Gold 31475/Silver 46464/ Crude Oil 3267 / Copper 330.30 /Soyabean 3840/
Top Gainers
Nickel – gains 4.96% LTP – 670.60
Silver – gains 4.77% - 46464
Top Losers
Jeera – losses – 2.83 LTP - 17350
Crude Oil – Losses 1.12% LTP – 3267
Commodity Round UP
Bullions
Gold surges 1% to hover near 27-month high, amid soft China factory data
Gold rose sharply on Friday hovering near 27-month highs, as soft manufacturing data in China and further indications of a delayed interest rate hike by the Federal Reserve bolstered the yellow metal.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,323.00 and $1,344.25 an ounce, up $18.40 or 1.39% on the session. Over the last week, Gold has surged more than 5% as investors have piled into the safe-haven asset in the wake of a surprising decision by U.K. voters to support a measure paving the way for Britain's departure from the European Union. On Thursday, Gold ended the first six months of 2016 up nearly 25%, completing one of its strongest first halves on record.
Gold likely gained support at $1,247.30, the low from June 8 and was met with resistance at $1,355.60, the high from June 24.
In China, the Caixin Manufacturing Purchasing Managers' Index dropped by 0.6 to 48.6 in June, falling at its swiftest pace in four months. It came as new orders moved lower for the month and companies in the sector cut staffing levels at a solid pace. Analysts expected to see a reading of 49.1 At the same time, the government's official Manufacturing PMI ticked down by 0.1 to 50.0, falling to its lowest level since February's reading of 49.0. Any reading under 50.0 provides signals of contraction in the industry.
The Chinese government's official reading serves as a gauge for activity among large and state-owned companies in the sector. China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
Elsewhere, Fed governor Stanley Fischer cautioned that it could be some time before the U.S. central bank will be able to determine the long-term effects of the Brexit referendum on monetary policy. In the meantime, Fischer said he is hopeful the Fed can continue tightening at a "slow, very gradual" pace amid signals of an improved economy.
The Federal Open Market Committee (FOMC) will re-assess the implications of the Brexit vote on the timing of its next rate hike when it meets again on July 26-27, he added.
"We are going to have to wait and see,” Fischer said in an interview with CNBC. “It clearly is a huge event for the U.K. and it’s an important event for Europe. Our direct trade with Britain is not going to make a huge difference to us, but it could set off -- there are a lot of things that will follow from Brexit for Europe, for the United Kingdom, and those are the things we will have to be thinking about."
Investors who are bullish on Gold are in favour of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.25% to an intraday low of 95.23, before rallying slightly to 95.48 in U.S. afternoon trading. The index dropped by nearly 3% over the first half. Dollar-denominated commodities such as gold.
Silver climbs to highest in two years as gold extends advance.
Silver jumped to the highest since September 2014 and gold surged as investors speculated central banks will need to continue supporting the global economy in the wake of Britain’s vote to quit the European Union. Silver rose as much as 3.6% to $19.3960 an ounce and traded at $19.2245 by 2:18pm in Singapore. Prices have soared 8.3% this week, the most in nearly three years. Gold added 0.8% to $1 332.17 an ounce and was set for a fifth weekly gain. The metal priced in the UK currency rallied above 1 000 pounds an ounce.
Governor Mark Carney said on Thursday the Bank Of England could cut interest rates within months as it tries to shield an unstable UK economy. Prospects for further US interest-rate increases have been wound back since the Brexit vote, while investors continue to pile into exchange-traded funds backed by gold, boosting the assets to the highest since 2013. According to Marc Faber, publisher of the Gloom, Boom & Doom Report, the Federal Reserve may even embark on a fourth round of quantitative easing.
“There are risks that policymakers will now have to consider further easing to help limit the fallout from Brexit,” Zhan Dapeng, an analyst at Ever bright Futures Company, said in a note. “Gold could climb further as more investors allocate money into it.” Assets in gold-backed ETFs keep expanding. The holdings have increased 34% this year to 1 952.5 metric tons as of Thursday, data compiled by Bloomberg show. Riding high on strong global cues and continued buying by industrial units and coin makers, silver prices cracked the Rs 45,000-mark today by surging Rs 960 per kg to trade at a two-year high of Rs 45,560. This was the fifth straight day of rise for the commodity.
