Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities

Content
News & Market Highlights Chana Sugar Oilseed Complex Spices Complex Kapas/Cotton

Research Team
Vedika Narvekar - Sr. Research Analyst vedika.narvekar@angelbroking.com (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Analyst anuj.choudhary@angelbroking.com (022) 2921 2000 Extn. 6132

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Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities
News in brief
After heavy spell, monsoon weakens in Kerala
After three days of heavy rains, the southwest monsoon has weakened in Kerala. Rain lashed only a few places in Kerala and Lakshadweep on Wednesday. Rains are expected to regain momentum during the weekend. The fishermen have been warned against venturing into the sea, as strong offshore wind from northwest reaching 45 to 55 km per hour is likely to hit the coastal regions in the state, as well as Lakshadweep, during the next 24 hours. IMD officials said rains are never uniform during the season. Many factors contribute to the distribution of showers. It could be change in wind pressure or seasonal changes in atmospheric circulation and precipitation associated with the asymmetric heating of land and sea. A rampant climate change with increasing deforestation, mining and other infrastructure development activities can also be a reason, the officials added. (Source: The Times of India)

Market Highlights (% change)

Last Prev. day

as on June 5, 2013
WoW MoM YoY

Sensex Nifty INR/$ Nymex Crude Oil - $/bbl Comex Gold - $/oz

19568 5924 56.5 93.31 1397

0.11 0.07 -0.32 -0.15 -1.03

-2.88 -2.96 0.34 0.19 0.42

-0.54 -0.79 4.99 -2.41 -4.59

22.39 22.19 1.51 11.11 -13.34

.Source: Reuters

Indias drought-hit sugar cane areas get rains, may limit damage
India's key sugar cane producing western and southern states received ample rainfall in the first few days of the annual monsoon after nearly eight months of drought, helping to limit damage. The states needed a prompt start and abundant rains this monsoon to ensure crops recover and output does not fall sharply below consumption in the world's biggest consumer during the 2013/14 season starting Oct. 1. "Rainfall in the last few days will help sugar cane to recover. Yields may be better than we had been estimating earlier," D. B. Gavit, a director at the Maharashtra Sugar Commissioner's office, said. After a drought in 2009, sugar production fell sharply, forcing India to make big purchases from overseas markets and pushing the price of raw sugar futures to 30-year highs. The cane crop in the country's biggest producer, the western state of Maharashtra, and the third and fourth-biggest producers Karnataka and Tamil Nadu in the south, was badly hurt due to poor rainfall in 2012 and in some areas the crop wilted. These three states account for more than half of India's total production, which is estimated at 24.6 million tonnes in 2012/13. (Source: Reuters)

Maharashtra govt and sugar factories to discuss road map for industry
The Maharashtra government and the sugar industry will hold a meeting on June 8 to discuss how to cope with an annual loss of about Rs 1,350 crore sugar factories would incur following the removal of the 10 per cent levy obligation by the Centre. As part of its sugar sector reforms, the government had earlier this year freed sugar mills from their obligation to supply the sweetener at cheap rates to the states for the public distribution system, or PDS (known as levy sugar). With the removal of levy sugar, the sugar, factories will have to become effective in sales and marketing. They will have to explore new markets. States, which earlier used to pick up sugar to meet their 10 per cent levy obligation, may look for factories closer home, said Maharashtra cooperation minister Harshvardhan Patil. Nearly 700,000 tonnes of sugar was supplied annually by sugar factories from Maharashtra to northeastern states, West Bangal, Madhya Pradesh and Rajasthan. These states might now explore mills situated closer to them to source the sweetener at lower prices. (Source: Business Standard)

China's 2013 cotton acreage seen down 6.7 pct

China's cotton planting area is expected to fall 6.7 percent in 2013 from a year ago, the president of the China National Cotton Exchange said on Thursday. The country's cotton industry is facing increasing risks as external demand for textiles and garments remains weak and domestic appetite is also sluggish, Zhou Shengtao, told an industry conference.
(Source: Reuters)

