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Wednesday, February 14, 2007
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Agri Commentary
Feb 5 2007 10:50AM
5th Feb 2007 Agri Report

 

    SUGAR

FUNDAMENTALS  
Spot market prices of sugar eased slightly in the major markets like Muzaffarnagar and Kolkata amidst increased supply from mills against reduced offtake, while slight improvement was noted at Delhi. Further, NCDEX and MCX have raised the limit on open positions for near month sugar contracts. At member level, the open position limits for Sugar-M and Sugar-S contracts will be 7,500 metric tonnes (MT) and at client level these limits will be 2,500 MT. The changes in open interest are effective February 2, 2007. Meanwhile, the Union Government is planning to raise excise duty on sugar from Rs 850/tonne to Rs 1000/tonne, an increase of Rs 150/tonne. This will bring additional revenue of Rs 300 crores to Government from 200 lakh tonnes of sugar output, which will be exclusively utilized for the sugar sector.
TUG-OF-WAR: Bulls vs. Bears
No.
 Pressure Point
Favours
1.
 Bumper production expected Bears
2.
 Weak physical demand Bears
3.
 Release of 13 lakh tonnes of free sale quota for Feb’07 Bears
3.
 Likely increase in Excise duty Bulls


SPOT MARKET PRICES: (Rs/qtl)
Grade
Center
03.02.07
02.02.07
Change
  Sugar M  
Delhi
1565-1595
1565-1590
+5
 Sugar S
Delhi
1550-1580
1550-1575
+5
  Mill Delivery
Delhi
1480-1510
1480-1505
+5
 
TECHNICALS
Sugar charts show continued downtrend. Prices remain below the gradually falling 9-day and 18-day EMA, indicating the market is in a prolonged weak trend. No intra-day rally has threatened breaking above the 9-day EMA. Fairly significant support lies around the 1560-1565 levels, which mark the contract lows. A fall below that should cause increased selling pressure.
 
WEATHER
Weather is not a factor at the moment.
   
TRADE RECOMMENDATION
 
Contract
Call
Entry
T1
T2
SL
S2
S1
PCP
R1
R2
NCDEX-Feb SELL >1576
1569
1566
1580
1554
1558
1571
1585
1590







    WHEAT

FUNDAMENTALS  
Wheat prices remained mixed in majority of domestic markets. Government’s decision to release upto 4 lakh tonnes of wheat under the Open Market Sale Scheme in February and March 2007 is pressurising the market. At Delhi, Wheat dara for mills quoted lower by Rs.30 per Qtl. at Rs.1040/qtl on steady arrivals around 3,000-4000 bags. Punjab mandis witnessed some higher prices for wheat on very poor arrivals on restricted market activities due to forthcoming election. Wheat acreage has increased by over 17.5 lakh hectare as on 01.02.2007. According to ministry of Agriculture, the crop condition is normal so far. Fresh wheat crop arrivals continue in market yards of Gujarat.
TUG-OF-WAR: Bulls vs. Bears
No.
 Pressure Point
Favours
1.
 Depleting stocks amidst mild demand Bulls
2.
 Wheat acreage has been increased by over 17.5 lakh hectare as on 01.02.2007  
3.
 Poor demand for wheat and wheat products at higher price levels Bears


SPOT MARKET PRICES: (Rs/qtl)
Grade
Centre
03.02.07
02.02.07
Change
Mill quality
Delhi
1040
1060-1070
-30
Mill quality
Khanna
1055-1062
1055-1060
+2
Mill quality
Indore
1050-1055
1055-1060
-5
Mill quality
Kanpur
1025-1030
1020-1025
+5
 
TECHNICALS

Candlesticks showing bearish market sentiments. Sellers dominated the market. Prices closed below 9-day and 18-day EMA. Stochastic are in normal region and moving downwards. MACD is in negative territory and moving downwards. Volume and Open Interest has decreased. Wheat is likely to trade bearish following a weak opening.

 
WEATHER

The temperature at the time of grain filling and development are very crucial for yield. Temperatures above 25°c during this period tend to depress grain weight

   
TRADE RECOMMENDATION
 
Contract
Call
Entry
T1
T2
SL
S2
S1
PCP
R1
R2
NCDEX-Jan SELL <1014 1462
1468
 1444 1443 1438 1455 1464 1473







GUAR COMPLEX
FUNDAMENTALS  
The guar spot markets witnessed weak sentiments during Saturday's trade, when the spot prices of guar seed and guar gum were quoted lower in majority of the markets on weak demand. Moreover, the weakness in the futures market, also affected the spot market sentiments. The arrivals at the major physical markets are reported to be steady at around 15000-16000 bags. Arrivals remain steady at 800 bags in Bikaner and 400 bags in Nokha. Farmers are releasing limited stocks only, which can be absorbed easily in the market. According to the trade sources good arrivals are expected up to March, by which time export demand is also expected to pick up.
TUG-OF-WAR: Bulls vs. Bears
No.
 Pressure Point
Favours
1.
 Higher production this year Bears
2.
 Decreasing arrivals at lower price levels Bulls


SPOT MARKET PRICES: (Rs/qtl)
Grade
Centre
 03.02.07
02.02.07
Change
Guar Seed
Bikaner
1835
1870
-35
Guar Seed
Jodhpur
1950
2000
     -50
Guar Gum
Jodhpur
4888
 4990
-102
 
TECHNICALS
Candlestick chart pattern exhibits weak market sentiment. Stochastic are in normal region and moving slightly upwards. MACD is also in negative region and moving upwards. Closing price is in-between 9 days and the 18 days EMA. Market is expected to trade bullish following a firm opening
 
WEATHER

Weather has no impact on Guar as harvesting is complete. 

   
TRADE RECOMMENDATION
 
Contract
Call
Entry
T1
T2
SL
S2
S1
PCP
R1
R2
NCDEX-Guar Seed-Mar.
BUY
>1990
2015
2025
1975
1970
1980
1999
2025
2032
NCDEX-Guar Gum-Mar.
BUY
>4955
5015
5040
4930
4900
4930
4969
5040
5060
 
DISCLAIMER
This report is prepared exclusively for Reliance Commodities by Indian Rural Market Products Pvt Ltd (IRMPL). The information and opinions contained in the document have been compiled from sources believed to be reliable. IRMPL does not warrant its accuracy, completeness and correctness. Use of data and information contained in this report is at your own risk. This document is not, and should not be construed as, an offer to sell or solicitation to buy any commodities. IRMPL and its affiliates and/or their officers, directors and employees may have positions in any commodities mentioned in this document (or in any related investment) and may from time to time add to or dispose of any such commodities (or investment).

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Equities: Trading through Reliance Securities Limited | NSE SEBI Registration Number Capital Market :- INB 231234833 | BSE SEBI
Registration Number Capital Market :- INB 011234839 | NSE SEBI Registration Number Derivatives :- INF 231234833 Commodities : Trading through Reliance Commodities Limited | MCX member code: 29030 | NCDEX member code: NCDEX-CO-05-00647|
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