Bullion traders attributed the rise in silver prices to a firming trend overseas, where it surged to its highest level since August 2014, as Britain's vote to leave the EU fuelled speculations that central banks around the world will boost economic stimulus. Moreover, increased offtake by domestic industrial units and coin makers too buoyed sentiment, they added.
Globally, silver climbed 5.2% to $19.58 an ounce and gold advanced 1.4% to $1,339 an ounce in New York in yesterday's trade. In the national capital, silver ready extended gains for a fifth straight day by surging Rs 960 to trade at Rs 45,560 per kg, its highest level since July 14, 2014 when it stood at Rs 45,600 per kg.
Silver weekly-based delivery to continue its upward journey and edged up by Rs 30 to Rs 45,200 per kg.
Energy
Crude ticks up, as U.S. oil rigs surge to highest level since late-April
Crude futures inched up on Friday in relatively quiet pre-holiday trade, as the U.S. oil rig count rose sharply last week, hitting its highest level since late-April.
On the New York Mercantile Exchange, WTI crude for August delivery traded between $47.91 and $49.08 a barrel before closing at $49.02, up 0.69 or 1.43% on the session. On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $49.26 and $50.42 a barrel, before settling at $50.39, up 0.68 or 1.37% on the day. Crude futures accelerated gains in the final hour to close near session highs.
Both the international and U.S. benchmarks of crude have moved slightly higher over the last week since U.K. voters shocked markets worldwide by approving a measure that paves the way for Britain's departure from the European Union. On Thursday, crude ended the second quarter up by nearly 25% -- its strongest three-month period in seven years.
In U.S. afternoon trading, oil services firm Baker Hughes said that U.S. oil rigs increased by 11 to 341 for the week ending on June 24, reaching their highest level since April 22. With the sharp gains, domestic oil rigs in the U.S. moved higher for the fourth time in five weeks. At the same time, natural gas rigs inched up by one to 90, helping push the overall count up to 431.
The continued gains in the nationwide rig count provide leading indications that U.S. producers are ready to return online as prices stabilize near $50 a barrel. Despite the recent upswing in prices, crude futures are still down sharply from their level in November, 2014, when OPEC rattled global markets with a strategic decision to maintain its production ceiling above 30 million barrels per day. The tactic triggered a prolonged battle between the U.S. and OPEC for market share, depressing prices amid a glut of oversupply.
Elsewhere, investors continued to closely monitor labor negotiations in Norway where top oil companies and labor unions engaged in heated talks to avoid a work stoppage. If the sides are unable to reach a deal by Saturday's deadline workers at five Norwegian oil fields could strike immediately, resulting in an estimated 6% decline in production, according to the Norwegian Oil and Gas Association.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.25% to an intraday low of 95.23, before rallying slightly to 95.48 in U.S. afternoon trading. The index dropped by nearly 3% over the first half.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.
Natural gas ends at 13-month high as oil gains 3% on week
Natural Gas skyrocketed this week adding 12.21% to close at 2.987 as summer demand increased along with the temperature. Natural-gas futures on Friday notched their highest close since May 2015 as traders bet that warmer weather will help to ease a glut of supplies in the U.S.
The Energy Information Administration on Thursday said total working gas in underground storage rose 37 billion cubic feet to 3.14 trillion cubic feet—above the five-year historical average.
“Storage levels may be near record levels for this time in the injection season, but the rate of storage injections has been well below average,” the American Gas Association said in a report Thursday.
A year ago, the EIA reported a build of 73 Bcf and the five-year average climb is 78 billion, according to S&P Global Platts.
A rally for natural gas this time of year isn't unusual, Matt Smith, director of commodity research at Clipper Data “In years past, we have seen natural gas rally through the second quarter, as the uncertainty of summer from both a heat and hurricane perspective works its way into prices.”
Hot high pressure continues dominating the western and southern US with widespread 90s to 100s, including all of Texas. However, weather systems will continue to track into the Midwest and east-central US through the weekend with showers, thunderstorms, and modest cooling, easing national natural gas demand to moderate levels.