NCDEX liberalizes Algo norms to attract more participation

Faced with a drastic decline in business, the National Commodity& Derivatives Exchange (NCDEX), Indias largest agri centric commodity derivatives trading platform, has liberalized its algo trading norm to catch traders active interest in this segment. As per the revised norm, the exchange has waived annual recurring charge for the first three ATS ID subscribers of each member of the exchange platform. While the fourth member onwards, the exchange would charge Rs 50,000 as annual recurring charge from each subscriber to algo / high frequency trade service. Other charges continue to remain unchanged. The decline in NCDEX turnover was recorded at a time when overall turnover in commodity futures witnessed a sharp jump of 28% from Rs 1152471.83 crore in April 2012 to Rs 1477303.87 crore in April 2013. (Source: Business
Standard)

U.N. Sees Lower China Wheat, Rice Imports

China's appetite for the world's supplies of wheat and rice may be ebbing, according to a new forecast, as its growing ability to feed its people reduces its dependence on imports. China, the world's largest consumer of the two staples, will be able to sustain a 98% self-sufficiency rate over the next 10 years, according to a report jointly issued by the Organization for Economic Co-operation and Development and the United Nations Food and Agriculture Organization. That is a slight increase from 2012's levels, based on Wall Street Journal calculations. The rapid growth in both national income and agricultural output has contributed to substantially higher national food availability and a muchimproved access to food. China's imports of cereals, including wheat and rice, surged last year, triggering concerns China may need more imports to feed its people. The U.S. Department of Agriculture expects China to pass Nigeria to become the world's largest rice importer in the next marketing year. The USDA forecast China will import 3 million tons of rice in the year that will begin July. (Source: Factiva)

Maize prices set to rally up on higher demand from growing poultry sector
Maize prices are expected to rally up in coming days due to short supply and good demand from the poultry sector. India produced around 22.5 million tones of maize from an area of 8.67 million hectares in 2012-13, and is one of the largest exporters of the commodity in Asia. Maize is cultivated twice in India during the summer and winter season, with a major contribution coming from the summer season crop. Major factors affecting the maize market are seasonal production, higher demand from the growing poultry sector and exports. The Indian poultry industry which is seed to be growing rapidly consumes increasing volumes of maize, wheat and soyameal as feed. The poultry industry is estimated at $3.6 billion & is seen growing at a CAGR of 10%. (Source: The Financial Express)

Vietnam cuts rice export price to boost demand

Vietnam, the worlds second-largest rice exporter after India, has lowered export prices of the grain to boost demand as fresh supplies begin to roll in, traders said. Vietnamese industry officials expect lower prices to help attract demand from key markets such as China, Indonesia and African countries, but buyers may stay away on hopes that prices will drop further when a major harvest peaks from late June. (Source: Google
News)

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Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities
Chana
Chana futures continued to decline yesterday as abundant supplies in the domestic markets have mounted pressure on the prices over the past few months. However, the downside was limited as stockists are buying at lower levels to build inventories. Prices touched a fresh contract low of Rs. 3105 last week. Peak arrival period this season has been extended on account of record high production and delayed start to harvesting. Supplies are at its peak as new crop from the major producing states such as Madhya Pradesh and Rajasthan have increased significantly. However, supplies are expected to slow down towards the end of the month. Also, stockists are building inventories at lower levels to meet the demand for the entire season. Thus, tracking seasonality pattern, chana prices may start recovering gradually from June onwards.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3261 3137 Prev day -0.86 -0.95

as on June 5, 2013 % change WoW MoM 0.33 -4.80 -1.66 -8.36 YoY -21.43 -20.42

Chana Spot - NCDEX (Delhi) Chana- NCDEX June'13 Futures

Source: Reuters

Technical Chart - Chana

NCDEX July contract

Demand supply scenario

Higher returns earned in 2012, coupled with a hike in minimum support prices (MSP), have helped expand overall acreage in 2012-13 season. Chana sowing in the current season is 5.65% higher at 95.17 lakh ha compared to previous year. Acreage is up in Rajasthan, Maharashtra, MP and AP at 15.7 lakh ha, 12.53 lakh ha, 32.99 lakh ha and 7.33 lakh ha respectively. According to third advance Estimates released on 3 May 2013, Total pulses output for 2012-13 season has been pegged at 18 mn tn, up 5.76% compared to previous year. The target for 2012-13 pulses crop output was set at 18.24 million tonne during the year. Out of the total pulses output, kharif output is estimated at 4.03% lower at 5.95 mn tn while rabi pulses output is pegged 9.25% higher at 12.05 mn tn compared with the final estimates of 2011-12. Chana output is pegged marginally lower to 8.49 mn tn compared with its second advance estimates of 8.57 million tonnes. However, chana output is expected to breach its 2010-11 record output of 8.2 mn tn in 2012-13. Erratic weather in M.P. lowered the yield.
rd

