Gold 31012 /Silver 47353/ Crude Oil 2773/ Copper 329.50 /Soyabean 3623/
Top Gainer
Natural Gas - Gains – 7.00% up by 12.70 pts LTP – 193.50
Nickel - Gains – 3.00% up by 20.90 pts LTP – 714.90
Top Losers
Crude Oil – Losses – 2.00% down by 58 pts LTP – 2773.00
Commodity Round UP
Bullions
Gold climbs above $1,350 as Fed fails to signal near-term rate hike
Gold prices added to overnights gains in North American trade on Thursday, climbing to a more than two-week high after the Federal Reserve gave no indication whether it would raise rates at its next meeting in September. The Fed left interest rates unchanged on Wednesday and said near-term risks to the U.S. economic outlook had diminished. However, the central bank stopped short of signaling a near-term rate rise. Fed funds futures are currently pricing in an 18% chance of a rate hike by September, down from around 22% the day before. December odds fell to 43% from 52% earlier in the week.
The yellow metal is sensitive to moves in U.S. interest rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases. Gold is up almost 25% for the year to date, boosted by concerns over global growth and expectations of monetary stimulus.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Prices surged to a more than two-year high of $1,377.50 earlier in July, as concerns surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
Energy
Oil falls to fresh 3-month lows on concerns of glut in refined products. Oil prices extended losses from the prior session in North American trade on Thursday, falling to a new three-month low amid ongoing concerns over a global glut of oil and refined products.
A day earlier, New York-traded oil lost $1.00, or 2.33%, after U.S. government data revealed a surprise build in crude and gasoline inventories last week.
The Energy Information Administration said that crude oil inventories rose by a surprising 1.7 million barrels last week to 521.1 million barrels, which the EIA considered to be “historically high levels for this time of year”.
The report also showed that gasoline inventories increased by 452,000 barrels. Despite being in the midst of the peak summer-driving season in the U.S., gasoline stocks are well above the upper limit of the average range, according to the EIA.
U.S. oil has been under pressure in recent weeks as signs of an ongoing recovery in U.S. drilling activity combined with elevated stocks of fuel products weighed.
London-traded Brent futures have been under pressure recently as prospects of increased exports from Libya and Iraq added to concerns that a glut of oil products will cut demand for crude by refiners.
Oil prices are down nearly 18% since peaking above $50 in early June, as high inventories of gasoline products cloud the future outlook for crude.
Natural gas futures spike 7.5% after bullish weekly storage data. U.S. natural gas futures rallied sharply in North America trade on Thursday, after data showed that natural gas supplies in storage in the U.S. rose less than expected last week.
The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended July 22 rose by 17 billion cubic feet, below forecasts for an increase of 26 billion.
That compared with an increase of 34 billion cubic feet in the prior week, 49 billion a year earlier and a five-year average of 52 billion cubic feet.
Total U.S. natural gas storage stood at 3.294 trillion cubic feet, 13.2% higher than levels at this time a year ago and 15.9% above the five-year average for this time of year.
A day earlier, prices lost 1.7 cents, or 0.64%, amid speculation that July heat won’t prevent stockpiles from reaching a record before the winter.
Unless intense summer heat boosts demand from power plants, stockpiles will test physical storage limits of 4.3 trillion cubic feet at the end of October.
Base Metals
Base metals climb off lows, dollar weakens after Fed sees lower risks
Base metals were recouping some of Wednesday’s losses on Thursday morning on the LME, supported by a weaker dollar after the US Federal Reserve statement last night.
Copper, lead and zinc all fell to two-week lows on Wednesday while aluminium touched six-week lows.
The US Federal Reserve decided to leave the Federal Funds rate unchanged but said “near-term risks to the economic outlook have diminished”.
“While there was no smoking gun as far as a hike in September is concerned, the statement is essentially a ‘holding’ one, and keeps the door ajar to a September hike should the data between now and then strongly suggest that’s the right course of action,” National Australia Bank said.