However, hot high pressure will expand over the northern and eastern US early next week with temperatures warming above normal over much of the US with increasing demand for cooling. Overall, nat gas demand will be MODERATE-LOW over the northern US through the weekend and HIGH over the southern and western US. Demand will then be HIGH everywhere next week.
In the United States, summer temperatures will be above normal with exceptions in the Southeast, near the Gulf of Mexico, and along the spine of the Appalachians. Rainfall will be below normal in most of the nation’s midsection, which may reduce yields of corn, wheat, soybeans, and other crops grown within this area. The drought in much of California will likely continue as well, putting additional stress on our food supply. In Canada, temperatures will be above normal, on average, throughout the entire Commonwealth. Rainfall will be above normal in British Columbia and parts of Quebec and below normal elsewhere.
Agri Commodity Round UP
Kharif sowing takes a beating in June on late monsoon arrival
Sowing of kharif crops took a beating in June with the total sown area declining 23 per cent to 215.87 lakh hectares against 279.27 lakh hectares (lh) last June as the monsoon played truant in the first half of the month. The 11 per cent rainfall deficit for the month due to the late arrival and slow progress of the monsoon across the country led to a decline in acreage of pulses, coarse cereals, oilseeds, jute and cotton. Transplantation of paddy, the main kharif cereal crop, picked up in the last week of June and the total acreage at the end of the month stood at 47.77 lh, almost at the same level as last year. Sowing of cotton took a major hit this kharif, as farmers in Punjab stayed away from planting the fibre crop due to fear of white flies spoiling it. In North India, where kharif cotton planting is already complete, the acreage is down by a third this year. Elsewhere, cotton farmers are seen preferring pulses and oilseeds. The acreage under cotton till June end halved to 30.59 lh compared to 60 lh in the same month last year. According to data supplied by States, pulses have been sown on 19.85 lh, coarse cereals on 37.15 lh, oilseeds on 28.71 lh and sugarcane on 44.38 lh. With the Met Department predicting above-normal rains over North India during the first week and over Central India during the second week of July, the kharif acreage is expected to improve in the weeks ahead. As of July 1, 24 of the 36 metrological sub-divisions, accounting for 63 per cent of the country’s geographical area, had received normal to excess rains. The other 12 sub-divisions had deficient rains.
Rains in June 11% lower than normal
The South-West monsoon, which arrived late by about eight days this year, has delivered a 11 per cent deficit rainfall for the month of June across the country. The country as a whole received 145.4 mm rainfall in June, about 11 per cent lower than the normal of 163.6 mm for the period, according to the data from Indian Metrological Department (IMD). About 24 of the 36 metrological sub-divisions, accounting for 63 per cent of the area the country have received normal-to-excess rains. The rainfall was deficient in about 10 sub-divisions, which formed 31 per cent of the area, while two sub-divisions had received scanty rains. The South Peninsula has received 26 per cent excess rains, while the rainfall has been deficit in Central India by 17 per cent, North West India by 7 per cent and East and North-East India by 28 per cent. June, the first of the four month rainy season, normally accounts for 18.4 per cent of the long period average of 886.9 mm rainfall that the country receives.
Soybean output declines to lowest in 11 years
India’s soybean output is estimated to have declined to its lowest in 11 years in the crop year 2015-16 (July–June), following two consecutive years of drought that resulted in crop damage and a steep fall in yield. Data compiled by the apex industry body, the Soybean Processors’ Association (SOPA), showed India’s soybean output at 7.54 million tonnes in crop year 2015-16, compared with 10.37 million tonnes in 2014-15, a decline of nearly 27 per cent. Faced with a sharp decline in output last year, soybean farmers this year eagerly await the monsoon to advance evenly throughout the country to start sowing for timely harvesting of the oilseed.
“Soybean output was lower last year due to drought in major growing regions. Apprehensions about the monsoon rainfalls remain due to two weeks of delay. Farmers with irrigation facilities have started sowing, but, rain-dependent farmers are yet to commence. Farmers may face problems in case rainfalls do not start evenly in Maharashtra, Madhya Pradesh and Rajasthan,” said D N Pathak, Executive Director, SOPA.
