Commodity Research Report Ways2Capital 4 Dec 2017
Gold jumped on Friday as the dollar and U.S. stocks fell on an ABC news report that former national security adviser Michael Flynn was prepared to tell investigators that Donald Trump directed him to make contact with Russians during last year's presidential election campaign. Gold edged higher on Friday as the dollar eased, but was still trading near the 3-1/2-week low touched in the previous session, with investors flocking to riskier assets amid a surge in US equities.
Spot gold was up 0.1 per cent at $1,275.81 an ounce at 0830 GMT. On Thursday, it fell 0.7 per cent to touch its lowest since Nov. 6 at $1,270.11. The yellow metal is down 0.9 per cent for the week. US gold futures gained 0.2 per cent to $1,275.30.
Gold and silver were trading higher in morning trade on Friday on account of demand of precious metals by jewellers, industries and retailers. MCX Gold futures were up Rs 270, at Rs 29,395 per 10 gram, while MCX Silver futures were up Rs 100, at Rs 38446.
✍ BASE METAL
MCX Copper futures rose modestly yesterday as bargain buying supported the metal. COMEX Copper futures have edged up after recent drubbing as strong data in US and China is likely act as good trigger for bargain hunting. Falling LME inventories and a tight demand-supply scenario is also triggering buying in the red metal. COMEX Copper slipped hurriedly from its one month high this week and fell to a one week low $3.03 per pound before marking a rebound. The metal currently trades at $3.07 per pound, up marginally on the day. The MCX Copper futures for February 2018 are likely to rise today after testing a near two month low on Wednesday.
Recent data showed that China manufacturing sector continued to expand in November with a PMI score of 51.8, according to the National Bureau of Statistics. Its up from 51.6 in October. It also moves further above the boom-or-bust line of 50 that separates expansion from contraction. The bureau also said that its non-manufacturing PMI came in with a score of 54.8, up from 54.3 in the previous month.
Large metals speculators increased their bullish net positions in the Copper futures markets last week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC).The non-commercial futures contracts of Copper futures, traded by large speculators and hedge funds, totalled a net position of 40,613 contracts in the data reported through Tuesday November 21st. This was a weekly increase of 899 contracts. Speculative positions have witnessed a marginal improvement from the lowest level in six weeks.
WTI and MCX oil prices traded lower last week by 2.27 and 1.5 percent while MCX oil prices declined 2.3 percent in the same time frame. Prices extended losses after data from industry group the American Petroleum Institute showed crude inventories rose by 1.8 million barrels in the week to Nov. 24 to 457.3 million, compared with market expectations for a decrease of 2.3 million barrels. OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018, while also signalling a possible early exit from the deal if the market overheats. Iran's energy minister announced Nigeria and Libya would be included in the oil output deal and an OPEC communique stated the countries would not produce above 2017 levels in the New Year.
MCX TECHNICAL VIEW
The main trend turned up according to daily swing chart. Based on Friday closing at Rs. 198.0 and the price action, the direction of the Natural Gas market on next week is likely to be determined by trader reaction on the important psychological number at the level of Rs. 200 A sustained move above Rs. 202 will indicate the presence of buyer. This could trigger the start of an acceleration to the upside with potential upside targets lined up at Rs. 210 and Rs. 125.A sustained move below Rs. 195 will signal the presence of seller. This could trigger a quick retest level at Rs. 190. Momentum still positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices for the Natural gas.
BUY NATURALGAS DEC ABOVE 202 TGT 213 SL 198
The primary trend is bullish on daily basis as displayed. As we can see the previous chart market price on its important support level and we are expecting market can move up from lower level. It can be facing near resistance level at Rs. 135 and support level at Rs. 132. Above the resistance level we can see the next target near of Rs. 137 and Rs. 138. Investors can follow the buy on dips strategy for intra day to mid term basis. Apart from this below the support level could see a test of level 130.
BUY ALUMINIUM DEC ABOVE 135 TGT 138 SL 133
NCDEX - WEEKLY MARKET REVIEW
✍ SPICE COMPLEX
Turmeric futures (Dec) may trade sideways in the range of 7370-7600 levels. The ongoing news pest attack which may result to lower production in new season, may act as an catalyst for enhancing the buyers enthusiasm. The total availability of Turmeric for 2018-19 season is expected around 83-89 lakh bags, while total consumption (including domestic and exports) is likely around 70-75 lakh bags, leaving ending stocks at 13-14 lakh bags, much lower from 32 lakh bags a year ago.
Jeera futures are trading near its lifetime high buoyed by the demand for the Indian variety in the global market. Indian Jeera price are more attractive than the rival countries like Syria and Turkey which is resulting in consistent export demand. On the national bourse as well as at the spot market of Unjha, the counter has witnessed a rise of more than 18% & 9% last month, respectively. No matter, this commodity is in the hands of bulls, but going forward, the market participants may keep a word of caution as some correction in the prices cannot be ruled out once the new crop enters the market amid rise in production prospects as the farmers were expecting lucrative prices for the crop. The December contract is likely to trade in a broader range of 21100-21500 levels.
