish out-look in the vegetable oils market. India im-ports about 60 % of its edible oil demand of 17-18 million tonnes.

According to Solvent Extractors Associa-tion data, vegetable oil imports in September increased 22 % to 1.05 million tonnes from the year-ago period, after hitting a record at 1.32 million tonnes in August. Of total 1.05 million tonnes of vegetable oils imported in September, edible oils made up 1.02 million tonnes and non-edible oils shipments were 28,853 tonnes against 0.83 million tonnes and 30,062 lakh tonnes in the same period a year

India Balance Sheet



Stocks

2009-10 0.73 6.60 0.05

NILL

6.44 0.94

2010-11 0.94 6.66 0.05 7.08 0.57

2011-12 0.57 7.47 0.05 7.43 0.67

2012-13 0.67 8.31 0.05 8.23 0.80

2013-14* 0.80 7.90 0.05 8.25 0.50

2014-15* 0.50 8.75 0.05 8.91 0.39Source: USDA & KCTL Research

SPECIAL FEATURE


ago. In the period of November 2013-Septem-ber 2014, India imported 5.54 million tonnes of palm oil higher by 5% from the same pe-riod year ago. According to Ministry of Ag-riculture (MOA) statistics as of October 10, 2014, total soybean acreage dropped 10% to 11.02 million hectares as compared to last year. Moreover, soybean acreage fell in major growing states, such as Maharashtra and Mad-hya Pradesh (acreage fell by 3% and 13%), because many farmers switched to other crops on expectations of higher profi t margins.

OutlookPalm oil outlook remains bullish for the next couple of months as the growing demand from bio-diesel sector might support gain in the prices. As stated by Plantation Industries and Commodities Minister Mr. Datuk Amar Doug-las Uggah Embas, B7 Biodiesel Programme would start on Nov 1 for the subsidized sector in peninsular Malaysia and in December for Sabah and Sarawak. Meanwhile, the imports of palm oil by the major importers like India might increase with a decline in oilseeds pro-duction in India. According to Industry expert Thomas Mielke, demand for palm oil was ris-ing from countries including India and China, with global imports expected to reach 44.71 million tonnes in 2014-2015, an increase of 5.1% from a year earlier.

The biological high cycle of oil palm pro-duction will come to an end around November this year. Palm oil production will not only enter its seasonal lean phase, it will also enter a new biological Low Cycle after November 2014. The palm oil stocks are likely to peak till October and gradually draw down and it might continue through the fi rst 6 months of 2015. Therefore, we believe the palm oil pric-es might gain by 5-6% in the next few months thereafter it is likely to fall as the harvest of soybean begins in South American nations and new soybean plantings starts in US. How-ever, with bearishness in the soybean market with increase in global soybean production is likely to cap the gains of the commodity. Probably, the oversupplied situation in soy oil might mount downward pressure in palm oil prices in the upcoming year.

Soy Oil

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NCDEXCBOT

Global production of soybean oil in 2014-15 is projected to increase by 5% to 44.57 million tonnes while con-sumption is also likely to increase by 3% which indi-

cates oversupply condition might create bearishness in the mar-ket. CBOT Soy oil futures trading at $33.78 cents/lb, fell by over 11% since January owing to record high soybean acreage and production outlook.

According to Oil World estimate, Argentina’s biodiesel pro-duction may climb to a record 2.8 million tonnes this year from 2 million tonnes in 2013, with most output expected to be export-




Stocks

2009-10 0.1 1.598 1.32 0.001 2.76 0.257

2010-11 0.257 0.945 1.675 0 2.64 0.237

2011-12 0.237 1.174 1.71 0.01 2.75 0.361

2012-13 0.361 1.086 1.74 0 2.91 0.277

2013-14* 0.277 1.65 1.54 0.001 3.3 0.166

2014-15* 0.166 1.7 1.61 0 3.3 0.176Source: USDA & KCTL Research




Stocks

2009-10 3.233 8.717 38.79 9.16 38.211 3.369

2010-11 3.369 9.507 41.285 9.643 40.698 3.82

2011-12 3.82 7.954 42.601 8.468 42.032 3.875

2012-13 3.875 8.43 42.894 9.317 42.342 3.54

2013-14* 3.54 9.032 44.574 9.19 44.955 3.001


SPECIAL FEATURE


ed. Indian soybean oil production is projected at 1.61 million tonnes, up 5% while consumption remains constant at 3.3 million tonnes. However, the imports of soy oil are projected to increase by 3% in order to fulfi ll its domestic demand. Soy oil futures traded in NCDEX fell by over 14% since the beginning of the calendar year. We witnessed fall in domestic soy oil prices due to bearish international soy market and glut of vegetable oil supplies in the domestic market resulted on in-crease in imports. According to Sol-vent Extractors Association data, vegetable oil imports in Septem-ber increased 22% to 1.05 million tonnes from the year-ago period, after hitting a record at 1.32 million tonnes in August. Of total 1.05 mil-lion tonnes of vegetable oils import-ed in September, edible oils made up 1.02 million tonnes and non-edible oils shipments were 28,853 tonnes against 0.83 million tonnes

and 30,062 lakh tonnes in the same period a year ago. Soybean oil im-ports for Nov’ 13 to Sept ‘14 period increased by 74% to 1732634 MT as compared to 994288 MT at the corresponding period previous year.

