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Commodities Daily Report

Agricultural Commodities

Thursday | 5th

June, 2014

www.angelcommodities.com

Content

Chana

Oilseeds

Edible Oils

Spices

Sugar

Cotton

Angel Commodities Broking Pvt. Ltd.

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Disclaimer: The inform ation and opinions contained in the document h ave b een compil ed from sources believed to be reliable. The comp any d oes not warrant its accuracy, completen

correctness. The document is not, and should not b e construed as an offer to sell or solicitation to buy any commodities. This document may not b e reproduced, distributed or published, in wh

part, by any recipi ent hereof for any purpose without prior p ermission from Ang el Commo dities Broking (P) Ltd. Your feedback is appreciated [email protected]

Prepared by

Anuj Choudhary

Research Analyst

[email protected]

022) 2921 2000 Extn. 6132
mailto:[email protected]:[email protected]:[email protected]:[email protected]

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News in brief

No Futures Ban: FMC Chairman

Scotching rumours spread by shortsellers that the new government

would ban futures trading of essential commodities, Forward Markets

Commission Chairman Ramesh Abhishekh on Wednesday clarified that

there was no such proposal. (Source: Economic Times)

Indian Wheat Becomes Un-competitive, Buyers Turns To Black

Sea Region

Wheat cash market decreased sharply on Wednesday as buyers

remained sidelined. Export demand has virtually come to a halt and

under diminishing export opportunity they want to offload stock in

domestic market. As supply from new crop still continues, higher supplyagainst lower demand may further pressurize wheat market. There is a

buzz in the market that major importers have turned to Black Sea Region

due to cheaper availability there. Russia is offering wheat at $275 per

tonne for long month delivery (August-Sept).Black Sea Region crop is due

in July and with span of time quotes are likely to dip further. IndianQuotes in May month have been hovering in the region of $280 to $284

per tonne on FOB basis Kandla. However, the current dip in domestic

market may cut FOB quote from $280-284 to $262-264 per tonne .But ittoo would not ensure export from India as Black Sea region crop would

remain competitive up to August -September. From October onward,

Australian crop would start hi tting the market. Overall si tuation on global

front hints a mple suppl y and depressed price for third quarter. In such a

developing s cenario Indian wheat e xport volume is bound to decrease.

July onward wheat p rices start firming up in the market as usual and i twould make wheat export tougher for the Indian exporters. Overall

situation remains depressing on wheat export front for India. (Source:Agriwatch)

World Cotton Trade Expected To Decline

World cotton trade is expected to notice timid sentiments in comingseason. The volume of cotton traded worldwide is expected to decline to

8.1 million tons, noticing a fall of 8%, said International cotton advisory

committee (ICAC). Reason for the same is fall in shipment to China which

was 5.3 million tons in 2011/12 and expected 2.1 million tons in 2014/15.

World consumption on other hand is projected to increase by 3% to 24.2

million tons in 2014/15. As far as India is concerned , the consumption incountry increased to 4.8 million tons in 2012/13, witnessing a growth of

12% due to revision of Chinese cotton policy and its expected to grow by

7% to 5.4 million tons in 2014/15.In the coming season exports from

Greece and CFA zone will notice growth of 6% and 3% respectively but at

the same time exports from the major producers and exporters would

decrease. USA cotton export is expected to decrease by 1% to 2.6 milliontons, Australia export is likely to fall by 23% to 8 lakh tons and India

cotton export is forecasted to fall to level of 1.1 million tons, noticing adecline of 21%. (Source: Business Standard)

Hike in palm oil duty unlikely this Budget

The new government will not raise duties on palm oil in the short term,

despite demands by domestic oilseed processors to cut cheap imports

from the world's top producer Indonesia, official sources said on

Wednesday. India is the world's leading cooking oil importer and PMNarendra Modi 's governmen t is expected to a dopt policies to promote

domestic oilseed production, but concerns over inflation mean it will not

act quickly to raise import duties, said one of the sources with the food

ministry. (Source: Financial Express)

