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Content 1. Director’s Interview 6. Performance of range forecast 2017 & Events of 2018 3. Commodity performance 2017 4. Asset class comparison 2017 5. Span of price movement 6. Fundamental calls performance in 2017 7. Economic indicators 8. Outlook 2018 i. Bullions ii. Energy iii. Base metals iv. Oilseeds & edible oil v. Spices vi. Other Commodities

COMMODITY OUTLOOK 2018

Page No. 4-5 6 7 8 9 10-14 15-16 17-19 20-22 23-27 29-31 32-35 36-39

SMC GLOBAL SECURITIES LTD. REGISTERED OFFICES: 11 / 6B, Shanti Chamber, Pusa Road, New Delhi 110005. Tel: 91-11-30111000, Fax: 91-11-25754365 MUMBAI OFFICE: Lotus Corporate Park, A Wing 401 / 402 , 4th Floor , Graham Firth Steel Compound, Off Western Express Highway, Jay Coach Signal, Goreagon (East) Mumbai - 400063 Tel: 91-22-67341600, Fax: 91-22-67341697 KOLKATA OFFICE: 18, Rabindra Sarani, Poddar Court, Gate No-4,5th Floor, Kolkata-700001 Tel.: 033 6612 7000/033 4058 7000, Fax: 033 6612 7004/033 4058 7004 AHMEDABAD OFFICE : 10/A, 4th Floor, Kalapurnam Building, Near Municipal Market, C G Road, Ahmedabad-380009, Gujarat Tel : 91-79-26424801 - 05, 40049801 - 03 CHENNAI OFFICE: Salzburg Square, Flat No.1, III rd Floor, Door No.107, Harrington Road, Chetpet, Chennai - 600031. Tel: 044-39109100, Fax -044- 39109111 SECUNDERABAD OFFICE: 315, 4th Floor Above CMR Exclusive, BhuvanaTower, S D Road, Secunderabad, Telangana-500003 Tel : 040-30031007/8/9 DUBAI OFFICE: 2404, 1 Lake Plaza Tower, Cluster T, Jumeriah Lake Towers, PO Box 117210, Dubai, UAE Tel: 97145139780 Fax : 97145139781 Email ID : [email protected] [email protected] NEW YORK OFFICE: Alliance Bernstein Building 1345 Avenue of the Americas Second Floor, New York, NY 10105 Phone: (212) 878-3684 Toll-Free: (855) 589-1915 Fax: (866) 852-4236 Printed and Published on behalf of SMC Comtrade Ltd. 11/6B, Shanti Chamber, Pusa Road, New Delhi-110005 Website: www.smcindiaonline.com Investor Grievance : [email protected] Printed at: S&S MARKETING 102, Mahavirji Complex LSC-3, Rishabh Vihar, New Delhi - 110092 (India) Ph.: +91-11- 43035012, 43035014, Email: [email protected]

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t has been always pleasant experience to be a part of the team bringing out the “Commodity Outlook” year after year. Today, I would like to take the opportunity to thank the Commodity editorial team, who worked long hours to make this magazine possible, as well as the advertisers and the many contributors who have taken the time to mark the 10th anniversary of “Commodity Outlook” in their own words. The Commodity research team will continue its effort to bring you the best and the latest information from all the concerned segments. We are in the year 2018. The year 2017 witnessed revival in prices after five years continuous fall. Economic growth across the globe and a lower dollar accelerated bullish price action in the industrial commodities. However, CRB index is still hovering near 200, which is more than 50% down from its all time high of 470 which it touched in early 2011. At present the 200 level appears to be a tough resistance for the index. On the flip side, equity markets which are regarded as the reliable and strong sign of economic health of the economy are mostly trading at all-time high. There is a huge gap between the performance of commodity and equity market. On the agro commodities front, almost all the agro commodities had a patchy ride as ample supply of stock pushed the prices below the minimum support price (MSP), giving tough time to both farmers and the Government. However, some corrective actions taken by the government and expectation of reduced crop supplies in the new season supported some commodities. Going forward, it is expected that the year 2018 would be a better year for agro commodities on the back of expected reduced supplies in many commodities on account of negative return in many agro commodities. Meanwhile, some commodities from grains, oil seeds, oil meals, cotton, and spices space are expected to give better returns as compared to last year. Though, one cannot deny the fact that upside would remain capped to some extent owing to factors such as favorable weather patterns, well-supplied global food markets. The Black Gold or Liquid Gold - Crude, has already seen an impressive rally. This impressive & energetic move is expected to persist on the back of strong global consumption. There is an assumption that inventories would decline and production would continue to underperform expectations in some countries. Besides, US production will be one of the major triggers for the market. Precious metals may remain stable through mid-year and after that it may move higher because of safe haven demand. Meanwhile, a weak US dollar in 2018 is likely to provide overall support to the commodities asset class. An increase in the US domestic budget and foreign trade deficits, driven by tax cuts, high military and entitlement spending historically correspond reasonably well with periods of dollar weakness. The global recovery is continuing, especially in developed economies. The spillover impact of this can be seen on emerging economies as well. Hence, we expect more strength in industrial commodities and energy counter. Any discussion on commodities won’t be concluded without including the talk about the giant “China” as it consumes more than half of the world’s metals, huge chunk of agro commodities and crude. China is giving strong indication with projected improvement in economic activities. Back at home, Indian commodity market is going through a transition phase. Improving volume is still a challenge for the market but the regulator has taken several significant decisions to strengthen this market. The launch of option contract is one the best example and we may see more launches of option contracts going forward and it is expected that it would add more tools to the exchanges. Furthermore, to increase the institutional participation in the commodity segment, recently SEBI is planning to allow mutual funds and portfolio managers to invest in commodity derivatives segment. “To make money, traders will have to play short-term trends to take advantage of price swings rather than holding the positions for long time”.

“Happy Investing in Commodities” (Vandana Bharti)

SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related activities. SMC is a registered member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited, MSEI (Metropolitan Stock Exchange of India Ltd.) and M/s SMC Comtrade Ltd is a registered member of National Commodity and Derivative Exchange Limited and Multi Commodity Exchanges of India and other commodity exchanges in India. SMC is also registered as a Depository Participant with CDSL and NSDL. SMC’s other associates are registered as Merchant Bankers, Portfolio Managers, NBFC with SEBI and Reserve Bank of India. It also has registration with AMFI as a Mutual Fund Distributor. SMC is a SEBI registered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities/commodities market. The views expressed by the Research Analyst in this Report are based solely on information available publicly available/internal data/ other reliable sources believed to be true. SMC does not represent/ provide any warranty expressly or impliedly to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision. The research analysts who have prepared this Report hereby certify that the views /opinions expressed in this Report are their personal independent views/opinions in respect of the subject commodity. Disclaimer: This Research Report is for the personal information of the authorized recipient and doesn't construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of this Research Report. The Research Report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this Research Report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that SMC its affiliates, Research Analyst, officers, directors, and employees, including persons involved in the preparation or issuance if this Research Report: (a) from time to time, may have long or short positions in, and buy or sell the commodity thereof, mentioned here in or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodities discussed herein© may have any other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High court. All disputes shall be subject to the exclusive jurisdiction of Delhi High court.

DIRECTOR'S INTERVIEW


On the occasion of 10th Anniversary “Commodity Outlook”, our CMD Mr. DK Aggarwal, is sharing his view on the commodity markets. He also shares that improved economic conditions, firming of commodity prices, combined with continued implementation of structural reforms at home such as launch of options, talk on allowing MF’s and PMS in commodities, would support the commodity market in the year 2018. He advises investors to diversify some of the investments to commodities as the trading environment is improving and there is more room for the upside.

Mr. D. K. Aggarwal CMD - SMC Capitals Ltd & SMC Investments & Advisors Limited Director - SMC Real Estate Advisors Private limited & SMC Comtrade Limited Vice President - PHD Chamber of Commerce & Industry Q : Considering the case of outstanding performance of Capital Market in 2017, do you think that Commodity Market will give the same performance or how it will perform in 2018?

Q : We have seen that gold prices have not been appreciated in last 23 years. Still you think that it should be the part of your portfolio? How much and why?

A : First of all, I would like to wish all readers a very happy and prosperous New Year 2018. Indeed, capital market at home saw another spectacular year on the back of reforms initiated by the government and increasing appetite for equities of domestic investors. The Euphoria was seen everywhere from domestic to international market with major improvement in economic activities amid huge liquidity. Even it could also be seen that the commodity market from past two years have improved marginally and now it appears more firm in the year 2018. It is good to see that supply side concern in many commodities have faded (to some extent) and at the same time demand is also improving. In this scenario, we do not expect magical upside like equity as the prices behavior of equity and commodity is different from each other, but we expect a gradual & continuous recovery. Factors such as improved economic conditions in the region's main trading partners and some firming of commodity prices, combined with continued implementation of structural reforms at home such as launch of options, talk on allowing MF’s and PMS in commodities, are anticipated to support the recovery. Hence, it is advised to investors to diversify some of the investments to commodities as the trading environment is improving and there is more room for the upside.

A : Of course, gold should be a part of every portfolio at around 5-10% of the total asset allocation as gold acts as insurance to the portfolio. We saw many events in the year gone by such as the Middle East tension, North Korea and many other geopolitical tensions and they kept the world in jittery. Factors such as expected correction in Equity market because of overstretched rally in equity market, geopolitical tension; downside in dollar index, buying by central Banks, increasing investment demand may invite capital inflow & add glitter to this metal. In 2018, I expect gold to cross $1400 in COMEX and Rs 32000 in MCX.

Q : Any two commodities you will prefer the most in 2018? A : I expect the base metal counter to outperform all other. Basically, improvement in economic activities in emerging as well as in developed economies amid shrinking supply side and inventories worldwide, is turning the demand supply equilibrium in favor of further rally in the prices. China, which contributes around 50% of the total trade, is expected to continue to remain the dominating factor. Demand growth has surged and production has been reduced due to actions to curb the pollution in China. Labour disputes too contributed in supply tightness. Nevertheless, we expect many mines to come with more production after witnessing good return in 2017. It is expected that Nickel will prove itself as a dark horse, as it has potential to touch 1000-1100 levels in 2018. China’s primary nickel consumption will rise by 3.8% year-on-year to 1.13 million tonnes in 2017 and then to 1.18 million tonnes in 2018. Nickel is an important component of lithium-ion batteries like those that power electric cars. As auto fleets become more electrified, this means there will be a lot more demand for the metal. My second choice is copper. We may see continuous price recovery going forward on the back of increasing usage of the metal in electric vehicles, solar and wind power sectors. The upside target for the commodity is expected to be around 510520 level. The increase in battery demand together with some supply side tightness fueled rally in copper. In agri complex, cotton counter may give better return.

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Q : What is your view on crude prices? A : We have seen impressive jump in crude prices in 2017 from $42 to $60 (around 11.48% return) on the back of solid upturn in fundamentals and it is expected that this upside momentum would continue in the year 2018. Factors such as steady growing demand, production cuts among oil exporters, stabilizing U.S. shale oil production and downside in dollar index gave enough reason to the Brent and WTI to reclaim the mark of $66 and $60 respectively. Besides, some tightness in supply side, amid OPEC and Non OPEC commitment to continue the production cut, weak dollar index, Middle East tension etc may give most dominant commodity of the world to hold on the stage for third consecutive year. However, we do not expect any magical upside as last year, considering the massive production of shale in US. Upside may remain limited in first half of the year on oversupplied situation but major upside action can be seen in the second half of the year. Brent and WTI are expected to make a high near $75 and $70 respectively. The recovery in global economy is happening, specifically in the developed economies and the spillover effect of this phenomenon over the emerging economies is expected to keep demand for oil intact. Q : Do you think that Mutual Funds and PMS should be allowed in Commodities? A : Yes, this is much awaited. SEBI has proposed allowing mutual funds and portfolio management services (PMS) firms to invest in commodity derivatives. This step is likely to increase the depth of the commodity market. Besides, allowing MF and PMS will improve the participation for sure as MFs and PMS can act as conduits to commodities markets for such investors. Actually due to lack of knowledge, including retail investors, many investors have kept themselves away. Undoubtedly, it as a riskier asset class, adequate checks and balances should be put in place before implementation, which SEBI is already doing.

DIRECTOR'S INTERVIEW


SMC Global is one of the largest and most reputed Investment Solutions Company that provides a wide range of investment solutions and services that are backed by rigorous research to its large and diversified client base. Mr. Ajay Garg, Whole Time Director – SMC Global Securities Limited discusses the company's future plans. “Commodity Outlook” caught up with him for a chat on the occasion of 10th Anniversary of the magazine. He also shared with us that SMC Comtrade would merge with SMC Global securities Ltd. Excerpts.

Mr. Ajay Garg Director, SMC Global Securities Limited

Q : Sir, euphoria has seen everywhere in equity market. It is expected that commodity will catch the trend this year. Rally is already begun and commodity market has launched options and planning new entrants in the market. What’s your take on commodity market and what SMC is doing to capture this opportunity? A : First of all, I would like to congratulate all market participants of commodity market for option launch in Gold. It is expected that many more commodities will come in this list in 2018. It will provide much needed tool to the market and it is expected that it will deepen the liquidity of this market by time. One more expectation is that Mutual Funds can participate in Commodity Trading. It is under consideration of SEBI and SEBI can give permission for it in 2018. It would definitely going to strengthen the market. My Best wishes! SMC will for sure is ready to take the opportunity and very soon SMC Comtrade Ltd will merge with SMC Global Securities Ltd, which will increase the fungibility. Q : In India, the financial literacy is growing amongst the people of our country and with the capital markets touching life time high’s in recent time, what has been your recent initiative to reach every investor countrywide? A : We have recently launched our HTML 5 based website www.smctradeonline.com which is available in “ten languages” and loaded with lots of improved features and content which will help both existing and prospective client in informed decision making. Clients can access new website on Desktops, Tablets as well as on Mobile. Q : This generation investors are techies and want every financial android application on their mobile. With so much competition in this industry to rope in every possible client investment from equities to commodities, what is SMC’s future strategy to deal with such a scenario? A : SMC Easy Trade is a meticulously designed Mobile Trading Platform for Android & Apple smart phone users. Client can invest in Equities & Derivatives, Commodities, and Currencies. The smarter trading platform makes trading Simple, Speedy & Secure. You can trade on different exchanges on a single platform with real time streaming quotes with just few clicks. Since smartphones are fast becoming people’s necessity, we are working on it to add more features for enhanced user experience. In few months, you will have access to our new state-of-the art SMC Easy Trade mobile application with all necessary information and features so that investment decision can me made easily. We will also be introducing all back-office reports as available in SMC Easy Go so to give our customers a smarter and powerful mobile trading platform. Q : In recent times, Mutual funds have come into limelight after the bulls have started to ride the stock markets. In days to come, more money is expected to flow into mutual funds, as the outlook of the

financial markets is bullish. Is SMC planning to provide seamless mutual fund investment experience? A : We will be soon launching Beta version of Mutual Fund platform for our clients, associates & branches. The new platform will be available both on Desktop & Mobile with lots of features to provide seamless mutual fund investment experience. Q : In this market, advice comes from everyone, but SMC provides research based recommendations & it is very well known among the market participants for its accuracy. To reach more audiences, kindly highlight some of the SMC’s branding & advertisement approach. A : SMC’s research analysts regularly appear on various business news channels to give their valuable research based views on equity & commodity markets, which the viewers eagerly wait so as to take further cues for their trades or investments. SMC Global Securities Ltd. has started advertising in a big way on Network 18 group TV channels, CNBC TV18 & CNBC Awaaz. And to spread its digital reach it is also giving ads on the no.1 stock market website and mobile application - Moneycontrol.com. Q : The stock markets have always been favorite for those who take higher risk of capital to enjoy more gains. Lending a little margin to these investors gives them an edge to take the courage. Are there any means, in which SMC can facilitate their clients in lending margin? A : SMC has introduced Margin Trading Facility (MTF) in Aug-17 which enabled its clients to experience hassle free trading and higher exposure in Group-I securities against their available collateral. Client can opt for Margin Trading Facility (SMC) from SMC, in accordance to SEBI rules & regulations, either by signing consent letter or by submitting consent through Online Portal. Q : SMC has always been known in the for providing the best PMS service by providing higher returns. Kindly give some insights on the past performance. A : SMC Investments and Advisors is a SEBI registered Portfolio Manager. We offer portfolio management services to the investors with an option to customize their equity portfolios through personalized investment mandates. SMC PMS look to generate capital appreciation by investing into a well diversified equity portfolios. These are structured to suit different risk profiles of various investors. We are running with four different PMS portfolios, out of which three are plain vanilla portfolios according to the risk profile of the investors and the forth portfolio is a quant based portfolio. All the four portfolios managed by us are discretionary portfolios. The investment horizon of the investor should be atleast 3-5 years. As on 30th November 2017, our Moderate and Conservative portfolio has outperformed their benchmarks respectively in last one year period.