According to Oil World, With consumption of the 8 key vegetable oils estimated at 18.4 million tonnes in 2014/15, India will be forced to further raise imports to a new high of around 12.2 million tonnes, up 0.5 million tonnes or 4%. India will thus need to import at least two thirds of its vegetable oil require-ments in the new season, meaning that the import dependence will stay near the unprecedented level of 2013-14.OutlookWe believe CBOT soy oil prices are likely to recover 5-6% from its cur-rent level in the next few months. Meanwhile, the NCDEX soy oil prices are likely to gain in the near term taking bullish cues from inter-

national soy oil and palm oil mar-ket. Thereafter, it is likely to fall with oversupplied situation in the global front and the fall in crude oil prices might negate the demand for vegetable oil like soy oil and crude palm oil which is generally used in production of bio-diesel. Overall, we believe the commodity to follow bearish trend in the upcoming year provided all other factors remain constant.

Mustard Seed

Rape/Mustard seed price movement

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Rape/Mustard Seasonality

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95

105

115

125

3300

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3500

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Close PriceSeasonality Index

Global rapeseed production is likely to decline by 1% to 70.31 million tonnes due to reduction in rapeseed production for Canada based on lower

yields as reported in the most recent survey from Statis-tics Canada. However, for EU production is increased to a record 23.5 million tonnes. However, consumption is likely to increase by 2% to 69.56 million tonnes.

Meanwhile, if we look at the total supply it is cal-culated at 89.29 million tonnes which surpasses total

demand by 8%. Therefore, we believe an oversupply situation might be seen in the global rapeseed produc-tion. In the domestic front, production is estimated at 7.50 million tonnes, up 3% from previous year on good sowing prospects. Meanwhile, consumption is likely to increase by 3% at 7.60 million tonnes.

The NCDEX RM Seed prices appreciated by 5% since January and trading at Rs. 3754 per quintal. Due to heavy rains and hailstorm in the last week of Febru-ary and early March 2014, the mustard crops standing on fi eld damaged which led to declination in the pro-duction fi gures and almost 7 lakh tonnes of crop dam-

SPECIAL FEATURE


aged. Mustard seed production stood at 6.5 million tonnes and total supply stood at 6.8 million tonnes. Out of total supply of 6.8 million tonnes, almost 4 million tonnes of mustard seed were traded in the market. In 2014, harvest is delayed due to unfavor-able weather conditions and continued till the last of April which led the bearishness to prevail in the market.

However, the demand for rapeseed meal from exports front boosted the mustard seed prices. During April–September 2014, India exported 572,352 MT of rapeseed meal which in-creased by 37% as compared to the corresponding period pre-vious year. Even the price of mustard meal is less than other meal this year so better demand from export front is being seen for mustard meal.

Recently the Rabi season (2014-15) sowing is commenced for most of the crops in India. Rapeseed sowing reached 18.64 lakh ha higher by 4.56 lakh ha compared to the corresponding period previous year. The late monsoon rains this year might prove ben-efi cial for the Rabi crops as the soil holds ample amount of mois-ture and rapeseed sowing also showed signifi cant improvement this year. In MP, rapeseed sowing reached 3.8 lakh ha while in Rajasthan sowing reached 9.07 lakh ha, down 24% from previ-




Stocks

2009-10 7.28 10.74 61.06 10.84 59.35 8.89

2010-11 8.89 10.10 60.57 10.87 61.30 7.40

2011-12 7.40 13.18 61.49 12.92 63.51 5.65

2012-13 5.65 12.66 63.67 12.45 65.49 4.04

2013-14* 4.04 14.58 71.09 15.11 68.36 6.24





Stocks

2009-10 1.01

NIL

6.40

NIL

6.23 1.18

2010-11 1.18 7.10 7.15 1.13

2011-12 1.13 6.20 6.60 0.73

2012-13 0.73 6.80 6.96 0.57

2013-14* 0.57 7.30 7.35 0.52

2014-15* 0.52 7.50 7.60 0.42Source: USDA & KCTL Research

ous close. In UP, 4.91 lakh ha area rapeseed is sown and in West Bengal 0.65 lakh ha is sown.OutlookFor the next couple of months we expect a bull-ish trend in the commodity as supplies are de-clining in the market gradually due to lean sea-son demand. Sowing of rapeseed commenced across the key producing areas in India. Mean-while, the sowing prospects looks better this year with ample amount of moisture in the soil provided by late monsoon rains. So, we be-lieve the acreage might surpass previous year’s fi gure. The MSP of Rapeseed is raised by Rs. 50per quintal to Rs. 3100 per quintal from Rs. 3050per quintal from previous year. Therefore, the farmers would likely increase the harvest-ed area of mustard seed which might mount downward pressure in the commodity. While we look at the seasonality index, prices tend to gain from August-mid onwards and this trend might continue till Jan-mid.

