Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities

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

Research Team
Vedika Narvekar - Sr. Research Analyst [email protected] (022) 2921 2000 Extn. 6130 Anuj Choudhary - Research Analyst [email protected] (022) 2921 2000 Extn. 6132

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Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities
News in brief
Govt moves to examine agri price panels mandate
With some major states slated to go to the Assembly polls this year, the government has initiated amove to examine the mandate of the Commission for Agricultural Costs and Prices (CACP), for the first time since 2005, and revisit its methodology to calculate the minimum support price ( MSP). The move follows complaints that MSPs of farm produce, especially foodgrain, are inadequate to cover production costs. Delhi, Madhya Pradesh, Chhattisgarh and Rajasthan are slated to hold Assembly polls towards the year- end. Officials said the government had formed a committee under the chairmanship of Ramesh Chand, director of the National Centre for Agricultural Economics and Policy Research, to study the cost concepts for fixing MSP. Its first meeting was held today. The committee has been asked to suggest whether there is a need to reposition CACP, owing to the liberalisation of Indian agriculture. In 2005- 06, the government had appointed a committee under economist Y K Alagh to examine CACPs terms of reference. The committee had said price recommendations should be integrated with the tariff policy. (Source:
Business Standard)

Market Highlights (% change)

Last Prev. day

as on May 09, 2013

WoW MoM YoY

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

19939 6050 54.37 96.39 1469

-0.26 -0.32 0.52 -0.24 -0.35

1.03 0.85 0.98 2.55 0.07

9.40 10.10 -0.21 2.32 -7.40

20.99 21.62 1.13 -0.43 -7.84

.Source: Reuters

Pre Expiry Margin - Refined Soya Oil Contract

Trading and Clearing members are hereby informed that in continuation of the Exchange Circular NCDEX/RISK-011/2011/136 dated May 05, 2011 and in terms of Bye-laws, Rules and Regulations of the Exchange, pre expiry margin of 5% will be imposed on all running contracts and yet to be launched contracts in Refined Soya Oil for last 5 trading days increased on a daily basis on both buy and sell sides. (Source: NCDEX)

Rice Stock Reached 34.73 Million Tons as on 1st May, 2013

As per data received from FCI, rice stock in central pool kitty as on 1st May 2013 reached at 34.73 million tons, up about 5.5% from around 32.92 million tons recorded during the same time last year. However it is lower than previous months stock of 35.47 million tons. (Source: Agriwatch)

Cardamom growers fret as prices slide

Unwinding of large stocks has caused a crash in the prices of cardamom at various auction centres in the past two months. The average price today was Rs. 558/kg, down from Rs. 658 in the last week of March. It has been a continuous fall over the past fortnight it was Rs. 626/kg on April 20 and Rs. 590/kg on April 27. This has caused worry for growers in Kerala and Tamil Nadu, with the next main harvesting season set to begin next month. A section of growers from the VandanmeduUdumbanchola area of Idukki district told Business Standard the price might even slide below Rs. 500/kg, as cardamom is still coming in large quantities to various auction centres. KK Devasya, former president of the Cardamom Growers Association, said auction centres were getting 25- 80 tn per day even in this off- season. This is mainly because of the unwinding of stocks by farmers. (Source: Business Standard)

Centre tells states to start buying PDS sugar from open market
The Centre has asked state governments to immediately start buying sugar from the open market to ensure supply to ration card holders as it is left with the stock to meet the Public Distribution System (PDS) requirement for current month only. The Centre has partially decontrolled the sugar sector and mills are no longer obligated to supply sweetener to the Centre for the Public Distribution System. In a letter to state chief ministers, Food Minister K V Thomas said that the centre has allocated sugar quota up to May 2013 and it is imperative that the states take immediate action for procurement for future requirements. He also asked states to initiate steps immediately to ensure that the supply of sugar through PDS is not affected during the period of transition and thereafter. (Source: Financial Express)