Market Highlights(% change) as on June 4, 2014

Last Prev. day WoW MoM Y

Sensex 24806 -0.21 1.02 10.72

Nifty 7402 -0.18 0.99 10.57

INR/$ 59.28 -0.10 0.57 -1.50

Nymex Crude Oil - $/bbl 102.64 -0.02 -0.08 2.89

Comex Gold - $/oz 1244 -0.02 -1.21 -4.50 -

Source:

Pepper loses sting as imports flood N. India

Spot pepper prices fell on Wednesday on slack demand due to t

availability of imported pepper in upcountry markets. No activities to

place on the national and regional exchanges. North Indian markets aflooded with imported material sold at Rs.675 a kg on 30 days cred

market sources told Business Line. Karnataka sellers were offering t

commodity at Rs.675 a kg on a cash-and-carry basis. But there were

buyers as the material was available on credit at the same rate, they sa

India has imported around 5,000 tonnes of pepper from Vietnam, awith other origins put together, the total could be 7,000 tonnes dur

January-May this year, they said. On the other hand, heat wave in No

India has weakened upcountry demand, they said. Spot prices dropp

by Rs.500 a quintal to Rs.68,100 (ungarbled) and Rs.70,100 (garbled

quintal on limited activi ties . Indian export prices moved up to $12,10

tonne (c&f) for Europe and $12,350 (c&f) for the US, but continued

remain totally out priced..(Source: Business Line)

UP heat on sugar mills over arrears

After the Allahabad High Court rap over massi ve a rrears on paymentsfarmers for sugarcane sales of about 8,500 crore, the Uttar Prad

government has turned the heat on private s ugar mills. The governm

has started the process of registering First Information Reports ( FIR) a

issuing Recovery Certificates ( RCs) against defaulting mills. UP ca

commissioner Subhash Chandra Sharma told Business Standard 36 F

had been lodged and 13 RCs issued against defaulting units. An

empowers the district administration to seize assets for recovery. T

actual action depends upon the amount to be recovered. I ha

convened a meeting of all mills in the private and cooperative sect

tomorrow to discuss the payment issue, he said, adding that mills we

cooperating and had assured about se ttling the payment.(Source: BusiStandard)

Govt must improve supply, storage of crops to counter El Nin

Assocham

Industry body Assocham has asked the government to take measures

improve supply and storage facilities for the country's crop produce,view of the likelihood of deficit rainfall due to the El Nino effect. "W

recommend the government to immediately announce steps to contfood inflation in view of the impending El Nino and the cascad

negative affect it will have on crop production," Assocham Preside

Rana Kapoor said. "The government needs to make some k

announcements on suppl y side manageme nt, logistic manageme

including warehousing, and implement changes in the Agricultu

Produce Market Committee (APMC) Act to curb hoarding," he addAfter four years of normal and above-normal monsoon, India is expect

to have below normal monsoon this year with rainfall projected to be

per cent, a news which is disappointing for the farming communi(Source: Financial Express)

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Market Highlights as on June 4, 20

%

Unit Last Prev day WoW MoM

Chana Spot - NCDEX `/qtl2844 1.56 1.20 -4.81

Chana- NCDEX June Fut `/qtl 2855 0.95 1.06 -6.24

Source: Reu

Spread Matrix as on June 4, 20

Closing 20-June-14 18-July-14 20-Aug

Spot2843.75 11.25 74.25 141.2

20-June-142855 0 63 130

18-July-142918 - 0 67

20-Aug-142985 - - 0

Technical Chart - Chana NCDEX June contract

Source: Teleq

Chana

hana futures traded on a positive note for the second consecutive day

n extended sho rt coverings along with bargain buying and settled 0.95%

igher. Prices have declined sharply over the last few days on account ofuggish demand coupled with increased sowing of summer pulses,

igher arrivals and rising stocks on the exchange warehouses. Also, fears

hat the government may take some steps to control inflation and mayurb trading in essential commodities further pressurized prices. The 3

rd

dvance Estimates pegged total pulses production for 2013-14 at 19.6

mn tn, marginally lower from 19.8 mn tn earlier.

rocurement of chana in Rajasthan by the NAFED was delayed by a

ouple of weeks due to poor quality and lower arrivals. Madhya Pradesh

tate Cooperative Marketing Federation has bought 26,000 tn under the

market intervention scheme. (Source: Factiva cited Cogencis as saying)

here was a delay in the harvesting of the chana crop along with crop

amage in Madhya Pradesh, Rajasthan, Maharashtra and Andhraradesh due to unseasonal rainfall as well as hailstorms.

s per the data released by the ministry of Agriculture, area under Rabi

ulses stood at 161.9 lakh ha as against 152.65 lakh ha last year. Chanaowing is reported at 10.21 mn ha compared to 9.51 mn ha during the

ame period las t year. Sowing of summer pulses is reported at 1.17 mn

a as against 589,000 ha last year.

