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Weekly Commodity: Commodities counter remained in a bear grip for the continuous third week

SMC | 08 May, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary


Commodities counter remained in a bear grip for the continuous third week. CRB closed near 178, which made a high of 197.66 in 2017 so far. Dollar index moved up and most of the commodities turned weak. The US Federal Reserve has kept interest rates unchanged, downplaying weak first-quarter economic growth while emphasizing the strength of the labor market; signaling it is still on track for two more rate rises this year. On Thursday, dollar saw some correction. Energy counter saw a sharp fall. Crude oil prices continued to decline after EIA inventory data showed stockpiles shed just 930k barrels last to last week, a far smaller drawdown than the 2.91 million barrel outflow expected by economists. Furthermore, the same report showed that a measure of implied US crude demand plunged 5.4%, marking the largest weekly drop in seven months. The spotlight now turns to Census Bureau data tracking US crude oil exports through the first three months of the year. Shipments hit 1.12 million barrels per day in February, the most in atleast last six years. Natural gas prices fell as cool weather raised long-term concerns that summer heat won't show up in full force. Industrial metals turned weak on bearish cues. Nickel prices declined on the news of rejection of appointment of Regina Lopez as environment secretary by Philippine lawmakers as it is likely to ease the supply woes for the metal used in making stainless steel. Copper prices dropped after a jump in inventories increased, worries about an economic slowdown in China, the world's largest consumer of the metal. On-warrant inventories available for delivery at LMEregistered warehouses increased by 38,950 tonnes, or 32%, to 160,200 tonnes, the highest since mid-April.

The forecast of a normal monsoon, weak demand and rising supply of agri commodities, following a good crop, led to a fall in prices of the produce. Wheat arrivals have risen sharply. FCI has recorded huge procurement in some parts of North India. Cardamom prices strengthened on lower level buying. A further fall in small cardamom prices below ` 1,000 per kg for the first time this season will benefit exporters as India is facing tough competition from Guatemala. Cardamom prices touched a five-year high of Rs 1,400 per kg earlier this year as output fell by 50% from a year ago. From there it saw continuous decline on smooth supply by Guatemala.

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About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.

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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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