Gold 31282 /Silver 46390/ Crude Oil 2865/ Copper 318.40 /Soyabean 3619/
Top Gainer
CPO - Gains – 1.21% up by 6.40 pts LTP – 536.60
Mentha Oil - Gains – 0.71% up by 6.40 pts LTP – 906.50
Top Losers
Natural Gas – Losses – 4.50% down by 8.30 pts LTP – 176.10
Crude Oil – Losses – 0.90% down by 26.00 pts LTP – 2865
Commodity Round UP
Bullions
Gold stays lower after U.S. productivity data; Fed rate hike outlook weighs
Gold prices held near a one-week low in North American trade on Tuesday, after data showed U.S. nonfarm productivity declined unexpectedly in the second quarter, while unit labor costs rose more than forecast.
Gold fell to a session low of $1,336.00 a troy ounce, the weakest since July 29. It was last at $1,339.35, down $1.95, or 0.15%.
Nonfarm business sector labor productivity fell 0.5% in the second quarter, missing expectations for a gain of 0.4% and following a drop of 0.6% in the first quarter, the Labor Department said.
Unit labor costs increased by 2.0% in the three months ended June 30, above forecasts for a gain of 1.8%.
A day earlier, gold shed $3.10, or 0.23%, after the latest U.S. employment report bolstered expectations of faster economic growth and revived speculation that the Federal Reserve will raise interest rates this year.
Fed funds futures prices showed traders now see a 50% of a U.S. rate hike by December, according to CME Group's (NASDAQ:CME) Fed Watch tool. That compares with around 30% as recently as last week. September odds were at around 20%, compared to less than 10% late last week.
Gold is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 96.40 early Tuesday, recovering from levels below 95.00 just a week ago, amid resurgent expectations of a U.S. interest rate hike by the end of this year.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The yellow metal flirted with a more than two-year high above the $1,370-level less than a week ago as a string of disappointing U.S. economic data prompted market players to push back expectations for the next U.S. rate hike.
For the year, the precious metal is up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery shed 15.7 cents, or 0.79%, to trade at $19.64 a troy ounce during morning hours in New York, while copper futures lost 1.9 cents, or 0.88%, to $2.146 a pound.
Investors digested another round of Chinese economic data. The National Bureau of Statistics reported earlier that China’s consumer price index rose 1.8% in July from a year earlier, in line with forecasts and slowing from 1.9% in the preceding month.
The producer price index fell 1.7% on a year-over-year basis, compared to a decline of 2.6% in June, the agency said.
The soft figures confirmed there was scope for further policy easing if needed.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Energy
Oil seesaws as global glut pit against U.S. crude draw forecast
Oil prices were little changed on Tuesday as the market weighed forecasts for a weekly drop in U.S. crude inventories against a stubborn global petroleum glut.
The market also lost the momentum of the previous day's rebound when crude futures rose nearly 3 percent on talk that the Organization of the Petroleum Exporting Countries and other oil producers might initiate another round of talks on price cooperation.
Brent crude (LCOc1) was down 5 cents at $45.34 a barrel by 11:36 a.m. EDT (1536 GMT), after trading between $45.77 and $44.80.
U.S. West Texas Intermediate (WTI) crude rose by 8 cents to $43.10, also trading within a dollar band between $43.52 and $42.50.
"The oil market remains in a battle between the trading community which focuses in the shorter term data and information which has been mostly bearish, versus the investment trading crowd which is focused on the medium-to-longer term which is projected to be bullish," said Dominick Chirichella, senior partner at the Energy Management Institute in New York.
"Both WTI and Brent will have to move above the $50 per barrel level and remain there for the shorter-term traders to regain confidence that the market is embarking on a new up leg," Chirichella said.
The U.S. government is expected to report on Wednesday a 1.0 million-barrel crude stockpile drawdown for the week ended Aug. 5, after unexpected rises in two prior weeks, analysts polled by Reuters said. [EIA/S]
The American Petroleum Institute (API), a trade group, will issue its own report on U.S. petroleum stockpiles after Tuesday's market settlement, at 4:30 p.m. EDT (2030 GMT).
The forecast U.S. draw aside, analysts and traders have mostly cautioned of a glut building in both crude and refined oil products this summer, with U.S. gasoline demand particularly lagging supply despite the peak season for driving in the United States. OPEC's biggest producers have also been pumping near record high levels. [OPEC/O]
Speculation of market cooperation between OPEC and other producers also fizzled after disinterest shown by top producer and non-OPEC member Russia, traders said.