The reason behind this is that the festive season in India begins from August-Septem-ber onwards due to which the consumption of mustard oil increases while the export demand for oilcake also boosts the prices. The con-sumption demand remains high in the winter season as well people used to consume variet-ies of fried snacks. However, from February onwards prices might fall with the beginning of harvesting season.

Overall, we believe the mustard seed prices might trade on a bullish note for the near term and it is likely to gain 5-6% from the current price level. Thereafter, it is likely to fall with the new supplies hitting the market and look-ing at the sowing prospects it is expected to surpass previous year production fi gures.

Mustard Seed Sowing ScenarioState 2014 2013

Assam 0.21 0.12

Madhya Pradesh 3.8 0

Rajasthan 9.07 11.88

Uttar Pradesh 4.91 0

West Bengal 0.65 0

All India 18.64 14.08Arel: Lakh hactre


SPECIAL FEATURE


Castor Seed: Prices Could Go Up— Aurobinda Prasad

Ten months into 2014, castor seed prices have returned a measly 3% from its previous year closing, almost negligible for anyone trading

this oil seed. In fact, during the course of 2014, this commodity performed so poorly that around the end of the second half of 2014, prices dropped to Rs. 3750/Quintal how much % from last year

On the fl ip side, prices have increased since then to trade at Rs. 4750/Quintal. So if someone had invested or procured the commodity in May or June 2014, then the returns are more than 25%; we believe a good avenue to make profi t going ahead as well. Our observation of the trend in this commodity reveals that price tends to move higher just before sowing begins. As we understand, the castor seed sowing happens from May through July, pre-cisely a Kharif crop (sown in the rainy season, also called summer or monsoon crops), wherein, supply of the seed is inadequate which pushes the prices higher. A similar trend is noticed in 2014 too. As a matter of fact, we need to assess the supply-demand fundamentals of the com-modity in the current year and understand its dynamics in the short to medium term to develop an outlook on it.

In this article, we shall discuss the commodity’s fun-damental aspects and market scenario, and endeavor to

provide an outlook, especially when the seasonal har-vesting is about to begin in November through to Janu-ary, and its likely price trend.

We conducted a primary market survey on Castor seed late July when sowing of the commodity was in progress. Our preliminary estimates were for the pro-duction number to be lower owing to the fact that the monsoon during Kharif would be low. By the end of monsoons in India, the defi cit remained above 12%, indicating that most of the Kharif crops had been af-fected, so is the case with Castor seed.

Herein below we have the balance sheet of Castor seed as per our market survey done in July month. We have revised our estimates in this article, based upon a separate market survey we conducted towards the end of October 2014. It renders an outlook that production this year would be much lower than it was anticipated in July, and also, harvesting would be delayed from its normal time to January 2015.

We understand that the production fi gures have been on the decline over the past fi ve years, and the table shows that in the current year, supply is expected to see a dramatic fall. As per our estimate, supply is likely to be around 1-1.2 million tones, lower than the past six

FEATURE



years, while the pace of demand is growing. A defi cit phase on the commodity is very noticeable.

Let’s not forget, as mentioned earlier, since sowing was delayed and monsoon in most pockets of the nation has spoiled the crop, harvesting would also be delayed, likely to January 2015. In this regard, we can see that supply would be very tight in the physical market, at least until the end of 2014. Also, we understand that the daily arrivals are around 20,000-25,000 tonnes which is historically low in the current season, and that may drive the commodity prices higher. Hence, overall, we may see a good defi cit of Castor seed, which may pos-sibly keep the prices elevated.

If we look at the sowing area in the current year, though overall acreage in the country has increased by 5%, it is likely that the yield would be poor due to dis-turbed monsoon, creating a tight supply situation in the country for the commodity.

Looking at the above scenario, we understand that the commodity which has been rising over 25% since the bottom of this year may have the potential to make some more gains. As per the primary survey conducted in the physical markets, among producers, processors and farmers, we render a view that the commodity in the physical market may hit Rs. 5000/Quintal. In line with this view, our technical research study also sug-gests that the far calendar month contracts may touch the Rs. 5000 mark. If the expected scenario continues this year, then possibly, the commodity may adhere to its prices above Rs. 5000/Quintal at the spot market and could even hit Rs. 5200. However, we are also of the opinion that once supply reaches the market in late De-cember or January, the prices might soften a tad from the highs. This has been a generally noticed trend that the commodity tends to make a decline during the fi rst quarter of every calendar year. So, we may see the com-modity touching Rs. 5000-5200 at the physical market, then possibly, it may come down by an average 10%.

Thus, the fi rst quarter may remain with an average price of Rs. 4500-4700/Quintal.

Studying the trends of Castor seed in the physical market, we feel that future contracts, basically de-rivatives of castor seed commodity traded in India are likely to trade in a similar fashion. At the commodity futures market, the NCDEX platform have the future contracts for November, December, January and Febru-ary at contango (time value added as part of premium over the spot prices).

