Commodities Daily Report

Saturday| May 18, 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

Saturday| May 18, 2013

Agricultural Commodities
News in brief
Congress brass discuss Food Security Bill
Congress brass, including Prime Minister Manmohan Singh and party Chief Sonia Gandhi, on Friday deliberated on the way ahead on the issue of Food Security Bill. All options were considered, was the response of party sources who said no decision had been taken about the future course of action on the ambitious legislation, as also on the Land Acquisition Bill. The law ministry had recently told the food ministry that without the list of intended beneficiaries with state governments in place and setting up of a redressal mechanism, an ordinance should not be promulgated as it would make the proposed law meaningless. The Food Bill aims to give legal right to a uniform quantity of 5 kg foodgrains at a fixed price of Rs 1- 3 per kg via ration shops to 67 per cent of the population. (Source: Business Standard)

Market Highlights (% change)

Last Prev. day

as on May 17, 2013

WoW MoM YoY

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

20286 6187 54.9 96.02 1365

0.19 0.28 0.20 0.90 -1.60

1.01 1.52 0.16 -0.02 -5.00

8.30 8.76 1.32 10.78 -1.25

26.23 27.04 0.98 3.74 -13.31

.Source: Reuters

Water scarcity begins to take toll on kharif sowing

Planting of key kharif crops such as rice, sugarcane and cotton has begun on a sluggish note this year, with total acreage standing at 58 lakh hectares, lower than the corresponding last years 62.9 lakh ha. Farmers have planted rice in 2.40 lakh ha, marginally lower than 2.53 lakh ha last year. The lower rice area is reported mainly in Assam and Orissa, according to an official statement. Sugarcane has been planted in 40.7 lakh ha against 45.7 lakh ha last year. Lower acreage has been reported in Karnataka, Maharashtra and Tamil Nadu where poor water availability has hit the planting this year. In Maharashtra, sugarcane has been planted in 5.11 lakh ha, a 45 per cent decline over the corresponding last years 9.37 lakh ha. The decline has been attributed to the prevailing drought conditions in the State. In Karnataka, the decline is marginal as the acreage stands at 3.27 lakh ha against last years 3.65 lakh ha. (Source:
Business Line)

Sugar co- ops want restrictions on import, with export subsidy

Burdened by rising sugar imports, impacting their price realisation and payment of dues to cane growers, the National Federation of Cooperative Sugar Factories (NFCSF) has sought a rise in the tariff on both raw and refined sugar to 30 per cent. At present, sugar imports via the open general licence (OGL) route are permitted at 10 per cent duty. Sugar imports should also be taken off OGL, says the letter to the Union food and agriculture ministries from NFCSF President Kallapa BAwade. Traders have imported 468,000 tonnes in the ongoing 2012- 13 sugar season (October- September), he said, adding some imports were also coming from Pakistan. This is despite their estimation of sugar production exceeding demand, of 25 million tonnes versus 22.5 mt, respectively. Taking imports into account, opening stock in the next year would be 9.7 mt. Considering the initial three months requirement for 2013- 14 of about 5.8 mt, India will have a net surplus of 3.86 mt, it said. The surplus cannot be exported as international prices are ruling lower. If imports are continued at lower duties, domestic prices will further fall, hitting realisation and timely payment to cane growers, says the letter. It is becoming very difficult for factories.. cane price arrears are mounting and reached Rs. 12,600 crore up to March 15, the NFCSF said. The body also wants the government to give export subsidy to ship surplus sugar, saying it would help them clear their cane arrears. Exfactory realisation has been falling since October 2012. The all- India average ex-factory price in October was Rs. 3,328.7 a quintal. It was down to Rs. 2,925 a quintal last month. (Source: Business Standard)

Haryana: 58.62 lakh tonne wheat arrives so far

The wheat arrival in Haryana has reached 58.62 lakh tonnes in the mandis during the current procurement season. Out of this, over 58.54 lakh tonnes of wheat has been procured by government agencies at the minimum support price and 8,815 tonnes of wheat has been purchased by the private millers and traders, a spokesman of the Food and Supplies Department said here on Friday. He said that HAFED had procured over 22.69 LT of wheat, Food and Supplies over 14.56 LT, Food Corporation of India over 7.24 LT, Haryana Agro Industries Corporation over 5.68 LT, Haryana Warehousing Corporation over 5.29 LT and CONFED had purchased 3.06 LT of wheat. (Source: Business Line)