The FOMC’s decision saw some selling in the dollar on Wednesday but the market is still pricing less than a 50-percent chance that the Fed will lift rates by the end of the year, the bank noted.
The dollar was last weaker at 96.49.
“The weaker dollar has thrown the base metals a bit of a lifeline,” FastMarkets head of research William Adams said.
“In the short term, since we see the FOMC statement has somewhat hawkish, we are surprised by the initial reactions so there may be some room for a rebound in the dollar, which could put downward pressure on the metals again,” he added.
The market remains more focused on the low-inflation backdrop and the wave of central bank meetings in the next few weeks, with easing a prospect at most, ANZ said.
Friday’s Bank of Japan (BoJ) meeting could have greater impact for markets given the weight of expectation of more aggressive fiscal and monetary stimulus following the recent election victory by Prime Minister Shinzo Abe’s Liberal Democratic Party in recent elections.
The BoJ is considering an expanded $265 billion stimulus package, part of which would target low-income citizens to boost non-existent inflation and weak wage growth.
The economic agenda today is fairly light, with Spanish and German unemployment figures both better than expected. The German CPI and US initial jobless claims are scheduled for release later.
In the metals, copper recently traded at $4,865 per tonne, up $15 on Wednesday’s close. Around 4,000 lots have changed hands on Select so far. Stocks fell a net 5,700 tonnes to 208,725 tonnes and cancelled warrants fell 4,525 tonnes to 68,250 tonnes.
Aluminium at $1,600 was $8 higher after stocks dropped 5,850 tonnes to 2,312,275 tonnes – interrupting a recent upward spike.
Nickel at $10,550 was up $195 – stocks edged 54 tonnes lower to 374,598 tonnes – and zinc was last at $2,184, up $9, with stocks and cancelled warrants both down 1,575 tonnes at 434,025 tonnes and 17,275 tonnes.
Lead climbed $6.50 to $1,806, with stocks and cancelled warrants both edging 25 tonnes lower to 187,125 tonnes and 70,700 tonnes respectively.
Agri commodity
Dry State: Gujarat hoping rain forecasts come true
Even though overall monsoon rainfall has been a tad above the Long Period Average (LPA) for the country, Gujarat remains the driest place and faces a severe rainfall deficit of 73 per cent of the LPA. As the key sowing period of July nears its end, the State government is betting big on the optimistic forecasts by weather watch agencies, including the India Meteorological Department and a few private ones. As of 8 am on July 27, the State has received 215.38 mm of rainfall as against the LPA of 797 mm. The impact of deficient rainfall is clearly visible on the sowing pattern with a significant drop of around 28 per cent in cotton acreage. But groundnut has managed to maintain its acreage as farmers chose the oilseed over the fibre crop, which repeatedly faces pest attacks. Surprisingly, acreage under pulses has registered an increase of over 30 per cent in the state. (Source: HBL)
Soyabean sowing in Maharashtra, MP: Acreage may drop 5% There have been some shifts in planting this kharif season by farmers of Maharashtra and Madhya Pradesh as far as soybean is concerned.In some parts of Maharashtra, they have shifted from cotton to soya and in other parts, they have moved to pulses from soybean. In Madhya Pradesh as well, some farmers have opted for pulses over soybean, a survey conducted by the Soybean Processors Association of India (SOPA) shows. On a pan-India basis, it has been estimated that area under soybean may decrease by about 3-5% over the previous year. The soya acreage for last year’s kharif season stood at 110.65 lakh hectares. Madhya Pradesh, Maharashtra and Rajasthan account for 80% of the national soya output. The total output has been estimated at 85-90 lakh tonne compared to the previous season’s 70 lakh tonne by the Solvent Extractors Association of India. (Source: FE)
‘Whitefly damage to cotton crop unlikely to spread’
Cotton farmers in Punjab will not suffer as much as last year from the whitefly infestation as the attack on the crop this year is in a limited area and unlikely to spread, a senior official has said. “The pest attack is directly related to dryness, and rain weakens it. This year, about 4,400 hectares got affected in the Fazilka district. With adequate rains, it will not spread further,” Agriculture Secretary SK Pattanayak told BusinessLine. The Central team that visited the whitefly-affected districts has reported that the situation was under control as subsequent rains had washed away and restricted the movement of the flies. But, it said that the situation needed monitoring. (Source: HBL)
CBOT Soybean futures see 'corrective rally'
Soybean markets continued to bounce back, helped by a hotter August outlook. Next month will be key to soybean yields, and with above average temperatures now indicated across the US Midwest, there is some weather risk to put back on after a precipitous sell-off in last two weeks. There was some support from the demand side as well China came back into the picture. The USDA reported export sales to China of 131,000 tonnes of soybeans, of which 65,000 tonnes were delivery this year, the USDA said. Moreover, the heavy exports, that have been booked for the rest of the marketing year, should be pushing up soybean basis, and August-November spreads. But although prices were up for the second day running, this may not be enough to generate upward technical momentum. (Source: AM)
Technical Levels.