However, if we look at the premium difference between two consecutive contracts at NCDEX, the spreads are at present Rs. 100, Rs. 70 and Rs. 45 re-spectively, for the November, December, January and February contracts. The spot price is presently around Rs. 4700 excluding tax, while on delivery, the price would be more than Rs. 4800. This indicates that once we approach late December or January, the available future contracts then would be for February, March, April and May, and they should fall under backward-ation (future prices at discounted cost over the spot price). This also gives us an opinion that the demand for the commodity would be low while higher supply may keep the commodity under tone post mid-Jan to February month. However, till that time, bullish fac-tors are seen prevailing and we recommend buying the commodity on dips.

Balance Sheet Of Castor Seed Years Total Supply (Million Tonnes) Total Demand (Million Tonnes)

Beg. stocks Production Exports Consumption Ending Stocks

2012-13 1.14 1.50-1.63 0.43 0.49 0.71

2013-14 0.71 1.20-1.30 0.04 0.70 0.425

2014-2015 ( Preliminary estimation) 0.425+0.25 1.17-1.20 0.00-0.04 0.60-0.80 *****

2014-2015 ( Revised estimation) 0.50 1.00-1.20 0.00-0.04 0.70-0.90 *****

State 2014 2013 ∆ %

A.P. 0.46 0.45 2%

Telangana 0.66 0.83 -20%

Gujarat 7.33 6.22 18%

Karnataka 0.12 0.14 -14%

Maharashtra 0.17 0.15 13%

Rajasthan 1.49 1.92 -22%

All India 10.35 9.84 5%Area: Lakh hectare

FEATURE


DO YOU KNOW

It’s been over a decade that the commodity futures’ trading was re-launched in India in the year 2003. The market has been helpful in deriving better

pricing of commodities with a transparent mechanism and also helping in asset optimization for many small to large scale investors in the country. Besides, many corporate, traders, exporters and importers are also managing their price risk management through this platform. However, we still believe that further awareness of this market is needed for investors. Hence, in this article we shall discuss a few important points that one should know before stepping into commodity trading.

Commodity and commodity marketBefore starting trading in commodity market we should know about commodity. It is nothing but a physical substance in which investors can buy and sell through futures contracts. Commodity market is a physical market place for buying, selling, trading of both agri commodity (wheat, sugar, cotton etc) and non-agri commodity (energy, gold, silver, crude oil etc).

Regulator of commodity marketThe Forward Market Commission (FMC) is the regulator of commodity futures market in India. It is headquartered in Mumbai and was established in 1953 under the provisions of the Forward Contracts (Regulation) Act, 1952.

NCDEXNational Commodity and Derivatives Exchange is one of the India’s largest and most recognized commodities exchanges, which was established in 2003. NCDEX is regulated by Forward Market Commission (FMC) in respect of futures trading in commodities.

MCXMulti Commodity Exchange was established in 2003 and based on Mumbai. MCX offers futures trading in bullion, metals, energy and number of agricultural commodities (mentha oil, cardamom etc.)

Role of a brokerA commodity broker is a fi rm or individual who takes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. Today commodity brokers trade a wide variety of fi nancial derivatives based on not only grain and livestock, but also derivatives based on food metals, energy, stock indexes, equities, bonds, currencies, and an ever-growing list of other underlying assets.

Margin tradingMargin trading is buying commodity without having the entire money to do it. Margin trading is a double-edged sword — it cuts both ways. If the price rises, the investor makes twice as much profi t as with his own cash only. Similarly, if the price falls, the investor loses twice the amount.

Use stop loss while tradingA stop loss is an order to buy (or sell) a security once the price of the security climbs above (or drops below) a specifi ed stop price. It’s important to realize that stop-loss orders do not guarantee you’ll make money in the

Commodity Trading— Sonali Patnaik


market; you still have to make intelligent investment or trading decisions. If you don’t, you’ll lose just as much money as you would without a stop-loss, only at a much slower rate.

Risk-reward ratioA ratio used by many investors to compare their expected returns of an investment to the amount of risk undertaken to capture these returns. The risk reward ratio applies to the stop loss point and the target (exit) point of a trade.

Futures contractFutures contract is a standardized contract between two parties to buy or sell a specifi ed asset of quality and quantity for a price agreed upon today with delivery and payment occur at a specifi ed future date. Some futures contract may call for physical delivery of the asset.

Contract marketAn exchange that is registered with the commodity futures trading commission (CFTC) to trade specifi c commodity or option contracts. It is a market in which futures are traded.

DeliveryThe transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specifi c procedures for delivery of a cash commodity.

• Delivery Date is the date on which the commodity of delivery must be delivered to fulfi ll the terms of a contract.

• Delivery Instrument is used to effect delivery on a futures contract, such as warehousing receipt.

• Delivery Notice is a written notice given by the seller of his intention to make delivery against an open short futures position on a particular date.