Source: Telequote

Technical Outlook
Contract Chana July Futures Unit Rs./qtl Support

valid for June 6, 2013 Resistance 3250-3275

3170-3200

Trade Scenario
According to IBIS, imports of chana in the month of April declined to 0.04 lakh metric tonnes compared to 0.11 lakh metric tonnes during the previous month. India imports Chana mainly from Australia and Canada and higher availability in these countries at comparatively cheaper rates is seen boosting imports of Chana to meet the domestic shortfall. In Australia, total chickpea production in 201213 is estimated to have increased to a record 713000 tones as compared with 485000.

Outlook
Chana may decline today extending yesterdays losses. Higher supplies coupled with higher output estimates may continue to mount pressure on the prices. However, lower level buying may support prices. Demand from stockists at lower levels may also provide support to the prices. Seasonal pattern in chana indicates that prices generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. Thus, going forward downside seems to be limited as prices are nearing its MSP levels.

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Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities
Sugar
Sugar traded on a flat note yesterday and settled marginally higher by 0.03% on Wednesday. Demand from the stockists coupled with concerns about cane output this season due to drought conditions in Maharashtra have supported prices. However, higher supplies have capped the gains. Good rains in parts of the drought affected Southern and Western India may reduce the damage to the cane crops. Prices have recovered from lower levels after the government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector. Improving demand from bulk consumers and expected lower output next season in Maharashtra also supported an upside in the prices. The Minimum Initial Margin has been revised to 5% of the value of the contract or VaR based margin whichever is higher and will be imposed on all running contracts and yet to be launched contracts w.e.f beginning of trading day Monday, May 13, 2013. The Government has cleared the partial decontrol of sugar on April 4, 2013, however, notified the same after almost a month. The government will now have to buy sugar from the mills at open market prices. Also the release mechanism will be done away with, after September 2013. According to the Ministry of Agriculture, Sugarcane has been planted in 41.24 lakh ha as compared to 46 lakh ha at this time last year. Less area is reported mainly in Karnataka, Maharashtra and Tamil Nadu.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX June '13 Futures Rs/qtl Last 3055

as on June 5, 2013 % Change Prev. day WoW -0.05 0.03 MoM 0.54 YoY 5.01

Rs/qtl

3043

0.03

0.86

4.25

9.66

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 477.8 364.00

as on June 5, 2013 % Change Prev day WoW 0.19 0.00 -0.04 -1.62 MoM -3.82 -6.56 YoY -13.68 -14.06

.Source: Reuters

Technical Chart - Sugar

NCDEX July contract

Domestic Production and Exports

According to ISMA, Indias Sugar production between October-April stood at 24.52 mn tn, lower by 3% during the same period last year. Maharashtras production dipped 10% to 8 mn tn while production in Uttar Pradesh increased by 7% to 7.43 mn tn. India is likely to produce 24.6 mn tn of sugar in 2012-13 year ending on Sept. 30, higher than the previous estimate of 24.3 mn tn, the Indian Sugar Mills Association (ISMA) said. With the opening stocks of 6.5 mn tn, domestic Sugar supplies are estimated at higher against the domestic consumption of around 22. 5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly.

Source: Telequote

Global Sugar Updates

LIFFE sugar settled marginally higher by 0.19% higher while Raw sugar on the ICE settled unchanged on Wednesday. Prices have remained under downside pressure on account third back to back years of sugar surplus. Prices are trading at the lowest levels since July 2010. Unica reported Brazils sugar production at 3.76 mn tn, higher by 140% by mid-May. According to the exchange data, Raw Sugar open interest has climbed to a 5 year high. The ISO has forecast sugar surplus of atleast 3.5 mn tonnes for 2013-14 season. Reports that China may curb imports as their stocks have more than doubled last season have also added to the downside. However, there are reports that demand from Brazil's resurgent biofuels industry will cut burgeoning global sugar surplus, helping cushion prices that fell below 17 cents per lb for the first time in almost three years. According to Unica, South-Central Brazil cane crush projected at 589.60 million tons for 2013/2014. Main center-south sugar cane crop will produce a record 35.5 mn tn of sugar in the 2013/14 season, higher by 4.1% compared to 34.1 mn tn last year.

