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Bullions Gold Gold Guinea Gold M Gold Petal Gold Petal (New Delhi) Mild Steel Platinum Silver Silver M Silver Micro Zinc Mini Plantations Rubber Ingot,Billets Nickel Tin Zinc Metals Aluminium Aluminium Mini Copper Copper Mini Iron Ore Lead Lead Mini Energy ATF Brent Crude Oil Crude Oil Electricity Monthly & Weekly Gasoline Heating Oil Imported Thermal Coal Natural Gas Weather Carbon (CER) Carbon(CFI) Oil & Oil Seeds Crude Palm Oil Kapasia Khalli Refined Soya Oil Soya Bean Cereals Barley Wheat Maize-Feed / Industrial Grade Fiber Kapas Cotton (29mm) Others Almond Gaur Seed Melted Menthol Flakes Mentha Oil Potato (Agra) Potato (Tarkeshwar) Sugar M Spices Cardamom Coriander Turmeric Pulses Chana
Gold
Gold is the oldest precious metal known to man and for thousands of years it has been valued as a global currency, a commodity, an investment and simply an object of beauty.
Major Characteristics
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Gold (Chemical Symbol-Au) is primarily a monetary asset and partly a commodity. Gold is the world's oldest international currency. Gold is an important element of global monetary reserves. With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of highkarat jewellery.
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y
Less than one-third of gold's total accumulated holdings are used as ³commodity´ for jewellery in the western markets and industry.
Demand and Supply Scenario
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Gold demand in 2010 reached a 10-year high of 3,812.2 tonnes, worth US$150billon, as a result of;
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strong growth in jewellery demand; the revival of the Indian market; strong momentum in Chinese gold demand and a paradigm shift in the official sector, where central banks became net purchasers of gold for the first time in 21 years.
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China was the world's largest gold producer with 340.88 tonnes in 2010, followed by the United States and South Africa.
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In 2010, India was the world's largest gold consumer with an annual demand of 963 tonnes.
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The total supply of gold coming onto the market in 2010 reached 4,108 tonnes, a rise of 2% from 2009 levels.
Global Scenario
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London is the world¶s biggest clearing house. Mumbai is under India's liberalised gold regime. New York is the home of gold futures trading. Zurich is a physical turntable. Istanbul, Dubai, Singapore, and Hong Kong are doorways to important consuming regions.
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Tokyo, where TOCOM sets the mood of Japan.
Indian Scenario
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India is the largest market for gold jewellery in the world. 2010 was a record year for Indian jewellery demand; at 745.7 tonnes, annual demand was 13% above the previous peak in 1998. In local currency terms, Indian jewellery demand more than doubled
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in 2010.
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A 20% rise in the rupee price of gold combined with a 69% rise in the volume of demand, pushed up the value of gold demand by 101% to 1,342 billion. This compares with 2009 demand of 669 billon.
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The rising price of gold, particularly in the latter half of 2010, created a 'virtuous circle' of higher price expectations among Indian consumers, which fuelled purchases, thereby further driving up local prices.
Factors Influencing the Market
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Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
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Hedging interest of producers/miners. World macroeconomic factors such as the US Dollar and interest rate, and economic events. Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
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In India, gold demand is also determined to a large extent by its price level and volatility.
Measurement Weight Conversion Table To convert from Troy ounces Million ounces Grams Kilograms Tonnes Kilograms Kilograms Kilograms Troy ounces Troy ounces To Grams Tonnes Troy ounces Troy ounces Troy ounces Tolas Taels Bahts Grains Avoirdupois ounces Multiply by 31.1035 31.1035 0.0321507 32.1507 32,150.70 85.755 26.7172 68.41 480.00 1.09714
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Troy ounces Avoirdupois ounces Short tonne Penny weights Troy ounces Metric tonne 20.00 0.911458 0.9072
Purity Gold purity is measured in terms of karat and fineness: Karat: pure gold is defined as 24 karat Fineness: parts per thousand Thus, 18 karat = 18/24 of 1,000 parts = 750 fineness
Silver
Major Characteristics
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Silver (Chemical Symbol-Ag) is a brilliant grey-white metal that is soft and malleable. Silver has unique properties such as its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity.
