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Weekly Commodity: Energy counter showed dovish move

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


Fear of interest rate hike by Fed in June, some weak data, marginal recovery in dollar index, North Korea test fire were some important triggers for the weak performance of commodities. Even safe haven buying eroded from bullion counter. Gold as U.S. economic data boosted the case for an interest rate hike by the Federal Reserve this month. It gave the closing near 28650 in MCX. Silver too, closed below 40000 levels. Energy counter showed dovish move. Prices moved down on bearish indications amid ample of supply and reluctance of OPEC for taking more aggressive steps to cut production. Though the downside was limited as OPEC continued its production cut policy for next 9 months and US inventories saw sharper downside. Even natural gas suffered from a sharp decline in the prices. The U.S. Energy Information Administration (EIA) reported Thursday that U.S. natural gas stocks increased by 81 billion cubic feet for the week ending May 26. Analysts were expecting a storage injection of 74 billion cubic feet. In base metals all moved down except copper. Nickel prices fell further to hover around 11-month lows, dragged down by worries about oversupply and fears of tepid demand from steel mills in top metals consumer China.


Oil seeds and edible oil remained weak; both are giving a nightmare to the farmers who are suffering from the multi years low prices. It was only refined soya oil which saw some marginal gain. China's soybean importers are delaying soybean shipment orders. Last to last week hedge funds raised their net short position in soybean futures by nearly 26000 lots to 62355 contracts, according to data from the US Commodity Futures Trading Commission. This is the largest net short in 14 months. Spices continued to perform bearish except cardamom. Loss of export demand to Syria has led to a plunge in jeera prices. Syria is selling $150 per tonne cheaper than India in the world market. Consequently, the demand from the Gulf countries has shifted to Syria. Additionally, China which is the major importer of cumin seed from India has better crop this year. Coriander seed prices continued bearish trend in the spot market racking volatility at future trade amid sluggish demand.



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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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