Demand supply scenario

upplies of Chana since past one year has been ample as the countryeaped bumper Chana output in 2012-13 season. For 2013-14 too

overnment in their third advance estimates has projected record output

f at 9.9 mn tonnes in the Rabi season .

hana would however, continue to retain the tag of largest produced

ulse crop in India holding a lions share o f 48-50 percent in total Indian

ulses production.

ccording to India Pulses and Grains Association, Apr-Dec13stood at

mport 2.4 mn tn vs 2.8 mn tn last year. In value terms, India imported

2.3 billion of pulses in 2012-13, almost 28% higher over $1.85 bill ion inhe preceding year. However, imports in 2013-14 season may decline

1% to 3.2 mn tn on expectations o f higher output.

ccording to APEDA, Pulses exports (kabuli chana) between Apr-Feb 14

ose 228% to 517,095 tn as against 157,799 tn between Apr-Feb 13.

Outlook

hana futures may trade on a mixed note. Lower level buying coupled

with pickup in demand from the millers and lower pulses target for 2014-

5 on forecast of below normal monsoon by the I MD may support prices.

owever, weak demand, rising stocks on the exchange warehouses,igher sowing of summer pulses and higher output in 2013-14 may cap

he upside and pressurize prices a t higher levels.

echnical Levels valid for June 5, 2014

Contract Unit Support Resistance

Chana NCDEX June Futures `/qtl 2805-2835 2885-2910

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Market Highlights as on June 4,

% Change

Unit Last

Prev

day WoW MoM

Soybean Spot- NCDEX `/qtl4322 0.23 -4.00 -9.39

Soybean- NCDEX June Fut `/qtl 4421 0.07 -3.70 -6.67

Soybean-CBOT July Fut USc/Bsh 1483 0.08 -1.02 0.12

RM Seed Spot- NCDEX `/qtl 3427 0.40 -0.67 -0.96

RM Seed- NCDEX June Fut `/qtl 3404 0.44 -0.29 -2.60

Source:

Soybean Spread Matrix as on June 4

Closing 20-June-14 18-July-14 20-Oct-1

Spot4322 99 -1 -725

20-June-144421 0 -100 -824

18-July-144321 - 0 -724

20-Oct-14 3597 - - 0

Mustard Seed Spread Matrix as on June 4

Closing 20-June-14 18-July-14 20-A

Spot 3426.9 -22.9 73.1 11

20-June-14 3404 0 96 1

18-July-14 3500 - 0 4

20-Aug-14 3545 - -

Technical ChartSoybean NCDEX June contract

Technical ChartMustard Seed NCDEX June con

Source: Te

SoybeanSoybean futures traded on a mixed note on Wednesday. Weak soymeal export coupled with favorable monsoon conditions and fears that

the government may take some steps to curb inflation pressurized

prices. However, prices recovered from lower levels on short coverings

and tight supplies settled 0.07% higher.

The Ministry of Agriculture in its 3nd Advance Estimates, projected2013-14 soybean output at 11.9 mn tn as against 14.67 mn tn in 2012-13. Soy meal exports in April14 have declined to 89,883 tn, down

9.62% m-o-m and 59.73% lower y-o-y on poor demand and lower

availability for crushing due to higher Indian quotes for foreign bu yers.IMDshas forecast of below normal rains which may impact the yield.

Soybean was in a bull rally since January on the back of s upply crunch

of this oilseed along with the bullish overseas markets. Concerns overbelow normal monsoon season, emergence of El-Nino and shortage of

seeds for kharif 2014 sowing further fueled the al ready rising p rices.

