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Weekly Commodity: Seesaw moves prevailed due to mixed fundamentals

SMC | 21 Feb, 2017  | Follow Author | Add to my Favourites 
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Weekly Commentary

                  

Seesaw moves were noticed in commodity complex as ambiguity prevailed due to mixed fundamentals. Depreciation in INR increased the high volatility in the prices in the later part of the week. Dollar index closed down on uncertainty on rate hike and Trump policies. CRB somehow managed to close above 194. Energy counter weakened on inventories issue amid ongoing mild weather. U.S. crude stocks rose 9.5 million barrels last to last week, the U.S. Energy Information Administration (EIA) said, nearly three times more than forecast. Mild weather across the US continued to weigh on natural gas prices. MCX natural gas traded below the level of 197. The recent forecasts for mild weather are not expected to change. Buying returned in bullion counter but it was more in gold. Precious metals are seeing a revival in demand among investors as gold prices continue to rally amid global economic uncertainties and geopolitical tensions. Gold prices have gained 6.5% year-to-date, having jumped 5% in January alone. US rate hike in December and lack of clarity on US economic policies are key factors driving gold prices. Investment demand in exchange-traded funds (ETF) has started to pick up. SPDR ETF holdings saw an inflow for a second straight week with holdings up 18 tonnes last week. Even silver prices zoomed up on upside in gold as well as in some base metals. Copper prices were really volatile and strike issue continuously affecting the price movements. Copper eased after China's overseas investment weakened and sentiment waned over demand in the world's top copper user, but fall was limited on the prospect of lengthy supply disruptions in Chile and Indonesia. Nevertheless, even in strike situations in Escondida, Asia's copper industry is pretty relaxed, due to heavy stockpiles. Copper inventories tied to SHFE have surged 61% since the week of Jan. 20 to 277,659 tonnes.


As regards agri commodities, castor oil in the non-edible section saw some short covering after a sharp fall of many weeks due to reduced offtake by consuming industries. Edible oil and oil seeds traded bearish on account of good domestic oilseeds production and better domestic availability of edible oils. India, the world's leading vegetable oil buyer, had imported 6, 88,393 tonnes palm oil in January 2015. Guar counter revived further on improved demand in spot market and impact was visible in futures as well.


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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 IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.



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