Last week, coriander futures (Dec) has come out of its consolidation zone & bounced up owing to the initial ground reports that this season the area is expected to decline as the farmers might switch to different commodities for better remunerations. This counter may trade sideways to up in the range of 5250-5380 levels as this commodity will be in grip of buyers.
✍ OILSEED COMPLEX
Soybean futures (Dec) may witness a consolidation in the range of 3000-3080 levels. At current levels, millers are showing less interest in procuring soybean due to sluggish sales of soy meal in international market. Indian Soymeal had priced at $368 per tonne FAS Kandla Vs $378 Argentina CIF Rotterdam (November) as on November 29, 2017. On CBOT, a weakness in soybean prices is also being foresighted as the counter is continuously facing resistance near $10 a bushel.
The news that Brazil is currently expected to harvest more than 109.43 million tons of soy in the 2017/18 as climate fears have subsided the crop is developing well, has induced a negative sentiments among the market participants. The Bull Run in refined soy oil futures (Dec) witnessed in November, is likely to take a pause & trade sideways in the range of 725-734 levels. The demand of soy oil in retail market is fragile so most of the wholesalers are procuring hand-to-mouth. Further, the stock at port has increased to 2,01,158 tons as of 20 November compared to 1,99,633 tons which is also weighing on this edible oil counter.
CPO futures (Dec) is likely to descend towards 579-589 levels, owing to profit booking & bleak scenario of demand in the retail markets. On the Bursa Malaysia Derivatives, palm oil futures will possibly continue to trade lower for the sixth consecutive week & test 2500 ringgit per ton. The positive signs of higher production & swelling stockpiles could weigh on the prices.
Mustard futures (Dec) is likely to trade with an upside bias in the range of 4050-4140 levels. The sowing window is expected to close very soon & the bleak prospects of increasing area under cultivation may keep lend firm sentiments to the counter.
✍ OTHER COMPLEX
Kapas futures (April) is looking bullish & may reach for 960-970 levels owing to reports of crop loss. The Vidarbha and Marathwada regions of Maharashtra are staring at huge losses owing to a pest (pink bollworm) attack on the cotton crop, across at least 8 lakh hectares of land in 20 districts. The pink bollworm eats away the cotton fibre and the bolls, causing economic loss to the farmer. This year, rain was also irregular which led to multiple pests attacks, but bollworm caused the maximum damage.
Chana futures (Dec) are likely to nose dive further towards 4550-4500 levels. The sentiments have turned extremely bearish after the sowing data indicated that the supplies are likely to ample this Rabi season, as many farmers may have shifted to chana from wheat due to less moisture content in the soil. The government's decision to raise the chickpea support price by 10% and a recent move to impose a 50% import duty on peas has lured farmers to plant chickpea. As a result of which, the area under chana this season has already witnessed a rise of 16% at 7.3 million ha & this growth is likely to rise by 35-40% from 9.9 million ha the previous year due to favorable weather conditions.
Guar seed futures (Dec) is expected to witness some profit booking & face resistance near 3950-3980 levels, while guar gum futures (Dec) may trade sideways to down in the range of 8600-8900 levels. The crushers have already cornered good quantity of guar seed for inventory and now they may opt to procure hand-to-mouth as guar gum exports during mid-December-mid-January is expected to be dull due to holidays for Christmas and New Year.
NCDEX TECHNICAL VIEW
✍ GUARSEED 10
NCDEX GUARSEED10 futures closed higher for second consecutive week. Market is continuously trading on higher level indicating strong number of buyers. It is facing important resistance level at Rs.3960 above the level we believe that market can touch the level of Rs.4000 & Rs. 4050. Traders can follow the buy on dips strategy. Momentum still positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The MACD histogram is printing in the black with an upward sloping trajectory which points to higher prices for the Natural gas.
BUY GUARSEED10 JAN ABOVE 3960 TGT 4028 SL 3910
✍ COTTON SEED OIL
COCCUDAKL witnessed flat movement at NCDEX. Market is facing good support at the level of Rs. 1660supported by 50 days moving average and getting bounce back and recently market has broken its trading range appearing on the chart image. Technically we believe that market can move higher from lower level and if market could break its trading range. Recently it is sustaining above important resistance of psychological number at Rs. 1600, it can move to the level of Rs. 1700 & Rs. 1800 . Also market also forming higher highs and higher low indicating upside momentum. RSI (Relative Strength Index) fluctuating in the buying zone on its daily chart indicating positive movement in upcoming sessions.
BUY COTTONSEED OIL CAKE JAN ABOVE 1645 TGT 1732 SL 1592
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