International Markets

CBOT Soybean traded on a mixed note on Wednesday. Good sowing

progress coupled with favorable weather conditions and forecast ofrains have kept prices under check. However, prices recovered from

lower levels on short coverings and settled 0.08% higher.

The USDA monthly crop report forecast 2013-14 end stocks at 130 mn

bsh against p revious months fo recast of 135 mn bsh. The report

forecast Brazil output at 91 mn tn against estimates of 87.23 mn tn andArgentina output unchanged at 54 mn tn. Soybean planting is 78%

complete compared to 5 yr avg 70%. The planting intention report

forecast record high 81.493 mn acres to be covered under soy beans

for 2014-15. According to NOPA, soybean crushing in April was

reported at 132.667 mn bsh, abo ve e xpectations of 132.26 mn bsh.

Conab raised Brazil output estimate to 86.57 mn tn against its earlier

forecast of 86.08 mn tn in April. Buenos Aires Grains Exchange upped

Argentinas soy harvest to 55.5 mn tn from 54.5 mn tn. China Jan-Aprilsoybean imports increased 41.2% y-o-y at 21.85 mn tn. (Source: Reuters)

OutlookSoybean futures are expected to trade on a mixed to negative note.

Weak overseas markets and poor soy meal export demand may keep

prices under check. However, tight supplies and lower availability of

seeds for sowing may support prices a t lower levels.

Rape/mustard Seed

Mustard seed futures traded on a positive note extending previous

days gains on meal export demand and a cut in the output estimates

and settled 0.44% higher on Wednesday. Prices have declined over thelast few days tracking weak edible oilseeds.

Mustard meal export surged 132% to 125,872 tn in Apr 14 compared

to 54,077 tn in Apr 13. Sowing of mustard seed in 2013-14 stood a t

7.13 mn ha as against 6.73 mn ha last year. Agriculture ministry in its

3rd advance estimates pegged 2013-14 mustard output at 7.8mn tn,

down 2.9% compared to 8.03 mn tn in 2012-13.

OutlookMustard seed may trade on a mixed no te. Lower ou tput estimates and

meal export demand may support prices. However, weak edible

oilseeds and arrival p ressure may p ressurize prices at higher levels .

Technical Levels valid for June 5, 2014


Soybean NCDEX June Futures `/qtl 4355-4390 4455-4485

RM Seed NCDEX June Futures `/qtl 3360-3385 3425-3445

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% Change

Unit Last Prev day WoW MoM

Ref Soy oil Spot-

NCDEX

`/10 kg 672.00 0.73 -3.03 -7.32 -

Ref Soy oil- NCDEX

June Fut

`/10 kg 675.50 1.84 -0.44 -5.88 -

Soybean Oil - CBOT-

July FutUSc/ Bushel 39.25 2.35 -0.96 -4.94 -

CPO-Bursa Malaysia

June Fut

MYR/Tonne 2440 1.67 -2.67 -8.27

CPO- MCXJune

Futures

`/10 kg 512.80 1.56 -2.21 -7.87

Source: Reu

Refined Soy Oil Spread Matrix as on June 4

Closing 20-June-14 18-July-14 20-Aug-1

Spot672 3.5 -11.85 -19.3

20-June-14 675.5 0 -15.35 -22.8

18-July-14660.15 - 0 -7.45

20-Aug-14652.7 - - 0

CPO Spread Matrix as on June 4


30-June-14512.8 0 -3.1 -4

31-July-14509.7 - 0 -0.9

28-Aug-14508.8 - - 0

Technical ChartRef Soy Oil NCDEX June contract

Technical ChartCrude Palm Oil MCX June contrac

Source: Telequ

Refined Soy Oil

efined soy oil futures traded on a positive note on Wednesday

aking cues from positive overseas so y oil prices and se ttled 1.84%

igher. CBOT Soy oil recovered from lower levels on short coverings

ettled 2.35% higher. Prices declined over the last few days as

ncreased crushing for soy meal has lead to a supply glut si tuation.

ccording to NOPA, Soy oil stocks increased to 2.058 bn lbs from

.023 b n in March and forecast of 1.990 bn lbs . (Source: Reuters)

ndia meet 50-55 percent of its edible consumption through imports

nd thus rupee factor is a major determinant of edible oil prices.

s per the data released by the Solvent Extractors' Association of

ndia Imports of vegetable oils, including non-edible oils in April

eclined 27.17% y-o-y to 832,760 tn.

rude Soy oil imports in April 14 rose 121% to 113,000 tn compared

o 50,999 tn last year. Stockpiles of edible oil at ports on May 1tood at 465,000 tn, the trade body said, lower than 490,000 tn on

pril 1.