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Past Performance & Future Events


Performance of range forecast given in our Annual magazine commodity outlook 2017 Commodity

FOMC & ECB meeting schedule for 2018

Range forecasted

2017

2017

(Annual Magz. '17)

Low*

High*

1020-1360

1146.50

1355.80

25500-32000

27401.00

30474.00

15.15

18.50

35460.00

43605.00

May

1st & 2nd

2nd & 16th

42.05

60.51

June

12th & 13th

14th & 27th

2732.00

3863.00

July

31st

11th & 26th

2.52

3.57

August

1st

1st

25th & 26th

13th & 26th

-

10th & 25th

November

7th & 8th

7th & 21st

December

18th & 19th

5th & 13th

Gold (COMEX) Gold (MCX) Silver(COMEX)

14-21

Silver(MCX)

33000-44000

Crude Oil (NYMEX)

37-65

Crude Oil (MCX)

2700-4700

Natural gas(NYMEX)

2-5

Natural gas (MCX)

150-320

164.70

254.20

Aluminium (MCX)

100-150

114.60

145.95

Copper (MCX)

310-510

353.85

471.60

Lead (MCX)

115-205

131.65

171.10

Nickel (MCX)

450-950

558.60

841.90

Zinc (MCX)

130-260

156.10

218.80

Cardamom

1100-1900

830.00

1593.00

Jeera

14000-23000

16555.00

22360.00

Turmeric

5000-11000

5234.00

8066.00

66.49

87.18

18040.00

21650.00

Cotton (CBOT)

62-98

Months 2018

FOMC meeting

ECB meeting

January

30th & 31st

10th & 25th

February

-

7th & 21st

March

20th & 21st

8th & 21st

April

-

11th & 26th

September October

Source: FOMC & ECB

WGC Gold holdings(Top 10 Countries)

Country

Tonnes

% of reserves

1

United States

8,133.50

74.90%

Cotton

17500-25000

Kapas

820-1250

847.00

1079.00

2

Germany

3,373.60

68.90%

Sugar (LIFFE)

16-32

353.30

564.90

3

Italy

2,451.80

67.30%

Sugar (NCDEX)

3000-4800

3160.00

3953.00

4

France

2,435.90

64.90%

Wheat (CBOT)

360-530

386.50

556.00

Wheat (NCDEX)

1550-2200

1572.00

1938.00

5

China

1,842.60

2.30%

CPO (BMD)

2500-3900

2417.00

3175.00

6

Russia

1,801.20

17.30%

CPO (MCX)

480-650

475.20

599.70

7

Switzerland

1,040.00

5.30%

27-45

30.86

36.07

8

Japan

765.2

2.50%

630-790

605.40

748.10

RM Seed

3300-5200

3461.00

4375.00

9

Netherlands

612.5

66.30%

Soybean (CBOT)

8.80-11.80

900.25

1080.00

10

India

557.8

5.70%

Soybean (NCDEX)

2700-4100

2643.00

3284.00

Ref. Soy oil (CBOT) Ref. Soy oil (NCDEX)

Source: WGC

Source: SMC Research

* Up to 29th December 2017

World interest rates of key central banks at present Central Banks Federal Reserve(FED) European Central Bank(ECB) Bank of England(BOE)

Country

Current interest rates

Previous rate

Date of change

US

1.50%

1.25%

13-Dec-17

Euro

0.00%

0.05%

10-Mar-16

England

0.50%

0.25%

2-Nov-17

Bank of Japan(BOJ)

Japan

-0.10%

0.00%

1-Feb-16

Reserve Bank of India(RBI)

India

6.00%

6.25%

2-Aug-17

People Bank of China(PBOC)

China

4.35%

4.60%

23-Oct-15

Reserve Bank of Australia(RBA) Brazil Central Bank(BACEN)

Australia

1.50%

1.75%

2-Aug-16

Brazil

7.00%

7.50%

6-Dec-17 Source: FX Street

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Commodity Performance in 2017


% Change

Return of Agri Commodities from 1st Jan '17 till 29th Dec '17 Mentha oil

67.57

Guar Gum

43.76

Guar Seed

25.67

Jeera

21.02

Turmeric

15.53

Castor seed

13.14

Cotton (CBOT)

10.45

Kapas

6.84

Soybean (NCDEX)

0.99

Refined soy oil (NCDEX)

0.69

Crude palm oil (MCX)

-2.20

Refined soy oil (CBOT)

-3.75

Soybean (CBOT)

-4.44

Maize

-7.48

Mustard seed

-9.51

Wheat

-11.32

Cotton oil seed cake

-12.65

Sugar M 200

-14.28

Cardamom

-18.31

Crude palm oil (BMD)

-20.11

Chana

-24.27

Coriander

-42.00

-60.00

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

Source: Reuters & SMC Research

Return of Bullion, Base Metal and Energy from 1st Jan '17 till 29th Dec'17

% Change

Aluminium (LME)

32.40

Copper (LME)

29.29

Zinc (LME)

28.45

Aluminium (MCX)

25.13

Lead (LME)

23.73

Copper (MCX)

22.63

Nickel (LME)

22.36

Zinc (MCX)

21.00

Lead (MCX)

16.73

Nickel (MCX)

14.26

Gold (COMEX)

13.08

Crude oil (NYMEX)

11.48

Gold (MCX)

6.40

Silver (COMEX)

6.36

Crude oil (MCX)

5.02

Silver (MCX)

0.16

Natural Gas (NYMEX) Natural Gas (MCX) -30.00

-17.24 -24.75 -20.00

-10.00

0.00

10.00

20.00

30.00

40.00


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Asset Classes Comparison


Asset class performance from 1st Jan'17 to 29th Dec'17

% Change

Baltic Dry Index*

43.34

Hang Sang

36.04

Nifty

28.27

NASDAQ

27.24

Bovespa**

26.86

Dow Jones

24.39

S&P 500

18.74

Strait Times

17.87

DAX

16.41

Euro/USD

13.93

Gold (COMEX)

13.42

Crude Oil (NYMEX)

11.48

CAC

9.63

FTSE

7.63

Silver (COMEX)

7.00

Shanghai Composite

6.50

DJ EuroStoxx

5.70

US Treasury

1.85

INR/USD

1.55

CRB

1.10

Japanese Yen/USD

-3.63

Dollar Index

-9.79

Natural Gas (NYMEX)

-17.24 0

-30

-20

-10

0

10

* Closing as on 22nd Dec, 2017 ** Closing as on 28th Dec, 2017

20

30

40

50


Year 2017, “Gain for All”

T

he year gone by will be known for “Gain for All” as most of the asset class performed well. In the year 2017, Indian stock markets have delivered approx 30% return, making it the best year for equities since 2014. Undoubtedly, the year will be remembered in history as Indian markets have helped investors to get the hefty returns. This euphoria was not limited to India but seen everywhere, from Asia to US and Africa to Australia. However, emerging economies scored better than developed economies. Pick up in global growth boosted the corporate profits and bounce back in commodities during the year supported the upside. Hong Kong’s Hang Sang Index led the way with a 36% return. Since 2009 low, the Hang Sang has been moving higher in an ascending parallel trend channel. Domestic equity market took the second position with Nifty gained approx 30% on the back of reforms initiated by the government and increasing appetite for equities of domestic investors. With optimism everywhere, Indian currency, rupee too appreciated notably. On the flip side, the greenback almost lost 10% in 2017, biggest annual decline since 2003. The downside in dollar index has been a gain for the emerging economies along with Euro. Euro gained much awaited strength and closed the year with about 14% upside. Expectation that Fed would raise interest rates and lawmakers would cut taxes gave ray of hope to dollar index. However, Fed was not aggressive as expected and sent dovish signal to the markets. Corporate taxes were cut to 21% from 35%, and individual rates were also sliced for most Americans whereas strength in the Euro zone supported euro and it traded on multi years high. US major stock indices made double-digit gains for the year with great performance by technology stocks such as Apple, Face book and others. Furthermore, global economy rebounded, while the U.S. economy and job market continued to strengthen, which helped drive strong corporate earnings growth. However, US equity market performance had a limited upside as sentiments were dented by the weak dollar. On the flip side, stability in the euro zone after years of turmoil stunned market participants. Amid a more stable political backdrop, growth has soared in the economy on the back of accommodative monetary policy. In the year gone by, global investors increased their exposure to Chinese markets despite worries about a slowing economy and further regulatory crackdowns. Shanghai composite was up by 6.5%. The year 2017 also witnessed Baltic Dry Index, an overall measure of the Baltic Exchange’s key dry-commodity routes surged by 43%. The increase was reflection on the improvement witnessed in terms of trade flows and the much better economic growth figures in the most of the major trading economies. Dry bulk shippers specialize in transporting cargos, typically commodities, such as iron ore, coal, grain, and other materials around the world. The wilting U.S. dollar along with the growth story worldwide has lifted commodities prices and it was quite visible. CRB has touched the high of 197 in the year 2017. However, 200 levels once again may act as a strong resistance. Commodities also benefited from a synchronized pick-up in global trade and surprisingly strong demand from China. In the energy complex, crude gained more than 11%. Strong demand for crude imports in China and a surprise fall in U.S. production along with high determination by OPEC and Russia to keep the production in check gave opportunities to Brent as well as WTI crude to close above $60. On the flip side, natural gas prices slipped by more than 17% as it sat on hefty inventories with little demand. US treasury closed positive despite the Fed’s rate hikes as weak inflation and strong demand for bonds kept rates in check and financial conditions easy. Bitcoin has recorded consistent gains throughout its eight-year history with an exception of 2014. Though Bitcoin’s value grew by more than 1,000% in 2017, but that wasn’t enough to even place it among the 10 best-performing crypto assets of the year.

8

Span Of Price Movement


Span of price movement (Agro Commodities) COMMODITY Cardamom Coriander Jeera Turmeric Chana Castor Seed Cotton oilseed cake Guar Seed Guar Gum Cotton Kapas Maize Mentha Oil (MCX) Sugar Wheat Crude Palm Oil Crude Palm Oil (BMD) Soybean Soybean (CBOT) RM Seed Ref. Soy Oil (NCDEX)

LIFE TIME HIGH 2097.00 13345.00 22360.00 16350.00 9380.00 6058.00 2791.00 29900.00 95920.00 23990.00 1262.00 1678.00 2570.30 3953.00 2143.00 632.20 4486.00 5064.50 1794.75 5156.00 817.00

LIFE TIME LOW SPICES 206.10 2570.00 4877.40 1666.00 OTHER COMM ODITIES 1331.00 268.60 218.30 1015.00 3235.00 13970.00 398.90 940.00 342.00 1182.00 662.00 OILSEEDS 154.20 424.00 1104.50 401.50 1586.25 337.70

2017 HIGH 1593.00 7889.00 22360.00 8066.00 6428.00 5097.00 2303.00 4288.00 9145.00 21650.00 1079.00 1658.00 1991.90 3953.00 1938.00 599.70 3175.00 3284.00 1080.00 4375.00 748.10

2017 LOW 830.00 4272.00 16555.00 5234.00 3830.00 3830.00 1365.00 3153.00 6199.00 18040.00 847.00 1273.00 870.00 3160.00 1572.00 475.20 2417.00 2643.00 900.25 3461.00 605.40 Source: Reuters & SMC Research

* Closing till 29th December 2017

Span of price movement (Bullions, Metals & Energy) COMMODITY

EXCHANGE

LIFE TIME HIGH

LIFE TIME LOW

2017 HIGH*

2017 LOW*

COMEX

1911.60

239.40

1355.80

1146.50

MCX

35074.00

5600.00

30474.00

27401.00

COMEX

50.35

1.95

18.50

15.15

MCX

73600.00

7551.00

43605.00

35460.00

NYMEX

147.27

9.75

60.51

42.05

MCX

7784.00

1626.00

3863.00

2732.00

NYMEX

15.78

1.04

3.57

2.52

MCX

591.80

99.50

254.20

164.70

Aluminium

MCX

151.50

62.20

145.95

114.60

Copper

MCX

512.65

117.60

471.60

353.85

Lead

MCX

175.70

40.50

171.10

131.65

Nickel

MCX

2253.90

442.30

841.90

558.60

Zinc

MCX

218.80

49.85

218.80

Gold Silver Crude Oil Natural Gas

156.10 Source: Reuters & SMC Research

* Closing till 29th December 2017

9

Performance of Fundamental calls


Performance of Metals and Energy Fundamental Calls (January - December) 2017 Sl. No.

Date

Commodity

Contract

Trend Given

1 2 3 4 5 6 7 8 9 10 11 12 12 16 17 18 19 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

3-Jan 10-Jan 10-Jan 11-Jan 16-Jan 18-Jan 23-Jan 25-Jan 6-Feb 7-Feb 8-Feb 13-Feb 14-Feb 17-Feb 26-Feb 1-Mar 1-Mar 2-Mar 6-Mar 6-Mar 8-Mar 9-Mar 15-Mar 16-Mar 16-Mar 22-Mar 22-Mar 27-Mar 28-Mar 3-Apr 5-Apr 7-Apr 10-Apr 13-Apr 20-Apr 21-Apr 24-Apr 25-Apr 2-May 4-May 5-May 10-May 16-May 22-May 24-May 30-May 1-Jun 5-Jun 5-Jun 6-Jun 6-Jun

Copper Mini Lead Mini Nickel Mini Copper Mini Gold Mini Copper Mini Copper Mini Lead Mini Gold Mini Copper Mini Aluminium Mini Aluminium Mini Gold Mini Gold Mini Aluminium Mini Zinc mini Lead Mini Lead Mini Zinc mini Lead Mini Zinc mini Crude oil Mini Natutral gas Gold Mini Silver Mini Aluminium Mini Gold Mini Zinc mini Gold Mini Zinc mini Gold Mini Zinc mini Silver Mini Zinc mini Lead Mini Lead Mini Gold Mini Nickel Mini Gold Mini Zinc mini Silver Mini Lead Mini Gold Mini Silver Mini Aluminium Mini Aluminium Mini Silver Mini Gold Mini Silver Mini Zinc mini Natural gas

Feb Jan Jan Feb Feb Feb Feb Feb March Feb Feb Feb March March March March March March March March March March March April April March April April May April May April April April April April May May June May June May June June May June June July June June June

Buy Buy Buy Buy Buy Sell Buy Buy Buy Sell Buy Buy Buy Buy Buy Buy Buy Buy Sell Sell Sell Sell Sell Buy Buy Sell Sell Sell Sell Buy Sell Buy Sell Buy Buy Buy Sell Sell Sell Buy Buy Buy Buy Buy Buy Sell Sell Buy Buy Buy Buy

Call Initiated Price

Targets

Stop Loss

383 144.7 707.5 395.85 28661 393.55 399.6 162.6 29032 391.55 123.55 125.5 29163 29382 126.3 190.2 153.15 153.6 183.2 147.35 179.45 3384 192.7 28385 40967 124.8 28842 181.55 28870 179.9 28960 171.05 41400 169 140.4 139.6 29130 602.6 28632 164.15 38455 141.25 28125 39277 126.1 125.75 39690 29207 40517 161.2 193.9

395 152 740 415 29150 380 420 167 29800 372 127.5 132 29660 30000 131 198 159 160 176 140 172 3260 186 29200 43000 127.5 28200 174 28300 188 28400 180 40000 175 150 149 28600 560 28000 170 40500 147 28700 41000 130 129 40200 29800 41500 169 202

377 140 695 385 28400 402 390 157.65 28600 402 121.5 122.5 28900 29050 124 186 150 149.5 187 151 184 3450 196 28000 40000 120 29150 185 29150 176 29250 166 41200 166 135 136 29400 620 28950 161 37400 138 27800 38300 124 120 38400 28900 40000 157 190

Remarks Book partial profit at 387.65 Book partial profit at 145.75 Book partial profit at 711 Book partial profit at 398.30 Book partial profit at 28800 Book partial profit at 389.80 Book partial profit at 404.20 Stop loss hit Book partial profit at 29269 Exit at 396 Book partial profit at 123.95 Book full profit at 127 Book partial profit at 29220 Book partial profit at 29580 Book partial profit at 126.70 Book full profit at 192 Book partial profit at 153.30 Exit at 148.80 Book full profit at 177 Exit at 147.80 Book partial profit at 177.70 Book full profit at 3270 Stop loss hit Book full profit at 28900 Book full profit at 42300 Book partial profit at 124.60 Book partial profit at 28766 Book partial profit at 180 Book full profit at 28450 Book partial profit at 181.05 Book partial profit at 28700 Book partial profit at 172.35 Book partial profit at 41135 Exit at 164.35 Book partial profit at 141 Book partial profit at 140.75 Book partial profit at 29000 Book partial profit at 601.60 Book full profit at 28340 Book partial profit at 164.55 Book full profit at 39200 Book partial profit at 142.40 Book full profit at 28700 Book partial profit at 38585 Book partial profit at 126.65 Book full profit at 121 Stop loss hit Book partial profit at 29320 Book partial profit at 40654 Stop loss hit Book partial profit at 194

Note:  These fundamental calls are for duration of one week time frame and do not confuse these with intraday calls.  It is assumed that investor takes position in two lots and square off position in one lot on partial profit booking and trail stop loss to buying/selling price for second lot.

10

Net % Price movement 1.21 0.73 0.49 0.62 0.48 1.33 1.15 -3.14 0.82 -1.14 0.32 1.20 0.20 0.67 0.32 0.95 0.10 -3.12 3.28 -0.31 1.37 3.47 -1.71 1.81 3.25 0.16 0.26 0.85 1.45 0.64 0.90 0.76 0.64 -2.75 0.43 0.82 0.45 0.17 1.02 0.24 1.94 0.81 2.04 1.76 0.59 3.78 -3.25 0.39 0.34 -2.61 0.05


Sl. No.

Date

Commodity

Contract

Trend Given

53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104

7-Jun 15-Jun 21-Jun 22-Jun 22-Jun 22-Jun 3-Jul 4-Jul 5-Jul 5-Jul 6-Jul 7-Jul 10-Jul 11-Jul 14-Jul 17-Jul 19-Jul 19-Jul 21-Jul 25-Jul 26-Jul 27-Jul 28-Jul 1-Aug 3-Aug 7-Aug 7-Aug 10-Aug 10-Aug 14-Aug 17-Aug 21-Aug 29-Aug 29-Aug 30-Aug 30-Aug 4-Sep 5-Sep 6-Sep 7-Sep 11-Sep 12-Sep 15-Sep 20-Sep 21-Sep 21-Sep 26-Sep 27-Sep 29-Sep 9-Oct 10-Oct

Natural gas Silver Zinc Lead Silver Aluminium Zinc mini Aluminium Mini Lead Mini Silver Mini Aluminim Mini Zinc mini Gold Mini Aluminium Mini Nickel Nickel Nickel Gold Mini Silver Mini Nickel Gold Mini Zinc mini Nickel Gold Mini Nickel Silver Mini Gold Mini Aluminium Mini Aluminium Aluminium Lead Mini Zinc mini Silver Crude oil Copper Crude oil Zinc mini Gold Mini Nickel Mini Gold Mini Nickel Gold Mini Gold Mini Aluminium Mini Zinc mini Aluminium Mini Copper Mini Lead Mini Zinc Nickel Mini Silver Mini

June July June June Sep June July July July Aug July July Aug July July July July Aug Aug July Aug July Aug Sep Aug Aug Sep Aug Sep Aug Aug Aug Sep Sep Nov Sep Sep Sep Sep Oct Sep Oct Oct Sep Sep Sep Sep Sep Oct Oct Nov

Buy Sell Buy Buy Buy Buy Buy Buy Sell Sell Buy Buy Sell Sell Buy Buy Buy Sell Buy Buy Sell Sell Buy Buy Buy Sell Sell Buy Buy Buy Sell Buy Buy Sell Buy Sell Buy Sell Buy Sell Buy Buy Buy Buy Sell Buy Buy Sell Sell Buy Buy



Targets

Stop Loss

198.3 38952 166.3 140.1 38850 121.1 179.85 124.45 147.35 37464 125.25 180.55 27704 124.4 599.7 618 622.3 28206 37900 631 28365 180.05 648.5 28732 661.4 37227 28331 129.55 130.85 129.75 160.3 202.85 40080 3091 441.3 2948 204.45 30145 771.8 30132 742.9 29878 30042 136.95 199.6 138.05 428.7 161.5 206.5 706.1 40114

206 38400 170 144 39850 119.5 176 130 140 36000 130 186 27100 119 620 638 642 27800 39500 650 28100 172 668 29050 690 35700 27700 136 136 135 153 210 40700 2900 451 2850 214 29600 810 29700 762 30350 30500 143 193 143 437 155 203.5 750 40800

194 39120 164 138 39350 124 188 121 151 38200 123.5 177 28000 124 590 606 612 28400 37200 620 28480 184 638 28475 645 38650 28900 126 128 128 164 199 39800 3040 436 3000 199 30450 750 30400 732 29600 29750 134 203 135.5 424 165 208 680 39700

Remarks

Net % Price movement

Stop loss hit Stop loss hit Book full profit at 170 Book full profit at 144 Book partial profit at 38995 Book partial profit at 121.85 Book partial profit at 180.55 Book partial profit at 124.55 Book partial profit at 146.85 Book partial profit at 37370 Book partial profit at 125.40 Book partial profit at 181.10 Exit at 27970 Book partial profit at 123.65 Book partial profit at 603.80 Book full profit at 638 Book full profit at 640 Exit at 28308 Book partial profit at 37970 Book partial profit at 634.30 Exit at 28563 Book full profit at 177 Book full profit at 665 Stop loss hit Book full profit at 688 Exit at 38650 Exit at 28900 Book partial profit at 130.05 Exit at 130.80 Book partial profit at 131.50 Book partial profit at 159.15 Exit at 198.35 Book partial profit at 40165 Book partial profit at 3046 Exit at 440 Stop loss hit Book partial profit at 205 Book partial profit at 30085 Book partial profit at 782.50 Exit at 30414 Book partial profit at 763.80 Book partial profit at 30014 Exit at 29721 Book partial profit at 137.60 Book partial profit at 198.30 Book partial profit at 139.30 Stop loss hit Exit at 164.35 Stop loss hit Book partial profit at 714.70 Book partial profit at 40284


11

-2.17 -0.43 2.22 2.78 0.37 0.62 0.39 0.08 0.68 0.25 0.12 0.30 -0.96 0.60 0.68 0.29 2.84 -0.36 0.18 0.52 -0.69 1.69 2.54 -1.11 4.02 -3.82 -2.01 0.39 -0.04 1.35 0.72 -2.22 0.21 1.48 -0.29 -1.76 0.27 0.20 1.39 -0.94 0.24 0.46 -1.08 0.47 0.65 0.91 -1.94 -1.76 -0.73 1.22 0.42


Sl. No.