The monsoon rainfalls were delayed by two weeks in some parts of Rajasthan, Madhya Pradesh and Maharashtra, India’s three major soybean producing states that contribute to nearly 80 per cent of the country’s total output. Alarmingly, the rainfalls remained inadequate in some areas in Maharashtra and Madhya Pradesh to commence sowing. Farmers still await the intensity of rainfalls to increase to achieve at least normal output level this year.
Soybean, a 100 per cent kharif produce, is a 90-day crop whose sowing begins with the onset of monsoon in June, for harvesting in the second half of September. But, soybean sowing has been delayed by two weeks which, traders believe, would impact yield. Data compiled by the Ministry of Agriculture showed India’s soybean output at 8.7 million tonnes. The scenario looks grim for sowing and harvesting this year as well, due to delay in the monsoon rainfalls.
“This year again, farmers faced huge supply shortage of breeder seed due to the lack of breeding from professional seed suppliers. This is likely to impact next sowing year more than the current year,” said a soy oil producer.
Soybean output is imperative to edible oil import into due to India’s heavily dependence on imported oil.
India meets around 55 per cent of 23.5 million tonnes of vegetable oil demand through imports largely from Indonesia, Malaysia and Argentina. Traders, therefore, have urged the government to allow import of oilseeds duty free to make edible oilseed available for domestic crushers which they believe would benefit two ways : promote manufacturing locally and make oilmeal available for exports. "We have lost heavily in oilmeal exports at a time when its global demand is increasing.
With growing demand from India as bird and animal feed, we will soon start importing oilmeal," said Atul Chaturvedi, chief executive officer, Adani Wilmar, producer of the Fortune brand of edible oil. India’s has lost heavily in terms of oilmeal exports due to non availability of the animal feed following lower crushing of seeds in India.
Maize shortage hits starch makers
Starch manufacturers are facing a shortage of maize, the primary ingredient, whose price has touched a record high of Rs 1,850 a quintal and is expected to move higher, in the wake of supply constraints. I K Sardana, president of the All India Starch Manufacturers Association says maize is mainly grown in the rain-fed areas of Bihar, Maharashtra, Andhra Pradesh and Karnataka. Two years of drought have curtailed supply. The price is normally around Rs 1,500 a quintal in this season and starts moving up in August. This year, low availability due to crop failure and stocking by global entities operating in India has posed a problem. According to trade estimates, the crop for the current season is 17 million tonnes, against the domestic demand of 20 mt. As there were no carryover stocks from last year, due to less production from scanty rain and lower sowing, the industry is in a tight spot. Nor is it able to revise the price of starch, as the contracts for these are signed well in advance and cannot be revised in the middle of the season.
Technical Levels.
Gold
Gold has a support at 31250 and resistance at 31600.
Two consecutive close above 31600 will take it to 32000---32200 and then to 32450+ marks in days to come.
Else it could test its support level of 31250 again. Further downside panic can be seen if weekly close below 31250 mark
Silver
Silver has support at 45500 and resistance at 46700,
Three consecutive + weekly close above 46700 will take it to 47000-47200 and then to 47500 mark in days to come else could test its support level of 45500.
Further downside panic can be seen if closes below 45500.
Fresh selling can be initiated below 45500.
Trade with levels only
Crude Oil
Crude oil has support at 3220 and resistance at 3320. Two consecutive close below 3220 will take it to 3150--3120 and then to 3025 else could test resistance level of 3320. Further upside rally can be seen if closes above 3320.
In Comex division – Support at $48.00 and resistance at $50.00, close below $48.00 will take it to $47.50--- $47.00 and then to $46.80 else could test its resistance level of $50.00.
Further upside rally can be seen if closes above $50.00.
Traders can trade with levels only
Copper
Copper has support at 330.00 and resistance at 335. Close above 335.00 will take it to 342—345+ mark in days to come else could test its support level of 330.00
Trade with levels only.
Soyabean
Soyabean has support at 3800 and resistance at 3940.
Close above 3940 will see further upside rally till 3980---4050 + mark in days to come else it could test its support level of 3800.00 again.
Fresh selling can initiate only close below 3800.00 mark Three consecutive closes + weekly close below 3800 will take to 3720---3650 mark in days to come.
Trade with levels only.
Economic Data
U.S Bank Holiday