Technical Outlook
Contract Sugar July NCDEX Futures Unit Rs./qtl Support

valid for June 6, 2013 Resistance 3097-3103

3077-3084

Outlook
Sugar futures may trade with a positive bias. Demand from stockists and coupled with output concerns this season and the governments partial decontrol of sugar sector may support prices. However, higher supplies may pressurize prices. Weak global markets may also check prices.

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Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean July futures traded on a positive note yesterday
and settled 0.24% on account of poor supplies, positive international markets and a weak Rupee. However, the arrivals of the monsoon coupled with weak meal export demand capped the upside. Indias soy meal exports for the month of May 2013 were 0.97 lakh tonnes, lower by 29.74 percent from 1.39 lakh tonnes a year ago. According to the 3rd advance estimates, Soybean output is pegged at 14.14 mn tonnes. IMDs forecasts of normal monsoon have raised hopes of better output next season too.

Market Highlights
% Change Unit Soybean Spot- NCDEX (Indore) Soybean- NCDEX June '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX June '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 3851 3727 708 706.4 Prev day 0.23 -0.93 -0.64 0.13

as on June 5, 2013

WoW -1.28 -2.61 -2.59 -1.15

MoM -4.37 -6.19 -3.87 -1.78

YoY 12.77 13.06 -1.56 #N/A

International Markets
CBOT Soybean settled higher by 0.21% on account of tight supplies coupled with good US soymeal demand while the back months declined due to good weather in the soybean producing regions. Soybean planting has been delayed due to heavy rains in the US Midwest and is reported at 57% as against 44% last week. However, it is much lower as against 93% last year and five year average of 74%. It is said to be the slowest in 17 years. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. Argentinas agriculture ministry has cut its 2012/13 forecast to 50.6 mn tn from its April forecast of 51.3 mn tn. NOPA reported that the soybean crush fell to 120.11 million bushels in April, from 137.08 million in March. China is forecast to import a record 66 mn tn of soy in 2013/14, 11% higher than the estimates of current season, driven by robust domestic demand and low stocks.

Source: Reuters

as on June 5, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1532 48.3 Prev day 0.21 -0.60 WoW 2.42 -0.58 MoM 5.29 -1.75 YoY 13.52 -0.41

Source: Reuters

Crude Palm Oil

as on June 5, 2013 % Change Prev day WoW 1.24 0.52 1.85 1.13

Unit
CPO-Bursa Malaysia June '13 Contract CPO-MCX- June '13 Futures

Last 2369 485.4

MoM 6.19 6.61

YoY -19.78 -11.99

Refined Soy Oil: Ref soy oil July contract as well as MCX CPO
settled 0.55% and 0.52% higher respectively on Wednesday tracking positive international prices coupled with a weak Rupee. Palm stocks in Malaysia and Indonesia are expected to decline & demand is set to rebound ahead of Ramadan. Exports of Malaysian palm oil products in May declined 3.4 percent to 1,248,014 tonnes from 1,292,371 tonnes shipped during April. It is expected that output in Malaysia, the world's second largest producer, to slow this month and help to further ease stocks that have dipped below the psychological 2 million tonne mark to 1.93 million tonnes in April. Stocks data from industry regulator the Malaysian Palm Oil Board showed inventory levels at the end of April down 11.3 percent against the previous month's 2.17 mn tn. India's palm oil imports declined for a third straight month in April. But India, the world's largest importer of edible oils, is still on track to surpass last year's record purchases of 10 million tonnes of cooking oil as demand rises.