Date

105 106 107 108 109 110 111 112

12-Oct 26-Oct 27-Oct 14-Nov 15-Nov 7-Dec 13-Dec 14-Dec

Commodity Gold mini Nickel Silver Mini Lead Mini Crude oil Mini Nickel Mini Nickel Mini Silver Mini

Contract

Trend Given

Dec Oct Nov Nov Dec Dec Dec Feb

Buy Sell Buy Sell Sell Sell Buy Buy

Total calls : 112



Targets

Stop Loss

29907 767.8 39278 163.65 3619 698 720.3 37502

30200 735 40400 168 3500 660 760 38500

29400 784 38700 157 3690 720 700 37000

Profitable : 85

Remarks


Exit at 29414 Book partial profit at 760 Book partial profit at 39844 Book partial profit at 163.15 Exit at 3807 Book partial profit at 694.20 Book full profit at 760 Book full profit at 38500 Net price movement

Stop loss : 27

-1.68 1.02 1.44 0.31 -5.19 0.54 5.51 2.66 40.10%

Strike rate : 76%

Performance of Agri Commodities Fundamental Calls (January - December) 2017 Sl. No.

Date

Commodity

Contract

Trend Given

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

2-Jan-17 4-Jan-17 10-Jan-17 17-Jan-17 17-Jan-17 25-Jan-17 8-Feb-17 9-Feb-17 20-Feb-17 21-Feb-17 22-Feb-17 22-Feb-17 28-Feb-17 28-Feb-17 2-Mar-17 3-Mar-17 3-Mar-17 7-Mar-17 8-Mar-17 10-Mar-17 17-Mar-17 20-Mar-17 21-Mar-17 22-Mar-17 24-Mar-17 5-Apr-17 6-Apr-17 7-Apr-17 10-Apr-17 6-Apr-17 12-Apr-17 12-Apr-17 17-Apr-17

RM Seed Mentha Oil CPO Guar gum Guar gum Mentha Oil Guar gum Ref. Soy oil Guar seed Mentha Oil Sugar Wheat Ref. Soy oil Soybean Ref. Soy oil Ref. Soy oil Wheat Sugar Barley Kapas Cardamom CPO Ref. Soy oil Ref. Soy oil Kapas Ref. Soy oil Kapas RM Seed RM Seed Kapas RM Seed Kapas Kapas

April Jan Jan Feb Feb Feb Mar Mar Mar Mar Mar Mar Mar April April April April May April April April April April April April May April May May April May April April

Buy Sell Sell Buy Buy Sell Sell Buy Buy Sell Sell Sell Buy Buy Buy Buy Buy Sell Sell Sell Buy Buy Buy Buy Sell Buy Sell Sell Sell Sell Sell Sell Sell


Targets

Stop Loss

3985.00 1039.10 580.80 6424.00 6497.00 1010.80 6325.00 694.30 3377.00 1026.50 3842.00 1691.00 657.25 3011.00 659.00 660.30 1659.00 3845.00 1525.50 1076.50 1410.00 519.00 646.70 649.80 1062.00 630.60 1036.00 3931.00 3882.00 1016.00 3871.00 1011.00 990.50

4185.00 1010.00 571.50 6511.00 6750.00 977.00 6125.00 700.00 3460.00 1002.00 3750.00 1620.00 663.00 3070.00 664.00 666.00 1720.00 3780.00 1465.00 1036.00 1475.00 525.00 653.00 657.00 1035.00 636.50 990.00 3885.00 3837.00 1000.00 3830.00 985.00 970.00

3885.00 1060.00 586.50 6424.00 6360.00 1025.00 6425.00 690.00 3335.00 1040.00 3885.00 1730.00 654.00 2980.00 656.50 657.00 1630.00 3900.00 1560.00 1097.00 1370.00 516.00 643.00 646.00 1080.00 627.50 1060.00 3965.00 3915.00 1030.00 3900.00 1030.00 1007.00

Remarks Squared off at 3927.00 Partial profit booked at 1038.00 Squared off at 586.35 Partial profit booked at 6511.00 Squared off at 6411.00 Squared off at 1024.60 Squared off at 6425.00 Partial profit booked at 695.30 Partial profit booked at 3392.00 Squared off at 1027.30 Partial profit booked at 3825.00 Squared off at 1698.00 Partial profit booked at 658.10 Partial profit booked at 3015.00 Full profit booked at 661.50 Squared off at 657.75 Partial profit booked at 1668.00 Partial profit booked at 3841.00 Partial profit booked at 1525.00 Partial profit booked at 1070.00 Full profit booked at 1430.00 Partial profit booked at 520.30 Partial profit booked at 647.70 Partial profit booked at 650.60 Partial profit booked at 1057.50 Partial profit booked at 631.65 Partial profit booked at 1034.00 Full profit booked at 3905.00 Partial profit booked at 3870.00 Partial profit booked at 1015.00 Squared off at 3900.00 Partial profit booked at 1001.50 Partial profit booked at 989.00


12

Net % Price movement -1.46 0.11 -0.95 1.34 -1.34 -1.35 -1.56 0.14 0.44 -0.08 0.44 -0.41 0.13 0.13 0.38 -0.39 0.54 0.10 0.03 0.61 1.40 0.25 0.15 0.12 0.43 0.17 0.19 0.67 0.31 0.10 -0.74 0.95 0.15


Sl. No.

Date

34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84

20-Apr-17 2-May-17 3-May-17 5-May-17 6-May-17 12-May-17 1-Jun-17 2-Jun-17 5-Jun-17 5-Jun-17 6-Jun-17 8-Jun-17 8-Jun-17 9-Jun-17 12-Jun-17 14-Jun-17 15-Jun-17 3-Jul-17 4-Jul-17 4-Jul-17 5-Jul-17 5-Jul-17 6-Jul-17 7-Jul-17 10-Jul-17 11-Jul-17 11-Jul-17 11-Jul-17 14-Jul-17 17-Jul-17 17-Jul-17 18-Jul-17 20-Jul-17 21-Jul-17 25-Jul-17 25-Jul-17 25-Jul-17 26-Jul-17 27-Jul-17 27-Jul-17 28-Jul-17 1-Aug-17 1-Aug-17 2-Aug-17 3-Aug-17 7-Aug-17 8-Aug-17 9-Aug-17 9-Aug-17 16-Aug-17 23-Aug-17

Commodity Soybean Soybean RM Seed Ref. Soy oil CPO Soybean Mentha Oil COCUD Soybean Kapas RM Seed CPO Mentha Oil Kapas RM Seed Mentha Oil Kapas Mentha Oil Kapas Soybean CPO CPO RM Seed Wheat Kapas Ref. soy oil Cocud Ref. soy oil RM Seed RM Seed Jeera Kapas Ref. soy oil Guar seed Ref. soy oil Ref. soy oil RM Seed Guar seed Guar Gum Castor Seed RM Seed Wheat RM Seed Kapas CPO Kapas Cardamom Ref. soy oil Guar seed RM Seed CPO

Contract

Trend Given

May June May June May June June July July April July June June April July June April July April July July July Aug Aug April Aug Aug Aug Aug Aug Aug April Aug Oct Aug Aug Aug Oct Oct Aug Aug Aug Sept April Aug April Sept Aug Oct Sept Sept

Buy Sell Sell Buy Buy Sell Buy Sell Sell Sell Buy Sell Buy Buy Buy Buy Buy Sell Sell Buy Buy Buy Buy Buy Buy Sell Sell Sell Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Sell Buy Sell Buy Buy Sell Buy Sell Buy Buy Buy Sell



Targets

Stop Loss

3020.00 2975.00 3717.00 618.30 493.20 2911.00 937.90 1808.00 2722.00 899.50 3586.00 490.00 909.20 885.00 3598.00 917.90 902.00 890.20 858.00 2935.00 485.40 485.80 3648.00 1664.00 878.00 644.55 1633.00 643.80 3681.00 3703.00 20090.00 866.00 642.80 3433.00 642.29 644.30 3690.00 3460.00 7319.00 4481.00 3702.00 1668.00 3754.00 874.50 483.30 879.00 1082.10 652.40 3845.00 3760.00 514.80

3055.00 2920.00 3665.00 623.00 498.00 2880.00 953.00 1760.00 2675.00 880.00 3630.00 485.50 920.00 895.00 3635.00 928.00 922.00 875.00 835.00 2985.00 490.00 492.00 3690.00 1695.00 895.00 639.00 1580.00 638.55 3730.00 3745.00 20295.00 885.00 646.50 3480.00 647.00 648.00 3730.00 3520.00 7470.00 4420.00 3740.00 1650.00 3790.00 890.00 478.80 890.00 1045.00 657.00 3905.00 3865.00 504.50

2995.00 3010.00 3755.00 615.00 490.00 2933.00 928.00 1840.00 2752.00 917.00 3555.00 493.00 899.50 876.00 3573.00 910.50 887.00 900.00 880.00 2895.00 481.50 481.50 3610.00 1645.00 864.00 648.00 1670.00 647.50 3630.00 3670.00 19960.00 853.00 640.00 3400.00 640.00 641.50 3665.00 3420.00 7220.00 4520.00 3675.00 1680.00 3725.00 862.00 486.30 891.00 1110.00 649.30 3800.00 3690.00 522.00

Remarks


Full profit booked at 3055.00 Full profit booked at 2927.00 Full profit booked at 3660.00 Partial profit booked at 619.30 Partial profit booked at 494.40 Partial profit booked at 2902.00 Partial profit booked at 942.60 Full profit booked at 1765.00 Partial profit booked at 2721.00 Partial profit booked at 897.50 Partial profit booked at 3595.00 Partial profit booked at 489.10 Partial profit booked at 909.90 Partial profit booked at 890.00 Partial profit booked at 3610.00 Full profit booked at 925.00 Squared off at 894.00 Partial profit booked at 887.00 Partial profit booked at 855.50 Full profit booked at 2972.00 Squared off at 485.10 Partial profit booked at 487.00 Full profit booked at 3670.00 Squared off at 1658.00 Squared off at 868.00 Partial profit booked at 643.00 Squared off at 1645.00 Partial profit booked at 643.15 Partial profit booked at 3695.00 Squared off at 3675.00 Squared off at 19930.00 Squared off at 857.00 Partial profit booked at 644.20 Squared off at 3417.00 Partial profit booked at 644.20 Squared off at 644.00 Partial profit booked at 3696.00 Full profit booked at 3523.00 Squared off at 7245.00 Squared off at 4517.00 Partial profit booked at 3713.00 Full profit booked at 1660.00 Squared off at 3724.00 Partial profit booked at 881.00 Full profit booked at 479.60 Partial profit booked at 881.00 Squared off at 1103.00 Squared off at 648.00 Squared off at 3800.00 Partial profit booked at 3825.00 Partial profit booked at 513.50


13

1.15 1.64 1.56 0.16 0.24 0.31 0.50 2.44 0.04 0.22 0.25 0.18 0.08 0.56 0.33 0.77 -0.89 0.36 0.29 1.24 -0.06 0.25 0.60 -0.36 -1.15 0.24 -0.73 0.10 0.38 -0.76 -0.80 -1.05 0.22 -0.47 0.30 -0.05 0.16 1.79 -1.02 -0.80 0.30 0.48 -0.81 0.74 0.77 0.23 -1.89 -0.68 -1.18 1.70 0.25


Sl. No.

Date

Commodity

Contract

Trend Given

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114

24-Aug-17 24-Aug-17 28-Aug-17 29-Aug-17 4-Sep-17 5-Sep-17 11-Sep-17 13-Sep-17 13-Sep-17 14-Sep-17 19-Sep-17 20-Sep-17 25-Sep-17 26-Sep-17 26-Sep-17 6-Oct-17 10-Oct-17 12-Oct-17 24-Oct-17 25-Oct-17 26-Oct-17 6-Nov-17 8-Nov-17 9-Nov-17 12-Dec-17 19-Dec-17 21-Dec-17 21-Dec-17 26-Dec-17 28-Dec-17

Ref. soy oil Turmeric CPO CPO RM Seed Soybean Kapas CPO Kapas Ref. soy oil Turmeric CPO Mentha Oil Soybean Soybean CPO RM Seed Coriander Mentha Oil Turmeric Ref. soy oil Kapas Soybean COCUD COCUD Soybean RM Seed Kapas Kapas Mentha Oil

Sept Sept Sept Sept Sept Oct April Sept April Oct Oct Oct Oct Nov Nov Oct Nov Nov Nov Nov Dec April Dec Dec Jan Jan April April Jan Jan

Buy Buy Sell Sell Buy Buy Sell Buy Sell Buy Sell Sell Sell Sell Sell Sell Buy Buy Sell Buy Sell Buy Buy Buy Buy Buy Sell Buy Buy Buy

Total calls : 114



Targets

Stop Loss

664.30 7442.00 515.00 513.50 3813.00 3146.00 880.00 543.10 862.50 678.45 7568.00 534.50 1182.10 3091.00 3062.00 535.60 3830.00 4987.00 1251.00 7468.00 681.40 881.00 2879.00 1530.00 1671.00 3065.00 4091.00 1021.50 1705.00 1729.50

673.00 7620.00 505.00 506.00 3885.00 3220.00 845.00 552.00 832.00 687.00 7400.00 526.00 1160.00 3000.00 2990.00 528.00 3905.00 5080.00 1230.00 7620.00 674.00 905.00 2940.00 1590.00 1790.00 3145.00 4025.00 1060.00 1755.00 1770.00

658.00 7320.00 522.00 519.00 3860.00 3090.00 902.00 537.00 882.00 672.00 7700.00 540.00 1196.00 3150.00 3115.00 541.00 3785.00 4925.00 1265.00 7370.00 686.50 855.00 2840.00 1490.00 1590.00 3010.00 4140.00 995.00 1670.00 1712.00

Profitable : 80

Remarks Partial profit booked at 665.85 Partial profit booked at 7470.00 Partial profit booked at 514.50 Full profit at booked at 510.60 Partial profit booked at 3832.00 Squared off at 3110.00 Full profit booked at 869.00 Full profit at 546.00 Squared off at 866.00 Squared off at 671.50 Full profit booked at 7430.00 Squared off at 541.30 Full profit booked at 1162.00 Partial profit booked at 3076.00 Partial profit booked at 3031.00 Squared off at 541.00 Partial profit booked at 3846.00 Squared off at 4875.00 Partial profit booked at 1247.50 Full profit booked at 7590.00 Squared off at 685.50 Full profit booked at 901.50 Partial profit booked at 2886.00 Partial profit booked at 1540.00 Full profit booked at 1713.00 Full profit booked at 3085.00 Squared off at 4140.00 Full profit booked at 1043.00 Squared off at 1678.00 Full profit booked at 1764.00 Net Price Movement

Stop loss : 34


14

Net % Price movement 0.23 0.37 0.10 0.57 0.50 -1.16 1.25 0.53 -0.41 -1.03 1.82 -1.26 1.73 0.49 1.02 -1.00 0.42 -2.30 0.28 1.61 -0.60 2.27 0.24 0.65 2.45 0.65 -1.18 2.06 -1.61 1.96 20%

Strike rate : 70%

GOLD


Yearly price movement of Gold futures

RANGE 40000

35000

Factors to watch:

30000

India may recover from the “shock demonetization” and adjust with GST

25000



Bull market in equities reduced gold’s appeal in 2017, a pause in rally in equity could re-ignite demand for gold

