Commodities & Currencies Weekly Tracker 5 …web.angelbackoffice.com/Research_ContentManagement/...Commodities Weekly Tracker Gold • Last week, spot gold prices declined by 0.5 percent

Commodities & Currencies

Weekly Tracker

5 December 2016

Commodities Weekly Tracker Monday, December 05, 2016

0.24 0.10

-0.20 -0.33 -0.34

-0.47 -0.70

-0.98

-1.63 -1.77 -2.00

-1.50

-1.00

-0.50

0.00

0.50

NIK

KEI

22

5

DJI

A

KO

SPI

SEN

SEX

NIF

TY

CA

C 4

0

HA

NG

SEN

G

S&P

50

0

FTSE

10

0

DA

X

Global Equities Performance (%)

Source: Reuters; Angel Currencies

1.93

1.22 1.17

0.81 0.71

0.42

-0.12

-0.71 -1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

GB

PU

SD

GB

PIN

R

JPYU

SD

EUR

USD

INR

USD

JPY

EUR

INR

DX

Currencies Weekly Performance (%)

Source: Reuters; Angel Currencies

Commodities Weekly Tracker

Monday, December 05, 2016

Source: Reuters

3.2 2.9

1.2 1.0 0.7 0.5 0.3 0.3 0.2

(0.2)

(1.1)(1.5)

(2.2)(2.6)

(7.2)(8.0)

(6.0)

(4.0)

(2.0)

0.0

2.0

4.0

Agri-Commodities Weekly Performance (%)

12.1

8.2

1.2

(0.5) (1.8) (2.0) (2.7)

(6.7) (7.6) (10.0)

(5.0)

0.0

5.0

10.0

15.0

Non-Agri Commodities Weekly Performance (%)

Source: Reuters

Global update

The Italian government suffered a resounding defeat in a constitutional referendum that prompted Prime Minister Matteo Renzi to say he would resign.

This had infused jitters in the European markets last week . The Prime Minister of Italy is in support of ‘Leave’ vote and has decided to give up his seat if the ‘Remain’ party wins.

Bank of Japan surprisingly announced its first special bond-buying operation to curb growth in bond yields. The governor mentioned about not standing idly by as Japanese government bond yields jump in line.

In the recent Autumn Statement, the new Chancellor of UK pledged to increase spending on the UK's infrastructure and research and development programs. The Autumn Statement prioritized additional spending on high-value investments, specifically in infrastructure and innovation.



Gold • Last week, spot gold prices declined by 0.5 percent to close at $1176.9 per ounce extending losses

after its biggest monthly decline in more than three years, as a surge in oil prices boosted bond yields, denting interest in non-yielding gold as an alternative investment.

• The precious metal fell more than 8 percent in November, hurt by a jump in the dollar and Treasury yields after Donald Trump's surprise election to the U.S. presidency led to speculation that his commitment to infrastructure spending would spur growth and inflation.

Prices fell to nearly a 10-month low on Wednesday, adding to its deepest monthly price declines in more than three years as strong U.S. economic data and higher U.S. Treasury yields buoyed the dollar, further cementing the case for a December rate increase.

U.S. private employers stepped up hiring in November much more than expected and consumer spending increased last month, giving more ammunition to the Federal Reserve for an interest rate increase.

From a week perspective, we expect gold prices to trade lower towards $1160 mark while MCX gold prices will trade lower towards Rs.27,500 mark.



Crude Oil

WTI oil prices rose by 12.2 percent last week to close at $51.7 per barrel extending gains after OPEC and Russia agreed to restrict output to reduce the global supply glut more quickly.

The Organization of the Petroleum Exporting Countries agreed on Wednesday to its first oil output reduction since 2008 after the group's leading producer Saudi Arabia accepted "a big hit" and dropped a demand that arch-rival Iran also slash output.

The deal also included OPEC's first coordinated action in 15 years with non-member Russia. Azerbaijan said it was also willing to discuss cuts.

The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, agreed to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent, to 32.5 million bpd.

From a weekly perspective, we expect oil prices to trade higher towards $54 while MCX crude oil prices can inch higher towards Rs.3700 mark.



Copper

Last week, LME Copper prices traded lower by 2 percent as Chinese exchanges took stern measures to tame the excessive volatility in base metals. Also, uncertainty regarding OPEC decision and Italy’s referendum hurt prices for better part of the week.

Further, Chinalco has reached a deal with the Peruvian government for a major expansion of Toromocho, one of Peru’s biggest copper mines. Also, Peru’s National Institute of Statistics said last week that national copper production in September grew 35.9% as compared to the same month of 2015.

However, sharp downside was restricted as the Organization of the Petroleum Exporting Countries reached a deal on Wednesday to reduce their oil production by 1.2 million barrels per day in order to raise global prices.

Moreover, manufacturing data from the US and China expanded in November, adding to positive demand outlook.

MCX copper prices traded lower by 1.7 percent to close at Rs.396.7 per kg on Friday.

From a weekly perspective, we expect LME Copper prices to trade higher towards $6000/t while MCX Copper prices may surge towards Rs.410/kg mark as Chinese services PMI added to a string of positive data from the mainland nation. Besides, investors will keenly watch ECB Press conference and China’s trade balance data due this week.



Rupee

The Indian Rupee appreciated by 0.71 percent in the last week following gains in Asian market currencies as the markets discounted the decision of the Organization of the Petroleum Exporting Countries of agreeing to cut oil output in a bid to increase crude prices.

Moreover, outflow of $25 billion of FCNR deposits were eased by suspected intervention by RBI through state-owned banks which further acted as a positive factor.

There is a rising speculation that the Reserve Bank of India will lower its repo rate by 25 basis points to 6 percent in its next month monetary policy meeting; all thanks to lower inflation rate.