"The discussions are likely to prove to be nothing but empty talk, with OPEC sticking with its policy of defending its market share,"
U.S. natural gas futures fall for 4th straight session
U.S. natural gas futures fell for the fourth session in a row on Tuesday, touching a more than one-week low as forecasts for less hot weather in the days ahead dampened demand expectations for the cooling fuel.
Natural gas for delivery in September on the New York Mercantile Exchange slumped to a daily low of $2.671 per million British thermal units, a level not seen since July 28.
It was last at $2.677 by 14:30GMT, or 10:30AM ET, down 7.1 cents, or 2.58%.
On Monday, prices sank 2.4 cents, or 0.87%, as traders reacted to milder weather and the reality that higher summer demand for the commodity is coming to an end.
Demand for natural gas tends to rise in the summer months as warmer temperatures increase the need for gas-fired electricity to power air conditioning.
Meanwhile, market players looked ahead to weekly supply data due on Thursday, which is expected to show an increase in a range between 17 billion and 30 billion cubic feet of gas in the week ended August 5.
That compares with a surprise drop of 6 billion cubic feet in the preceding week, 65 billion a year earlier and a five-year average of 53 billion cubic feet.
Total U.S. natural gas storage currently stands at 3.288 trillion cubic feet, according to the U.S. Energy Information Administration, 11.8% higher than levels at this time a year ago and 14.1% above the five-year average for this time of year.
Natural gas futures have been under pressure in recent days amid speculation that August 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 hit by seasonal slowdown, dollar strength
Base metals were hit by the seasonal slowdown on Tuesday as prices drifted in recent ranges in quiet trading conditions. With much of Europe shuttered for August summer holidays just 4,500 lots of copper had changed hands on Select.
A stronger dollar index is also weighing on prices – it was last at 96.54- as it maintained gains following a strong non-farm payroll report from the US last Friday.
With the rest of the globe struggling to avoid a potential recession and lingering fears over the UK referendum, the July US non-farm employment report last Friday shattered expectations with 255,000 Americans joining the labour force – bettering the 180,000 forecast.
Meanwhile, in data today, Chinese CPI and PPI were both above expectations at a 1.8 percent increase and 1.7 percent decrease respectively.
Later there will be the US preliminary nonfarm productivity figures and preliminary unit labour costs, as well as wholesale inventory data.
Copper at $4,776 per tonne was down $24 on the Monday close. Stock moves were marginal – inventories increased a net 325 tonnes to 205,350 tonnes and cancelled warrants fell 2,300 tonnes to 50,525 tonnes.
Aluminium at $1,640 was down $3, while stocks and cancelled warrants both fell 2,925 tonnes to 2,256,400 tonnes and 943,375 tonnes respectively. Tightness in spreads has eased with cash/August last level, having been at a small backwardation yesterday.
Nickel at $10,790 was $20 higher, although stocks increased 1,926 tonnes to 371,154 tonnes, due to arrivals in Singapore. Cancelled warrants were 744 tonnes higher at 114,234 tonnes.
“Nickel tried once more to rally but ran into an as yet unexplained wall of selling at $10,850 [yesterday] which always seemed to have between 300-600 lots on offer on the Select system – which when attacked twice was always added to,” Malcolm Freeman at Kingdom Futures said.
Zinc at $2,267 was down $12, despite small pockets of tightness. Both the cash/Oct and the Aug/Sept spreads were in a backwardation at $0.10 and $0.50 respectively. The most recent warrant holding data showed there is one dominant holder across all three reported positions in the 30-39 percent bracket. Stocks were down 150 tonnes to 429,275 tonnes.
Lead at $1,789 was $2 lower, while both stocks and cancelled warrants fell 75 tonnes to 188,100 tonnes and 69,600 tonnes, respectively. Tin at $18,150 was down $150 while stocks fell 210 tonnes.
Agri commodity
China extends cotton auctions to end Sept to meet demand
China will extend auctions of its state reserve cotton for an additional month to meet strong demand from spinning mills, in a move that may ease demand for imports in the world's top textile market. The additional sales - widely anticipated by the market - were confirmed by the National Development and Reform Commission and the Ministry of Finance in a document dated Aug. 5 and posted on the China Cotton Association website on Monday. The total amount offered could also exceed the 2 million tonnes initially slated for sale, depending on demand, the document said.