20000



Global hedge book down by almost 25% over recent quarters

15000



New mines reporting ramped-up production, which boosted some countries' output

10000





US interest rate policy



Hedge funds and SPDR funds flow

5000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S2

S1

Pivot

R1

R2

25937

27547

29010

30620

32083

Yellow metal gold continued its upside momentum in 2017 also as the recovery continued for consecutive second year after the sharp fall witnessed in the 2013-15.During the past 15 years gold has seen lot of volatility. Its massive bull run which started in 2002 from $300 exhausted near $1900 in 2012-13. It nosed dived to below $1100 in 2015. In 2016 and 2017 its price managed to stage recovery and crossed $1300 in 2017. On domestic bourses during the last decade prices have scaled higher from nearly 6000 in 2005 to above 35000 in 2013. But after witnessing correction from 2013-2015 its prices staged recovery in 2016 and 2017 due to spurt in investment demand and safe haven buying, now trading near 29000. In the year 2017 weaker greenback and geopolitical tensions between US and North Korea helped gold to end in positive territory. Overall gold staged slow recovery in three quarters of the year fueled by sharp drop in dollar index as Fed delayed interest rate hike. World Gold Council (WGC) data showed that gold demand slumped 14% to 2,003.8 tonnes in the first half of 2017, the lowest level in eight years due to drop in global ETF holdings and better return in other asset classes. While on domestic bourses implementation of Goods and Services Tax (GST), demonetisation and Anti-Money Laundering (AML) regulations also dented Indian demand. The government has brought the gems and jewellery industry under the purview of Prevention of Money Laundering Act, which in turn has increased compliance requirements. The new indirect tax regime (GST) was rolled out across the country on July 1, in which the yellow metal came in the three per cent bracket. During the last quarter of 2017, ECB announced a dovish taper in its meeting. The ECB will halve its bond purchases to €30 billion a month and will continue its purchases almost till the end of 2018. Mario Draghi also indicated that ECB remains open to increasing bond purchases again if conditions warrant and thereby provided a very dovish forward guidance. This step pressurized both euro and gold. Growing geopolitical tensions supported the gold especially between US and North Korea. The United States flew two supersonic B-1B bombers over the Korean peninsula in a show of force and the US ambassador to the United Nations said China, Japan and South Korea needed to do more after Pyongyang's latest missile tests. Going forward in 2018, gold may keep investors on their toes throughout the year. Loads of factors viz; movement of greenback, fed monetary policy in 2018, investment and physical demand, central banks buying, performance of equity market and geopolitical tensions will give further direction to the prices. Central banks to remain net buyers of gold as Russia, Indonesia and Turkey have already started accumulating gold to prop up their currencies. The Russian central bank’s gold holding stood at 1,779 tones and was the sixth largest just behind China. Meanwhile central banks are not buying gold because they feel the prices are undervalued, but to diversify their reserves from the US dollar. Typically, developed countries have 60 per cent gold holdings against their total reserves. India has 6.1 per cent. Currently China’s total foreign exchange reserve in gold holdings is just 2%. Movement of global equity market will continue to influence the gold prices in 2018 as any steep correction in the equity market will lead to money flowing into gold. Moreover geopolitical flare-ups, improving physical demand in key buying nations India and China, and investment demand as a hedge against any correction in soaring stocks will keep the yellow metal supported. Meanwhile bar and coin demand in Europe rose 36% in 2017 vs. 2016 while German demand surged 45% and South Korea demand jumped 42% in 2017 as compared to 2016. And thus shows once again that investors turn to gold when geopolitical tensions rise and equity market comes in overbought zone. Investors are anticipating tax reforms in the US that would seek to significantly reduce the tax rates for companies and individuals. Tax reforms are seen as a catalyst for economic growth. Thus, reforms could be positive for the US dollar and negative for gold if everything else remains the same. In addition, the US job market and inflation will be the key factors to look out for. Developments on these fronts could give a clue regarding the Fed’s future rate hike path trajectory .Fed in the last meeting in December 2017 increased the interest rate to 1.5% from 1.25% earlier and it planned to raise rates three more times in 2018, and twice in 2019. On positive side, unfortunately geopolitical risk in Middle East and between US and north Korea is expected to continue in 2018 as well which will compel investors diversify their portfolio in gold. Moreover a jump in economic growth could also lead to higher inflation, which is usually positive for gold prices. Currency play will be equally important in this counter and INR is expected to weaken towards 69 and that will be limiting the downside in Indian market. SEBI launch of gold options in October 2017 in which 1-kg gold futures contracts as underlying was a good step to create more participation and depth in commodity market. Although it witnessed very slow start but more participation can be seen in 2018. In 2018, in the first half MCX gold is likely to take support in the range of 25000-27000. In the second half physical as well as investment demand may augment gold price towards the level of 35000. In COMEX, it may take support near $1100 and resistance appears near $1450.

17

SILVER


Yearly price movement of Silver futures

RANGE 85000

75000

65000

Factors to watch: 

    

Silver market is expected to reach a small annual physical surplus of 32.2 million ounces in 2017 after four consecutive years of physical shortfall After five years of declines, scrap supply is expected to rise to 141.6 million ounces Geopolitical and economic concerns continue to draw buying interest As per expectation, Silver investment demand will rise to 128 million in 2018 from 108 million ounces in 2017 Hedge funds and silver ETF funds flow Demand for silver ink

55000

45000

35000

25000

15000

5000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S2

S1

Pivot

R1

R2

31289

35263

39434

43408

47579

White metal silver, which is also known as poor man gold, witnessed marginal recovery in the prices in 2017, it completely ignored the recovery in the prices of base metals and gold. Silver prices often follow the movement of gold and base metals as it has dual properties. It managed to trade in narrow range $15.12-18.65 in COMEX and in 35460-43605 in MCX. Silver started the year 2017 with some bounce back as it jumped from nearly 39000 to above 43000 in February 2017 but after it fell sharply lower from March to July to below 36000 and finally managed to stay narrow range in remaining part of the year 2017. Silver underperformed gold as both precious metals have ultimately performed below expectations given the positive macroeconomic and geopolitical backdrop in 2017. Whilst demand for silver coins in the US has been weak, there are some indicators that suggest this physical demand is beginning to pick up, alongside industrial demand. For example, there has been robust silver ETF demand during second half of 2017 as there was significant uptick in those taking immediate delivery on COMEX. According to Indian Silver Institute “global silver bar and coin demand projected to fall to 130 million oz (Moz) in 2017 compared to 206 Moz in 2016. Even though physical silver investment demand can drop by 37% in 2017, it will still be more than double the 62 Moz in 2007. Meanwhile data for Silver Institute, forecasted that global silver production can decline to 870 Moz in 2017. Meanwhile global bar and coin demand can show improvement in 2018 as supply side can shrink further. Silver is nowadays used more as an industrial metal as the world now uses an increasing amount of silver. Humans have always coveted the shiny metal for coins, jewelry, and all sorts of utensils and serving dishes. But now, silver has become a vital industrial workhorse. It’s crucial for smartphones, flat-panel TVs, solar panels, cars, and many other uses. According to the Silver Institute “Growing industrial applications for silver will increase demand for the metal by 27% within the next four years”. Along with technological improvements, more and more applications of silver have been invented, and more importantly, commercialized; such as nanosilver, solar cells and printed inks. Although solar panels represent the strongest demand, the sector to see the biggest growth in the next four years will be for silver inks. According to the research demand for silver inks for print was around 2 million ounces, which is expected to grow to 4 million by 2018. Going forward in 2018 the demand of white metal from industrial applications, solar panel and silver inks will give further direction to the prices. Silver will follow gold’s reactions to macroeconomic & geopolitical factors and can outperform gold in 2018. According to GFMS “the global silver market will be in a small supply surplus in 2017 after posting a deficit for last four years in a row”. Balance sheet reductions, Fed hikes mid-2018, stellar equity markets and Fed’s new leadership will all likely to effect the white metal prices. Meanwhile, passage of Trump’s promised tax reform could accelerate economic growth and possibly lead to a higher than anticipated interest rate environment and firmer equity markets could exert pressure on bullion counter. Gold silver ratio: Silver has been truly underperformer as compared to gold in 2017 as indicated by gold silver ratio which increased from 68 in first quarter of 2017 to above 77 in last quarter of 2017. Given the fact that "normal" level of 60 is average of last 20 years silver has more potential to move higher than gold in 2018. Gold Silver ratio is expected to move in the range of 65-80 in 2018. Meanwhile the rise of cryptocurrencies and more specifically bitcoin has attracted investors who would traditionally have invested in silver bullion. Bitcoin, which in a short time has emerged with a market cap of over $60 billion alone, have become popular investments among investors who in the past would have invested in silver. As regards price movements, volatility can continue in white metal. It has underperformed gold in 2017 but can again catch up gold in 2018. Silver was laggard as compared to gold despite the rally witnessed in base metals pack. Investors may accumulate near the level of 35000-36000; on upside they may hold up to the level of 45000. In COMEX, it can rest near the level of $14 and can touch the higher side of $21.

18

CRUDE OIL


Yearly price movement of Crude Oil futures

RANGE 9000

8000

7000

Factors to watch:       

Global demand and supply is expected to be roughly balanced in 2018 Total oil demand is projected to average 98.45 mb/d in 2018 OPEC and Non OPEC maintained their production cut US’s shale industry has come roaring back¸ rig count has doubled to 900 rigs in November 2017 from 380 rigs in May 2016 China and India will lead the non-OECD oil demand growth in 2018 India import dependence is significant at around 82% Indian energy consumption has surged by around 6% per year over the past decade

6000

5000

4000

3000

2000

1000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 2351

25937 3100

29010 3482

30620 4231

32083 4613

With relentless endeavor of OPEC and Non OPEC accompanied by revival in economic health of world economy helped the most dominant commodity of the world to hold on the stage for consecutive second year. During the first half of 2017 bears were having upper hand while in the second half bulls dominated the market as OPEC compliance to production cut amid improvement in demand supported the prices. Prices rallied further from $47 to $60, approx 27% in second half of 2017. In 2016, prices saw magical upside from $26 to $55. On big canvas we can see a very high volatility in crude prices. During the past decade, it has witnessed roller coaster ride as prices made high of above $147 in NYMEX in 2008. It hit high of 7700 in MCX in 2013. Meanwhile it melted sharply lower to 2000 in MCX and below $27 in 2016 as growing supply glut due to shale gas production. On MCX, in the first half of 2017, it made low of below 2700 while it made a high above 3800 during second half of 2017 as rally found further support from supply disruptions, stronger than expected demand and anticipation that the market will rebalance sooner than later in 2017, following coordinated by OPEC nations to restrict output. Though rise in US crude production limited the upside. US’s shale industry has come roaring back since OPEC announced its production cut move in November 2016 to prop up prices and reduce global inventories. US’ drilling efficiencies since then have improved complementing the more than doubling of the rig count. The country’s rig count has doubled to 900 rigs in November 2017 from 380 rigs in May 2016. Though dollar index has negative correlation with crude, but it couldn’t give any significant impact on crude oil prices in 2017. Meeting on 30th November 2017 between OPEC and other Non-OPEC members like Russia gave stability in the prices as they agreed to extend their current supply cut until end of 2018. In 2018, a lot will depend upon the further policies adopted by these OPEC and non OPEC producers. But it will be important to note the amount of compliance by these countries. In the year 2017 heavyweights like Saudi Arabia have led the effort; others like Angola and Qatar have also played an important part. Brunei, a minnow among global producers, slashed supply by far more than it promised. On demand supply front, some tightness in supply side could be sensed in 2018. According to the latest OPEC Oil Market Report “For 2018, global oil demand growth is expected at around 1.51 mb/d, revised up by 0.13 mb/d from the previous month’s expectations reflecting the improved expectations from OECD Europe, OECD Asia Pacific, China, India and some African countries. Total oil demand is projected to average 98.45 mb/d in 2018”. Major producers’ production cut deal and falling US and global crude oil inventories could drive oil prices higher in 2018. However, rising US crude oil production could limit the upside for oil prices. According to IEA “U.S. crude oil production will rise from an average of 9.2 million barrels a day this year to 9.9 million barrels a day in 2018, a new all-time high beating a record set in 1970”. Meanwhile, the IEA warned that while progress is being made, the inventory gains will stall in 2018 as non-OPEC supply picks up pace. The IEA also stated that OPEC will probably need to take more dramatic action to accelerate the tightening underway. The IEA noted that expected supply growth would largely cancel out rising demand. Middle East tensions will also continue to weigh on crude oil prices in 2018. President Trump has confirmed his plan to decertify the Iran nuclear deal, a move that could ratchet up tensions between the two nations. Moreover growing tensions in Iraq can also impact crude supply. Recently Kurdish authorities have sent thousands of troops to the key oil region of Kirkuk to defend the region, after the Iraqi government mobilized troops and tanks south of the city. The next trigger could be the hurricane in US will affect the crude oil price movement in 2018 as we have witnessed three hurricane namely Harvey, Irma, Nate in 2017. Any damage to the refineries during the hurricane generally reduces the crude oil demand. As regards price action, Crude oil prices in 2018 can take support near $42 in NYMEX meanwhile 2800 will be key support in domestic bourses. Upside may remain limited in first half of the year on oversupplied situation. Major upside action can be seen in the second half of the year. The market will remain oversupplied through the first half, with supplies exceeding demand by 600,000 BPD in the first quarter and another 200,000 BPD during the second. On the upper range of the prices might face stiff resistance near $75 and near 4500 in MCX. Accumulation at lower levels should be the strategy for the investors.

20

NATURAL GAS


Yearly price movement of Natural Gas futures

RANGE 650

550

Factors to watch: 450



U.S. oil output in 2018 would hit its highest level ever.



Industrial consumption is expected to rise by 1.2%, averaging 21.7

350

Bcf/d in 2018, as per EIA 

US consumes nearly 20% of total world consumption



Demand is excepted to rise in China, India and South East Asia as they



US weather related demand and US weekly inventory



US consumption & demand pattern and US exports & imports

prefer clean energy

250

150

50

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S2

S1

Pivot

R1

R2

113

152

203

241

292

Thanks to the powerful combination of fracking and horizontal drilling, this has sent U.S. natural gas supplies through the roof. Prices recovered from the multi years low in 2016 but it moved down again in 2017 due to supply surplus, thanks to the shale revolution. Prices witnessed decline of more than 22% amid weak demand and ample supply. Price movements depend upon more on whether when it comes to natural gas. Its prices plunged sharply lower in the first half of the 2017 on less demand due to warmer temperature in the winter season due to El Nino. Winter is the peak heating season while the summer is the peak cooling time of the year, both increase the demand for natural gas. However, when it comes to spring, withdrawals from storage turn to injections and the prospects for a sustained price rally decline. During the last decade natural gas prices witnessed roller coaster ride as prices peaked to above $13.5 in NYMEX in 2008 and below $2 both in 2012 and 2016 due to shale gas invention in US. On domestic bourses, during the last decade natural gas prices peaked near 400 in 2008 and went below 110 in 2012 and 2016. The substantial increase in natural gas production from various shale basins, both from wells drilled primarily to extract natural gas as well as associated gas production, has suppressed natural gas prices for several years. When it comes to natural gas, US become very important as it is the major producer as well as consumer. After US, Russia, China and Iran are the major player. Surge in natural gas production in US can continue in 2018 which may keep the upside capped. By the mid 2020s, the IEA expects the U.S. to become the world’s biggest exporter of liquefied natural gas, demand for which is set to rise strongly as China, India, and Southeast Asia all turn away from coal to cleaner energy sources. Although demand growth for natural gas has also grown over the past decade, this has been mainly due to a gradual shift towards gas-fired electricity generation and away from coal and nuclear. However, the dynamic in the US natural gas market is now set to change with a marked upward shift in demand likely to manifest itself over the next two years as LNG export as well as pipeline export capacity to Mexico ramps up. Looking ahead in 2018, demand for natural gas is also expected to strengthen from new demand from chemical and fertilizer sector. According to the EIA, US natural gas production can average 73.6 Bcf per day in 2017 and 78.5 Bcf per day in 2018 and US natural gas consumption will average 73.1 Bcf per day in 2017 and 76.8 Bcf per day in 2018. The gas rigs have also shown steady increase in 2017 as the number of gas rigs in the US stands at 176 during last quarter of 2017 up from 118 in 2016 which is increase of 49 percent. Going forward in 2018 the gas rig count data will also affect the prices. Natural gas production is in fact growing in most of the major shale basins at present. Total production is expected to increase by roughly 7 Bcf per day in 2018 and 2019. On the one side increasing usage as clean fuel considering stringent environmental norms across the globe can support the prices. While on the other side oversupply concerns amid shale gas production can limit the upside in 2018. Over the last few years, the glut and ensuing low prices have been welcomed by domestic consumers, including home heaters, electricity generators, and chemical producers, but the demand couldn't match rising production. Weather related demand to be the key driver of natural gas prices in 2018. The last two winters have been the warmest on record. The temperatures in December, January, and February 2018 are expected to be warmer than average temperatures, which could lead to less heating demand, which affects natural gas demand and in turn prices. Natural gas prices could rise in 2018 due to the rise in natural gas exports and a rise in domestic natural gas consumption in US. Prices saw sharp drop in 2017 can witness further some recovery in 2018 on weather related demand. Natural gas prices will face resistance near $4 in NYMEX and 300 in MCX. While key support is near 150 in MCX and $2.5 in NYMEX.

21

COPPER


Yearly price movement of Copper futures

RANGE 550

500

450


China's war on polluting industries, supply reforms and robust demand growth Mining productions and strikes China’s “One Belt, One Road” (OBOR) project – an estimated $5 trillion infrastructure project is opportunity for the entire commodities industry LME Stock positions (Moved in range of 200k-350k tonnes in 2017) China housing sector performance Mines production may increase by 2.5 percent in 2018 Deficit to be around 105000 tonnes in 2018

400

350

300

250

200

150

100

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 313

25937 389

29010 430

30620 507

32083 548

Doctor Copper which set the stage for its comeback in 2016 had a great time in 2017 and continued its bull run. In 2017, it made higher lows and higher highs throughout the year. Red metal often viewed as a barometer of the world economy witnessed best year since 2010 on bets that miners can’t dig fast enough to keep up with strengthening demand in 2017. There were bundle of reasons behind the upside. Chinese economic data’s were positive for the world’s leading consumer of commodities. Production level shrank and other economies also grow. Apart from improved demand in India, in the United States, economic growth has risen above the 3% level and unemployment has dropped to a low level. Even Europe is showing signs of moderate growth. Over recent months, the inventory levels of most nonferrous metals that trade on the LME have been moving lower, and copper is no exception. As regards price movements, copper rose in 2016 after prices fell steeply for three years as it took key support near 300 in MCX and 4400 in LME. The rally in which started in the last quarter of 2016 continued further as prices stabilized in first half of 2017 but rallied higher in second half of 2017 amid growing demand and restricted supplies. It crossed the psychological level of 460 in MCX and $7100 in LME in last quarter of 2017. According to the International Copper Study Group, world mine production is expected to decline by around 3% in 2017 and grow by 2.5% in 2018. World mine production in 2017 is being impacted by significant supply disruptions, namely in Indonesia and Chile, reducing output in major mining production countries. In addition, overall lack of major new projects or expansions and lower grades in planned mining sequencing in some countries negatively impacted world growth. In 2018, the expected recovery from 2017 constrained output, the re-starting of temporary closed/reduced capacity in the Congo and Zambia, and to a lesser extent additional output from new projects/expansions coming on stream, could lead to a growth in world mine production of around 2.5%. Current ICSG projections are for a deficit of about 150,000 metric tonnes in 2017, and about 105,000 tonnes in 2018. Sustained growth in copper demand is expected to continue because copper is essential to economic activity and even more so to the modern technological society. On positive side, infrastructural development in major countries such as China and India will continue to sustain growth in copper demand. Improvement is anticipated for the world economy for 2017 and 2018 which, although modest, should support copper demand growth. Chinese copper demand growth is expected to be at around 3% in 2018 for both apparent and real usage. Although underlying “real” demand growth in China is estimated by others at around 4% in 2017, Chinese apparent demand is expected to grow by only 1% impacted by lower net imports of refined copper. Stringent winter air pollution curbs could add to business costs and force companies to throttle back production further in coming months. The stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries. China’s economy has surprised global financial markets and investors with robust growth of nearly 6.9% in 2017. But property and construction activity, two of the economy’s main growth drivers, are starting to cool under the weight of government measures to cool heated housing prices and higher borrowing costs. And the reason for immediate caution is a slowdown in China’s property market and its electricity grid in two areas that are critical for demand. China home sales fell the most in almost three years in October 2017. Investment in power grid infrastructure was flat at about 413 billion yuan in the first 10 months of 2017, compared with a 29 percent gain in the same period in 2016. Demand supply equilibrium always put the metal market on toes. After struggling with falling copper prices since 2011, producers of the red metal are finally recording profits due to upswing witnessed in 2017. Due to increased profits more new mines can come up in 2018 will increase global production thereby impacting prices. Meanwhile strike concerns can impact the prices in the 2018 as workers can hold strikes in mines to get better share of profits in form of wage hikes. Workers for the two largest unions at Southern Copper Corp in Peru went for strike, demanding a fair share of mining profits in November 2017. Copper treatment and refining charges (TC/RCs) trend will give further direction to the prices. Prices and treatment and refining charges (TC/RCs), generally have inverse correlation. India has the potential to boost consumption of copper as its economy expands over the next two decades and more people flock to its cities. India is also expected to benefit from the electric vehicle push as Prime Minister Narendra Modi seeks to turn all passenger car sales electric by 2030. Overall prices can continue its recovery in 2018 as increasing usage of the metal in electric vehicles, solar and wind power sectors. Meanwhile supply and demand factors, US monetary policy, performance of global equity market and recovery in Chinese economy to give further direction to the red metal in 2018. Copper prices may find support near 350 in MCX while 540 will act as a resistance on the domestic bourses. In LME, prices can get support near $6200 while $7800 can act as a resistance.

