Commodities Daily Report

Wednesday| June 5, 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

Wednesday| June 5, 2013

Agricultural Commodities
News in brief
Minimum Support Prices for Major Farm Crops Raised Substantially in Recent Years
Government announces minimum support price (MSP) for major crops during the two main crop seasons rabi and kharif every year. MSP is the price which the government ensures to farmers for their produce. In recent years, MSP for various crops has been raised year after year. For example, the MSP for wheat has been raised to Rs. 1350 per quintal this year while it was Rs. 650 in 2005-06. In the case of rice, MSP has gone up to Rs. 1250 per quintal from Rs. 570 per quintal in 2005-06. Pulses and oilseeds have seen similar or bigger hikes in MSP over the years. The substantial hike in MSP has resulted in better prices available to farmers for their produce. Successive rise in MSP has also led to overall food security to the country: India is now self-sufficient in wheat and rice. 2011-12 has seen record production in the case of wheat, rice, pulses and oilseeds. Even there was wide-spread drought in the monsoon season in 2012, overall foodgrain production dipped only marginally. While rice, wheat and major coarse cereals are purchased by procuring agencies, government helps producers of pulses, oilseeds and some other crops by market intervention when prices tend to fall below the MSP. The government is strengthening the procurement infrastructure so that farmers do not have to resort to distress sale of their produce. For sugarcane, the government changed the Statutory Minimum Price regime recently into a more scientific Fair and Remunerative Price (FRP). The present FRP is Rs. 170 per quintal. States can top up FRP to give farmers a more remunerative price. (Source: PIB, GOI)

Market Highlights (% change)

Last Prev. day

as on June 4, 2013
WoW MoM YoY

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

19546 5919 56.5 93.31 1397

-0.33 -0.33 -0.32 -0.15 -1.03

-2.99 -3.03 0.34 0.19 0.42

-0.15 -0.41 4.99 -2.41 -4.59

22.25 22.10 1.51 11.11 -13.34

.Source: Reuters

May soyameal exports drop 30%

Soyameal exports dropped nearly 30 per cent in May on poor demand across the globe. Exports in May slipped to 97,000 tonnes against 1.39 lakh tonnes during the same period a year ago. A statement from the Soyabean Processors Association of India said that during the current fiscal, soyameal exports are lower by 58 per cent at 1.98 lakh tonnes. Last year, 4.75 lakh tonnes had been exported during the same period. (Source: Business Line)

Monsoon onset lifts copra, coconut oil prices

The copra and coconut oil markets have registered a slight increase in prices, thanks to recent monsoon showers. Further northward movement is likely, as there is good demand for both, but not indefinitely, say leading traders, as there is enough supply, especially from the Tamilnadu. The oil price is now Rs 6,200-6,400 a quintal, while copra is readily available at Rs 4,500-4,600/qtl. The failure of government agencies in procurement had badly affected the market. According to sources, hundreds of tonnes of copra had been damaged in Lakshadweep due to absence of timely intervention of state agencies such as Nafed. Growers and traders say in previous years, too, it has been usual for procurement in general to commence too late. A sharp increase in the import of palm oil and palm kernel oil has also hit the coconut oil market. The lower priced palm oil and palm kernel oil are good options for industrial users, many of whom preferring it. (Source: Business Standard)

Prices of vegetables & spices crash upto 20% due to the brisk start to monsoon
Prices of vegetables and spices have dropped up to 20% in the past month and are likely to remain low as higher output along with the brisk start to the monsoon has calmed the market. The drop in vegetable prices, on top of the global fall in various commodities from aluminium to zinc, is good news for policymakers as stubbornly high inflation has hindered moves to cut interest rates. Expectations of higher farm output after last year's slump would also boost overall economic growth, economists said. The fall in vegetable prices in the past month has been the steepest in recent times. Prices had shot up in previous years because of erratic rainfall, particularly in 2012 when rainfall was 30% below normal in June. (Source: Economic Times)

2013-14 cotton acreage likely to stand at last year's levels

The International Cotton Advisory Committee (ICAC) has scaled up its cotton crop estimate for 2013-14 by 4,80,000 tonnes to 25.09 million tonnes (mt). However, in 2013-14, global output is expected to be lower than last year's output of 26.36 mt. With the monsoon expected to be normal this year, fears of a fall in cotton acreage have subsided somewhat. According to the Cotton Advisory Board, in cotton year 201213 (October-September), area under the crop stood at 11.77 million hectares, compared with 12.17 million hectares in 2011-12. The board had estimated last year's production at 34 million bales (1 bale=170 kg), compared with 35.5 million bales in 2011-12. "So far, rains have been on time, due to which we are expecting the area under cotton to be the same as last year. However, it is still too early to predict," said D K Nair, secretary general of the Confederation of Indian Textile Industries. Globally, too, cotton acreage was expected to see a drop. However, acreage rose last month. (Source: Business Standard)