Haryana: 58.62 lakh tonne wheat arrives so far

The European Union will impose punitive duties on imports of biodiesel from Argentina and Indonesia, charging them with selling the product into the bloc at unfairly low prices, EU sources said. The European Commission has set provisional tariffs at between 7 and 11 percent for imports from Argentina and between zero and 10 percent for those from Indonesia, said sources familiar with the trade defence case. Argentina is the world's No. 1 biodiesel exporter and the two countries represent 90 percent of EU biodiesel imports. The duties will be set by May 29 and the investigation will continue, with member states set to vote on definitive duties - typically imposed for five years - before the end of November.
(Source: Reuters)

State entering a pre-monsoon phase

Kerala seems to have entered a pre-monsoon phase with the sea turning rough at many places along the States coastline and the air suggestive of rain. Cyclone Mahasen, which had virtually cut a path for the monsoon flow to enter the Andaman Sea, crossed the Bangladesh coast around 1.30 p.m. on Thursday and weakened into a deep depression by evening over Mizoram. The IMD expects the system to weaken further into a depression and then into a low-pressure area over the north-eastern part of the country by Friday morning. (Source: Business Line)

Monsoon reaches Andamans

Conditions are favorable for further advance of the southwest monsoon over the remaining parts of Andaman Sea in 2-3 days, the department said in a statement. Monsoon rains will likely reach India's mainland on June 3 through the southern state of Kerala, it said Wednesday. The timely arrival of monsoon rains and their distribution and quantity are all critical to crop sowing in the main summer season. The majority of India's farmlands are rain-dependent. After arriving over Kerala, the monsoon gradually spreads over most of the central and northern grain and oilseed-producing regions by July. India expects normal monsoon rains this year. Last year, it received below-normal rains in the first half of the season, which left vast swaths of the country reeling under a drought. (Source: The Wall Street Journal)

Syrian grain imports pick up despite worsening war

Syria has managed to increase its grain imports in recent months after a period when it was less active on international markets, traders say, a development that suggests President Bashar al-Assad has found a way to feed his people despite war. Traders say Syria appeared to have had difficulty securing international supplies of grain last year, but the trouble has abated this year as middle men have been able to set up deals. Foodstuffs are not covered by international sanctions, but banking sanctions and war had created a climate that had made it difficult for some trading houses to do business with Damascus. Now, with foreign brokers setting up deals, Damascus is able to buy wheat while paying a small premium of about 3% to 5% of the global price. (Source: Reuters)

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Commodities Daily Report

Saturday| May 18, 2013

Agricultural Commodities
Chana
After gaining sharply over the past four sessions, Chana corrected yesterday on account of profit booking. Emergence of demand at lower levels has pushed up the prices. However, higher supplies and record output expectations have capped sharp upward movement. The Spot settled 0.8% higher while June Futures settled 0.98% lower on Friday. Higher supplies of the new crop from the major producing states such as Madhya Pradesh, Rajasthan and Maharashtra was a major reason attributed to recent fall in chana prices. 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 3443 3384 Prev day 0.80 -0.21

as on May 17, 2013 % change WoW MoM 1.36 -4.09 0.83 -6.93 YoY -18.98 -19.29

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

Source: Reuters

Technical Chart - Chana

NCDEX June 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. The Centre has hiked the MSP by 14 per cent to Rs 3,200 a quintal for chana and as part of its strategy to encourage farmers to grow more pulses to reduce import dependence. 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 May Futures Unit Rs./qtl Support

valid for May 18, 2013 Resistance 3440-3480

3350-3375

Trade Scenario
According to IBIS, imports of chana in the month of February declined to 0.46 lakh metric tonnes compared to 2.31 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 is may decline today extending yesterdays losses coupled with higher supplies. However, demand from stockists may support prices at lower levels. Seasonal pattern in chana indicates that prices may generally bottom out in May when arrivals reach their peak, while they start recovering gradually June onwards with declining supply pressure. On the downside, we dont expect chana prices to go below Rs 3200 per qtl levels as this being the MSP levels farmers may hold back their stock. Considering the record output expectatations and seasonal patterns and demand side fundamentals, we expect chana prices to trade in the range of Rs 3200- Rs 3800 per qtl over the medium term (3 months).

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Commodities Daily Report

Saturday| May 18, 2013

Agricultural Commodities
Sugar
Sugar prices gained 0.29% as sentiments have turned positive after the government notified partial sugar decontrol. Demand from bulk consumers also supported prices. However, higher supplies are seen offsetting summer season demand. Prices recovered last week 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. According to this, 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. India's sugar output is set to decline 10-15 per cent in the 2013-14 crushing season due to lower cane availability from drought-hit Maharashtra districts, where sowing could not be finished or crops were damaged due to lack of monsoon showers in 2012. (Source: Business Standard.