23

NICKEL


Yearly price movement of Nickel futures

RANGE 2500 2300 2100


1900

Demand for nickel will outstrip global supply for the third year on the trot in 2018, although the size of the deficit is set to shrink LME Stock positions (Dropped sharply to below 366k tonnes in Q4 2017) LME Cancelled warrants Decision of Philippines mine closure Chinese demand Environment concerns in Philippines and Indonesia Increasing demand for lithium-ion batteries

1700 1500 1300 1100 900 700 500 300

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S2

S1

Pivot

R1

R2

445

614

728

897

1011

Improved demand gave new lease of life to nickel prices and it remained firm for the second consecutive year. 2017 started on bearish note with the Indonesian government announcing plans to loosen a ban on nickel ore exports. Prices tied to move up after Regina Lopez, the Philippines’ acting environment secretary, ordered the closure of over half the country’s mines due to environmental concerns, but couldn’t sustained at higher levels. Chinese stainless demand weakened in Q2 and thus nickel continued its downside journey. Finally the much awaited upside came in the third quarter of the year when nickel began to receive increasing attention for its role in lithium-ion batteries, which are used to power electric vehicles. Lithium-ion batteries are composed of 80 percent nickel, 10 percent cobalt and 10 percent manganese. In fourth quarter prices jumped further on decline in production in Philippines amid increase in the production of stainless steel. Though China’s cooling housing market capped the upside. During the last decade nickel witnessed roller coaster ride as it scaled higher from nearly 500 in 2008 to above 1300 in 2011 and moved in this range for rest of the years. 500-550 level range acted as key support level and prices managed to hold above that level. Nickel prices witnessed subdued movement in the first half of 2017 as Indonesia allowed exports of nickel ore and bauxite and concentrates of other minerals under certain conditions in a sweeping policy shift by the key global supplier. A ban on unprocessed ore exports was imposed in 2014 to spur higher value smelting industries, but the government of Southeast Asia’s biggest economy has faced a hefty budget deficit. During the second half of 2017 prices recovered and crossed the key level of 800 in MCX amid strong rise in stainless steel prices in China. Moreover nickel prices got support due to fresh crackdown by Chinese environmental regulators in several key nickel producing regions. China Imports of refined nickel are down 51.4 percent to 155,382 tonnes in the first three quarter of 2017 as compared to the same period in 2016. The drop in refined imports has been somewhat offset by an 8.8 percent gain in imports of nickel ores and concentrates to 25.96 million tonnes in the three quarters of 2017. As we know that nickel market and its outlook has been hostage to politics in Indonesia and the Philippines over the past 2-3 years, in 2018 one will have to pay attention on political development regarding this area in Indonesia and Philippines. Indonesia’s state-owned diversified miner PT Aneka Tambang Tbk (Antam) is targeting a 162 percent jump in nickel ore sales in 2018. Moving towards 2018 outlook, some positive factors advocating upside in 2018 are supply tightness amid some improvement in demand. Environment concern in main producing countries like Indonesia and Philippines is indicating more mines closure if norms are not followed. If it happens; it will squeeze the supply and thus prices will jump on any demand side improvement. Philippines' environment minister stands by her decision to shut more than half the country's operating mines and bar mining in watershed zones. If she continues with the same decision then it may contribute in some supply tightness in 2018. The Philippines took over as the world's top nickel ore exporter after Indonesia banned exports of unprocessed ore in 2014, aiming to spur development of higher value smelting industries. Demand for nickel will outstrip global supply for the third year on the trot in 2018, although the size of the deficit is set to shrink. The global deficit in nickel supply will drop to 53,000 tonnes in 2018 from 98,000 tonnes this year, partly due to a recovery in Chinese production growth. China’s primary nickel consumption will rise by 3.8 percent year-on-year to 1.13 million tonnes in 2017 and then to 1.18 million tonnes in 2018. The share of the battery sector, which is putting nickel on a “new journey” given the growing popularity of electric vehicles, is increasing each year. Nickel is an important component of lithium-ion batteries like those that power electric cars. As auto fleets become more electrified, this means there will be a lot more demand for the metal. Nickel, which is primarily used for the production of stainless steel, is already one of the world’s most important metal markets at over $20 billion in size. For this reason, how much the nickel market is affected by battery demand depends largely on EV penetration. Electric Vehicles (EV) currently constitute about 1% of auto demand – this translates to 70,000 tonnes of nickel demand, about 3% of the total market. However, as EV penetration goes up, nickel demand increases rapidly as well. Though upside should remain capped owing to the weakening demand for stainless steel in top metals consumer China, rising Chinese borrowing costs and Beijing’s regulatory crackdown on risky financing. Apart from battery demand about 70 percent of global nickel supplies are used in making stainless and other steel products. China accounts for about half of global nickel consumption, most of it for use by stainless steel mills. Recently investor confidence in China has been dented by rising bond yields as Beijing stepped up its crackdown on shadow banking and other risky forms of financing. Higher borrowing costs threaten to squeeze corporate profits. So the performance of Chines bonds and steps taken by the banking sector will also affect nickel prices. Nickel prices have key resistance of 1000 in MCX and $14000 in LME while 600 are the key support in MCX and $9000 in LME.

24

ZINC


Yearly price movement of Zinc futures

RANGE 240 220 200


180

Refined-zinc market likely to tighten further in 2018 LME Stock positions and cancelled warrants (Stocks below 200k tonnes which are five years low in 2017) News related to mine closure & restart of closed mines Global galvanizing demand Movement of steel prices Demand steadily increase for decades According to ILZSG world zinc mine production is forecasted to increase by 6% to 13.78 million tonnes in 2018

160 140 120 100 80 60 40

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S2

S1

Pivot

R1

R2

133

172

195

235

258

Zinc deserves our attention with its massive rally in both 2016 and 2017. Though it was a roller coaster ride as in first quarter of 2017, it saw huge upside in the prices on improved demand amid strict supply. In second quarter it saw sharp dropdown in the prices. Again improved economic situation and tight supply lent a hand to the prices and it made good recovery. Though in last quarter, it appears that market players booked profit ahead of year end amid the concern of further slowdown in Chinese housing sector. Zinc, the galvanizing metal, continued its strong surge for the second consecutive year as supply concerns and rising demand supported its prices. Prices just got more than doubled from nearly 100 in beginning of 2016 to above 215 in 2017. In LME also, prices which were nearly $1450 in 2016 scaled higher above $3300 in 2017. Zinc benefited from the better outlook for Chinese infrastructure projects in 2016, the rally also reflects increased risk appetite as the world looks to growth in 2017 amid mine closure issue. Rise in China steel prices also fueled rally in zinc prices as zinc is used for galvanizing as Chinese steel futures jumped highest since 2014. Zinc, the fourth most mined metal in the world, has seen its demand steadily increase for decades. The metal is primarily used to galvanize steel, but its use in agriculture as a fertilizer to increase the productivity of soil has increased markedly in recent years. As more people consume greater quantities of resources every year, the search for profitable zinc mines will intensify. Factors which could support zinc to remain firm in 2018 are mine closures, improved demand and possibility of further improvement in US, Chinese and other major economies. With consumers in India and China buying more cars that use rustproof galvanized steel, which is made using zinc its demand could continue to outstrip supply in 2018. Meanwhile environmental inspections in China, the world’s top zinc-producing country, have resulted in reduced production or the closure of many zinc mines across the country, fueling shortages concerns. So supply concerns, growing demand and China spending on infrastructure will guide its movement in 2018. Another sign that the zinc market is tight are the low levels for treatment charges (Tcs), which are an indication that concentrate supplies are thin as supply-side factors continue to be largely behind the surge in prices in 2017. On the demand side, according to ILZSG “World demand for refined zinc metal is forecasted to increase by 0.7% to 13.93 million tonnes in 2017 and then by 2.5% to 14.28 million tonnes in 2018”. Apparent usage in the United States is forecasted to rise by 12.2% in 2017 with a further 2% rise anticipated in 2018. European demand is forecasted to increase by a modest 0.4% in 2017 with rises in Belgium and the Russian Federation being largely offset by reductions in France and Germany. In 2018, a rise of 2.8% is anticipated which, if realized, will take European usage to its highest level since 2011. In China, the latest official reported figures indicate that a slowdown in refined zinc metal production will not be fully compensated for by an increase in net imports and therefore apparent demand is expected to fall by 1.8% in 2017. However, in 2018 demand is expected to rise by 3% mainly as a consequence of increased galvanized steel production. On the supply side, according to ILZSG world zinc mine production is forecasted to increase by 1.8% to 13.00 million tonnes in 2017 and by 6% to 13.78 million tonnes in 2018. Global refined zinc metal production in 2017 is forecasted to fall by 1.4% to 13.53 million tonnes despite a significant recovery in Indian output. In 2018, Australian output will benefit from the opening of MMG’s Dugald River mine. Similarly South African production will be boosted by the commissioning of Vedanta’s Gamsberg operation which is scheduled to commence production during the first half of 2018. Increases in Finland and Greece are expected to add to European output with higher production also anticipated in China, Cuba and the United States. But upside will remain capped as the expected restart of closed mines can take place in 2018 thus leading to increased supply. The Century zinc mine in Queensland could be churning out ore again in 2018 to a $52.9 million private placement raised by owner New Century Resources. The mine was the third largest zinc mine in the world prior to its closure in 2016 and still hosts mineral resources in excess of 2.6Mt of zinc. New Century acquired its interest in 2017 and is currently undertaking a feasibility study into the recommissioning of the existing processing plant. During its 18 years of operations, starting in 1999, Century processed an average 475,000 tonnes per annum zinc concentrate. So according to ILZSG in 2018, zinc is expected to remain in deficit with the extent of the shortage forecast at 223000 tonnes can give further support to the prices. In 2018, zinc will find key support near $2200 at LME and 150 in MCX while key resistance will be $3900 in LME and 250 in MCX.

25

LEAD


Yearly price movement of Lead futures

RANGE 190

170

150


Global lead demand supply pattern



LME Stock positions ( Stocks near 140k tonnes which are near two

130

110

years low in 2017) 90



LME cancelled warrants



News related to mines closure & restart of old mines & labour action in Lead mines



70

50

Global demand for refined lead metal is forecasted to rise by 0.9% to 30

11.82 million tonnes in 2018

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 115

25937 137

29010 154

30620 176

32083 194

The “Shy Sibling” of zinc had a great year in 2017. It gave positive return for second consecutive year as the increase in battery demand together with some supply side tightness, which fueled rally in this metal. Lead prices witnessed steady upside after hovering around 100 levels in December 2015 as it tested high of above 170 in December 2016 and again in October 2017. During the last decade, its prices have seen multifold increase as from hitting low of near 40 levels in 2008 to above 170 in 2015 due to increasing use of environment friendly E cars and bikes. This “Environment Friendly” step has given a new lease of life to the lead prices. In China, every year, millions of Chinese are hitting the streets on "e" bikes battery powered contraptions that are increasingly popular as soaring fuel prices make traditional motorbikes and scooters expensive to drive. Everyone looks at the "e" bike as a replacement for a motorbike. For the lead industry, it's an astonishing change. In terms of lead demand, one "e" bike is one car. A 48-volt bike battery uses just under 10 kilograms of lead, similar to that used by a medium-sized car like a Toyota Camry. Even India is not behind with the world. With a major boost for electric vehicles planned in private and public transportation by the Indian government over the next few years, a similar push is now being planned in the battery manufacturing sector as well. The Indian government’s planning arm, NITI Aayog, expects that a push for electric vehicles can deliver a $300 billion market for domestic battery manufacturers by 2030. On the demand side, global demand for refined lead metal is forecasted to rise by 5% to 11.70 million tonnes in 2017 and a further 0.9% to 11.82 million tonnes in 2018. In 2017, the rise will be driven primarily by forecast growth in Chinese apparent usage of 11.3% which has been partially influenced by a rise in the use of three-wheeled e-bikes that has more than offset reductions in the e-bike sector as consequence of increased penetration by lithium-ion batteries. It is anticipated that European usage will rise by 2.2% in 2017 but remain flat in 2018. In the United States, increases of 1.1% and 1.8% are predicted in 2017 and 2018 respectively. Downside risks include slower-than-anticipated demand from China and greater-than-expected production including the restart of idled capacity and an easing of production restrictions in China. On the supply side, the ILZSG expects world lead mine supply to rise by 5.6% to 5.06 million tonnes in 2017 and a more sedate 1.1% to 5.11 million tonnes in 2018. The rise in 2017 will be mainly due to higher output in China with smaller contributions from India, Kazakhstan and Canada, where Coeur mining’s Silvertip mine was commissioned in January 2017. In 2018, production will benefit from the impending start-up of Minera del Caribe’s Castellanos mine in Cuba, the recent commissioning of Eldorado Gold’s Olympias mine in Greece and increased output in Mexico. Rises of 3.7% to 11.58 million tonnes and 1.6% to 11.77 million tonnes are forecast for world refined lead metal production in 2017 and 2018 respectively. These will be primarily driven by increased production in China. On supply front in China, the Chinese environmental campaign has heavily impacted lead. According to research group Antaike, 80% of illegal secondary smelters have been shut down during the second half of 2017. China has also lost an important source of raw materials from North Korea due to its commitment to international sanctions. Meanwhile global demand for refined lead metal will exceed supply by 125kt in 2017 due to lower than expected lead metal output in the United States and increased Chinese net imports. In 2018, a deficit of 45kt is expected which can give cushion to the prices. Meanwhile prices may continue to get support from the sanctions imposed on North Korea. China did not import lead from North Korea in October as sanctions against the isolated nation came into force on Sept. 5, 2017 banning Pyongyang from selling lead and lead ore abroad. Like other base metals, lead will be driven by diverse factors including economic growth, monetary policy, currency gyrations and labour action in Lead mines in 2018. Good demand growth from the industrial battery sector and for Sealed Lead Acid batteries (SLA), which are used to power e-bikes, can support the prices further. Lead zinc spread: Lead and zinc are often discussed in tandem. Between those two metals, zinc has shown greater price strength, with prices recently rallying to their highest levels in more than 10 years. During the past two years, lead which was trading at premium to zinc to nearly 13 in MCX at start of 2016 went into discount of more than 58 in October 2017 as zinc outperformed lead by huge margin. Increased demand of Zinc from steel sector and closure of key zinc mines helped zinc rally faster than lead. But during the last quarter of 2017 lead zinc spread narrowed to 42 in December 2017 as lead appreciated more than zinc. This spread can move in range of 30-65 in 2018. Lead has a key support of 120 in MCX and $1800 in LME and key resistance of 200 in MCX and $3000 in LME.

26

ALUMINIUM


Yearly price movement of Aluminium futures

RANGE 170

150

Factors to watch: 130



China’s supply reform policies to benefit aluminium



Price of crude oil as crude constitutes 40% of cost of production



LME stock positions (Stocks are below 1100k tonnes which are four



LME cancelled warrants & global auto sales



Demand from packaging & aerospace



Demand from automobiles, construction & power



Shutdown of illegal and polluting smelters

years low)

110

90

70

50

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 103

25937 124

29010 135

30620 155

32083 166

Aluminum move on its own tune in 2017, mainly the aluminum’s story was all about rising global demand and smelter curtailments in China. White metal Aluminum surged higher for the second consecutive year. Increasing demand and supply restrictions in China due to stringent pollution control norms supported its prices. After hitting low of nearly 100 in beginning of 2016 aluminium prices hit high of above 140 in 2017 that is a jump of nearly 40% in two years. Supply side reforms in the Chinese aluminium smelting sector are accelerating, and environmental regulations are further limiting output thereby lifting the prices. The rally in other base metals and rising energy cost as well supported the white metal which breaks the $2,000/tonne barrier for the first time in three years in LME and 140 in MCX. Meanwhile US imposed fresh import duties on Chinese aluminium, accusing exporters of dumping their product in the US market at prices slipped below cost. The move follows a Commerce Department decision in August that also imposed import duties to counteract alleged unfair Chinese subsidies in the aluminium foil industry. Trump administration has aggressively pursued trade remedies in commercial relations with Beijing investigating Chinese trade practices on intellectual property and for aluminium. Meanwhile India’s top aluminium producers Vedanta Resources and Hindalco Ltd stare at losses as a coal shortage at their captive power plants threatens to shut down smelters at a time when global metal prices are the highest in three years. Higher Alumina prices as a result of higher coal price will continue to support Aluminium prices in 2018. China's crackdown on its bloated aluminium industry is driving up the share price of the country's major producers and raising the spectre of a tighter global market that could buoy prices. The automotive industry is among the largest aluminum end users in the world. Automobile companies use steel products for auto sheets and engine parts. But aluminum has been gaining more popularity in the automobile industry, though aluminum is expensive when compared with steel. According to the China state-run metals consultancy Beijing Antaike “China's refined aluminum demand in 2018 is forecasted to rise 6% to 36.9 million mt from the estimated 34.8 million mt in 2017”. Demand from the aluminum alloy wall, aluminum bridge and solar aluminum extrusion sectors have risen in recent years, providing new demand growth amid a slowdown in growth in the major consumers -- construction, transport, electronics and power. China's net refined aluminum import in 2018 is seen at 30,000 mt. On the supply side, China's national aluminum supply is seen at 38.03 million mt in 2018, up 5.6% from 36.03 million mt in 2017, with a national aluminum surplus of 1.13 million mt in 2018, from a surplus of 1.23 million mt in 2017. Aluminum smelting capacity growth in 2017-18 to be below previous expectations given the market, fund, environment protection and government policy factors, and estimated 7 million mt/year new refined aluminum output capacity would be added. Aluminum is widely used in various sectors from airliners to drinks cans and the demand pattern in these sectors in 2018 will have big impact on the prices. Demand coming from the sectors like packaging, aerospace, automobiles, construction and power etc will affect demand scenario of aluminum in 2018. Its light weight quality has improved its demand in most of the sectors. Use of aluminium in vehicle and cargo/goods container, across transport modes improve the efficiency and reduced energy consumption. Moreover prices of aluminum have shown recovery in past two years due to measures taken up by the Chinese economy to witness growth as well as renewed sentiments toward the demand for aluminum. Shutdown of illegal and polluting smelters will continue to result in a cut in capacity, thereby supporting the prices. Also, producers in China are upgrading their production facilities. New smelting capacity growth in China is expected to slow down significantly due to supply side restrictions in 2018. Aluminum prices will experience an upward trajectory due to an uptick in demand from the European markets in 2018. Consumption of bauxite and alumina is also likely to move in tandem with the domestic aluminum production trend however any surplus production of alumina will lead to increasing alumina exports. Vehicle light weighting helped propel aluminum demand in the automotive industry. Several auto companies, including Ford Motor (F), launched full aluminum-body vehicles. So, expected increasing demand of aluminium may give further strength to the prices in 2018. Movement of crude oil prices in 2018 should be watched, apart from other fundamental factors as the energy constitutes 35-40% of aluminum costs. It has positive correlation with crude prices. Moreover positions of cancelled warrants and mining closures will give further direction to the prices in 2018. Nevertheless, upside in aluminum is likely to be capped because rise in prices will encourage idle smelters in China to restart production again. Aluminum prices is expected to take key support near 110 in MCX and $1600 in LME and resistance will be 180 in MCX and $2600 in LME in 2018.