Govt notifies decision on partial sugar decontrol

The government has notified the Cabinet Committee on Economic Affairs (CCEA) decision to remove two key controls on sugar sector. On April 4, the CCEA had decided to decontrol the sugar sector by giving freedom to mills to sell sugar in the open market and removing their obligation to supply the sweetener at subsidised rates for ration shops. According to the gazette notification dated May 2, the Food Ministry has rescinded the control over sugar industry, especially on sugar sale in the open market and PDS, through Essential Commodities Act and Sugar Control Order. As a result, the regulated release mechanism -- under which sugar quantity for open market sale is fixed by the government -- has been abolished with immediate effect. Besides, mills are freed from mandatory supply of 10% of their production to the government at cheaper rate to meet ration shop demand. The sugar to be supplied through ration shops will be purchased by the state governments and the Centre will bear the entire subsidy cost, which is estimated to double to Rs 5,300 crore after the decontrol. (Source: Business Standard)

Food prices rise for second month, strong cereal crop forecast for 2013 UN agency
World food prices rose for a second straight month, the United Nations Food and Agriculture Organization (FAO) today said, while global production of coarse grains could set a new record this year with strong growth also projected for global wheat and rice production. FAOs Food Price Index which measures monthly changes in international prices of a basket of meat, dairy, cereals, oils and fats, and sugar rose two points to 215.5 in April, up one per cent from March. The slight boost was driven mainly by a spike in dairy prices which indexed an averaged 259 points in April, up nearly 34 points or almost 15 per cent from March. The change is due mainly to a lull in milk production in New Zealand, the worlds largest producer. The FAO Cereal Price Index slipped 10 points or 4.1 percent in April to 235 points, but it still 11 points higher than in April 2012. (Source: United Nations News Centre)

Cooking oil imports by India to drop on near- record reserves

Cooking oil imports by India, the worlds largest palm oil buyer, probably declined for the first time in five months in April, as reserves stayed near a record and summer heat curbed consumption of fried foods. Palm oil futures declined for the first time in three days in Malaysia. Purchases of vegetable oils, including those for industrial use, fell 24% to 700,000 tn last month from 925,334 tonnes a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Palm oil imports gained nine per cent to 560,000 tonnes from 512,137 tonnes, the survey showed. The Solvent Extractors Association of India will release the data next week. (Source: Business Standard)

Exporters await drop in jeera to place orders

Export demand for jeera is likely to improve soon because of lack of supplies from global producers Syria and Turkey. Besides, there are reports of higher output of the spice as well. As such, exporters are reportedly waiting for more drop in prices before floating any orders. Jeera futures decreased on the back of profit booking by traders. Arrivals were reported around 16,000-17,000 bags, while traded around the same. In Singapore one per cent Indian jeera seed was offered at $2,425 a tonne f.o.b Mumbai. (source: Business Line)

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Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities
Chana
After opening in the negative note, Chana June futures recovered from lower levels yesterday on account of short coverings and settled 0.35% higher on Thursday. Prices have declined sharply as supplies of the new crop coupled with higher output estimates pressurized prices. However, demand from stockists at lower levels has cushioned sharp downside in the prices. Lower yield in MP due to unseasonal rainfall in February have also supported prices at lower levels. The supplies are expected to slow down towards the end of the month. Higher supplies of the new crop from the major producing states such as Madhya Pradesh, Rajasthan and Maharashtra is seen pressurizing prices in the physical markets. Concerns over the yield in Madhya Pradesh, the largest chana producing state, due to unfavorable weather conditions has been seen supporting prices at lower levels. Chana prices may find support at lower levels as stockists will build inventories at lower levels to meet the demand for the entire season.