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The main source of silver is in lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities.
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Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from countries where export is restricted. Secondary sources are price sensitive.
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Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.
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Today, silver is sought as a valuable and practical industrial commodity and as an investment.
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Silver is an important element of global monetary reserves. It is an effective portfolio diversifier.
Demand and Supply Scenario
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Silverware achieved an increase of 4.6%, owing to stock-related gains in India. Demand for coins and medals surged yet higher from 2008, rising by 20.7% to reach a new record high of 78.7 Moz (2,447 t) in 2009 on the back of strong investment demand.
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In 2009, implied net investment soared to 136.9 Moz (4,258 t), buoyed by safe haven
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concerns, which led to strong inflows into both ETFs and physical investment.
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Scrap supply continued to decrease in 2009 by almost 6% to 165.7 Moz, despite a strong recovery in prices over the year.
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Most notable increases were seen in Bolivia and Argentina (both +6.8 Moz) with by largest single decline coming from Australia (-9.4 Moz).
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Net government sales fell by just over one half to 13.7 Moz (426t) in 2009, primarily driven by lowest stock sales from Russia, coupled with the continued absence of any disposal from China and India.
Global Scenario
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Silver is predominantly traded on the London Bullion Market Association (LBMA) and COMEX in New York.
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LBMA, as the global hub of over-the-counter (OTC) trading in silver, is its main physical market. Comex is a futures and options exchange, where most fund activity is focused.
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Silver is invariably quoted in the US dollars per troy ounce.
Indian Scenario
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India's silver demand averages 2500 tonnes per year, whereas the country's production was around 206.95 tonnes in 2010.
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Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in silver bangles and coins.
Factors Influencing the Market
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Economic events such as national industrial growth, global financial crisis, recession, and inflation affect metal prices.
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Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
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Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect supply by regulating (restricting or encouraging) material flow.
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Geopolitical events involving governments or economic paradigms and armed conflict can
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cause major changes.
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A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
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Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, and overall industrial growth.
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In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in sharp contrast to most developed economies.
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In India, silver demand is also determined to a large extent by its price level and volatility.
Measurement Weight Conversion Table To convert from 1 Moz 1 Ton 1 Ton To Metric tons Troy ounces Grams Multiply by 31.103 32,511 1,000,000
Top Platinum
Platinum is the rarest of all precious metals. It has several unique chemical and physical properties that make it essential in a wide range of industrial and environmental applications. Platinum is also considered as one of the finest of all jewellery metals.
Major Characteristics
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Platinum as a pure metal is silvery-white in appearance, lustrous, ductile, and malleable. It is widely used in several industrial applications as it possesses high resistance to chemical attack, excellent high-temperature characteristics, and stable electrical properties.
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Platinum is corrosion resistant and is more precious than gold. Platinum's wear- and tarnishresistance characteristics are well suited for making fine jewelry.
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Platinum is traded as a commodity with prices determined by market forces. It is also a widely sought after investment avenue in recent years. However, it is not widely treated as a
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monetary base like gold
Global Supply Demand Scenario
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The supply of platinum is met by mine production, auto catalyst refining and jewellery refining with their respective contribution estimated to be 6.15 million ounces, 1 million ounce and 0.9 million ounce in 2008.
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The annual production of platinum has averaged around 6.2 million ounces (193 tonnes) in the previous three years from 2006 with more than 90% of the production coming from South Africa (76%) and Russia. The other producers are United States of America, Canada and Zimbabwe.
