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Weekly Commodity: A firm trend witnessed in the commodity market

SMC | 18 Jan, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary


A firm trend witnessed in the commodity market, despite the fact that crude oil didn't participate in the rally. Downside in dollar index also supported commodities prices to move up. Gold edged higher and crossed $1200 as the dollar weakened after Donald Trump provided little clarity on future fiscal policies in his first press conference as US President-elect. In MCX, it touched 28500. Silver prices too moved up and crossed the mark of 41300. Crude prices once again were on the defensive mode as oversupply fears swirl. It shed some of its weekly loses on Saudi production cut news. Saudi Arabia has cut oil output to its lowest level in two years, reaching below 10 million barrels per day. Saudi Arabia's 10-million-barrel per day output is a more ambitious cut than it had promised as a part of this deal, and represents a 22-month low. Natural gas prices edged higher. The EIA reported that natural gas storage data recorded a decline of 151 Billion Cubic feet (Bcf) for the week ending January 6th following a 49 Bcf draw the previous week. This was the eighth successive draw and marginally above consensus forecasts of a 150 Bcf decline. The base metal complex traded in a positive territory except nickel. Nickel prices plummeted almost 5%, hitting a fourth-month low Thursday after Indonesia decided to finally relax its ban on partially processed minerals exports, including nickel ore, bauxite and other minerals concentrates under certain conditions. Copper and other base metals prices climbed after data showed inflation picked up in China last month, sending a reassuring signal about demand from the world's largest consumer of industrial metals. China's Producer Price Index rose 5.5% last month, higher than analysts' expectations and up from 3.3% in November. A reduction in copper stocks in LME warehouses points to a slightly tighter market, another supportive factor for prices in the short term.

In agri counter, oil seeds and edible oil complex performed well, except mustard oil. Soybeans climbed sharply following the release of the U.S. Department of Agriculture's latest supply/demand report. The data included an unexpected downward revision to the 2016 U.S. soybean crop, which sparked the rally. Cardamom saw some profitbooking from the higher levels whereas jeera and dhaniya prices augmented further. Cotton counter gave some buying opportunities to traders.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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