Market Highlights
Unit Rs/qtl Rs/qtl Last 3368 3357 Prev day -0.93 -0.09

as on May 09, 2013 % change WoW MoM -3.07 -6.02 -3.31 -6.05 YoY -21.28 -20.88

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 of 8.2 mn tn in 2012-13. Erratic weather in M.P. lowered the yield. Assocham estimates, 21 mn tn of pulses demand in 2012-13 and is likely to reach at 21.42 mn tn in 2013-14 and 21.91 MT in 2014-15. (Source:
Agriwatch).
rd

Source: Telequote

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

valid for May 10, 2013 Resistance 3455-3475

3385-3410

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 prices are expected to trade with a negative bias in the intraday. Higher supplies of the new crop are expected to pressurize prices. However, value buying may emerge at lower levels. Improvement in demand from stockists may also support prices at lower levels. Overall output in the current season is comparatively higher and thus no major upside is expected over a medium term.

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Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities
Sugar
Sugar June Futures extended the gains of the previous session and settled 1.88% higher as sentiments turned optimistic after the government notified the cabinet committee on economic affairs (CCEA) decision to remove two key controls on sugar sector. Improving demand from the bulk consumers and expected lower output next season in Maharashtra also supported an upside in the prices. Sugar prices in the domestic markets have consolidated at lower levels over the past couple of weeks as higher supplies was offsetting summer season demand in the physical markets. 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. States will decide on the FRP of cane. 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 3048

as on May 09, 2013 % Change Prev. day WoW 0.33 0.26 MoM 0.34 YoY 2.88

Rs/qtl

3017

1.48

2.79

4.36

4.50

Source: Reuters

International Prices
Unit Sugar No 5- LiffeMay'13 Futures Sugar No 11-ICE May '13 Futures $/tonne $/tonne Last 486.2 388.22

as on May 09, 2013 % Change Prev day WoW -0.21 0.00 -2.99 -0.74 MoM -3.99 -1.41 YoY -12.70 -14.28

.Source: Reuters

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 30.8 mn tn against the domestic consumption of around 22. 5 mln tn for 2012-13. Exports are not viable as international prices have also declined significantly. A severe drought in top sugar producing Maharashtra state has been affecting new plantation and is likely to affect on sugar production in the year starting from Oct. 1, 2013.

Technical Chart - Sugar

NCDEX June contract

Source: Telequote

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

valid for May 10, 2013 Resistance 3070-3090

Global Sugar Updates

Liffe Sugar declined for the third consecutive day losing 0.21% on Thursday, on account of improvement in the pace of cane crush in Brazil supported by favorable weather. Cool, dry weather in Brazil has boosted cane crushing and will allow uninterrupted exports. Sugar prices in the international markets are trading at their lowest levels in since July 2010 on account of a global surplus situation for the third consecutive year. 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. Expectations of abundant supplies from the 2013-14 harvest in the other leading producers, such as Thailand, Mexico and the United States have kept prices under pressure. Sugar prices are trading around 2 year lows.

2980-3015

Outlook
Sugar prices are expected to gain further on account of improvement in demand from the bulk manufacturers. Sentiments are expected to remain positive as government has notified cabinets decision to remove two key controls on sugar sector. Weak international prices may also cap sharp gains.

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Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities
Oilseeds
Soybean: Soybean futures declined yesterday on account of weak
meal export demand. IMDs prediction of a normal monsoon also pressurized prices. However, poor supplies in the domestic markets rd cushioned downside in the prices. According to the 3 advance estimates, Soybean output is pegged at 14.14 mn tonnes. The spot as well as the Futures settled 0.45% and 1.15% lower on Thursday. Special Margin (in Cash) of 10% on the Long side has be imposed in Soyabean May 2013, June 2013 & July 2013 expiry contracts with effect from beginning of day Tuesday, April 30, 2013. Indias soy meal exports in April are likely to fall to 200,000 tonnes, down 36 percent from a year ago, unless buying from Iran improves. Exports of Soybean meal during March, 2013 was 3,20,265 tonnes as compared to 4,61,892 tonnes in March, 2012 lower by 30.66% y-o-y.