27

SOYBEAN


Yearly price movement of Soybean futures

RANGE 5500 5000 4500

Factors to watch:  

 

4000

US Department of Agriculture's expects India's soybean output to fall 13% on year to 100 lakh tons in the 2017-18 (Oct-Sep) marketing year. India’s soybean ending stocks by the end of 2017-18 are projected lower at 5 lakh tons, which would be approximately 39% lesser as compared to 2016-17. U.S soybean ending stocks by the end of 31st August, 2018 is projected 29% higher as compared to last year. For 2018/19 crop year (Sept-Aug), USDA sees record-high U.S. soy acres & if the forecasts are borne out, then we might see another year of bumper supply.

3500 3000 2500 2000 1500 1000 500

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 2356

25937 2710

29010 2997

30620 3351

32083 3638

Soybean has always been a crucial Kharif oilseed crop in the country as it accounts for around 40% of the domestic oilseed basket. Last year, it was a problem of plenty for soybean in the domestic as well in the international markets. Soybean futures on the national bourse witnessed the worst as its prices crashed & hit a 5-year low of Rs.2,643 a quintal. On the spot markets, soybean made a low of Rs.2,729 a quintal & traded below its minimum support price of Rs 2,775 a quintal fixed for the 2016-17 (Oct-Sep) marketing season owing to a bumper crop and tepid demand for the oilseed and its by-products. In addition to it, the rise in output of mustard by 16% increased the overall supply of edible oilseeds in domestic markets & weighed on sentiments for soybean. Near normal monsoon and a rise in acreage led to expectations of higher oilseed production and better yields last year. On the international market also, soybean futures struggled to trade higher & closed in the red zone due to raised global soybean productions, driven by higher output estimate for Brazil. On CBOT, it took nearly six month to rise from $9 & to reach the psychological level of $10 a bushel after China pledged to import more U.S. Soybean during 2017-18. But, by the end of the year, the counter took negative cues from the improved crop prospects in Brazil which raised a concern over the demand for U.S. soy exports. Additional pressure on CBOT soy futures stemmed from worries that more stringent quality rules on Chinese soybean imports starting in 2018 could stall U.S. soy sales. Back at home, by the end of year, soybean price in the Indore market managed to touch the MSP of Rs.3,050 per quintal for the 2017-18 (Oct-Sep) Kharif marketing season after the government increased import duty on the soy oil and the export incentives on soy meal by 2% to 7% under the Merchandise Export Incentive Scheme to jack up the prices in spot markets. This positive news made the market participants more optimistic about soy meal exports & also boosted the sentiments of the millers to crush more soybeans. However, still the current price level is the lower in the last five years and looking at this the farmers may get discouraged to sow this oilseed & shift to other remunerative crops such as maize, pulses and cotton during Kharif season. US Department of Agriculture's expects India's soybean output to fall 13% on year to 100 lakh tons in the 2017-18 (Oct-Sep) marketing year. The fall in output can be attributed to a decline in acreage of the crop to 105 lakh hectares, lower by 8% as compared to 2016-17. The total availability of soybean, including carryover stocks, is estimated at 109 lakh tons this year, lower than 117 lakh tons a year ago. On the demand side, India’s consumption of soybean is about 102 lakh tons & soy meal exports are estimated at 2 lakh tons in 2017-18. The ending stocks by the end of 2017-18 are projected lower at 5 lakh tons, which would be approximately 39% lesser as compared to 2016-17. A rise in demand from domestic food and feed industry is expected to consume a major portion of the soy meal produced in the country. Domestic poultry and livestock industry together consumes around 70% of the total soy meal produced in the country. Moreover, the market participants are optimistic to do more export business of soy meal, owing to the recent rise in export incentives. Going forward, the factors such as output of beans in Brazil, Argentina, south west monsoon & rupee lending a hand to the Indian soy meal to maintain its competitiveness in the global market will be influencing soybean prices. Let’s take a look of the fundamental of the U.S soybean. USDA released several tables previewing the annual long-term Agricultural Projections to 2027 (the complete projections will be released in February 2018). In 2017-18 crop year (Sept-Aug), U.S soybean production is estimated at 4.425 billion bushels with a yield of 49.50 bushels per acre. The total supply of U.S soybean including opening stocks is pegged at 4.752 billion bushels, to meet the total demand of 4.326 billion bushels, which includes crushing, exports along with seeds & residual. These huge figures on the supply side may be a bearish indication to the market participants as the ending stocks by the end of 31st August, 2018 is projected 29% higher as compared to last year, due to lackluster demand from crushers & lower exports of soy meal. The U.S. Department of Agriculture predicts that U.S soybean stocks-to-use, a measure of both supply and demand, will rise to 9.8% in 2017/18 from 7.2% in the previous year. The report also highlighted that for 2018/19 crop year (Sept-Aug), USDA sees record-high U.S. soy acres & if the forecasts are borne out, then we might see another year of bumper supply. For soybeans in 2018, the USDA forecasts that soybean plantings are projected at 91 million acres & if realized, this would be a new record-high for soybean acreage. These metrics are important to monitor for evaluating planting decisions in 2018 and marketing the 2017 crop. The next opportunity to review potential acreage decisions will come in the Prospective Plantings report, scheduled to be released by USDA on March 29, 2018. Considering the above facts, soybean futures are likely to remain stable & will possibly touch 4000 levels, taking support near 2900 levels. On CBOT, the oilseed is expected to trade range bound within $9-10.80 a bushel, with upside getting capped.

29

EDIBLE OILS


Yearly price movement of Edible Oils futures

RANGE

800 700 600


The Indian currency would play a vital role in deciding the quantity of imports from the overseas markets.



Forecasting a 6% growth in demand of soy oil in the food industry with booming population of India.



India’s palm oil consumption is likely to grow by 4% to 9.80 million tons, leaving behind a little surplus.



The EPA biodiesel program might complicate the demand picture of U.S soybean oil. If implemented in 2018, a new U.S. Environmental Protection Agency (EPA) standard will negatively impact the volume of soybean oil.

500 400 300 200 100 2006

2007

2008

2009

2010

CPO

2011

2012

2013

2014

2015

2016

2017

Ref. soy oil


S1

S2

Ref. Soy Oil 27547 CPO

S2

S1

Pivot

Pivot

549 25937

635

29010

419

487

R1

R1

R2R2

692

30620 778

32083 834

543

611

668

Historically, the domestic edible oil counters have always been the price-taker & following the footsteps of their counterparts on CBOT & Bursa Malaysia Derivatives Exchange. But 2017, was an exceptional year, as the Indian soy oil & palm oil showed contra moves against U.S soy oil & Malaysian palm oil. Despite of a stronger rupee & higher imports, the vegetable oils rose to multiyear high buoyed by the growth in demand & stagnancy of domestic oilseeds production. In the eleventh month of the last year, the Centre has raised the import duty on crude palm oil to 30% from 15% and on refined oil to 40% from 25% in a bid to curb cheaper shipments and boost local prices for supporting farmers and refiners. These hikes in import duty were the highest level in more than a decade. The step to increase the import duty was taken by the government to protect the farmers, domestic crushers & mainly to discourage the import of cheap edible oils from Indonesia, Malaysia, Brazil and Argentina. The latest data from the Solvent Extractors' Association of India shows that the total import of vegetable oils i.e. edible oil and non-edible oil for the year 201617 (Nov.’16 to Oct.’17) was reported at 154.4 lakh tons. Import has jumped by 45% in last 5 years. The main reason due to which the imports have sharply increased in last few years was the stagnant oilseed production and rising demand in the country. The detailed analysis of advance estimates reveals that, this year also a there would be supply constraints, owing to the reflection of lower Kharif oilseeds output which has plunged to 20.68 million tons in 2017-18 from 22.40 million tons in 2016-17. Even after adding the government’s target of producing 10.09 million tons of oilseeds during the current Rabi season, the total availability of oilseeds (Kharif & Rabi) during in 2017-18 is likely to be lower at about 30.77 million tons, as compared to 32.09 million tons in 2016-17. India already in dependent on imported oil of around 80-90% of its requirements is likely to import 136 lakh tons to meet the demand of 154 lakh tons in the 2017/18 marketing year (November-October). In brief, during 2017-18 the total supply of edible oils would be around 16.57 million tons including production & opening stocks, against 15.70 million tons of demand, leaving behind a surplus of merely 0.87 million tons. Presently, the demand for edible oils in domestic market is hand to mouth as the bulk buyers are not interested in purchasing such higher prices. Going ahead, fresh buying at such higher levels is likely to get muted. The market participants would wait for some correction before getting into fresh buying. The buyers have in knowledge that the importers would first clear earlier inventories & closely watch at what level prices of edible oil stabilize in the local market before deciding about further imports. Here, the Indian currency would play a vital role in deciding the quantity of imports from the overseas markets. India purchases soybean oil from Argentina and Brazil. The projected figures by the USDA shows that the total supply of soybean oil in Brazil during 2017-18 is likely to be around 8.43 million tons, while in Argentina the availability would be nearly 8.9 million tons, higher by 4% in both the countries as compared to 2016-17. India in 2017-18, is likely to import 4.10 million tons of soy oil to fill the gap between the consumption of 5.60 million tons against the domestic supply of only 1.92 million tons, including 0.27 million tons of opening stocks. Forecasting a 6% growth in demand of soy oil in the food industry with booming population, soy oil futures on the national bourse are likely to take support near 680 levels, while the upside may get extended towards 800 levels. Regarding palm oil, India is a major importer for the largest producing countries Malaysia and Indonesia. In 2017-18, the total estimated availability of palm oil in Malaysia & Indonesia is likely to be nearly 64.64 million tons, which would be more by 11% as compared to 2016-17. The Malaysian Palm Oil Board (MPOB) has targeted to raise the production of palm oil to 6 tons per hectare by increasing productivity through up-to-date technology integration, based on the fact that some areas had the potential to produce a total harvest of 18.2 tons per hectare. It would be interesting to watch as to how much rains the northeast monsoon (November to March) brings to these countries & the what would be it’s impact on the production. In the longer term, Malaysia’s palm oil sector will face some more challenges. The upcoming EU ratification to ban the import of palm oil-based biofuels will present a significant longer-term challenge for the country. The EU imports roughly seven million tons of palm oil from various global sources. Back a home, India’s import of palm oil during 2017-18 would approximately be 9.90 million tons & the total supply would result to 10.55 million tons including opening stocks. On the demand side, India’s palm oil consumption is likely to grow by 4% to 9.80 million tons, leaving behind a little surplus. Analyzing this scenario, it is clearly evident that the bullish momentum in CPO futures on the national bourse will possibly continue to persist & can test 650-680 levels, taking support near 510 levels. While, the benchmark palm oil on the Bursa Malaysia Derivatives Exchange, which is maintaining an uptrend since 2001, would possibly continue to maintain its course & trade in the range of 2100-3100 ringgit a ton. At this juncture, it would be necessary to discuss the fate of the U.S soybean oil, as it’s the trend setter for all the edible oil counters traded in rest of the world. Apart from all the factors, the EPA biodiesel program might complicate the demand picture of soybean oil. If implemented in 2018, a new U.S. Environmental Protection Agency (EPA) standard will negatively impact the volume of soybean oil needed to produce biodiesel as soybean oil accounts for nearly 70% of total U.S biodiesel production. Year ahead, on CBOT, not much of an upside is seen, however it likely to remain above 30 cents a pound, while the gains may face resistance near 40 cents.

30

MUSTARD


Yearly price movement of Mustard futures

RANGE 5800

5300

4800

Factors to watch:    

The total availability of mustard in the MY 2017-18 (Oct-Sept) is estimated at 71.60 lakh tons. The good news is the ending stock would be 4.90 lakh tons, which is 26% lower than 2016-17. The market participants will keep their eyes on the weather movements & as on how the temperature prevails in the next six to eight weeks. The market participants would also remain cautious & keep a close watch on the various factors ranging from area that would be covered under soybean in the Kharif season to the impact of monsoon on the oilseed crop.

4300

3800

3300

2800

2300

1800

1300

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 3011

25937 3475

29010 3925

30620 4389

32083 4839

Mustard, especially the brown grown commercially in Northern & Central India (Rajasthan, Uttar Pradesh, Madhya Pradesh, Haryana and Gujarat) is a multi talented Rabi oil seed crop or as vegetable or as fodder. Over the past 3 years, the production of mustard has witnessed a significant increase in area (25%) and production (22%). As a result, the ending stocks have also been higher due to which mustard prices have been reeling under pressure. India's carryover stock of mustard seed at the end of the marketing year 2016-17 (Oct-Sept) was nearly 6.60 lakh tons, higher from 4.69 lakh tons in 2015-16, due to lower demand for the crop from millers and meal exporters last year. Good weather, adequate soil moisture and increase in minimum support prices (MSP), attracted farmers to plant higher mustard. The average yield of mustard Rabi crop in India for the year 2016-17 was 1069 kg/hectare. If we take a closer look during 2015-17, the prices on the national bourse as well as on the spot markets have been trading in the range of 3200-4400 & 3400-4600 levels. In the first two consecutive quarters of last year, mustard futures plunged 21% and in the major mandies across the country, the market prices of mustard traded below MSP of Rs 3,700/100kg on account of sluggish demand from processors. Another factor which added to the bearish sentiments was the low selling price of the finished products, especially edible oil, as the market was flooded by the imports of cheap RBD palmolein from Malaysia. The demand of mustard kachhi ghani oil remained subdued, on account of shift in the usage to soy oil due to the summer season which changes the consumption pattern. In the second half of the last year, mustard futures witnessed a decent recovery of 13% as the demand of mustard oil revived with the timely arrival of monsoon & much of the produce was reported to be damaged by the floodwaters in Gujarat. Secondly, the government's move to raise the import duty on edible oil twice in the last year had a positive impact on the prices of mustard seed. The Centre has increased the import duty on canola/rapeseed/mustard oil crude to 25% from 12.5% and canola/rapeseed/ mustard oil refined to 35% as compared to 20% notified earlier. Overall, last year, this oilseed gave a negative return of about 9.5% as supply side was heavier as compared to demand. Hence after witnessing a bearish year, this season the farmers are unenthusiastic about growing mustard even after the government announcement of hike in MSP to Rs.4,000 per quintal. As per the latest data compiled by Ministry of Agriculture and Farmers Welfare, farmers have cultivated 6.40 million hectares of rapeseed as of Dec. 28, down 7.8 % from a year ago. However, even if the production declines, still the supply side will be sufficient to meet the demand throughout the year as the higher carryover stocks will balance the disequilibrium of demand & supply. In the coming year, as per the estimates of USDA, taking into account production and carryover stocks of the oilseed, total availability of mustard in the MY 2017-18 (Oct-Sept) is estimated at 71.60 lakh tons. Throughout the year, mustard oil mills across the country would crush around 56.40 lakh tons & food-feed consumption is likely to be 10.30 lakh tons. The good news is the ending stock would be 4.90 lakh tons, which is 26% lower than 2016-17. The exports of rapeseed meal will perhaps be around 2,75,000 tons. Taking a glimpse of this above mentioned tight supply situation, the mustard prices are likely to trade with an upside bias with not much of a downside. In days to come, the weather conditions will hold the key to the crop's output size as the seeds have entered the flowering stage. The market participants will keep their eyes on the weather movements & as on how the temperature prevails in the next six to eight weeks. The final crop output figures would give clarity to the direction of prices. Going by it’s seasonality, a same price pattern is likely to be seen again this year, starting with a descending trend till the month of June owing to peak arrivals season & lesser consumption during summers. During this time of the year, the market participants would also remain cautious & keep a close watch on the various factors ranging from area that would be covered under soybean in the Kharif season to the impact of monsoon on the oilseed crop. In the second half of the year, as ascending price movement can be seen towards 4600 levels, taking support near 3600 levels, when the stockiest may come out to store so as to meet the future demand from millers during winters & marriage season. By the end of the year, there’s always a consumption shift from mustard oil to palm oil / soy oil. The total supply of mustard oil in 2017-18 is expected to be nearly 27.49 lakh tons against a consumption of 25.55 lakh tons, leaving behind carryover stocks of 1.91 lakh tons.

31

CARDAMOM


Yearly price movement of Cardamom futures

RANGE 2300 2100 1900

Factors to watch:

1700



The most important single factor that influences the production and productivity of cardamom is climate.

1500



Peak period of harvest is during October-November.

1100



The major growing regions are facing a severe labour issue & expertise in plucking ripened beans due to which this year, there the production be almost similar like last year.



The first advance estimates for 2017-18 released by Ministry of Agriculture showed that cardamom production is likely to be around 29,000 tons as compared to 28,000 tons in 2016-17.

