Weekly Outlook on Commodities..........

Bullion: MCX October Gold futures fell sharply in the last week after a report showed the U.S. jobless claims last week fell to the lowest since April 2006, boosting speculation that the Federal Reserve will scale back fiscal stimulus this week. Gold has declined amid expectations that the Fed will pare $10 billion of its’ existing $85 billion month bond-purchases in the Sep 18 meet as the economy improves. Added, the U.S. President Barack Obama asked Congress to delay a vote on military action against Syria, diminishing haven demand for gold. Russia proposed that Syria surrender its chemical weapons to avert a strike on Syria. The Syria’s government said it welcomed the idea. Further, Job openings in the U.S. fell in July to the lowest level in six months while Jobless claims declined to the lowest level since April 2006 in the week ended Sept. 7, signaling uneven progress in employment. Additionally, declining trend in SPDR gold holdings exerted downside pressure on prices. Investment demand for gold in SPDR Gold holding Trust, the biggest Exchange-Traded Product (ETP) declined to 917.13 tonnes as on September 12, 2013, down 0.23 per cent compared with 919.23 tonnes September 06, 2013. ¬¬¬¬¬Price Movement in the Last week: MCX October gold prices opened the week at Rs 31,802/10 grams and fell sharply and touched a low of Rs 29,613/10 grams and currently trading around Rs 29,790/10 grams (September 13, Friday at 5.50 PM) with a huge loss of Rs 2094/10 grams (down 6.60%). Outlook for this week: MCX October gold prices are expected to trade lower on the back of improved economic growth in U.S. and as tension in Syria eased. MCX October gold shall find supports at 28,720/28,000 levels and resistances at 30,850/31,560 levels. International Spot gold has supports at 1280/1265 and resistances at 1340/1365 levels. Copper: MCX November Copper futures traded lower in the last week on the back of more than expected decline in US jobless claims data increased concerns regarding QE tapering by Federal Reserve in its meeting this week. The euro-area industrial output contracted more than economists forecast in July as manufacturers struggled to shake off the legacy of a record-long recession. Factory production in the 17-nation euro area fell 1.5 percent from June, when it gained 0.6 percent, said the European Union’s statistics office. That’s more than the 0.3 percent contraction forecast by economists. Additionally, sharp gains of the rupee also added bearish market sentiments at domestic bourses. Price movement in the last week: MCX November copper prices opened the week at Rs 476.90/kg, initially traded slightly higher, but found strong resistance at Rs 482.30/kg. Later, prices fell sharply from there and touched a low of Rs 456/kg and currently trading at Rs 458.40/kg (September 13, Friday at 5.55 PM) with a loss of Rs 17.85/kg (down 3.75%). Outlook for this week: MCX November copper is expected to trade lower on concerns of QE tapering from the Federal Reserve in this week. Reduced industrial production and higher unemployment from Germany to Australia fanned concern economies are still struggling. Wholesale prices dropped the most since 2009 last month in Germany, the world’s third-biggest copper consumer. However, depreciating rupee may restrict to gradual fall at domestic bourses. MCX November copper shall find a supports at 440/432 levels and resistances at 472/483 levels. Crude: MCX September crude oil futures traded lower in the last week on account of eased tensions in Syria after the U.S. and Russia met to discuss a plan for Syria to surrender its chemical weapons. The U.S. President Barack Obama said in an interview that Russia’s proposal is a “potentially positive development,” adding that he wasn’t confident of congressional approval for military action against Syria for its alleged use of chemical weapons. Further, increase in concerns of QE tapering from Federal Reserve meeting in next week restricted upside in prices. The International Energy Agency (IEA) cut estimates of the Organization of Petroleum Exporting Countries (OPEC)’s oil output next year. Demand for crude from the OPEC will be 29.2 million barrels a day or 1.3 million a day lower than the group’s current production levels. OPEC produced 0.8 percent less crude oil in August due to declining Libyan output, even after Saudi Arabia pumped the most in 32 years. Saudi Arabia, OPEC’s biggest producer, pumped 10.19 million barrels a day, up 190,000 barrels from July, the International Energy Agency said. Libya’s output fell to an average of 550,000 barrels in August from 1 million barrels in July, the IEA said. U.S. crude oil inventories dropped 0.2 million barrels to 360.0 million barrels last week. Price movement in the last week: MCX September crude oil prices opened the week at Rs 7160/bbl, initially traded mildly higher, but found strong resistance of Rs 7199/bbl. Later, prices fell sharply from high and touched a low of Rs 6778/bbl, currently trading at Rs 6881/bbl (September 13, Friday at 6.00 PM) with a loss of Rs 288/bbl (down 4%). Outlook for this week: Crude oil is expected to trade under negative tone on the back of eased tensions in Syria and U.S. Federal Reserve may reduce stimulus. However, Indian rupee is expected to strengthen against the U.S. dollar this week, by which prices may fall sharply in the domestic bourses. MCX September crude oil shall find a support at 6650/6450 levels and resistance 7050/7200 levels. Soybean: NCDEX November soybean futures traded slightly lower in the beginning of the last week on account of higher sowing acreage of kharif oilseeds and record high production estimates of 12.3 million tonnes. Further, appreciation in Indian rupee against the U.S. dollar also added bearish market sentiments as exporters of soy meal would get less returns on meal exports and vegetable oil imports would be cheaper as India imports edible oil about 50% of it’s total requirement. As per Ministry of Agriculture (GOI), Kharif oilseeds sowing area covered to 192.51 lakh hectares till September 13, 2013, up 12.60% against 170.97 lakh hectares last year during the same period. However, soybean prices bounced back in later parts of the week on account of short covering after continuous fall in previous 2-3 trading sessions. Further, strong gains in overseas market after USDA’s bullish monthly supply & demand report. According to USDA’s Monthly Supply & Demand Report, U.S. soybean planted acreage held steady at 77.2 million acres and the national average yield was pegged at just 41.2 bushels per acre vs. 42.6 in August. Global soybean production for 2013/14 is projected at 281.66 million tons, it is down from 281.72 million tons from last month. Global soybean stocks are projected at 71.54 million tons, down from 72.27 million tons from last month. China import demand was left at 69 million tonnes as compared with 59.5 million for the 2012/13 season. Brazilian production came in at a record 88 million tonnes for 2013/14. This is up 3 million tonnes from last month and it is up from 82 million this past year. Soybean production for China is reduced 0.3 million tons to 12.2 million on lower yields resulting from excess rainfall and flooding in the northeast. As per USDA’s net weekly export sales report, net export sales for soybean came in at 478,100 tonnes for the 2013/14 marketing year and as of September 5th, cumulative sales stand at 58% of the USDA forecast versus a 5 year average of 43%. Sales of 305,000 tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 17,000 tonnes for the current marketing year and 111,700 for the next marketing year for a total of 128,700. Net oil sales came in at 1,700 tonnes for the current marketing year and 4,500 for the next marketing year for a total of 6,200. Cumulative sales stand at 94% of the USDA forecast for 2012/2013 versus a 5 year average of 93.7%. Outlook for this week: Soybean is expected trade slightly higher on account of firm overseas market as lower yield of U.S. soybean. However, for the medium term, soybean is expected to trade lower on the back of higher sowing acreage this year as compared to last year and arrival pressure of new crops. Additionally, appreciation in Indian rupee against the U.S. dollar is also negative for prices as soy meal exports would be less attractive and edible oil would be cheaper. NCDEX November Soybean shall find a support at 3360/3250 levels and resistance 3625/3705 levels.