Market Highlights
Unit Sugar Spot- NCDEX (Kolhapur) Sugar M- NCDEX May '13 Futures Rs/qtl Last 3069

as on May 17, 2013 % Change Prev. day WoW -0.07 0.24 MoM 0.95 YoY 3.20

Rs/qtl

3071

-0.10

1.82

5.17

4.03

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 477.5 375.33

as on May 17, 2013 % Change Prev day WoW 0.27 0.36 -2.39 -3.10 MoM -5.80 -5.38 YoY -17.32 -19.03

.Source: Reuters

Technical Chart - Sugar

NCDEX June 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 last week. 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 as well as Raw sugar settled marginally higher on Friday on account of short coverings and settled 0.27% and 0.36% higher on Friday. Prices have declined sharply on expectation of a record sugar cane crop in Brazil. The prices are trading at the lowest levels in 34 months. 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. Sugar production in Brazil's main cane belt surged in April, outpacing last year's early harvest by 210 percent, as rains cleared in the middle of last month to allow crushing.

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

valid for May 18, 2013 Resistance 3085-3110

3040-3060

Outlook
Overall sentiments for domestic sugar remain positive on account good demand from bulk manufacturers at such low levels. Also, government has notified cabinets decision to remove two key controls on sugar sector, which may keep sentiments upbeat. However, higher supplies and weak international markets may cap sharp upside in the prices.

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Commodities Daily Report

Saturday| May 18, 2013

Agricultural Commodities
Oilseeds
Soybean: soybean futures declined 0.55% on Friday on account of
weak meal exports coupled with prediction of a normal monsoon by IMD. However, poor supplies restricted the downside in the prices. Indias soy meal exports for the month of April 2013 were 99.451 tonnes, lower by 68.31 percent from 313,832 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 May '13 Futures Ref Soy oil SpotNCDEX(Indore) Ref Soy oil- NCDEX May '13 Futures Rs/qtl Rs/qtl Rs/10 kgs Rs/10 kgs Last 4064 3976 726.2 725.8 Prev day 0.25 -1.67 0.09 0.17

as on May 17, 2013

WoW 0.30 -1.36 0.23 1.43

MoM 2.52 -0.67 0.64 0.67

YoY 19.81 23.17 0.33 0.20

International Markets
CBOT Soybean traded on a positive note and settled 1.47% higher on Friday drawing strength from tight U.S. stocks. According to the weekly crop progress report, only 6% of Soybean has been planted as against 43% last year and five year average of 24%. There are delays in planting in the Midwest. However, large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. 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 May 17, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1449 49.52 Prev day 1.47 0.00 WoW -2.67 0.71 MoM 1.85 0.26
Source: Reuters

YoY 0.73 -2.37

Crude Palm Oil

as on May 17, 2013 % Change Prev day WoW 0.60 -0.11 1.92 0.45

Refined Soy Oil: Ref soy oil settled 0.15% higher while MCX CPO
settled marginally lower on account of profit taking. Palm oil futures climbed earlier this week as stocks are expected to decline and demand is set to rebound ahead of Ramadan. Shipments of palm oil fell between 3 percent and 8 percent over the period May 1 to 15 from the corresponding April period. But, 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. Exports of Malaysian palm oil products from May 1 to 15 inched down 7.6 percent to 599,300 tonnes from 648,275 tonnes shipped during April 1 to 15. Rape/mustard Seed: Mustard Futures settled marginally lower by 0.08% on account of profit booking at higher levels. Prices have gained this week on account of lower level demand. Higher supplies of the new crop coupled with higher output expectations led to a sharp decline in the prices since April. 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%.
Unit
CPO-Bursa Malaysia June '13 Contract CPO-MCX- May '13 Futures

Last 2334 471.3

MoM 2.19 2.23

YoY -24.98 -17.40

MYR/Tonne Rs/10 kg

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX May '13 Futures Rs/100 kgs Rs/100 kgs Last 3541 3508 Prev day 0.87 -0.14 WoW 3.37 2.60

as on May 17, 2013 MoM 1.16 0.34

Source: Reuters

YoY -8.04 -7.12

Technical Chart Soybean

NCDEX June contract

Outlook
Soybean prices are expected to trade sideways with upward bias as poor supplies in the domestic markets and firm international markets may support prices. While, forecast of a normal monsoon coupled with weak meal export demand may cap sharp gains. Soy oil as well as CPO may gain due to higher international prices as well as lower yield period. However, comfortable stock levels may cap sharp upside.