Outlook

oy oil futures may trade on a mixed note. Bargain buying may be

een at lower levels. However, no sharp upside is seen as weak

verseas markets and higher imports may keep prices under check.

rices may also take cues from movement in the Rupee.

Crude Palm Oil

PO Futures traded on a positive note on Wednesday on short

overings as well as positive overseas palm oil prices and settled.56% higher.

alm oil Futures on KLCE recovered from lower le vels on Wednesday

n short coverings and settled 1.67% higher. Prices have declined

ver the last few days on lower than expected exports andncreased inventories. There are expectations of improvement in

emand ahead o f Ramadan.

ccording to Malaysian Palm oil Board, exports increased 1.18% in

pril against March, while palm oil output jumped 3.92% and the

nd stocks increased 4.6%.

xports of Malaysian palm oil products in May increased 7.8% to,315,952 tonnes from 1,220,882 tonnes shipped in April. Malaysia

as set the export tax for Palm oil for May at 5.5%, unchanged as

gainst 5.5% in April. Indonesia has kept export tax for Palm oil for

une at 12% unchanged as against May.

ndia's crude palm oil imports increased 87.24% in March to 438,122

n from 233,987 tn last year.Outlook

alm oil futures are expected to trade on a mixed to negative note.

Weak Malaysian palm oil may keep prices under downside pressure.owever, short coverings may be seen at lower levels. Prices may

lso take cues from movement in the Rupee.

echnical Outlook valid for June 5, 2014


Soy Oil NCDEX June Futures `/qtl 668-671 677-681

CPO MCX June Futures `/qtl 505-509 516-520

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Market Highlights as on June 4 , 2

% Change

Unit Last

Prev

day WoW MoM

Jeera Spot- NCDEX `/qtl 11099 -0.27 0.44 4.45

Jeera- NCDEX June Fut `/qtl 11010 -0.27 0.32 5.31

Turmeric Spot- NCDEX `/qtl 5833 -0.36 0.10 -10.29

Turmeric- NCDEX June Fut `/qtl 6018 -2.18 -0.03 -10.23

Source: Re

Jeera Spread Matrix as on June 4 ,


Spot 11098.6 -88.6 36.4 196.4

20-June-14 11010 0 125 285

18-July-14 11135 - 0 160

20-Aug-14 11295 - - 0

Turmeric Spread Matrix as on June 4 ,


Spot 5833.35 184.65 296.65 438.65

20-June-14 6018 0 112 254

18-July-14 6130 - 0 14220-Aug-14 6272 - - 0

Technical ChartJeera NCDEX June contract

Technical ChartTurmeric NCDEX June contract

Source: Tele

Spiceseeraeera futures traded on a mixed note on Wednesday. Demand from

he domestic as well as overseas markets supported prices. However,

rrival pressure a nd comfortable su pplies in the physi cal markets onhe back of record output as well as huge carryover stocks capped

harp gains and settled 0.27% lower.

Area under jeera in Gujarat was reported at 455,000 ha as against335,200 ha last year while about 390,000 ha were sown in Rajasthan.

Geo-political tensions in Syria and Turkey have led to a supply crunch

n the global markets raising supply concerns from the two major

exporting countries . Export orders a re diverted to India. Production is

lso expected to fall in Syria and Turkey due to crop failure.

Arrivals, production and Exports

Arrivals in Unjha were reported at 13,000 bags on Wednesday. (Source:

griwatch). Exports of Jeera between Apr-Dec 2013 stood at 96,500 tn,up 89% as against 50,944 tn between Apr-Dec 2012. (Source: Spices Bo ard)

According to IBIS Indias Jeera exports have crossed 1,00,000 tonnesill Feb14. Production of Jeera in 2013-14 is expected around 45-50

akh bags (55 kgs each), higher than 40-45 lakh bags las t year.

