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Weekly Commodity: A mixed week for commodity counter

SMC | 28 Feb, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary


It was a mixed week for commodity counter, CRB closed little down, near the level of 192. Bullion counter recovered to some extent from its weekly low. Gold held up despite a rising dollar (particularly against the euro) and soaring US equity markets. As per market expectation, although US inflation has risen, the rate hike in March is not very high. Gold is highly-sensitive to rising US interest rates, which increase the opportunity cost of holding nonyielding bullion, while also boosting the dollar. In MCX, it gave closing above 29200 levels whereas silver closed above 42600 levels. Most of the base metals traded in a range with bearish bias, except copper. Copper prices slipped as some traders took profits and reduced their positions ahead of the release of U.S. Federal Reserve minutes that could push the dollar higher. In the energy counter, crude oil prices reignited whereas natural gas saw no respite and noticed very sharp fall. In the time period of three weeks, natural gas came down towards the level of 175 from 220 levels. Natural gas prices fell to a six-month low, their second-largest losses of the year as warm-weather forecasts continue to damp expectations for demand. Crude futures rose with data showing hedge funds are betting big across oil markets following OPEC production cuts agreed last year. Investors now hold more crude futures and options than at any time on record, after members of OPEC committed last year to cut production.

In agri commodities, oilseeds and edible oil pack is in tremendous selling pressure. Crude Palm Oil (CPO) price, which was surging since last November, is under pressure on better production news amid smooth supply. Good soybean yields reported in Brazil also dragged down CPO prices. Soybean futures dropped on persisting weak fundamentals and on traders anticipation that demand for soymeal in domestic as well as in the international market is not improving as per expectation at higher level. Guarseed and Guargum recorded sharp gain in spot markets across the country thanks to strong rally on futures and robust demand from crushers. Crushers were actively buying Guarseed due to good demand in Guargum from overseas market. India Guargum exports in the recent months have shown good growth and industry exports believes that shipment during the fiscal year 2016-17 (April-March) is likely to surpass 3 lakh tonnes. Spices counter traded mix.

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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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