Monsoon Seen Advancing to Indias Main Cotton, Sugar Cane Areas

The monsoon, which accounts for 70 percent of Indias annual rainfall, may advance to the main cotton, sugar and coffee-growing areas this week, drenching regions parched by the worst drought in four decades. Rains will cover all of Maharashtra state, the countrys second-biggest grower of sugar cane, cotton and soybeans, by June 10 after having advanced through the southern coastal states of Karnataka, Tamil Nadu and parts of Andhra Pradesh, said D.S. Pai, head of the long-range forecasting division at the India Meteorological Department. Karnataka is the largest coffee producer, while Andhra Pradesh is the top rice grower. A normal monsoon is critical to boosting harvests of rice, corn, soybeans, sugar cane and cotton, as well as curbing retail inflation that hovers at about 10 percent. Agriculture accounts for about a fifth of Indias economy, while 55 percent of the farmland does not have access to irrigation. Parts of Maharashtra and Karnataka, which together account for 45 percent of the countrys total output, have faced drought because of below-average monsoon rains in the past two years. (Source: Bloomberg)

Fresh monsoon pulse to bring rain to West Coast this week

The forecast phase of expansive monsoon from the weekend is very much in the making, with a fresh wave of rains projected to approach the West Coast soon. A long-persisting low-pressure area off Oman coast flared up on Tuesday, taking away clouds and moisture and holding back intensity of rain over Indias West Coast. Fresh rain-maker lows are expected to spring up over both Arabian Sea and Bay of Bengal, international weather models indicated. (Source: Business Line)

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Commodities Daily Report

Wednesday| June 5, 2013

Agricultural Commodities
Chana
Chana corrected yesterday on account of profit taking after witnessed significant gains in the previous session and settled 0.66% lower. Prices touched a fresh contract low of Rs. 3105 last week. Higher supplies in the domestic markets have pressurized prices over the last few weeks. 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 3289 3167 Prev day 1.07 -0.66

as on June 4, 2013 % change WoW MoM 1.99 -3.97 -0.50 -7.48 YoY -21.92 -22.36

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 5, 2013 Resistance 3270-3310

3190-3215

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 trade on a mixed note today. Lower level buying may support prices. Demand from stockists at lower levels may also provide some support to the prices. However, higher supplies coupled with higher output estimates cap the upside and mount pressure at higher levels. 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

Wednesday| June 5, 2013

Agricultural Commodities
Sugar
Sugar traded on a flat note yesterday and settled marginally higher by 0.07% on Tuesday. Buying by the stockists coupled with concerns about the cane output this season due to drought conditions in Maharashtra have supported prices. However, comfortable supplies have capped the gains. Weak international markets have also kept prices under check. 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 3057

as on June 4, 2013 % Change Prev. day WoW 0.02 -0.50 MoM 0.59 YoY 4.62

Rs/qtl

3042

0.07

0.76

4.21

#N/A

Source: Reuters

International Prices
Unit Sugar No 5- LiffeAug'13 Futures Sugar No 11-ICE July '13 Futures $/tonne $/tonne Last 476.9 364.00

as on June 4, 2013 % Change Prev day WoW 0.17 -0.30 0.32 -1.74 MoM -4.01 -6.56 YoY -13.84 -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 witnessed short coverings and settled 0.17% higher while Raw sugar on the ICE continued to decline and settled 0.3% lower on Tuesday. Prices have declined sharply on the back of third consecutive year of sugar surplus and 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. Raw Sugar open interest has climbed to a 5 year high. The ISO 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 5, 2013 Resistance 3095-3110

3060-3070

Outlook
Sugar futures may trade on a mixed note today. Demand from stockists and coupled with output concerns this season and the governments partial decontrol of sugar sector may support prices. However, higher supplies and lower than expected demand may pressurize prices. Weak international markets may also keep prices under check.