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The production of platinum is highly dependent on South Africa's production with 2009 output from South Africa, Russia, USA and Zimbabwe estimated to be 4.7 million ouces, 0.74, 0.25 and 0.33 million ounces respectively.
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The platinum mining industry is very capital intensive and it is reported that approximately 10 tonnes of raw ore has to be mined to produce just one pure ounce of platinum.
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Unlike other precious metals like gold and silver, there are no large above-ground platinum stockpiles to protect against significant supply disruptions. Some estimates predict that existing above ground reserves would last only for a year, if platinum mining was suddenly stopped.
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The demand for platinum mainly comes from auto catalyst, jewellery, other industrial application and investment. The other industries uses platinum are electronics, glass and petroleum industry.
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The total global demand for this rare metal is reported to be around 7.79 million ounces in 2008, with consumption by auto catalyst (used in automobiles), jewellery, investment and other industrial applications estimated to be around 3.8, 1.6, 0.45 and 1.9 million ounces respectively.
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North America, Europe, China and Japan are the most important economies accounting for majority of the global platinum consumption.
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World Gold Markets The London Platinum and Palladium Market (LPPM), which provides the industry benchmark price µLondon fix¶ Derivative exchanges at New York ± CME (COMEX), TOCOM (Japan), MCX (Mumbai)
Indian Platinum Market
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India's appetite for platinum has been steadily increasing in recent years on account of the country's economic progress leading to rising industrial demand and increasing preference for platinum jewellery in urban areas.
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India's consumption of platinum in 2008-09 is estimated to be around 932 kgs, which is expected to rise to around 1200 kgs in 2009-10.
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The approximate consumption by various sectors in India is estimated to be automobile (55%), petrochemicals (25%), jewellery (15%) and electronics & dental (5%).
Market Moving Factors
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Indian platinum prices are highly correlated with international prices. However, the fluctuations in the INR-US Dollar impact domestic platinum prices and have to be closely followed.
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The global prices are driven by a host of factors with macro-economic factors like strength of the global economy, currency movements, interest rates, rising importance of emerging markets being major influencing factors.
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Economic situation in major consuming countries like USA, Europe, Japan and China influence consumption on account to its high demand from industrial sectors, especially automobiles.
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Platinum production is highly skewed with just four mines and two countries producing almost 90% of the total annual production. Prices are influenced profoundly by production disruptions, policies taken in producing countries. The influence of this factor is enhanced by the absence of any significant global stocks of platinum in the world, unlike that of gold and silver. Additionally, platinum mining is a very capital intensive industry, which discourages entry of new players.
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Any change in global stocks, of which a major portion is present in Russia do influence prices.
Multi Commodity Exchange - products
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The price movement in other precious metals, especially gold is a major influencing factor.
Measurement Weight Conversion Table To Convert from Troy Ounce Troy Ounce Million Troy Ounce Kilograms Tonnes To Grams Kilograms Tonnes Troy Ounce Troy Ounce Multiply by 31.1035 0.0311035 31.1035 32.1507 32150.7
Crude Palm Oil
Palm oil is obtained from fresh fruit bunches (FFB) of oil palm cultivated in plantations. There are several commercial variants of palm oil available viz., Crude Palmoil, Crude Palmolein, RBD (Refined Bleached Deoderised) Palmoil, RBD Palmolien and Palm Kernel Oil. Crude Palmoil when subjected to refining results in the other factions.
Global Scenario
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Palmoil with an annual production of 25-27 million tons is second most produced oil in the world.
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Malaysia (13 million tons) and Indonesia (10 million tons) are the major producers. They together account for 85% of production.
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Around 80% (21-23 million tons) of global production is exported. Malaysia and Indonesia with 12-12.5 and 6-7 million tons respectively are major exporters.
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India, China and EU are the major importers. Price competitiveness has been reason for increased consumption of this oil.
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Important World Palmoil Markets
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Bursa Malaysian Derivatives (BMD) is the largest futures market for crude palmoil. Malaysian & Indonesian FOB prices set the mood in the physical market.
