Poor monsoon rains this year may have taken a toll on summer crop and driven up food prices to scary highs, but it hasn’t impacted rural India’s bubbling craze for shampoos, toothpastes and hair-oils.

Demand for these personal care products grew faster in rural areas than
urban areas during April-September, a period that includes the peak
monsoon months, according to market research organisation, A C Nielson.

India imported 25.18 lakh tonnes of sugar during the 2008-09 season to
augment domestic supply. Imports of raw and white sugar in the 2008-09
sugar season were 22.93 lakh tonnes and 2.25 lakh tonnes, respectively.
The country is reeling under high prices due to lower output as
sugarcane acreage has fallen.

Interest Rate Futures have failed to take off in National Stock
Exchange with average daily turnover declining from Rs 267 crore at
launch to Rs 13 crore. IRF volumes on the National Stock Exchange
(NSE), the only exchange that hosts trading, have recorded a
significant fall since the launch on August 31. Market players said
this could be attributed to poor response from foreign banks and
insurance companies.

The National Commodity & Derivatives Exchange (NCDEX) launched
futures trading in platinum to widen its presence in the metal segment.
A total of four contracts in platinum were offered for trading on the
inaugural day, of which the first contract will expire next month,
while the rest three in March, June and September next year, the
exchange circular said.

Gold

Gold prices touched a high of $1,153/oz in the last week and prices
traded higher on the back of bullish sentiments related to higher
investment demand for the yellow metal. Prices could continue to trade
with a positive bias in the coming week but will also take cues from
the movement in the Dollar Index. The dollar strengthened this week and
put pressure on the yellow metal as it made it look expensive for
holders of other currencies. Though the short term trend in Gold
remains up, we feel that even slight strength in the dollar could put
pressure on prices. Investment demand from central bankers is on the
rise and this factor is expected to be positive for the yellow metal.
If more news on gold buying by central bankers is released in the
coming days then prices could test new highs.

US interest rates are expected to remain low for an extended period and
that may continue to trigger a downside in the Dollar Index from the
short-term perspective. Gold prices have risen around 30% since the
start of the year and weakness in the dollar has been a major aid to
the rally. Gold prices come under selling pressure as the dollar
strengthens but fundamentals like low interest rates would continue to
be bearish for the dollar and further buying in gold could emerge as
investment demand has emerged. Doubts about a nascent economic recovery
and jitters among central banks, some of which have diversified away
from the dollar, have raised gold’s allure as a safe haven asset. MCX
December Contract shall find a strong support at 16850/16540 and
resistance at 17320/17750 levels in the coming week.

Copper:

In last week, Copper prices touched a high of $6,992 but couldn’t test
a major $7,000 psychological mark. Rumbles in the South American labour
arena continued to offer support. Workers at Chile’s giant Chuquicamata
mine are seeking a 7.5 percent wage increase, although at the Cerro
Colorado mine, employees appear likely to accept an early wage deal
offered by BHP Billiton and avoid a strike. BHP has evacuated the
Spence mine following worker sabotage. Clearly, the threat of strikes
remains a major feature of the industry, particularly in South America,
and is contributing to the current pricing environment. Ongoing labour
worries continue to provide upside support to prices. Even is the
dollar strengthens, copper prices may not decline sharply as supply
issues will come to the support. Even if inventories are rising, these
issues will help the red metal trade with a positive bias in the coming
week. MCX November Contract shall find a strong support at 311/303 and
resistance at 320/328 levels in the coming week.

Crude Oil:

Oil prices came under pressure in the last week as demand concerns
coupled with a stronger dollar put pressure on prices. Risk aversion
also led to lower demand for higher-yielding and riskier investment
assets. Oil prices have risen 74% this year but it fell during the week
as investors closed off positions before the end of the year. US
refinery utilization rates fell for the third consecutive week to 79.4%
last week. Refineries are running at a low rate in the export markets
like Korea, Taiwan, Singapore and that indicated that demand globally
is weak. But the OECD has doubled its growth forecast for the leading
developed economic next year and predicted a further acceleration in
2011 as China power a global recovery. Oil prices could continue to
trade with a negative bias in the coming week as even slight strength
in the dollar could exert selling pressure. MCX December Contract shall
find a strong support at 3550/3450 and resistance at 3760/3930 levels
in the coming week.

Wheat

CBOT Wheat futures which has risen 28% since September 30 is likely to
remain subdued to ample global stocks and lower demand for US wheat in
global markets. US Department of Agriculture data shows US wheat
shipments falling in 2009 compared to a year ago. CBOT Futures for
March delivery fell for a third day on Friday to $5.8075 a bushel after
attaining 6.05 earlier in the week the highest since June 16.

Meanwhile India’s December wheat Futures at National Commodity and
Derivatives Exchange of India (NCDEX) has traded in a narrow range of
Rs 1394-1402 last week as rising spot demand was contained by rains in
major wheat growing regions and ample stocks forcing the government not
to import wheat for the time being. On Friday, December contract closed
marginally lower at Rs 1394 on higher output hopes. India plans to
raise its annual output to 82 mn tonnes as against 80 mn tonnes last
year. Rains in Punjab, UP and Haryana have raised production hopes even
as high temperature reduced overall sowing area. As on October 1, India
has 28 mn tonnes of buffer stock as against the required norm of 11 mn
tonnes. Wheat Futures at NCDEX is likely to remain subdued next week
trading near to Rs 1395 levels although a climb towards 1400 can push
the prices further by Rs 50 as firm spot demand is supportive of prices.

Source: Commodity Online

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