Outlook

eera futures may trade on a mixed to positive note. Demand from the

domestic as well as overseas markets may support prices. However,

omfortable supplies and higher arrivals may cap sharp gains .

Turmeric

Turmeric futures traded on a negative note on Wednesday on weak

demand due to arrivals of poor quality crop in the physical marketsoupled with huge carryover stocks and expectations of a better

owing this season and settled 2.18% lower.

Production, Arrivals and Exports

Arrivals in Nizamabad a nd Erode mandi were reported a t 12,000 bags

nd 3,000 bags on Wednesday. Sowing of Turmeric in AP for the 2013-

14 season is reported a t 0.53 lakh ha, as against 0.68 lakh ha last yea r

nd a normal sowing of 0.68 lakh ha.

Production in 2013-14 is reported around 40 lakh bags, down by 10-

15%. Exports between Apr-Dec 2013 stood at 58,000 tn, higher than

49,526 tn in Apr-Dec 2012. (Source: Spices Board)

Outlook

Turmeric futures are expected to trade on a negative note. Weak

demand d ue to poor quali ty arrivals as well as h uge carryover s tocksmay keep turmeric prices under check. However, lower level demand

nd expectations of overseas enquiries may support prices at lower

evels.

Technical Outlook Valid for June 5, 2014

Unit Support Resistance

Jeera NCDEX June Futures `/qtl 10820-10910 11065-11150

Turmeric NCDEX June Futures `/qtl 5980-5950 6040-6120

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% Change

Unit Last Prev. day WoW MoM Y

Sugar Spot-

NCDEX `/qtl

3043 0.68 -0.15 -5.35

Sugar M- NCDEXJune Fut `/qtl

3007 0.07 0.13 -6.18

Sugar No 5- Liffe-

Aug Fut $/tonne

465.4 -0.45 -0.39 -1.08

Sugar No 11-ICE

July Fut $/tonne

378.67 -0.87 -0.41 -2.35

Source: Re

Sugar S pread Matrix as on June 4

Closing 20-June-14 18-July-14 20-Aug-

Spot3042.5 -35.5 -71.5 -64.5

20-June-143007 0 -36 -29

18-July-142971 - 0 7

20-Aug-14 2978 - - 0

Technical Chart - Sugar NCDEX June contract

Source: Tele

SugarSugar futures traded on a flat to positive note on Wednesday on shortcoverings and settled 0.07% higher. Prices have declined on weak

demand coupled with rising supplies and lack of fresh export demand.

SMA seeks a hike in import duty from 15% to 40% to protect the

domestic sugar industry.

According to a circular released by NCDEX, some changes have beenmade in the contract specifications in Oct14 expiry futures and

thereafter. Kindly refer the circular for further details.

Prices were on a bullish trend since February on demand from the bulk

consumers coupled with lower output this season and forecast of below

normal rains by the I MD.

The government, in its notification, has cut the subsidies on raw sugar

export from Rs. Rs. 3300/tn to Rs. 2777/tn for the months of April and

May 14.

SMA has reported that crushing for the Oct Sept 14 season has ended

and sugar production stands at 23.9 mn tn, against 24.7 mt last year.

Exports for the season is e xpected at 1.9-2 mn tonnes as a gainst 8 mn tn

ast year.

The government has raised the FRP on cane for the 2014-15 season to

Rs.220/qtl from Rs. 210/qtl.

Domestic Production and ExportsAccording to the latest estimates by ISMA, production is estimated 23.8

mn tn for 2013-14 season A good monsoon last season led to higher

output for fourth consecutive year in row in 2013-14.

SMA has estimated that the opening balance as on October 1, 2013 (forthe new season 2013-14), at around 88 lakh tonne, which is about 20

akh tonne more than the normal opening balance.

Global Sugar Updates

Global sugar prices traded on negative note on Wednesday. A pickup in

output from Brazil coupled with higher global stocks kept prices under

downside pressure. However, tight US supplies coupled with drought

fears in Brazil, expectations of pickup in demand and chances ofdiversion of cane towards ethanol supported prices at lower levels. Liffe

as well as ICE Raw sugar settled 0.45% and 0.87% lower respectively.