Weakness in the DX added to INR’s strength as markets book profits from post election rally which made a weekly high of 68 and closed at 68.02 levels on Friday.

From a weekly perspective, the Indian Rupee is expected to appreciate and touch 67.70 levels as investors book profits from post-election rally which will keep the DX weak. Moreover, rising speculation of repo rate cut by the RBI in this week’s policy meeting will further act as a positive factor and boost the demand for the Indian currency.



Euro

Euro currency traded higher by 0.81 percent as the robust release of economic datasets from the zone kept the market sentiments in an upbeat.

Unemployment data from the zone fell to a seven-year low at 10 percent and the inflation data of the Euro area came better than the expected levels.

Moreover, markets discounted the ECB President’s speech where he warned that Brexit would be tougher for Britain than Euro-zone and wants clarity over the negotiation process.

He also mentioned about the ECB committee being in a position to address bond scarcity and has flexible programs to maintain monetary accommodation.

All the above factors along with weak DX boosted the demand for Euro which made a weekly high of 1.0689 and closed at 1.067 levels in Friday.

From a weekly perspective, the Euro currency is expected to trade lower and touch 71.70 levels as prime minister of Italy confirms that he will resign following his heavy referendum defeat. This will keep the shared currency pressurized as the next contesting government i.e. Five star movement is Euroskeptic.


Soybean


Soybean futures closed higher for the week but the prices are trading flat and tried to

stabilize at the current levels as the arrivals of soybean in the domestic market keeping

the supplies more that the demand.

The most-active Dec’16 delivery contract closed 0.30% higher last week to settle at Rs.

3,112 per quintal.

The surge in Soy oil prices too support the soybean prices. The tariff value of crude soyoil

was raised by $4 per tn to $876 which was the fifth increase in two and half month by the

government. The tariff value of soy oil has been increase by about 6.5% since 15-Sep-16.

The soybean harvesting is complete and the farmers are quite reluctant to sell at lower

prices. The soybean arrivals have improved in Maharashtra and Madhya Pradesh which

were badly hit.

Soymeal exports enquiries have slightly improved primarily from South-East Asian

countries at the current level also support prices.


Soybean


CBOT soybean was closed higher lower last week, on reports of improved weather in

South America for soybean planting and expectation of Chinese purchases of US soybean.

The USDA reported net sales of 227,000 MT were down 22%from the previous week and

34% from the prior 4-week average for the period November 18-24, 2016.

Earlier, soybean prices have been supported by strong demand for U.S. supplies led by

China, but the export sales notices to China dropped by over 45% in November to 1.16 mt

from 2.1 mt in October.

We expect Soybean prices for December delivery to trade higher towards 3220 / 3250

(CMP: 3,114) due to expectation of good demand from the industrial buyers for

soybean crushing. The increase in Ref Soyoil prices may also support the soybean prices.

However, the prices may trade in a range on expectation of higher domestic soybean

crop this season and weak soy meal exports.


Cotton


Cotton complex prices closed higher last week due to good demand for new season cotton.

However, the gain was limited due to ease in arrivals of seed cotton (Kapas) in the physical

market. NCDEX Kapas for Apr’17 closed 1.04% higher while MCX Nov’16 cotton closed 0.05%

higher.

As per the latest press release by CAI, total supplies of cotton in the domestic market during

2016/17 will be lower at 408 lakh bales compared to 427 lakh bales as compared to last year

supplies as per latest release by CAI due less carry over stock and imports.

India exported 1.842 lakh bales of cotton last week (21 -26 November 2016), which was

1.812 lakh bales previous to last week (14 -20 November 2016), according to the data

released by IBIS.

According to data release, major importer of Indian cotton during the week (21 -26

November, 2016) was China followed by Bangladesh, Vietnam, Indonesia and Pakistan.


Cotton


ICE Cotton futures marked its second successive weekly decline for the week due to good

harvesting progress of the US cotton and slowdown in exports.

The U.S. Department of Agriculture's weekly crop progress report released on 28-Nov-16

showed that 77% of cotton crops were harvested in the United States by the week ended

Nov. 27, up from 67 % in the previous week.

Moreover, USDA showed net upland sales of 202,300 running bales (RB) for the week Nov

18-24 were down 21% from the previous week but up 1 percent from the prior 4-week

average for the 2016/17 crop.

ICAC in its latest press release stated that the world cotton consumption is forecast to

exceed world production by 1.7 mt and the ending stocks are projected to shrink by 9% to

17.4 million tons, which represents 72% of expected mill use.

We expect cotton prices to trade higher towards Rs. 19,600 / 19,700 (CMP: 19,140 / bale)

on expectation of improved demand for new season crop from textile mills. The arrivals in

the physical market have been improved but the peak arrivals have not been achieved due

to cash crunch.


Thank You!

Angel Commodities Broking Pvt. Ltd. Registered Office: G-1, Ackruti Trade Centre, Rd. No. 7, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 3083 7700 Corporate Office: 6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai - 400 093. Tel: (022) 2921 2000 MCX Member ID: 12685 / FMC Regn No: MCX / TCM / CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302 Disclaimer: The information and opinions contained in the document have been compiled from sources believed to be reliable. The company does not warrant its accuracy, completeness and correctness. The document is not, and should not be construed as an offer to sell or solicitation to buy any commodities. This document may not be reproduced, distributed or published, in whole or in part, by any recipient hereof for any purpose without prior permission from “Angel Commodities Broking (P) Ltd”. Your feedback is appreciated on [email protected]


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Commodities & Currencies Weekly Tracker 5 …web.angelbackoffice.com/Research_ContentManagement/...Commodities Weekly Tracker Gold • Last week, spot gold prices declined by 0.5 percent