Chinese warehouses held around 11 million tonnes before the sales began, or about half of global stocks. Beijing has already sold 1.7 million tonnes from its reserves since daily auctions began in May, or 98 percent of the offered volumes, as mills raced to restock after clearing out inventory ahead of the sales. (Source: Reuters)
Vanishing Chinese Cotton Acres Spark Biggest Rally Bet Since ’13
Once the world’s biggest grower of the crop, the country lost that crown to India in the season that just ended in July after depressed prices discouraged plantings. China’s sowings are set to drop again in the 12 months that started on Aug. 1, with harvested acres poised for the lowest since U.S. government data begins in 1960.
The smaller Asian crop underscores why money managers have increased their wagers on a rally for cotton futures to the highest in three years. Prices have rallied 21 percent this year, reaching a two-year high last week on signs that the global supply overhang is starting to ebb. World inventories declined last season for the first time in six years, and the reserves will fall further this year as global harvested acres slump to the lowest in three decades, the U.S. Department of Agriculture estimates. (Source: Bloomberg)
Cardamom gains aroma on short supplies
Small cardamom prices showed a firmer trend on thin arrivals at auctions held in Kerala and Tamil Nadu. Good domestic demand continued to persist at a time when the arrivals were showing a declining trend, Ranganathan, a dealer in Bodinayakannur, told Business Line.
Cardamom gains aroma on short supplies
Small cardamom prices showed a firmer trend on thin arrivals at auctions held in Kerala and Tamil Nadu. Good domestic demand continued to persist at a time when the arrivals were showing a declining trend, Ranganathan, a dealer in Bodinayakannur, told Business Line.
Good quality bulk from the new crop, which is of course at short supply, was being traded at ₹760-820 a kg, he said. At present, harvesting is taking place in a few pockets such as Kallar and Mankulam in Munnar valley which had received summer showers and thus were not affected by drought.
Whereas, harvesting in half of the main growing areas is expected to commence from August-end while picking in the rest of the areas would begin from mid-September. (Source: HBL)
Sowing of kharif crops up at 885 lakh hectares
Sowing of kharif crops in the first week of August remained on track as rains continued to be plentiful and acreage under most major crops such as rice, pulses, coarse cereals and oilseeds posted a rise compared to the previous year.
Total acreage under kharif crops till August 5 this year at 885.29 lakh hectares (lh) compared to 841.65 lh sowed in the same period last year. Cotton was the only crop where acreage declined considerably to 96.48 lh till August 5 this year compared to 105.68 lh in the same period last year. Many farmers sowing cotton switched to other crops because of last year’s damage to the Bt cotton crop by whiteflies in Punjab and Haryana. Pulse acreage continued to be high with total acreage in the period rising to 121.10 lh (89.72 lh).
Rice acreage increased to 281.95 lh (276.10 lh). Sowing of coarse cereals till August 5 rose to 163.77 lh compared to 158.66 lh in the same period of the previous year. Oilseeds acreage too gained at 167.58 lh (157.65 lh). While sugarcane sowing increased marginally from 46.87 lh to 46.11 lh in the same period last year, jute sowing edged down to 7.55 lh to 7.73 lh. (Source: HBL)
Technical Levels
Gold
Support at 31000 and Resistance at 31330.
Close below 31000 we can see downside panic till 30800—30600, else could test its resistance level of 31330 mark in days to come.
Further upside rally can be seen only above 31330 mark on closing basis
Trade with levels only
Silver
Support at 45800---45400 and Resistance at 46700
Above 46700 it can touch 47200---48000---48700 marks else could test its support level of 45800---45400 mark.
Trade with levels only
Crude oil
Hurdle at 2920 and Support at 2800
More and more upside only above 2920 mark else it could test its support level of 2800 again
Further downside panic will see only close below 2800 mark
Trade with levels only
Copper
Support at 317 and Resistance at 324
Close below 317 will take to 312---310 and then to 305 mark. Further downside panic will see only close below 305 mark else it could test its resistance level of 324 mark
Further upside rally will see only close above 324
Trade with levels only
Soyabean
Support at 3550---3480 and Resistance at 3760
If it unable to breach its support level of 3480 then we will see rally till 3680---3720---3760. Further upside rally will see only weekly close above 3760
Buy and accumulate Soyabean in panic with strict stop loss below 3480 on closing basis
Today's Data and Event
JOLTS Job Openings – 07:30 P.M
Crude Oil Inventories – 08:00 P.M
10-y Bond Auction – 10:31 P.M
Federal Budget Balance – 11:30 P.M