According to FC Stone, Centre South sugar output for 2014-15 season is

forecas t at 33.1 mn tn, while sugarcane crushing is seen a t 585.85 mn tn.

According to UNICA, Brazilian mills produced 3.41 mn tn of sugar till 1st

half of May compared to 3.78 mn tn last year.

Outlook

Sugar futures are expected to trade on a mixed note. Higher supplies,ack of fresh export orders and weak demand may continue to keep

prices under downside pressure. However, demand from bulk consumersmay support prices at lower levels.

Technical Outlook valid for June 5, 2014


Sugar NCDEX June Futures `/qtl 2980-2990 3010-3020

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% Change

Unit Last Prev. day WoW MoM

NCDEX Kapas Apr 15 `20 kgs 938 -0.58 4.45 -4.19

MCX Cotton June `/Bale 19440 -0.56 2.48 -8.69

ICE Cotton July USc/Lbs 86.08 -1.47 1.43 -8.61Cot look A Index 91.9 0.93 2.68 -3.57

Source: R

Cotton Spread Matrix as on June 4, 20Closing 30-June-14 31-July-14 31-O

30-June-1419440 0 230 5

31-July-14 19670 - 0 -18

31-Oct-14 19490 - - 0

Technical Chart - Kapas NCDEX April 2015 contrac

Technical Chart - Cotton MCX June contract

Source: Tele

KapasCotton complex traded on a negative note on Wednesday days on

concerns over global demand, weak cotton yarn exports to China and

higher output as forecast in the 3rd

advance es timates coupled with weakoverseas markets. NCDEX Kapas as well as MCX Cotton futures settled

0.58% and 0.56% lower respectively. However, demand from the

domestic mills supported prices at lower levels. Cotton Association ofndia has revised its 2013-14 output marginally higher from its previous

estimates.

n the domestic markets, although production is estimated higher,arrivals so far remain significantly lower compared to last year. This is

because farmers were holding back their produce in anticipation of

higher returns.

Domestic Production and Consumption

According to 3rd

Advance Estimates Cotton output for 2013-14 is

projected at 36.5 mn bales against 34.22 mn bales last year. Cotton

Association of I ndia es timates 2013-14 cotton crop a t 383.5 lakh bales

against earlier estimates of 381.3 lakh bales. 2012-13 output stood at

356.75 lakh bales.As per latest CAB estimates, total arrivals as on 14th May 2014 were

reported at 295.16 lk bales as against 308.5 during the correspondingperiod in the previous year, a decline of about 4.32 percent.

ndia is estimated to export less cotton this year (9 million bales) on

expected drop in demand from the largest consumer, China. Domestic

consumption is expected to grow at a normal pace while imports are

expected to increase due to cheaper a vailability of cotton in the global

markets. Thus, suppl y side fundamen tals (42.7 mn bales) a re comfortable

to meet the domestic as well as e xport demand (38.7 mn bales) keepingdomestic cotton prices stable.

Global Cotton Updates

CE Cotton futures traded on a negative note on Wednesday on forecastof rains in Texas and e xport concerns and settled 1.47% lower. i mproved

planting, demand concerns from China coupled with favorable sowing

conditions an d USDA report forecasting hi gher i nventories next season

added to the downside pressure. Prices gained earlier this week on

concerns over dry weather in Texas. Chinas April imports declined 47.9%

to 224,400 tns y-o-y.

According to the USDA weekly crop progress report, Cotton planting is

74% complete v/s 62% last week and 5 year average 81%. The USDAreport forecast end stocks in line with expectations to 2.5 mn bales.

CAC has cut forecast a cu t in the global output as well as consumption .

However, the decline in the consumption is higher than the output,which may result in higher stocks.

Outlook

Cotton prices a re e xpected to trade on a negative note . Global demandconcerns, higher output, lower cotton yarn exports and comfortable

supplies may keep prices under check. However, lower level demand

coupled with forecast of below normal rains in the 2014 monsoon season

and declining supplies in the physical markets may support prices at

ower le vels.

Technical Outlook valid for June 5, 2014


Kapas NCDEX April 15 Fut `/20 kgs 920-928 946-955

Cotton MCX June Futures `/bale 19170-19310 19580-19730

jun-050614-34050614

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