MYR/Tonne Rs/10 kg

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX June '13 Futures Rs/100 kgs Rs/100 kgs Last 3500 3473 Prev day -0.27 -0.37 WoW 0.69 0.58

as on June 5, 2013 MoM 2.75 1.67 YoY -7.89 -4.74

Source: Reuters

Technical Chart Soybean

NCDEX July contract

Rape/mustard Seed: Mustard July Futures declined by 0.4% on

Wednesday. Prices declined last week on account of weak meal export demand coupled with the arrival pressure. Huge supplies of the new crop coupled with higher output estimates led to a sharp decline in the prices. Sowing of Mustard seed is up by 2.2% at 67.23 lakh ha. Agriculture ministry in its third advance estimates, pegged mustard output at 7.36 mn tn, up by 11.5%.

Outlook
Soybean prices may trade higher today as poor supplies as well as positive international markets may support prices. However, weak meal export demand coupled with forecast of a normal monsoon may cap the upside. Mustard may also gain tracking positive edible oil pack. Soy oil as well as CPO may continue to gain due to lower yield period. Higher international prices may also support prices. However, comfortable stock levels may cap the upside.

Source: Telequote

Technical Outlook
Contract Soy Oil July NCDEX Futures Soybean NCDEX July Futures RM Seed NCDEX July Futures CPO MCX June Futures Unit Rs./qtl Rs./qtl Rs./qtl Rs./qtl

valid for June 6, 2013 Support 687-690 3700-3725 3500-3510 480-483 Resistance 696-700 3770-3790 3530-3545 487-490

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Commodities Daily Report

Thursday| June 6, 2013

Jeera Agricultural Commodities

Jeera prices declined yesterday extending previous days losses as good arrivals coupled with higher output have pressurized prices. The spot as well as the Futures settled 0.4% and 1.14% lower. Fresh export enquiries have supported prices at lower levels. Currently, about 2530% of total arrivals have been exported, mainly to Singapore, Europe and Dubai. Prices have declined sharply over the last few months on the back of higher production estimates. According to Gujarat State Agri Dept. sowing in Gujarat is reported at 3.352 lakh ha in 2013 compared with 3.719 lakh ha last year. Due to the ongoing geo-political tensions in Syria and Turkey, supply concerns from these two major exporting countries still exist. Export orders may still continue to be diverted to India due to lack of supplies from Syria on back of the ongoing civil war. Production in Syria and Turkey is being reported around 17,000 tonnes and around 4,0005,000 tonnes, lesser than expectations. Jeera prices of Indian origin are being offered in the international market at $2,450 tn (FOB Mumbai) while Syria and Turkey are not offering. Carryover stocks of Jeera in the domestic market is expected to be around 8-9 lakh bags.

Market Highlights
Unit Jeera Spot- NCDEX (Unjha) Jeera- NCDEX June '13 Futures Rs/qtl Rs/qtl Last 13430 12908 Prev day -0.44 -1.43

as on June 5, 2013 % Change WoW -0.16 -1.07 MoM -0.01 0.17 YoY 0.64 4.70

Source: Reuters

Technical Chart Jeera

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 9,000 bags on Wednesday. Production of Jeera in 2012-13 is expected around 40-42 lakh bags (55 kgs each), marginally higher than last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)
Source: Telequote

Outlook
Jeera may trade with a negative bias today. Higher output and good arrivals may pressurize prices while improvement in overseas as well as domestic demand may support prices at lower levels. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.

Market Highlights
Prev day -1.83 -2.32

as on June 5, 2013 % Change

Unit Turmeric SpotNCDEX (N'zmbad) Turmeric- NCDEX June '13 Futures Rs/qtl Rs/qtl

Last 5755 5550

WoW -3.68 -6.44

MoM -8.29 -12.10

YoY 66.24 64.49

Turmeric
Turmeric July futures declined sharply and hit a fresh contract low of Rs. 5552 and settled 1.91% lower as huge carryover stocks, weak demand and good monsoon prospects have pressurized prices. NCDEX issued a circular whereby the earlier circular regarding modification in the tick size and lot size has been kept in abeyance. The regulator also withdrew special margins on the long side. There are expectations of improvement in overseas demand in June ahead of Ramadan. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. Special Margin of 10% on the Long Side on all the running contracts in Turmeric have been withdrawn w.e.f Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 4,000 bags and 4,000 bags on Wednesday. Exports of Turmeric between Apr 2012- Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Expectations are that production may be lower by 40-50%. There are reports of some crop damage in Erode region. Turmeric production in 2012-13 is expected around 45 lakh bags. Production in Nizamabad is expected around 12 lakh bags. Production in 2011-12 is projected at historical high of 10.62 lakh tn. It is estimated that current years carryover stocks would be around 10 lakh bags. (1 bag= 75 kgs) Outlook Turmeric is expected to trade with a negative bias as higher stocks with farmers coupled with huge carryover stocks may pressurize prices. However, declining arrivals coupled with expectations of improvement in export demand may support prices.

