MTECHTIPS COMMODITY MARKET UPDATE

MTECHTIPS:-India Pepper spot markets dull on price mismatch

Kochi spot markets witnessed no sales for pepper on Monday.There were sellers for ungarbled pepper at the rate of 411/Kg for about 40 tons. But the buyers insisted on Rs.408-409/Kg. In effect the sales did not materialise.Meanwhile on Friday, pepper markets witnessed sales to the tune of 35 tons in Kochi. Ungarbled variety saw sales at the rate of 409/kg for 10 tons of the commodity and 410/Kg for 25 tons thus clocking 35 tons of total sales for that day.Pepper is still trading in a narrow range between Rs.42900 and Rs.43500 in November contract on NCDEX. It may witness some selling pressure in coming sessions due to the good production expectation. Major support and resistance are at Rs.42900 and Rs.43600 respectively. said our in-house analysts.

MTECHTIPS:-Crude Oil makes a come back across Comexes on technicals, supply fears
With tensions escalating between Syria and Turkey and oversold positions in crude oil creating a psychological buy back, crude oil climbed across board in comexes snapping the losing trend in prices.November crude oil on the NYMEX jumped up to $1 and reached $90.33 a barrel in electronic trading and was seen trading at $90.17 at 12:10 p.m. Singapore time. It had previously lost 55 cents and was at $89.33 on Oct. 8, the lowest point close since Oct. 3. For 2012, the prices have been down 8.8%.The ICE Futures counterpart of WTI, Brent crude gained $85 cents and touched $112.67 a barrel; its prices are up 4.9% this year, signalling supply side concerns and increasing demand from developing nations. No wonder, the premium between WTI and Brent stands at $22.50WTI was the most oversold, so technically speaking, it would bounce more than Brent, said Gordon Kwan, head of energy research at Mirae Asset Securities Ltd. in Hong Kong to Bloomberg. Its more like a dead-cat bounce until we seriously get into the winter heating oil season, which doesnt begin until Dec. 1.Meanwhile border tensions have escalated between Syria and Turkey and further escalations in conflicts have the potential to send shockwaves across the Middle East thereby creating uncertainty in supply side systems.

MTECHTIPS:-Physical Gold demand emerges, Q4 forecast $1810/oz: Barclays

Physical gold market has shown signs of life but the yellow metals ability to breach $1800 market continues to rest with developments in Europe, US macro data and whether central banks ratchet up QE asset purchases, according to.On Tuesday at US Comex, Gold for December delivery is up $4.4 at $1780.1/Oz.Physically backed gold ETP interest has continued to grow in October, taking total metal held in trust to fresh record highs. Gold holdings have now hit 2567 tonnes with inflows of 23 tonnes in the first week of October alone. Inflows for the year-to-date have reached 192 tonnes, surpassing full-year inflows for last year at 175 tonnes.Speculative positions in Comex gold rose for the seventh straight week to its highest level since August last year. The CFTC data for the week ended 2 October cover trading activity ahead of the ECB press conference and US non-farm payrolls data. Non-commercial positions rose by 4.4k lots as the

establishment of fresh longs (5.4k los) offset fresh shorts (1k lots). Gross long positions are at their highest since September last year and net longs now make up 43% of open interest but remains below the peak of 51% implying further room to grow.

MTECHTIPS:-Not addressing the US fiscal cliff issue may cause Recession

Unless the fiscal cliff issue in the US is addressed and debt levels not raised by policy makers, the nation could fall back into yet another recession, warns the IMF in its latest World Economic Outlook.U.S. legislators must soon remove the threat of the fiscal cliff and raise the debt ceilingif they fail to do so, the U.S. economy could fall back into recession, with deleterious spillovers to the rest of the world. Furthermore, policymakers in the United States urgently need to specify strong medium-term fiscal plans. the Bank said in a report.Speaking on QE measures adopted by various countries, the IMF also said, in many advanced economies, injections of liquidity are having a positive impact on financial stability and output and employment, but the impact may be diminishing.On the eurozone crisis, the Bank said:The crisis in the euro area remains the most obvious threat to the global outlook. The ECB has put in place a mechanism to improve the transmission of low policy rates to borrowing costs in the periphery, where investors fears about the viability of the euro have pushed market rates to very high levels. The periphery

MTECHTIPS:-Should China buy more Gold? No!