1300

900 700 500 300 100

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 413

25937 758

29010 1176

30620 1521

32083 1939

The “Queen of Spices” lost its throne in terms of ranking as it gave an 18% negative yearly return last year. The year 2017 was a bearish year for cardamom because after witnessing a 4-year high of 1593 in the month of February, the counter nosedived to 830 levels & ended its journey around 1000 levels. In the starting, the factors such as shrinkage of supply at the auctions with 90% after all the four rounds of picking ended in February & a 13% drop of estimation in the output, led to the gains. On the demand side, the exporters were also active and were covering and that kept the buoyancy in the market. But, the buying enthusiasm slowly calmed down among North Indian buyers due to higher prices. Export demand for cardamom, mainly from Saudi Arabia which usually picks up April-May, was limited as most exporters were believed to have covered their requirements earlier fearing shortage of stocks. Availability of imported cheap Guatemala cardamom in the north Indian markets is also aided fall in demand. It was reported that India had to bring down prices from around $20 a kg to around $18 to match competition from Guatemala. Total shipments of the aromatic spice stood at 3,850 tons valued at Rs.421.50 crore in 2016-17 as against 5,500 tons valued at Rs.449.83 crore in 2015-16. Adding to these woes, the showers during Mar-Apr also boosted the yield of the standing cardamom crop, which were to improve the output of 2017-18 (Jul-Jun). After witnessing good summer showers, the growers started liquidating stocks before the start of the next season which was expected to set in a month earlier in June. The first round of harvest in July was poor with delayed monsoon, but the late rains in August raised the output. When the harvest started, growers estimated crop output to remain in the range of 10,000 to 15,000 tons, but later the estimates went beyond 20,000 tons. According to the crop calendar, the harvesting starts by July end and reach its peak by September-October, but due to many plantations experiencing shortage of labor, cardamom production last season witnessed low yield and poor prices in the current season. All these bundle of bearish factors, pulled down cardamom prices. The road that led to upside made a U-turn & in duration of ten months, the prices of these aromatic capsules almost halved, made a low of 830, almost near to the cost of production of around Rs 800 per kg. Again this year, the time has come when all these above mentioned factors starting from end of harvesting season of previous year, then summer showers uplifting the mood of growers & finally the commencement of harvesting will play a vital role in deciding the price trend of the cardamom prices throughout the year. The most important single factor that influences the production and productivity of cardamom is climate. The failure of monsoon is highly detrimental to the plants as well as yield. Throughout the cropping season of cardamom, i.e., from August to March, approximately 6 picking is done in each 45 days interval. In most of the areas the peak period of harvest is during October-November. As per the data from Spices Board, cardamom output (small & large) in 2016-17 was estimated to be around 25,248 tons, as compared to 29,205 tons in 2015-16. Whereas, the first advance estimates for 2017-18 released by Ministry of Agriculture showed that cardamom production is likely to be around 29,000 tons as compared to 28,000 tons in 2016-17. The viewpoint of cardamom futures at this point of time looks bullish for two main reasons. Firstly, there is very less room for downside as the prices are hovering near the cost of production & the counter will probably maintain its course taking support near 800 levels. Secondly, the major growing regions are facing a severe labour issue & expertise in plucking ripened beans due to which this year, there the production be almost similar like last year. The queen of spice contains natural pigments and exposure to light can affect the pigments resulting in loss or fading of colour and deterioration. They are also prone to spoilage due to insect infestation and microbial contamination due to high humidity, heat and oxygen. So proper handling & packaging is necessary to maintain its original aromatic flavor over a prolonged time. Indian cardamom has always ruled the international market due to its intrinsic qualities, physical and aromatic properties, flavor, lighter weight & oil content. It is slightly smaller, but more aromatic and far superior in quality parameters than those from other cardamom producing nations such as Guatemala, Tanzania, Sri Lanka, El Salvador, Vietnam, Laos, Cambodia and Papua New Guinea. On the demand side, the exports of cardamom are likely to be similar to last year, with Saudi Arabia continuing to be the highest buyer. Analyzing the past, it’s seen that the Middle East continues to be the major export market for Indian cardamom, where this aromatic spice is used extensively in the preparation of “kahwa” – a drink that is a symbol of hospitality in every home – and is widely used as a flavoring ingredient in whole and ground form. To conclude, if we closely analyze the long term charts, it is clearly evident that every alternate year, cardamom a bullish year. Hence, going by this pattern, we forecast that this year, cardamom futures on the national bourse are likely to see a rebound & trade in the range of 800-1500 levels.

32

TURMERIC


Yearly price movement of Turmeric futures

RANGE 19000

17000

15000




 

The total availability of turmeric for 2018-19 season is expected around 83-89 lakh bags, while total consumption (including domestic and exports) is likely around 70-75 lakh bags, leaving ending stocks at 13-14 lakh bags. The price outlook is not much promising as on the supply side there are sufficient stock is available followed by 48,000 metric tons with AP Markfed. The new crop will hit the Tamil Nadu markets by mid January & will continue till March followed by harvesting in Maharashtra. Food sector will foresee increase use of turmeric & increasing application scope in the food & beverages sector due to rising demand for the natural colorants.

13000

11000

9000

7000

5000

3000

1000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 4215

25937 6029

29010 7047

30620 8861

32083 9879

In the year 2017, the smiles of turmeric growers came back, as the yellow spice fetched good returns for the producers as they expected. On NCDEX, turmeric spot prices closed in the positive territory, & on the national bourse, the counter posted a decent gain of 15%. In the first five months, turmeric prices went down the hill to 5,234 levels owing to market estimates of bumper production. The reduced output from Tamil Nadu and Karnataka due to inadequate rainfall was offset by Andhra Pradesh, Telangana and Maharashtra. India turmeric production was stood higher at 65-67 lakh bags (70kg each) in marketing year 2017 (Jan-Dec) against 50 lakh bags. However carryover stocks from previous crop was lower at just 20 lakh bags against around 40 lakh bags in 2016, which took the total availability for 2017 at 85-87 lakh bags. Soon this news started to spread & those stockiest holding on to their produce, started selling their stocks to reduce their inventories. This pushed the prices to 3-years low of Rs.5,234 per quintal on NCDEX. At the spot markets also, the joy of higher price was short lived as the price fell down from Rs.7,559 to Rs.5,376. The stronger appreciation of rupee by 6% also raised concerns on the pace of exports. We all know that price of any commodity is arrived at by the interaction between demand and supply. So, the most important factor that gave farmers a huge shock was lack of demand, following which the traders quoted decreased price and purchased less quantity for five consecutive months. The climatic changes and unseasonal rains had destroyed the crop to some extent and reduced its demand as moisture increased. In Erode, due to monsoon failure, the producers even bought buying water at exorbitant rates to save their standing turmeric crop, but the yield was very poor. Because of this they incurred heavy cultivation charges. In the later half of the year, as the sowing commenced, the major growing areas in Telangana, Tamil Nadu, Karnataka and Maharashtra turned dry as the first 40 days of the four-month southwest monsoon was below normal. In addition to it, the crop in the producing belts of Andhra Pradesh, Telangana, Nanded and Basmatnagar area is reported got affected by virus/pest attack. These factors raised a concern over the total crop production, which gave turmeric prices a push & took to a high of 8066 on NCDEX, while 7900 levels on the spot markets. However, profit booking from higher levels along with auctions by Andhra Pradesh Markfed kept the turmeric prices range bound & the upside capped. Coming to this year, the total availability of turmeric for 2018-19 season is expected around 83-89 lakh bags, while total consumption (including domestic and exports) is likely around 70-75 lakh bags, leaving ending stocks at 13-14 lakh bags. The first advance estimates for 2017-18 released by Ministry of Agriculture showed that turmeric production is likely to be around 10.61 lakh tons as compared to 10.56 lakh tons in 2016-17. The price outlook is not much promising as on the supply side there are sufficient stock is available followed by 48,000 metric tons with AP Markfed. However, in months to come, the not much of a downside is seen as the counter will possibly continue to take support near 5500 levels, while the upside may resume, only if it clears the resistance near 10000 levels. Till then, turmeric futures are seen trading in the range of 6500-8000 levels. In the first few months, selling pressure can take toll over the counter as new crop will hit the Tamil Nadu markets by mid January & will continue till March followed by harvesting in Maharashtra. The main factor which would decide the course is “demand”. The global turmeric market is expected to witness significant growth in terms volume owing to growing demand for sustainable cosmetic products & India being the largest producer and exporter of turmeric accounting for nearly 80% of the global production, the export scenario may get better in the second half of the year. The growing demand from the emerging segment of nutraceuticals is driving the global consumption of Indian spices. Earlier, the pharma industry used just 500 mg to 1 gm of turmeric extract in medicines, but now researchers are using higher amount of about 12 grams. The spice industry would require more of the spice, not only to meet the existing requirement but also to develop new product lines. The demand for nutraceutical products has gone up as more people are turning to natural products for treating lifestyle diseases. The nutraceutical sector is growing at 12-14 % in the US, 8-10 % in Europe, 14% in China and almost 9% in Japan while it is still at a nascent stage in India. Increased global demand for turmeric, especially in the pharmaceutical sector, drove its exports to attain figures of 59,000 tons in volume and Rs. 547.63 crores in value terms during April-September 2017. Food sector will foresee increase use of turmeric & increasing application scope in the food & beverages sector due to rising demand for the natural colorants is a lucrative factor to favor the product demand. Last but not the least, rising demand for organic products is expected to play a significant role in the growth of the Indian turmeric market during the forecast period.

33

JEERA


Yearly price movement of Jeera futures

RANGE 28000

23000


Overall, this season (2017-18) the cumin seed acreage is seen

18000

increasing by about 8-10% in Gujarat and Rajasthan. 

The production this year is estimated around 60-65 lakh bags.



The projections of larger output may get balanced with thin stocks.



The country needs around 21-28 lakh bags of jeera until the new crop

13000

8000

starts from February-March. 

Lower level buying would be the ultimate strategy. 3000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 14383

25937 18017

29010 20188

30620 23822

32083 25993

In 2017, jeera prices witnessed an epic run & marked a history by making a new life time high of 22360 on NCDEX, after it hit a low of 16,555 a quintal in February. The sentiments had turned bearish during the first two months as the fresh arrivals had hit the spot markets & the crop was anticipated to be around 4.16 lakh tons in 2016-17. On the contrary export demand had slowed down due to New Year holiday in China. Later, as the exports gathered pace in the second quarter & the news of lesser output started to flow around, the jeera prices never looked back. In the second advance estimates for 2016-17, Gujarat also reported that production of jeera will be 2.21 lakh tons, down almost 11% compared to 2.38 lakh tons in 2015-16. The bitter news of damage to the standing crop in Rajasthan due to rainfall and hailstorm added flavor to the jeera prices. On top of it, the information that the carryover stock has dipped to 8-10 lakh bags - the lowest level of in the past decade & against a normal 20-25 lakh bags, gave the jeera prices a strong reason to witness a one sided rally. Since 2016, jeera futures have trying hard to clear the resistance near 20,000 levels & march ahead, but profit booking along with cautiousness had kept the upside capped. Again in the start of the second half of the year, the exports as well as the domestic demand shoot up, thanks to the Ramadan month. At this time, there was a co-incidence that in the international market also, the availability was lower in Turkey and Syria - India’s key competitors, & production was believed to hover at around 12,000 tons and 20,000 tons. Normally, the new crop in Syria and Turkey is harvested in Aug-Sep and till then Indian jeera found a good market overseas. The jeera exporters were immune to the demonetization that rocked the nation last year, as immediately they started accepting payments digitally, ensuring steady supply. Data released by the government showed that Jeera exports during Apr-Sep 2017 were recorded higher at 74,958 metric tons against 70,108 metric tons, owing to strong demand from Vietnam and Bangladesh. Hence, a pick-up in the spot demand and the restricted supplies were the reasons for this Bull Run & giving a yearly return of more than 21%. This rally, which began two years ago, is signaling for a third bullish year ahead but with a word of caution. Overall, this season (2017-18) the cumin seed acreage is seen increasing by about 8-10% in Gujarat and Rajasthan. During this time of the year, when the sowing window has closed & the crop will enter the development stage, here the dynamics of weather alongwith moisture condition may be a concern to this crop. Cumin needs a well-drained sandy loam soil because it does not like being water-logged & moderately cool and dry climate is best for it’s cultivation. It is being reported that the soil moisture is very much favorable & this year there are greater possibilities of higher acreage. The projections of larger output may get balanced with thin stocks and hence the counter may not witness any sharp fall even during the peak season of arrivals. As on December 18, Jeera sowing in Gujarat was recorded higher at 348,100 ha against 256,800 ha as per Gujarat Agriculture Department. As per market sources, Jeera production in 2016-17 was recorded at 55-60 lakh bags (55kg each) and the production this year is estimated around 60-65 lakh bags. The domestic and export consumption is pegged around 4.6 lakh bags a month, which means the country needs around 21-28 lakh bags of jeera until the new crop starts from February-March. The first advance estimates for 2017-18 released by Ministry of Agriculture showed that jeera production is likely to be around 4.95 lakh tons as compared to 4.93 lakh tons in 2016-17. During the peak arrivals season, some correction might be seen due to the supply pressure as maximum arrivals will hit the spot markets in the major growing regions of Gujarat and Rajasthan. Therefore, lower level buying would be the ultimate strategy & the market participants with a medium to long-term perspective can go long on dips near support zone of 13000 for a target of 22000-25000. This season, history might repeat itself & we will possibly witness supply constraints due to thin carryover stocks from previous years. Back-to-back, this year also the growers will again be able to make profits from their investments as they would be having with them a good holding capacity, because by it’s nature jeera can be stored for two years in cold storage. Going ahead, on the demand side, India has a great future in cumin exports as it is growing at a rate of 18% in the form of Whole cumin, in oil and oleoresin form it is increasing at a rate of 14% and 10% respectively. Earlier, the biggest challenge for India was to produce Pesticide free or IPM Cumin Seeds & quality issues affected the exports. The Spices Board India has always been concerned about this aspect, and hence has taken keen interest in harmonizing the disparate standards for spices which exist all over the world. Last year, in a major recognition of India’s efforts to benchmark global spices trade, the Codex Alimentarius Commission (CAC) has adopted three Codex standards for black, white and green pepper, cumin and thyme, paving the way for universal agreement on identifying quality spices in various countries. It will also benefit the trade from universal agreement to identify good quality spices.

34

CORIANDER


Yearly price movement of Coriander futures

RANGE 15000

13000


Sowing of coriander has been completed in major producing states i.e Madhya Pradesh, Rajasthan and Gujarat and the area is reported down

11000

9000

by 39% at 2,59,117 ha versus 4,25,166 ha in last year. 

As per market sources estimates, coriander stock in India is pegged

7000

around 60-65 lakh bags (40kg each). 

The price outlook seems bullish for this year for coriander futures as

5000

this year a deficit can be seen on the supply side. 3000 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 2268

25937 3881

29010 5885

30620 7498

32083 9502

We must be familiar with the saying “too much of anything isn't good”. This proverb fits the best with this spice, because when the prices of coriander made a high of 13444 in 2015 & touched almost 8730 levels in 2016, then almost all the farmers rushed to grow this commodity looking at the lucrative returns. And, this created dis-equilibrium in the demand-supply scenario & as we have studied in economics, too much of supply distorts & pulls down the market prices. The pursuit of happiness can sometimes make a farmer well, less happy. This what exactly happened with the growers of coriander, as the prices corrected by 42% & fell to a 4-year low on growing concerns of rising supplies from imports and good production expectations. For 2016/17, Department of Agriculture, Cooperation and Farmers Welfare (Horticulture Division) in its 3rd advance estimate, pegged the total production of coriander seed at 9 lakh tons on a area of 704,000 ha, higher by 35% & 17% as compared to 2015-16 in terms of production & area respectively. The total supply was anticipated to rise to 13-13.50 million bags, including carryover stocks from 2015-16. According to respective state government data, coriander acreage in Rajasthan fell to 161,780 ha last year from 205,000 ha in 2015-16 and in Madhya Pradesh, acreage declined to 182,400 ha from 240,000 ha in the same period. But, this deficit was filled by its neighboring states, as the coriander acreage in the last Rabi season in Gujarat had risen to 121,000 ha from 89,000 ha & also the yields were expected to be higher during 2016/17 harvesting season as most parts of North-West India and Central India have received normal and above normal rains during the monsoon months in the year 2016. The supply side went heavier & coriander witnessed the major downfall of 40% on the national bourse, while plunged nearly 30% on the spot markets in the month of April & May due to rise in arrivals of the new crop. It was reported that the arrivals of coriander seed in the country during the first 4 month of current calendar year has increased by 30% on year to 3.31 lakh tons compared to 2.55 lakh tons in 2016. On the other hand, imports or coriander also known as “cilantro or parsley” rose consistently supported by the strong Indian rupee, while exports decreased from the country. The country total coriander import up to February of FY April-March (2016-17) stood at 45,562 metric tons, up 80.80% from 24,094 metric tons previous year. In FY 2015-16 the country had imported 25,925 metric tons. The main reason for bringing in so much of coriander from Bulgaria, Ukraine and Italy despite of buffer stocks in the country, was due to cost effectiveness. Considering the customs duty of 36% and the exchange rate around 64 rupees per dollar, imported good quality coriander costs Rs.4,118 per quintal and medium-grade spice at Rs. 3,482 per quintal. In the domestic market in Kota at Rajasthan, however, the Badami variety of coriander was sold at Rs.5,800 per quintal, while the Eagle variety was quoted at Rs.6,000 per quintal. On the export front, India exported about 25,339 tons of coriander seeds in first 10 month of 2016/17 compared to 31,261 tons in the previous year for same period. Now coming to this year, the fundamentals highlights that sowing of coriander has been completed in major producing states i.e Madhya Pradesh, Rajasthan and Gujarat and the area is reported down by 39% at 2,59,117 ha versus 4,25,166 ha in last year. Looking at the less interest for sowing of coriander this season, the state of government of Gujarat under the scheme of National Horticulture Mission has started providing subsidy of 40% on seeds & other inputs. On the same side, the state government will also provide a subsidy of Rs.500 per ha on plant protection chemicals so that farmers do not face difficulty in spraying any kind of disease in the crop. The first advance estimates for 2017-18 released by Ministry of Agriculture showed that coriander production is likely to be around 8.88 lakh tons as compared to 8.83 lakh tons in 2016-17. This typical price & production scenario reflects the cyclical behavior of agro commodities, wherein this year the farmers are getting away from growing coriander due to lower prices in previous years. At present, the market participants are cautious & staying away from bulk buying as they are closely watching the production prospects for the upcoming year alongwith the higher carryover stocks. As per market sources estimates, coriander stock in India is pegged around 60-65 lakh bags (40kg each). Days ahead, after the counter goes through the phase of corrections owing to pressure of arrivals in the first quarter & when the final figures of production comes into picture, it would be the right to buy this commodity. The reason being, the price outlook seems bullish for this year for coriander futures as this year a deficit can be seen on the supply side. The counter will possibly continue to take support near 4500-5000, while the upside may get extended towards 8500 levels. However, the long term investor needs to keep a word of caution when the harvesting of this fresh herb taken place during June-July in the major global producing countries such as Bulgaria, Romania, Russia, Morocco & Egypt.