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 4021 4000 721.9 714.4 Prev day -0.45 -0.66 -0.31 -0.10

as on May 09, 2013

WoW 1.26 2.12 -1.78 -0.24

MoM -2.07 -3.49 -0.67 -1.29

YoY 12.16 14.55 -3.02 -4.02

Source: Reuters

International Markets
Soybean gained 0.83% on Thursday on concerns over delays in planting in the Midwest coupled with tight supplies of the old soy crop. Farmer selling has slowed down. Expectations of lower ending stocks in USDAs Monthly crop report to be released today also supported prices. Large South American crop coupled with forecasts for US weather to improve in the coming week have capped sharp gains. Sentiments remain weak on account of smooth supplies from Brazil coupled with demand fears amid bird flu in China. Chinas soybean imports were reported at 3.98 mn tonnes in April 2013, lower by 18.4% in April last year, but marginally higher compared to 3.84 mn tonnes in March. The decline is attributed to delays in shipment from Brazil coupled with weak demand on the back of outbreak of the bird flu. Brazil's government lowered its forecast for the 2012/13 soybean crop from 82.1mn tn to 81.9 mn tn.
International Prices Soybean- CBOTMay'13 Futures Soybean Oil - CBOTMay'13 Futures Unit USc/ Bushel USc/lbs Last 1491 49.07 Prev day 0.83 0.84 WoW 3.49 1.34

as on May 09, 2013 MoM 6.86 -1.82

Source: Reuters

YoY 4.45 -6.46

Crude Palm Oil

as on May 09, 2013 % Change Prev day WoW 1.10 0.68 2.37 1.58

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

Last 2288 461.9

MoM -3.09 -0.79

YoY -31.39 -23.95

MYR/Tonne Rs/10 kg

Refined Soy Oil: Ref soy oil settled marginally lower by 0.14%
tracking weak bean prices while MCX CPO settled 0.84% higher on Thursday tracking positive international prices. Indian government increased the base import price on crude soybean oil by US $9/tn to US $1103. Besides, base import price on crude palm oil set at US $ 824 and reduced base import price on palmolein crude as well as refined to US $ 864/tn and US $861/tn. Imports of all vegetable oils, including non-edible oils, fell 7.5 per cent to 896,714 tn in March, pulled down by the drop in palm oil imports. Palm oil imports dropped 12% to 708,262 tn in March. Malaysia, the world's No.2 palm oil producer, set its crude palm oil export tax for May at 4.5 percent, unchanged from April. Exports of Malaysian palm oil products from April 1 to 25 increased 5.2% to 1,123,129 tonnes from 1,067,140 tonnes shipped during March 1 to 25.

Source: Reuters

RM Seed
Unit RM Seed SpotNCDEX (Jaipur) RM Seed- NCDEX May '13 Futures Rs/100 kgs Rs/100 kgs Last 3414 3419 Prev day 0.16 0.44 WoW 0.41 -0.03

as on May 09, 2013 MoM -5.45 -4.52

Source: Reuters

YoY -13.02 -12.15

Technical Chart Soybean

NCDEX June contract

Rape/mustard Seed: Mustard June Futures settled 0.41% higher

on Thursday on account of short coverings. Prices have declined sharply on account of higher supplies of the new crop coupled with higher output expectations. 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 on a mixed note today. Positive international markets as well as poor supplies in the domestic markets may support prices. However, forecast of a normal monsoon coupled with weak meal export demand may pressurize prices. Soy oil may decline on expectations of higher imports. 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 10, 2013 Support 682-687 3770-3820 3390-3420 456-459 Resistance 695-700 3930-3995 3475-3495 464-466

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Commodities Daily Report

Friday| May 10, 2013

Jeera Agricultural Commodities

After witnessing some short coverings on Wednesday, Jeera futures continued to decline yesterday and settled 0.81% lower. However, the spot gained marginally by 0.37% higher due to declining arrivals from its peak. Prices have declined sharply on account of weak demand from the domestic as well as international markets. Higher production estimates have also pressurized prices. Domestic as well as overseas demand is expected to improve in the coming days. 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. According to the Rajasthan State Budget 2013-14, it has exempted jeera from VAT. Supply concerns from Syria and Turkey still exists. Expectations are that export orders may still 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 $2,425 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 13411 12703 Prev day 0.37 -0.84

as on May 09, 2013 % Change WoW 0.14 -0.51 MoM -2.67 -8.20 YoY -0.68 -5.92

Source: Reuters

Technical Chart Jeera

NCDEX June contract

Production, Arrivals and Exports

Arrivals in Unjha were reported at 15,000 lakh bags on Thursday. 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)
Source: Telequote