• Delivery price is fi xed by the clearing organization at which deliveries on future are invoiced. Generally the price at which the future contract is settled when deliveries are made.

Carrying chargesIt is also called as cost of carry. Cost of storing a physical commodity or holding a fi nancial instrument over a period of time. These charges include insurance, storage, and interest on the deposited funds as well as the other incidental costs.


DO YOU KNOW


— Ramesh Chenchala and Indrajit Paul

COMMODITY OF THE MONTH

Fundamental analysisIn the benchmark market of Delhi, Chana spot prices appreciated by 10% since October and

are trading near Rs. 3150/Quintal. Increase in minimum support price (MSP) and government agencies’ buy-ing decision lifted Chana prices in the domestic cash markets and the future market. Meanwhile, a decline in arrivals in the physical markets coupled with festive demand also supported gains in the prices. In October, Chana prices gained over 13% in the NCDEX platform.

Rabi sowing has commenced across India. Accord-ing to the Ministry of Agriculture (MOA), Rabi puls-es (2014-15) sowing reached 7.84 lakh ha, up 17.7% compared with the corresponding period last year. In Maharashtra, Chana sowing area coverage increased by 44% to 1.00 lakh ha, while in Andhra Pradesh and Telangana sowing area lag behind by 65% and 29% at 0.807 lakh ha and 0.29 lakh ha, respectively, ver-sus the previous year. The Cabinet Committee on Eco-nomic Affairs, Government of India, increased MSP of Chana by Rs. 75/Quintal to Rs. 3175/Quintal for 2014-15 Rabi season to be marketed in fi scal year 2015-16.

Looking at the sowing scenario, we believe, the total acreage might surpass the previous year’s fi gures as the weather and soil conditions remain favorable for the crop growth this year which could continue to weigh on the commodity over the medium-term. However, in the near term, we expect Chana prices to continue the bullishness with demand from the millers and gradual decline in Chana supply supporting the physical market prices and futures prices as well.

Technical Analysis In October, 2014 Chana futures at the NCDEX plat-form had breached the consolidation phase resistance (six months consolidation phase) at Rs. 3010/Quintal and settled higher at Rs. 3107/Quintal. Based on the be-low discussed technical study, we anticipate the prices to extend their gains in the coming month.

In the consolidation phase, prices formed reversal candle stick patterns such as Doji and Hammer pat-terns. The recent candle had engulfed the previous candle (candle stick Engulf pattern). These show the strength of the buyers. In the given price chart, it is vis-

Chana: Buy On Dips


ible that prices had failed to breach the long-term rising trend line (Marked in Dotted below the Price Candles) support levels around 2760 levels and turned toward the higher side. The trend line is still holding support

Recommendations

Chana January-2015 NCDEXBuy at 3030-3010

TP 3300/3450SL 2880

Chana December NCDEXBuy at 3010-3020

TP 3240/3350SL 2900


at 2770-2750 levels. Prices have breached exponential moving averages (8,13 and 21) resistance around 3070 levels. Taking clues from the weekly price chart, pric-es are witnessing moving averages bullish crossover 13/8 which is considered an additional bullish factor. Based on the aforementioned technical factors, we ex-pect Chana futures to prolong the gains up to the 3240 level, which is the fi bonacci 61.8% retracement sup-port level of the range 5050-2119, and even on to the 3350 level, a previous high (April 2014 high). Lower side break out point at 3030 might be considered as an immediate support level; coincidentally, it matches the monthly pivot point levels. Major resistance is seen at 2900 levels which are the weekly 21 exponential mov-ing average support levels. Overall, we are anticipat-ing chana futures to remain on the higher side and we recommend buying on dips.


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b i ti D t il


Domestic Commodities Monthly Supports And ResistanceCommodity Contract S3 S2 S1 Close R1 R2 R3 Direction Recommendation/Range

BULLION

Gold MCX Dec-14 24716 25190 25643 26135 26939 27654 27971 down Sell at 26570-26600 TP 25300/25000SL 27280

Silver MCX Dec-14 32496 33577 34641 35797 37630 39259 40001 down Sell at 37500-37600 TP 34700/33500SL 38500

METALS

Copper MCX Feb-15 403.5 407.4 413.5 420.2 426.6 432.4 436.5 Down Sell at 430-431 TP 410/407 SL 438

Lead MCX Dec-14 119 121 123 125 128 131 133 down Sell at 127.50-127 TP 119/115 SL 133

Zinc MCX Dec-14 131 133 138 142 146 149 152 Up Buy at 139.50-139 TP 147/152 SL 133

Nickel MCX Dec-14 850 882 926 974 1027 1075 1105 Sideways Trading range 900-1060

Aluminium MCX Dec-14 117 119 122 127 129 131 134 Up Buy at 124-123.50 TP 130.50/134 SL 121

ENERGY

Crude Oil MCX Dec-14 4332 4559 4751 4957 5346 5691 5826 Down Sell at 5250-5270 TP 4650 SL 5500