Source: Telequote

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

valid for May 18, 2013 Support 695-698 3810-3840 3500-3520 468-470 Resistance 704-707 3925-3970 3560-3580 474-477

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Commodities Daily Report

Saturday| May 18, 2013

Jeera Agricultural Commodities

Jeera prices continued to trade higher on reports of overseas enquiries. Arrivals have also declined from their peak in mid April. Demand from stockists and exporters also emerged at lower levels. The spot as well as the June Futures settled 0.33% and 0.36% higher on Friday. Over the last few months, prices have declined sharply 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. Expectations are that export orders may continue to be diverted to India from the international markets 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 4,000-5,000 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 May '13 Futures Rs/qtl Rs/qtl Last 13629 13343 Prev day 0.33 1.14

as on May 17, 2013 % Change WoW 1.63 4.36 MoM 0.75 2.05 YoY -1.01 -0.69

Source: Reuters

Technical Chart Jeera

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 11,000 lakh bags on Friday. Production of Jeera in 2012-13 is expected around 38-40 lakh bags (55 kgs each), same as last year. Exports of Jeera between Apr 2012- Jan 2013 stood at 64,400 tn, an increase of up 86%. (Source: Factiva)

Outlook
Jeera Futures is expected to continue to trade on a positive note in the intraday extending yesterdays gains. Improvement in overseas as well as domestic demand may support prices. However, higher output may cap sharp gains. Overall trend remain positive for the Jeera prices due to overseas demand as Syria & Turkey have stopped shipments which may keep prices firm.

Source: Telequote

Market Highlights
Prev day 2.42 4.03

as on May 17, 2013 % Change

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

Last 6092 6098

WoW 0.53 2.04

MoM -10.31 -9.82

YoY 63.21 59.05

Turmeric
Turmeric June Futures traded on a bullish note for the second day and settled 3.35% higher on Friday as the regulator withdrew special margins on the long side coupled with declining arrivals. Prices have declined sharply on account of weak demand coupled with huge carryover stocks. 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 beginning of day Thursday, May 16, 2013.

Technical Chart Turmeric

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Erode and Nizamabad mandi were reported at 4,000 and 3,000 bags respectively on Friday. 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) Exports of Turmeric between Apr 2012- Jan 2013 stood at 66,550 tn, a decline of 4%. (Source: Factiva) Outlook Turmeric is expected to trade with a positive bias today as withdrawal of margins boosted the sentiments. Declining arrivals coupled with expectations of improvement in demand from exporters as well as stockists in the coming weeks may support prices. However, weak demand coupled huge carryover stocks may pressurize prices. Crop damage and output concerns may also support prices at lower levels.

Source: Telequote

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

Valid for May 18, 2013

Support 13210-13290 6030-6130 Resistance 13470-13570 6310-6400

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Commodities Daily Report

Saturday| May 18, 2013

Agricultural Commodities
Kapas
NCDEX Kapas as well as MCX Cotton traded on a mixed note. Offloading of stocks by the CCI in the open markets and weak global markets is seen pressurizing domestic prices. However, emergence of fresh demand at lower price levels is restricting sharp downside in the domestic markets. Kapas prices at NCDEX settled 0.19% lower while Cotton prices at MCX remained unchanged on Friday. The Cotton Corporation of India (CCI) and the National Agricultural Cooperative Marketing Federation of India (NAFED) are expected to offload over 8 lakh cotton bales (a bale weighs 170 kg) in the domestic market this month and the asking price may be lower by Rs 1,000 per candy than the previous price. In April, the government had offered a price of Rs 39,500 per candy, which received lukewarm response from the textile industry. (Source:
Economic Times dated 6th May 2013)

Market Highlights
Unit Rs/20 kgs Rs/Bale Last 1030 17940

as on May 17, 2013 % Change Prev. day WoW -0.19 -0.53 0.00 -1.16 MoM YoY 16.71 3.00 -1.16 7.75

NCDEX Kapas Apr Futures MCX Cotton May Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 86.41 93.4

as on May 17, 2013 % Change Prev day WoW 0.44 -0.08 -0.11 -1.79 MoM 2.08 1.91 YoY 12.73 9.24

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.

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 Import are estimated 2.5 mn bales.

Global Cotton Updates

ICE Cotton futures gained 0.44% on Friday supported by positive financial markets. Prices declined earlier this week on account of weak export sales data. Net Upland sales of 74,000 running bales for 2012/2013 were down 37 percent from the previous week and 66 percent from the prior 4-week average. Planting picked up as weather improved in the Mississippi Delta and into the Southeast United States and eased concerns over delays in the regions. 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 May contract

Source: Telequote

Outlook
Weak international markets coupled with offloading of stocks in the domestic markets from the state reserves may keep cotton prices under downside pressure in the near term. However, improving demand at lower levels may cushion sharp fall in the prices. US cotton planting intentions at a 4 year low coupled with China continuing with its stockpiling policy, may also support an upside in the prices over the medium term.

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

valid for May 18, 2013 Support 1010-1020 17850-17900 Resistance 1040-1050 18000-18050

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