35

KAPAS


Yearly price movement of Kapas futures

RANGE 1400 1300 1200

Factors to watch:

1100



Tug-of-war between demand & supply.



CAI estimates exports for the season to be 55 lakh bales.

900



About 39% of the total crop estimated for the year has already arrived

800

in the market.

700

In 2017-18, the estimated carryover stocks is likely to be 39 lakh bales,

600

more by 30% in India as compared to last season.

500

U.S. may produce 21.4 million bales & the ending stocks are higher at

400

5.8 million bales at their highest share of use since 2008/09.

300





1000

2007

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 754

25937 892

29010 986

30620 1124

32083 1218

A bundle of fundamental factors are studied and analyzed to predict the price outlook of an agro commodity. Moreover, if the price movement of the commodity in the domestic market is allied with the international market, then more is needed to be studied in detail. Kapas (raw cotton) is a commodity which is grown all over the world & to our proud India is the largest cotton producing country with nearly 60% area under cotton under rainfed cultivation. Hence, monsoon plays a vital role as this crop requires lots of moisture with the onset of monsoon rains in June, although some with irrigated fields start as early as May. In the international market, the farmers also face a tough time during the growing season due to the Hurricanes that pass through & damage the crops. Last year itself, if we recollect, cotton prices inched up as the Hurricane Harvey left a lasting impact on South Texas and affected the cotton industry in the state right before harvest time. That reminds, supported by the good South-West monsoon this season, India is set to again witness a robust cotton output, i.e 10-12% higher as compared to previous year. In 2016-17, the opening stock of 36.50 lakh bales with crop of 337 lakh bales & import of 27 lakh bales raised the total supply to 400.75 lakh bales. While the domestic consumption for the season was estimated at 307.75 lakh bales & the exports of cotton from India during the 2016-17 season were about 63 lakh bales. At the close of the season the stock was estimated to be 30 lakh bales. These figures dampened the market sentiments of the Indian cotton market due to which since the beginning of the year, kapas witnessed a steep correction of about 21%. But later, the attack of pink worm on the cotton crops in the major producing states such as Karnataka, Maharashtra, Telegana added a flare & took the counter near to 1079 levels. ICE cotton futures jumped 25% last year, marking its best annual performance since 2010, with prices hovering near a 3-1/2 year high. Higher demand for U.S. cotton, speculative buying and a rally in oil prices fueled the gains in rates for the fiber over the last couple of months. Going forward, a similar situation of over supply is likely to prevail in 2018 & it will be interesting to watch the price movement of cotton amidst the tug-of-war between demand & supply. Coming back to the stout production figures, last year the acreage is estimated to be higher by 19% & in this year also a similar area under cultivation is likely to be seen owing to attractive minimum support price & systematic cotton procurement. The projected Balance Sheet drawn by the CAI estimated total cotton supply for the season at 425 lakh bales of 170 kgs each including the opening stock of 30 lakh bales at the beginning of the season and the imports which the CAI estimates at 20 lakh bales for 2017-18 crop year. The domestic consumption is estimated to be 320 lakh bales while CAI estimates exports for the season to be 55 lakh bales. As per the data received from various sources, the CAI estimates cotton arrivals up to end December 2017 at 147.75 lakh bales as compared to 108 lakh bales arrived up to 31st December 2016. About 39% of the total crop estimated for the year has already arrived in the market. Looking to the pace of arrivals this year, CAI is of the view that the projected crop of 375 lakh bales for 2017-18 crop years is very much achievable. Apart from the output figures, the concerning fact is that this season the estimated carryover stocks is likely to be 39 lakh bales, more by 30% in India as compared to last season. The question remains is that whether the market trends on the quality issues or will supply dominate keeping the bull steam limited, only time will tell! Overall, this year also, the cotton prices may remain suppressed as there would not be sufficient buyers in the Indian market as the estimated export & consumption numbers are showing any significant increase. In addition, the latest changes in the GST regime may slow down the purchase of cotton. The Centre had earlier deferred till March 31, 2018, the implementation of RCM under the GST regime, but during mid-November last year it issued a notification that the purchaser of cotton from farmers will have to pay the GST, thereby affecting ginners and cotton traders. Cotton, under headings 5201 and 5203, falls in the 5% tax slab. But as farmers are not liable to pay tax and not registered under GST, buyers of raw cotton will be required to pay the tax on reverse charge basis. As regards price outlook, various factors ranging from rupee, export-import figures, monsoon & most importantly the fundamentals of cotton in the international market such as weekly crop progress, net export sales report will play a vital role in deciding the direction. The market participants have always looked upon to the cotton prices of global market to get the price direction. The ICE cotton futures may continue to consolidate in the range of 55-95 cents per pound. The upside may remain capped owing to the fact that that U.S. may produce 21.4 million bales & the ending stocks are higher at 5.8 million bales at their highest share of use since 2008/09. On the national bourse, days ahead, kapas futures will possibly continue to take support near 850 levels & witness upside momentum to test 1050-1100 levels as in the second half of the season the spinning mills, traders and the bulk buyers are likely to cover huge quantities of cotton to meet their requirements against lean arrivals. The counter is however not expected to surpass the resistance near 1200 levels as the market participants would have the knowledge that the supply side would be heavier.

36

WHEAT


Yearly price movement of Wheat futures

RANGE 2400

2200

2000


For 2017-18, the government has fixed production target at 97.50

1800

million tons & USDA has estimated 98 million tons.

1600



A close watch on the planting, crop progress & yield is necessary.

1400



Overall, the supply scenario is likely to remain comfortable with 111

1200

million tons (including opening stock) against total domestic

1000

consumption of 100 million tons. 

Due to higher stocks in major exporting countries and it may be difficult for India to export despite a decent crop.

800

600

2006

2007

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 1363

25937 1519

29010 1729

30620 1885

32083 2095

Wheat, one of the main essential commodities of India got cheaper last year. The major fall was witnessed in the beginning itself, when more than one million tons of wheat was delivered to India in January and in addition to it the arrivals during February had already hit close to 400,000 tons. This action happened to the reaction of the news that the output in 2016-17 was at 92.29 million tons, the lowest since 2014-15. Taking negative cues from the over supplied scenario all through this period due to heavy imports, wheat prices plunged by nearly 19% from its year high of 1938 to a low of 1575 levels by March Thereafter, wheat price were seen getting stabilized & inched up a little as the Centre imposed an import duty of 10% in a bid to check falling domestic prices and support farmers and traders. However, the gains were not able to sustain as arrivals of the new wheat crop picked up in Central India with the harvest gaining pace in states such as Madhya Pradesh, Gujarat and Maharashtra, resulting in a softening trend in the prices of the cereal. In the second quarter, the counter again slid to 1572 levels as the total stock position of wheat reached a level of 33.44 million tons in June 2017, which was higher than stocking norms. Also, the import figures then had reached to a close of 5.7 million tons, the highest in 10 years. In the month of July, wheat prices witnessed some respite supported by lower level buying. But, later in the third quarter owing to the news of India importing about 800,000 tons of wheat from the Black Sea region & stocks in government warehouses swelled to 27.8 million tons as of Sep 1, up from 24.2 million tons a year ago, the grain again nosedived to 1595 levels. Thereafter, in the month of October, wheat prices on the national bourse gained the most by 9% after the Union Finance Ministry doubled import duty on wheat to 20% from 10%. Discouraging imports & to raise the domestic production for next year (RMS 201718) the centre raised the minimum support price (MSP) for wheat by Rs.110 per quintal to Rs.1,735 per quintal, a 6.8% hike over last year’s MSP - the highest in six years. Till December, according to the trade, over 5 lakh tonne of imported wheat was lying in various Indian ports in the south, with no major buyers as prices have crashed in the domestic and global market. For 2017-18, the government has fixed production target at 97.50 million tons & USDA has estimated 98 million tons, the harvest of which will be done in April/May 2018. Till then a close watch on the planting, crop progress & yield is necessary as in days to come, the crop would need a favorable climate of winter rains & cool temperatures. The latest statistics show that wheat acreage in the country during the ongoing Rabi season was at 26.27 million ha as of 21st December, down 3.6% from 27.26 million ha a year ago, according to data released by the farm ministry. Sowing has picked up in the past couple of weeks, aided by favourable weather conditions. In the beginning, wheat sowing was delayed as there was not enough sunlight due to smog, but the recent rains in north India have proved beneficial. The acreage, however, has remained lower than a year ago because some farmers shifted to other crops as they did not get a good return for their produce in the last season. Overall, the supply scenario is likely to remain comfortable with 111 million tons (including opening stock) against total domestic consumption of 100 million tons. After analyzing the demand-supply fundamentals, it is expected that wheat futures on the national bourse is likely to stay above 1600 levels & the upside may remain capped near 1800 levels. The international wheat prices, expected to remain under pressure in the range of $3.20-4.60 per bushel due to higher stocks in major exporting countries and it may be difficult for India to export despite a decent crop. As per the latest update from USDA, the total supply of wheat worldwide in 2017/18 is expected to be 1191 million tons-the highest in 10 years, with consumption & exports marginally higher totaling to 740 million tons, leaving behind a record large ending stock of 268 million tons.

37

CHANA


Yearly price movement of Chana futures

RANGE 10000

9000

8000


Chana production would be more than 10 million tons against 9.33 million tons recorded during 2016-17.



The beginning stocks of chana in 2017-18 (Jul-Jun) are estimated at 738,000 tons, which is also likely to weigh on chana prices.



In days to come, the government, which is sitting on a buffer stock of 18 lakh tons of pulses, is aiming to dispose of up to 5 lakh tons of lentils by March 2018.



The Rabi pulse crop numbers are really large & hence the pulse prices are most likely to continue to remain soft in the coming months.

7000

6000

5000

4000

3000

2000

1000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017


S1 S2

S2 S1

Pivot

R1

R2

27547 2160

25937 3087

29010 4758

30620 5685

32083 7356

Pulses form one of the most important part in Indian diets & major adaptable, versatile ingredients in an Indian kitchen. Pulses not only make up the shortfall of protein in a human body, but also beat alternatives such as milk, eggs and meat when measured in terms of rupees per kilogram of protein. From both economic and environmental standpoints also, they are good as well, because not only it needs less of inputs such as water and fertilizer for cultivation, but also ensures soil fertility. Moreover, the crop residue left behind can also be used as animal fodder. The co-ordinated effort of three ministries namely agriculture, food and finance along with the Niti Aayog continuously keeps an eagle eye on it’s demand-supply situation & brings necessary changes in the policy framework to rein in the inflationary impact and stabilize the supply of pulses. The demand supply gap in pulses ranges from 4 to 6 million tons depending on domestic production. Hence, to incentives the farmers, the government announces higher MSP including bonus to boost production of pulses. Chana being a major winter pulse, this Rabi season, the Minimum Support price (MSP) was raised by 10% to Rs.4,400 per quintal. Last year, further, to incentivize cultivation of pulses, the Cabinet decided to give a bonus, over and above the recommendations of the CACP, of Rs.425/- per quintal for kharif pulses, namely Arhar (Tur), Urad and Moong. As regards, kharif pulses the area sown by end of September was 142.01 lakh hectares, a little short by -3.70% as compared to 2016-17. The 1st advance estimates for 2017-18 shows that the total production of Kharif pulses is estimated at 8.71 million tons which is lower by 0.72 million tons than the last year’s record production of 9.42 million tons. However, Kharif pulses estimated production is 2.86 million tons more than the last five years average production. This year, pulses might not get scared, as the latest data show that in 2017-18, by end of December the total cultivation area under Rabi pulses has risen to 150.63 lakh hectares, a rise of 8% as compared to 2016-17. Under chana, the area under sowing has been 101.90 lakh hectares by end of last year, as compared to 89.2 lakh hectares in 2016-17. The country's total pulses output in 2017-18 are expected to be around 22.90 million tons, almost same as that of last year. Out of which, chana production would be more than 10 million tons against 9.33 million tons recorded during 2016-17. The beginning stocks of chana in 2017-18 (Jul-Jun) are estimated at 738,000 tons, which is also likely to weigh on chana prices. Last year, it was a bearish year for pulses & it was evident from the report from Ministry of Commerce & Industry released in the month of November which showed that pulses continued to witness deflation at -31.05%, as compared to 18.18% during same time last year. A record crop and high imports of 6.6 million tons in the 2016/17 fiscal year led to a glut in the domestic market, lead to low prices. On national bourse too, chana futures crashed to Rs.3830 per quintal after making a high of Rs.6428 per quintal. Chana prices in Delhi fell to a near-three-year low of Rs.4,100 mid-December because of lower demand from stockists and expectations of a higher acreage under the pulse. Hence, to protect the interest of farmers, the Centre decided to impose a 30% import duty on chana (chickpeas) and masur (lentils), with immediate effect. In a similar move, the Government had in November slapped a 50% per import duty on yellow peas and 10 per cent levy on tur dal. Last year, the cabinet committee on economic affairs (CCEA) gave approval for distributing a part of the pulses buffer stock to central schemes like Midday Meal and other state-run agencies besides state governments. The Centre has also been considering other measures such as imposing quantitative restrictions on imports, and tightening the fumigation norms for imported pulses particularly from Canada, France & the U.S. In days to come, the government, which is sitting on a buffer stock of 18 lakh tons of pulses, is aiming to dispose of up to 5 lakh tons of lentils by March 2018. The sales of these stocks are expected to impact imports of the country. In the next fiscal, another 8 lakh tons of pulses will be disposed of from the buffer stock. About 20 lakh tons of buffer were created through local procurement and imports. Among various measures taken, the Union cabinet after 11 years removed export curbs on all varieties of pulses to ensure farmers get remunerative prices as domestic rates have crashed below MSP in view of record production. After analyzing the fundamentals, it being seen that though there is a little shortfall, the Rabi crop is likely to compensate for it and the year's output is likely to match the year-ago level. In days to come, apart from keeping an eye on the demand-supply scenario, the market participants will closely watch the yields. The Rabi pulse crop numbers are really large & hence the pulse prices are most likely to continue to remain soft in the coming months. Overall, chana futures on the national bourse are likely trade in the range of 3500-5000 levels & a strategy of sell on rise would be advised as the supply side would be higher.

38

GUAR COMPLEX


Yearly price movement of Guar Seed & Guar Gum futures

RANGE 12000

Factors to watch:

10000

According to first advance estimate data released by major guar seed



producing states like Rajasthan, Haryana and Gujarat, the production

8000

sum at 20.14 lakh tons against 18.96 lakh tons a year ago. 6000

The export demand ahead & the trend of crude oil will decide the



further course of action of guar complex.

4000

Another catalyst of demand for guar gum will be increasing use of



“Food Emulsifiers” especially in the European and Asia-Pacific

2000 2014

markets.

2015

2016

Guar Seed

2017

Guar Gum


S1

Guar Seed 27547 Guar Gum

S2

S2

S1

Pivot

Pivot

R1

R1

R2R2

2705 25937

3391

29010

3840

30620 4526

32083 4975

5148

7044

8094

9990

11040

Sometimes change in one thing brings the same in others. Guar is perfect example; the massive upside in crude oil changed the fate of guar complex. Guar complex gave it’s investors a decent yearly return, with 26% & 44% from guar seed & guar gum respectively. Throughout the year, guar seed futures managed to take support near 3150 levels, while the upside of guar seed was capped near 4175 levels. However, guar gum maintained it upside momentum taking support near 6500 levels & with small corrections or can be termed as hurdles on it’s way, finally made a high of 9145. The encouragement given to U.S oil drilling industry by their President & the bullish crude oil prices, gave a boost to the Indian guar gum industry. The duos have always been directly connected to the crude oil prices as after the guar splits are further to guar gum, it is major consumption demand comes from oil & gas, accounting for 60-65%, followed by food (25-30%) and pharmaceuticals. Last year, almost every class of investor watched crude closely as on NYMEX, the Brent prices rallied from $42 to above $60 a barrel for the first time in more than two years. The data showed declines in petroleum-product stocks in the U.S. and news that Saudi Arabia and Russia wanted to extend the agreement to curb output after the deal expires in March 2018, likely through the end of next year. Meanwhile U.S. GDP and solid global economic data helped support the notion that global demand growth of crude is strong and that was supportive. Expansion in shale gas production & rally in crude oil prices lead to increased export demand for the gum and lower estimated production for guar seed pushed prices up in spot markets. Last year, after witnessing a rising trend of guar gum exports, the farmers were more attracted in cultivating guar seed & as a result of which farmers were very much interested in growing more of guar. Despite of falling to the prey of excess rains & reports of damage, India's guar seed production during 2017-18 season was estimated to rise as better yield offset acreage losses. According to first advance estimate data released by major guar seed producing states like Rajasthan, Haryana and Gujarat, the production sum at 20.14 lakh tons against 18.96 lakh tons a year ago. Guar being a rain-fed crop, sown in July-August and harvested in October-November, the lean period of arrivals has begun & the export demand ahead will decide the further course of action in prices. It will be interesting to see the reaction of growers to the price trend & as to how far they take up the cultivation for this year. The latest data from the Agricultural and Processed Food Products Export Development Authority showed that during 2017-18 (April - November) guar gum exports from India was 392,570 tons, higher by 42% as compared to 226,431 tons during same period in 2016-17. In days to come, another catalyst of demand for guar gum will be increasing use of “Food Emulsifiers” especially in the European and Asia-Pacific markets. Increasing demand for bakery products coupled with rising application in processed and convenience foods is expected to drive market growth. Growing consumption of food emulsifiers primarily in premium breads, low-fat spreads, chilled dairy products and chocolates is anticipated to augment market growth. Asia Pacific is expected to show high growth over the forecast period as a result of increasing demand for convenience products, consumer preferences for high-quality products. According to a report, the global food emulsifiers market demand was 751.7 kilo tons in 2013 and is expected to reach 1,019.8 kilo tons by 2020. The Asia-Pacific Food Emulsifiers Market is projected to reach USD 720 Million by 2023, at a CAGR of 3.8% during the forecast period from 2018 to 2023. Sophisticated food processing techniques by developing countries and demand for new ingredients in food processing has driven the food additives market. A populous country like India, with more than 1.2 billion people, is a major potential market for food emulsifiers. Before predicting the price outlook, if we take a look back, then it’s clearly visible that guar gum futures on the national bourse are giving a higher closing for the past six quarters, since 2016. Taking positive cues from the forecast of large numbers of demand, we forecast that a bullish future for guar gum as it has the potential to test 13500 levels, takings support near 8000 levels. While, if we analyze guar seed futures, there is strong support near 3200 levels, while the upside can get extended to 5500 levels.

39