Natural Gas MCX Dec-14 211 220 233 247 262 276 285 Down Sell at 260-262 TP 245/233 SL 272

EDIBLE OILS

Soybean NCDEX Dec-14 2842 2929 3125 3346 3480 3604 3734 Up Buy at 3220-3240 TP 3560 SL 3070

Soy Oil NCDEX Dec-14 563 570 588 607 619 630 641 Up Buy at 599-598 TP 630 SL 585

RM Seed NCDEX Dec-14 3608 3637 3697 3763 3808 3850 3890 Up Buy at 3720-3710 TP 3830/3910 SL 3630

CPO MCX Dec-14 439 445 458 472 482 490 499 Up Buy at 468-465 TP 500 SL 455

Castor seed NCDEX Dec-14 4386 4472 4701 4959 5090 5212 5362 Up Buy at 4760-4750 TP 5130/5360 SL 4600

SPICES

Dhaniya NCDEX Dec-14 11691 11897 12107 12336 12685 12995 13141 Sideways Trading range 11400-12600

Turmeric NCDEX Dec-14 5793 5877 6050 6244 6376 6496 6611 down Sell at 6340-6370 TP 5800/5500 SL 6600

Jeera NCDEX Dec-14 10527 10704 11023 11380 11664 11923 12136 Sideways Trading range 12000-10900

Cardamom MCX Dec-14 801 815 850 890 911 930 954 Sideways Trading range 800-950

OTHERS

Chana NCDEX Dec-14 2812 2869 2984 3113 3204 3287 3363 Sideways Buy at 3010-3020 TP 3240/3350 SL 2900

Mentha Oil MCX Dec-14 664 675 687 700 717 732 740 Down Sell at 740-745 TP 665/650 SL 790

Wheat NCDEX Dec-14 1558 1572 1596 1623 1645 1666 1682 Sideways Buy at 1595-1590 TP 1640/1680 SL 1540

Sugar NCDEX Dec-14 2726 2746 2771 2799 2831 2861 2878 Sideways Trading range 2880-2700

Maize NDDEX Dec-14 1011 1036 1084 1138 1178 1215 1247 Sideways Buy at 1140-1135 TP 1205/1220 SL 1180



International Commodities Monthly Supports And ResistanceCommodity Contract S3 S2 S1 Close R1 R2 R3 Direction Recommendation/Range

BULLION

Gold Comex Dec-14 1096 1122 1146 1172 1216 1255 1272 Down Sell at 1180-1185 TP 1100/1080SL 1240

Silver Comex Dec-14 14.29 14.86 15.46 16.11 17.07 17.92 18.33 Down Sell at 16.80-17.00 TP 15.00/14.30SL 18.20

METALS

Copper Comex Dec-14 2.892 2.927 2.984 3.047 3.103 3.154 3.193 Down Sell at 3.1150-3.1200 TP 3.000/2.950 SL3.1730

Copper LME 3M Fwd 6419 6484 6591 6711 6816 6912 6984 Down Sell at 6880-6900 TP 6650 SL 7110

Lead LME 3M Fwd 1870 1910 1956 2005 2073 2133 2164 Down Sell at 2040-2045 TP 1935 SL 2090

Zinc LME 3M Fwd 2119 2155 2228 2310 2367 2419 2467 Up Buy at 2260-2250 TP 2425 SL 2170

Nickel LME 3M Fwd 13639 14171 14915 15740 16617 17405 17911 Sideways Trading range 14500-16800

Aluminum LME 3M Fwd 1861 1890 1959 2037 2080 2120 2166 Up Buy at 1906-1904 TP 2050 SL 1860

ENERGY

Crude Nymex Jan-15 70.24 73.65 76.90 80.42 86.21 91.35 93.63 Down Sell at 85-86 TP 76 SL 89

Natural Gas Nymex Jan-15 3.422 3.562 3.750 3.959 4.191 4.399 4.528 Down Sell at 4.170-4.190 TP 3.800 SL 4.340

EDIBLE OILS

Soybean CBOT Dec-14 892 917 979 1049 1088 1123 1164 Sideways Buy at 1015-1010 TP 1100/1130SL 960

Soy Oil CBOT Dec-14 31.19 31.75 33.18 34.80 35.65 36.45 37.39 Up Buy at 33.90-33.70 TP 36.30 SL 33.40

CPO BMD Dec-14 2085 2119 2208 2309 2361 2409 2468 Up Buy at 2300-2290 TP 2370/2409SL 2230

Others

Corn CBOT Dec-14 310 327 347 377 393 408 426 Sideways Trading range 365-300

Wheat Dec-14 454 476 498 533 554 574 594 Sideways Buy at 510-505 TP 560 SL 485

Cotton Ice Mar-15 59.63 61.13 62.43 64.45 66.04 67.49 68.70 Sideways Sell at 16.60-16.70 TP 15.00 SL 17.30

Sugar Mar-15 15.00 15.15 15.30 15.49 15.80 16.05 16.30 Down Sell at 16.30-16.20 TP 15.00 SL 17.00