Source: Telequote

Technical Outlook
Unit Jeera NCDEX July Futures Turmeric NCDEX July Futures Rs/qtl Rs/qtl

Valid for June 6, 2013

Support 12980-13060 5530-5600 Resistance 13270-13410 5750-5840

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Commodities Daily Report

Thursday| June 6, 2013

Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton traded on a positive note and settled 0.74% and 0.53% higher on Wednesday on account of good yarn demand coupled with lower arrivals. However, higher sowing of cotton this season has capped sharp upside. Active selling by the CCI in the open markets has also capped the upside in the prices. CCI has offered 38,100 bales earlier last week through e-auction of which 6,000 bales have been sold. Emergence of fresh demand at lower price levels is also supporting an upside in the prices. India's imports of cotton this year could reach 1.5 mn bales, missing earlier estimates of more than 2 mn as the govt may to start selling its stockpiles. Cotton supplies since the beginning of the year in October 2012 until February 10, 2013 were down at 183.4 lakh bales, down from 189.27 lakh bales a year earlier.

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1094 18980

as on June 5, 2013 % Change Prev. day WoW 0.74 2.20 0.53 3.55 MoM YoY 5.04 17.83 3.55 25.53

NCDEX Kapas Apr Futures MCX Cotton June Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 83.52 93.1

as on June 5, 2013 % Change Prev day WoW -1.23 4.23 1.75 3.91 MoM -1.42 -0.43 YoY 24.86 #N/A

Sowing Progress
Cotton planting has been reported at 11.86 lakh ha as against 10.4 lakh ha during the same period last year. Higher sowing is report from Punjab and Haryana while a decline has been reported in Rajasthan.

Source: Reuters

Technical Chart - Kapas

NCDEX April contract

Domestic Production and Consumption

CAB in its latest meet has projected cotton crop at 34 mn bales for 201213 season compared to the previous estimates of 33 mn bales. Mill consumption is expected to go up from 22.3 million bales last year to 23.5 million bales. Exports are estimated at 8.1 mn bales while imports are estimated 2.5 mn bales.

Global Cotton Updates

After gaining sharply over the last two sessions, ICE Cotton futures corrected from higher levels on account of profit taking and settled 1.23% lower. A pickup in the export demand at lower levels has supported prices. Tight supplies from US have also supported prices. Prices declined over the last couple of weeks on worries of a potential slowdown in China, the largest consumer of the fibre. Improved weather in the US has also eased concerns over delayed plantings. Cotton prices have closed in the negative in 8 of the last 10 days. Cotton Plantings were reported at 82% v/s 59% last week, but lower against 5 year avg of 83%. China cotton imports declined 18.5% in April compared to March. The USDA monthly crop report forecast a sharp rise in the in the cotton stockpiles by almost 10%. The U.S. Department of Agriculture has forecast global cotton stockpiles will rise almost 10 percent to a record high in 2013/14, pushing prices lower and reinforcing concerns about stagnating demand in China, the world's No. 1 textile market. According to the USDA report, planting intentions for the 2013-14 season are said to be at a 4 year low. Also, there are expectations of good export demand from China. Reports of India and China releasing stocks from the state reserve led to a decline in the prices.

Source: Telequote

Technical Chart - Cotton

MCX June contract

Source: Telequote

Technical Outlook
Contract Kapas NCDEX April 14 Fut Cotton MCX June Futures Unit Rs/20 kgs Rs/bale

valid for June 6, 2013 Support 1078-1085 18780-18860 Resistance 1097-1105 19030-19120

Outlook
Cotton is expected to continue to trade with a positive bias as good yarn demand may support further upside in the prices. Sharp recovery in the international markets coupled with lower sowing in the US and expectatations that cotton may lose acreage to more remunerative crops like soybean and grains in India may also support an upside in the prices over the medium term. However, the governments selling of cotton stocks in the open market may cap sharp upside.

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