China is having the fifth largest gold reserves in the world. At about 1.7% of its total foreign exchange reserves of $3.3 trillion, the 33.9 mn ounces of gold that it owns compares in a pale fashion to 75.4% of US and 72.3% of Germany.The question here is should China be buying more gold?Not necessarily is the answer given by Campbell R. Harvey, professor at Duke University 's Fuqua School of Business and Claude B.Erb, Managing Director at First Chicago NBD Investment Management Company.Gold as an asset may be an inflation hedge in the long term, but not in the short term, their research paper Golden Dilemma updated in September this year says. They point out that gold becomes useful in the event of hyperinflation; but despite the QE drives the global inflation is not driven to these levels. According to the paper, it is a good bet that QE3 will not result in inflation in short-term even as the price of gold would rise.

MTECHTIPS:-Cotton cultivation becoming more sustainable: Cotton Inc

The LCA (life-cycle assessment) was one of the major focus of first Open Session of International Cotton Advisory Committee (ICACs) 71st Plenary Meeting, which took place on October 8 in Interlaken, Switzerland.The new results in the session stated that the cotton has made great strides over the last 30 years, including reductions in: Land usage: 30%, Soil loss: 68%, Water usage: 75%, Energy usage: 36%, Greenhouse gases: 30%A presentation by Berrye Worsham, CEO of Cotton Incorporated outlined how the LCA was developed, as well as some of its top findings.Worsham emphasized that Cotton Incorporated's leadership went through the exhaustive, two-year LCA process to determine exactly what cotton's footprint was, not just what could be used to combat misconceptions about the fiber's environmental impact."Cotton is

doing well, but we know we can do better," he said. "The key is continual progress. This LCA was all about measurement and improvement, and you can't make measurable progress if you don't know where you started," added Worsham.The final message of the first session was, those who attack the cotton industry for its perceived impact on the environment will need to have their facts straight, thanks to a major research

MTECHTIPS:-US Natural Gas upside to be capped at $4.30/MMBtu on Coal-switch prospects: BofAML

Any upside to US natural gas prices will likely be capped by coal. If natural gas prices run up too quickly, the relative advantage of gas over coal disappears rapidly and power generators will switch back into coal, Bank of America Merrill Lynch said in a report.Case in point, if coal-to-gas switching were to decline to 2 bcf/d, we estimate end of October inventories would rise to 4.2 tcf, reigniting containment concerns. the Bank said. As some coal-to-gas switching will still be necessary in order to balance the market, we see natural gas prices capped at $4.30/MMBtu unless we get outright production declines. the Bank added.As production growth slows down and prices move higher, Bank of America Merril Lynch expects coal-to-natural gas switching to fall by 1.8 bcf/d. With total gas demand contracting by 0.6 bcf/d, inventories will likely stay elevated next year.

MTECHTIPS:-DGCX records highest monthly volume in Sept, Euro futures up 414%

Dubai Gold and Commodities Exchange (DGCX) registered its highest ever monthly volumes in September, reaching 971,675 contracts, a 100% increase from the same month last year. The Exchanges total monthly volume was valued at $ 38.08 billion, the highest ever monthly trading value it has ever recorded.DGCX ended the third quarter of the year with year-to-date volumes of 6,724,161 contracts, a significant rise of 143% from last year DGCXs currency segment rose 105% year-on-year to end the month on 901,712 contracts. One of the key performers of the month was Euro futures, which recorded a massive year-on-year jump of 415%, aggregating 38,851 contracts the highest monthly volumes the contract has achieved this year. Indian Rupee Futures maintained its high-growth trend this year, rising 101% year-on-year to reach 859,739 contracts in September.Among precious metal futures, Gold continued its robust performance in September, rising 46% from last year to aggregate 58,897 contracts. Silver futures grew 133% from last month, while copper increased by 8% to reach 1,781 and 7,852 contracts respectively.

MTECHTIPS:-Soil moisture to become favourable for India Rabi crop: Sharad Pawar
To maximise the crop production in the coming rabi season, full advantage will be taken of high moisture content in soil, says Agriculture and Food Processing Minister Shri Sharad Pawar. The agriculture sector of the country will deliver an average of 4% growth in the 12th Plan as compared to 3.3% in the current plan, he added.Despite erratic monsoon this year there has been only marginal decline in the production of various crops as compared to last year, which was a year of record production. The achievement in the 11th Plan was better than that achieved during 9th Plan (2.5 per cent) and 10th Plan (2.4 per cent). In the 12th Plan India would be to

consolidate the gains and gear up to enhance the growth rate to 4 per cent.Steps will be taken to improve the required level of Gross Capital Formation in agriculture. Already, the GCF has shown an improvement from 13.1 per cent in 1999-2000 to 20.1 per cent in 2010-11 at 2004-2005 prices.The Minister supported FDI in agriculture sector. Recognizing the need to step up investment in the agriculture sector, FDI is welcome for development of seed, post harvest management infrastructure and now in multi-brand retail trading (MBRT), subject to setting up the back-end infrastructure which should benefit all stakeholders across the entire value and supply chain.