STATISTICS

Source: Bloomberg ; EC: European Union; IN: India; US: United States; CH: China; GE: Germany; UK: United Kingdom; JN: Japan

Economic Events In November 2014Date Time Region Event Period Surv(M) Actual Prior

11/01/14 06:30 CH Manufacturing PMI Oct 51.2 50.8 51.1

11/03/14 07:15 CH HSBC China Manufacturing PMI Oct F 50.4 50.4 50.4

11/03/14 20:30 US ISM Manufacturing Oct 56.1 59 56.6

11/04/14 15:30 EC PPI YoY Sep -1.50% -1.40% -1.40%

11/04/14 15:30 EC European Commission Economic Forecasts

11/04/14 19:00 US Trade Balance Sep -$40.2B -$43.0B -$40.1B

11/04/14 20:30 US Factory Orders Sep -0.60% -0.60% -10.10%

11/05/14 10:30 IN HSBC India Composite PMI Oct -- 51 51.8

11/05/14 14:30 EC Markit Eurozone Composite PMI Oct F 52.2 52.1 52.2

11/05/14 15:00 UK Markit/CIPS UK Composite PMI Oct 57 55.8 57.4

11/05/14 15:30 EC Retail Sales MoM Sep -0.80% -1.30% 1.20%

11/05/14 18:45 US ADP Employment Change Oct 220K -- 213K

11/05/14 20:30 US ISM Non-Manf. Composite Oct 58 -- 58.6

11/06/14 15:00 UK Industrial Production MoM Sep 0.40% -- 0.00%

11/06/14 17:30 UK Bank of England Bank Rate Nov-06 0.50% -- 0.50%

11/06/14 18:15 EC ECB Main Refi nancing Rate Nov-06 0.05% -- 0.05%

11/07/14 12:30 GE Trade Balance Sep 19.0B -- 14.1B

11/07/14 15:00 UK Trade Balance Sep -Â£2300 -- -Â£1917

11/07/14 19:00 US Change in Nonfarm Payrolls Oct 232K -- 248K

11/07/14 19:00 US Unemployment Rate Oct 5.90% -- 5.90%

11/10/14 07:00 CH PPI YoY Oct -2.00% -- -1.80%

11/10/14 07:00 CH CPI YoY Oct 1.60% -- 1.60%

11/11/14 10:30 JN Consumer Confi dence Index Oct -- -- 39.9

11/11/14 11:30 JN Eco Watchers Survey Outlook Oct -- -- 48.7

11/11/14 11:30 JN Machine Tool Orders YoY Oct P -- -- 34.70%

11/12/14 15:00 UK ILO Unemployment Rate 3Mths Sep -- -- 6.00%

11/12/14 15:30 EC Industrial Production SA MoM Sep -- -- -1.80%

11/12/14 17:30 IN CPI YoY Oct -- -- 6.46%

11/12/14 17:30 IN Industrial Production YoY Sep -- -- 0.40%

11/13/14 05:20 JN PPI YoY Oct -- -- 3.50%

11/13/14 10:00 JN Industrial Production MoM Sep F -- -- 2.70%

11/13/14 11:00 CH Industrial Production YoY Oct 8.00% -- 8.00%

11/14/14 12:00 IN Wholesale Prices YoY Oct -- -- 2.38%

11/14/14 15:30 EC CPI YoY Oct F -- -- 0.40%

11/14/14 15:30 EC GDP SA QoQ 3Q A -- -- 0.00%

11/14/14 19:00 US Retail Sales Advance MoM Oct 0.30% -- -0.30%


STATISTICS

Economic Events In November 2014 (cont’d)

Source: Bloomberg ; EC: European Union; IN: India; US: United States; CH: China; GE: Germany; UK: United Kingdom; JN: Japan