Outlook
Jeera Futures is expected to trade with a negative bias today. Higher output and weak demand may pressurize prices. However, any improvement in overseas as well as domestic demand may support prices. Overall trend remain positive for the Jeera prices as they are likely to stay firm as Syria & Turkey have stopped shipments.

Market Highlights
Prev day 0.00 -1.44

as on May 09, 2013 % Change

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

Last 6014 5870

WoW -5.02 -6.68

MoM -8.21 -13.90

YoY 76.18 58.05

Turmeric
Turmeric June Futures continued to decline yesterday on account of higher supplies and huge carryover stocks. Domestic as well as overseas demand is also reported to be weak. However, there are expectations of improvement in overseas demand in June. Unseasonal rains in Andhra Pradesh have damaged about 9240 tonnes of turmeric earlier. The spot settled unchanged while the Futures settled 0.8% lower on Thursday.

Technical Chart Turmeric

NCDEX June contract

Production, Arrivals and Exports

Spot markets remained closed on Thursday due to Amavasya. 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 next years carryover stocks would be around 10 lakh bags. According to Spices Board of India, exports of Turmeric in April 2012 increased by 1% at 7,300 tn as compared to 7,230 tn in April 2011. Outlook Turmeric is expected to trade with a negative bias today. Weak exports data coupled with higher supplies of the fresh crop and huge carryover stocks may pressurize prices at higher levels. However, expectations of improvement in export demand coupled as well as demand from stockists may support prices at lower levels. 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 10, 2013

Support 12570-12680 5750-5850 Resistance 12940-13090 6090-6180

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Commodities Daily Report

Friday| May 10, 2013

Agricultural Commodities
Kapas
NCDEX Kapas declined 0.63% as the government agencies CCI and NAFED will offload stocks in May after an unsuccessful bid to offload of 2.5 lakh bales of cotton in April 2013 continued to pressurize prices. However, MCX Cotton settled marginally higher by 0.17% tracking positive international markets. Emergence of fresh demand at lower price levels also supported prices. 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 1031 17970

as on May 09, 2013 % Change Prev. day WoW -0.63 -0.10 0.17 0.39 MoM YoY 10.80 -3.64 0.39 3.39

NCDEX Kapas Apr Futures MCX Cotton May Futures

Source: Reuters

International Prices
ICE Cotton Cot look A Index Unit USc/Lbs Last 87.92 95

as on May 09, 2013 % Change Prev day WoW 2.00 4.88 0.42 3.37 MoM 3.88 3.09 YoY 2.45 1.39

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 sharply and witnessed modest gains of 2% on Thursday on market participants built risk premiums ahead of the USDA monthly report to be released later today. U.S. plantings delays which prompted worry over upcoming supplies have also boosted prices from lower levels. US export sales for the week ending April 25 reached 314,400 running bales, up 32% from previous week and most since mid-January. According to China Cotton Association, China will continue with its stockpiling policy this year which will boost imports. 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. USDA has initially forecasted US Cotton acreage for 2013-14 season, at smallest in 20 yrs, however, with recent surge in prices, farmers may decide to plant more cotton. The planting intention data is schedule to be released on 28th march 2013.

Source: Telequote

Technical Chart - Cotton

MCX May contract

Source: Telequote

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

valid for May 10, 2013 Support 1015-1025 17840-17920 Resistance 1040-1050 18070-18150

Outlook
We expect Cotton prices to trade on mixed note today. Prices may decline as offloading from the state reserves may ease supplies in the short term. However, firm international markets may support prices at lower levels. US cotton planting intentions were reported at a 4 year low. China will continue its stockpiling policy, may also support prices.

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