Brazil 2016/17 soy area should grow modestly - AGR Brasil
The area planted with soy in Brazil in 2016/17 should grow 2 percent to 33.8 million hectares as some farmers favor corn, Chicago-based analysts AGR Brasil told Reuters on Tuesday.Brazil is facing a corn shortage, driving local prices up to record highs and changing a trend of farmers favoring soybeans in recent years. Soy planting will start in late September but farmers need to finalize their decisions now. (Source: Reuters)
No relief likely for consumers from high sugar prices
Domestic sugar prices are likely to remain firm in the near term, ICRA has said. The sugar prices have increased from around R34,000 per tonne in June 2016 to R35,000 per tonne in July 2016 on the back of a decline in domestic production during SY2016 by 11% to 252 lakh tonne and exports of 16 lakh tonne. Sabyasachi Majumdar, Senior Vice President, ICRA said, “We expect sugar prices to remain firm for the next 3-4 quarters given that the sugar production is likely to decline further to 230-240 lakh tonne in SY2017 because of a decline in the availability of cane in Maharashtra and Karnataka. Although the monsoon is likely to be better during the current year, the impact on the output is to be seen only in SY2018, given the growing period of sugarcane.” The imposition of a 20% export duty by the government is unlikely to have any significant negative impact on the prices and profitability of the sugar mills in the near term. (Source: FE)
Technical levels
Gold
Support at 30600---30450 and Resistance at 31150---31300
Close above 31300 we can see upside move till 31500—31800, else could test its support level of 30600 mark in days to come.
Further panic only below 30600.
Trade with levels only
Silver
Support at 47000 and Resistance at 48000---48300
Above 47600 it can touch 48000---48300 marks else could test its support level of 47000 mark in days to come. Trade with levels only
Crude oil
Looks weak and could touch 2720—2650 levels in days to come. Fresh buying only above 2880 mark
Copper
Support at 327 and Resistance at 332.
Close below 327 will take it too 323—320 marks else could test its resistance level of 332.
Further upside rally only above 332.
Further upside rally only above 332.
Soyabean
Below 3580 looks weak could test 3550—3520 marks else could test resistance level of 3670.
Upside rally can be seen above 3670.
Today's Data and Event
Monetary Policy Statement – Tentative
BOJ Press Conference – Tentative
BOJ Outlook Report – 10:30 A.M
German Retail Sales m/m – 11:30 A.M
CPI Flash Estimate y/y – 02:30 P.M
Core CPI Flash Estimate y/y – 02:30 P.M
Prelim Flash GDP q/q – 02:30 P.M
Canadian GDP m/m – 06:00 P.M
RMPI m/m – 06:00 P.M
U.S Advance GDP q/q – 06:00 P.M
Advance GDP Price Index q/q – 06:00 P.M
Employment Cost Index q/q – 06:00 P.M
Chicago PMI – 07:15 P.M
Revised UoM Consumer Sentiment – 07:30 P.M