Date Time Region Event Period Surv(M) Actual Prior

11/14/14 20:25 US Univ. of Michigan Confi dence Nov P 87 -- 86.9

11/14/14 20:30 US Business Inventories Sep 0.20% -- 0.20%

11/17/14 05:20 JN GDP SA QoQ 3Q P -- -- -1.80%

11/17/14 19:45 US Industrial Production MoM Oct -- -- 1.00%

11/18/14 15:00 UK CPI YoY Oct -- -- 1.20%

11/18/14 15:30 GE ZEW Survey Expectations Nov -- -- -3.6

11/18/14 15:30 EC ZEW Survey Expectations Nov -- -- 4.1

11/18/14 19:00 US PPI Final Demand YoY Oct -- -- 1.60%

11/19/14 19:00 US Housing Starts Oct -- -- 1017K

11/19/14 19:00 US Building Permits Oct -- -- 1018K

11/19/14 JN Bank of Japan Monetary Policy Statement

11/20/14 00:30 US Fed Releases Minutes from Oct. 28-29 FOMC Meeting

11/20/14 05:20 JN Trade Balance Oct -- -- -Â¥958.3B

11/20/14 15:00 UK Retail Sales Ex Auto YoY Oct -- -- 3.10%

11/20/14 19:00 US CPI YoY Oct -- -- 1.70%

11/20/14 20:30 US Existing Home Sales Oct -- -- 5.17M

11/24/14 14:30 GE IFO Business Climate Nov -- -- 103.2

11/24/14 14:30 GE IFO Expectations Nov -- -- 98.3

11/24/14 19:00 US Chicago Fed Nat Activity Index Oct -- -- 0.47

11/25/14 19:00 US GDP Annualized QoQ 3Q S -- -- 3.50%

11/26/14 15:00 UK GDP QoQ 3Q P -- -- 0.70%

11/26/14 19:00 US Durable Goods Orders Oct -- -- -1.30%

11/26/14 19:00 US Personal Income Oct -- -- 0.20%

11/26/14 19:00 US Personal Spending Oct -- -- -0.20%

11/26/14 20:30 US Pending Home Sales MoM Oct -- -- 0.30%

11/26/14 20:30 US New Home Sales Oct -- -- 467K

11/27/14 15:30 EC Economic Confi dence Nov -- -- 100.7

11/27/14 15:30 EC Industrial Confi dence Nov -- -- -5.1

11/28/14 05:00 JN Natl CPI YoY Oct -- -- 3.20%

11/28/14 05:35 UK GfK Consumer Confi dence Nov -- -- -2

11/28/14 10:30 JN Housing Starts YoY Oct -- -- -14.30%

11/28/14 15:30 EC Unemployment Rate Oct -- -- 11.50%

11/28/14 15:30 EC CPI Estimate YoY Nov -- -- --

11/28/14 16:00 IN Fiscal Defi cit INR Crore Oct -- -- 40897

11/28/14 17:30 IN GDP YoY 3Q -- -- 5.70%


Crude Oil -13.1%

Silver-7.1%

Natural Gas

-6.9%

Nickel-4.3%

Gold-3.7%

Lead-3.5%

Copper-0.3%

Mentha Oil, 0.0%

Zinc, 1.6%

Aluminum 6.0%

Cardamom, 6.9%

Soy Oil,-2.1%

Barley- 0.3%

Wheat 0.2%

Rm Seed 2.6%

Turmeric 3.3%

Jeera 4.3%

Soybean 7.3%

October International Commodity Price TrendsSept 30,

2014Oct 31,

2014% Change 52 Week

High% Change from

52 Week High52 Week

Low% Change from

52 Week Low

Nymex Natural Gas ($/mmbtu) 4.12 3.87 -6.0% 6.49 -40.35% 3.38 14.62%

Nymex Crude Oil (S/bbl) 91.16 80.54 -11.6% 107.73 -25.24% 78.08 3.15%

LME Nickel 3 Month ($/t) 16310.00 15780.00 -3.2% 21625.00 -27.03% 13274.00 18.88%

LME Zinc 3 Month ($/t) 2288.00 2307.00 0.8% 2416.00 -4.51% 1863.00 23.83%

LME Lead 3 Month ($/t) 2100.00 2010.00 -4.3% 2307.00 -12.87% 1961.50 2.47%

CBOT Soy Oil (cents/lb) 32.27 34.80 7.8% 44.70 -22.15% 31.34 11.04%

LIFFE Sugar (S/t) 422.30 422.40 0.0% 495.90 -14.82% 384.90 9.74%

LME Copper 3 Month ($/t) 6667.00 6695.00 0.4% 7460.00 -10.25% 6321.00 5.92%

ICE Cotton (cents/lb) 61.96 64.45 4.0% 97.35 -33.80% 60.58 6.39%

LME Aluminium 3 Month ($/t) 1960.00 2039.00 4.0% 2119.50 -3.80% 1671.25 22.00%

Comex Silver (S.oz) 17.06 16.11 -5.6% 22.18 -27.39% 15.64 3.01%

ICE Coffee (cents/lb) 193.35 188.00 -2.8% 225.50 -16.63% 100.95 86.23%

Comex Gold (S/oz) 1210.50 1171.60 -3.2% 1392.60 -15.87% 1160.50 0.96%

CBOT Soybean (cents/bushel) 913.25 1046.50 14.6% 1536.75 -31.90% 904.00 15.76%

ICE Sugar (cents/lb) 15.48 16.04 3.6% 18.47 -13.16% 13.32 20.42%

CBOT Wheat (cents/bushel) 477.75 532.50 11.5% 735.00 -27.55% 466.25 14.21%

CBOT Corn (cents/bushel) 320.75 376.75 17.5% 519.50 -27.48% 318.25 18.38%

CBOT Soy Meal ($/t) 304.60 389.00 27.7% 510.00 -23.73% 302.00 28.81%

STATISTICS

October Gainers and Losers (M/M%)MCX NCDEX

Karvy Comtrade’s Invest & HarvestNovember 2014

RNI No.APENG/2008/24815

I&H Nov 2014 · Karvy Comtrade’s Volume 07 ... 3.3 percent in 2014―unchanged from 2013―and to...

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