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Commodities Daily Report

Wednesday| June 5, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean declined by 0.82% on Tuesday on account of
weak meal export demand coupled with early arrival of the monsoon in the southern states. However, poor supplies have supported prices at lower levels. The government has set the MSP for Soybean (yellow) at Rs.2250/qtl as again Rs. 2200/qtl last year. 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 3842 3762 712.6 705.5 Prev day 0.47 -0.82 -0.34 -0.47

as on June 4, 2013

WoW -2.56 -1.74 -2.28 -1.07

MoM -4.59 -5.31 -3.25 -1.91

YoY 13.77 14.17 -0.32 -0.97

International Markets
CBOT Soybean corrected on Tuesday due to profit taking and settled 0.24% lower. Prices have gained as planting delay coupled with tight soybean stocks and good demand for US soymeal supported prices. 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 4, 2013 International Prices Soybean- CBOTJuly'13 Futures Soybean Oil - CBOTJuly'13 Futures Unit USc/ Bushel USc/lbs Last 1529 48.59 Prev day -0.24 -0.14 WoW 1.80 -0.08 MoM 5.07 -1.16 YoY 13.28 0.19

Source: Reuters

Crude Palm Oil

as on June 4, 2013 % Change Prev day WoW -0.85 -0.25 -0.81 0.15

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

Last 2340 482.9

MoM 4.89 6.06

YoY -20.76 -12.20

Refined Soy Oil: Ref soy oil as well as CPO settled 0.47% and
0.25% lower on Tuesday tracking weak Malaysian palm oil prices. . 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 3509 3486 Prev day 0.27 0.09 WoW 0.85 0.69

as on June 4, 2013 MoM 3.03 2.05 YoY -7.24 -4.49

Source: Reuters

Technical Chart Soybean

NCDEX July contract

Rape/mustard Seed: Mustard July Futures gained by 0.11% on

Tuesday. 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 with a positive bias today on the back of poor supplies as well as positive international markets. However, weak meal export demand coupled with forecast of a normal monsoon may pressurize prices at higher levels. Mustard may also gain tracking positive edible oil pack. Soy oil as well as CPO may continue to gain due to lower yield period. 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 5, 2013 Support 686-688 3685-3710 3505-3520 479-481 Resistance 693-695 3750-3765 3550-3565 485-487

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Commodities Daily Report

Wednesday| June 5, 2013

Jeera Agricultural Commodities

After opening on a positive note, Jeera prices declined towards the end of the day and settled 0.42% lower on Tuesday. Prices have gained on reports of some fresh export enquiries Good arrivals have also capped the upside. Currently, about 25-30% 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 13490 13095 Prev day 0.65 -0.42

as on June 4, 2013 % Change WoW 0.07 0.34 MoM 0.44 1.63 YoY 0.89 5.97

Source: Reuters

Technical Chart Jeera

NCDEX July contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 9,000 bags on Tuesday. 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 on a mixed note today. Prices may find support at lower levels on improvement in overseas as well as domestic demand. However, higher arrivals may cap sharp upside. 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 0.42 0.53

as on June 4, 2013 % Change

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

Last 5863 5682

WoW -2.84 -4.79

MoM -6.57 -10.01

YoY 67.88 63.84

Turmeric
Turmeric futures recovered from lower levels on declining arrivals and settled 0.53% on Tuesday. However, lack of fresh overseas demand coupled with huge carryover stocks capped sharp upside in the 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 5,000 bags on Monday. Exports of Turmeric between Apr 2012Jan 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 may remain under downside pressure 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. Output concerns may also support prices at lower levels.
Source: Telequote

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

Valid for June 5, 2013

Support 13180-13250 5670-5720 Resistance 13440-13550 5820-5880

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Commodities Daily Report

Wednesday| June 5, 2013

Agricultural Commodities
Kapas
NCDEX Kapas declined 0.91% due to tracking higher sowing of cotton this season. However, MCX Cotton traded on a positive note and settled 0.59% higher on Tuesday on account of good yarn demand coupled with lower arrivals. 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 1086 18880

as on June 4, 2013 % Change Prev. day WoW -0.91 3.09 0.59 3.85 MoM YoY 4.27 16.97 3.85 24.87

NCDEX Kapas Apr Futures MCX Cotton June Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 84.56 91.5

as on June 4, 2013 % Change Prev day WoW 2.67 4.78 3.04 1.55 MoM -0.19 -2.14 YoY 26.42 #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

ICE Cotton futures continued to gain sharply for the second consecutive session and settled 2.67% higher on Tuesday on extended short coverings. Also, as prices have declined sharply, export demand has picked up at lower levels. 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 5, 2013 Support 1070-1080 18640-18760 Resistance 1095-1110 19000-19120

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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