Indian Scenario
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India imports roughly 2.5-3.5 million tons of palmoil and its variants a year. The domestic production is very meager at 0.5 lakh tons.
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India imposes 65% duty on crude oil and 75% (imposed in 2003-04 Union Budget) on RBD Palmoil. The import ratio is highly dependent on the duty imposed.
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In addition to the customs duty, Government of India also imposes tariff value, on which the customs duty is calculated irrespective of the actual price at which the oil is imported.
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In 2002-03 India imported 21.5 lakh tons of crude palmoil and 3.15 lakh tons of RBD Palmoil. However, in 2003-04 till July from November '03 India has imported 13.7 lakh tons of crude palmoil and 4.8 lakh tons of RBD Palmoil.
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Kandla, Mumbai, Kakinada are the major ports for palmoil entry to India and the major trading points too.
India In World Palmoil Industry (Rounded figs.) India World % Share (In million Tons) Annual Oil Production Annual Oil Imports Annual Oil Consumption 0.05 3 3 26 22 26 0.2 13.6 11.5
Factors influencing Palmoil Prices
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The supply demand and price scenario of competitive oils, viz., soyoil. The supply-demand scenario of all oils and oilseeds in the consuming centers, viz., Inda, China and EU. This in turn is manifested as imports from these countries.
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The palmoil production cycle: April - December is peak production period. Import regulations imposed in the importing countries.
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Kapasia Khalli (Cottonseed Oilcake)
General Characteristics
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Kapaskhalli (cottonseed extraction/meal) is a byproduct of the cottonseed industry. Cottonseed is a by-product of the cotton plant, which is primarily grown for its fibre. Although cotton has been grown for its fiber for several thousand years, the use of cottonseed on a commercial scale is of relatively recent origin.
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Cottonseed was a raw agricultural product, which was once largely wasted. Now it is being converted into food for people; feed for livestock; fertilizer and mulch for plants; fiber for furniture padding; and cellulose for a wide range of products from explosives to computer chip boards.
Global Scenario
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Annually around 15 - 16.5 million tons of cottonseed meal is produced globally. Globally, the oil content of cottonseed is 18%, and the remaining portion is the cottonseed meal.
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Most of the production of cottonseed meal is consumed in the country of production itself, limiting the global trade to just 5-6 lakh tons a year.
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China (1-1.2 lakh tons) is the single largest exporter, while Europe (2 lakh tons), South Korea (1-1.5 lakh tons) are the largest importers of cottonseed meal.
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Cottonseed is the second most commonly produced oilseed in the world just slightly ahead of soy. However, in 2003-04 rapeseed/mustard has marginally overtaken this seed.
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The global production of cottonseed is around 35 million tons in the recent years. The major producers of cotton are also the major producers of cottonseed. China, USA, India, Pakistan, Uzbekistan and Brazil are the major producers globally.
Indian Scenario
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Cottonseed is a traditional oilseed of India. It is estimated that cottonseed production will be around 33% of the cotton production in bales. Around 80% of the seed is marketable surplus and arrives in the market for being crushed to oil. The remaining is used as seed is fed to cattle.
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India's cotton output and along with it the cottonseed, meal and oil output varies considerably from year to year in response to the vagaries of weather and pest attacks.
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y
India's cottonseed production in 2002-03 and 2003-04 is estimated at 36.3 and 43.4 lakh tons respectively.
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India produces around 2 million tons of cottonseed meal a year. The protein content of the scientifically produced meal is 40-42% against 20-22% in the traditionally processed meal. The cattlefeed manufacturers prefer this meal as it contains lesser amount of gossypol, which if consumed in larger amounts is a poison for cattle.
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However, in India mainly undecorticated meal is largely produced. Several associations are promoting the production of decorticated cake in India and the production of this is expected to increase in the country.
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India used to be a major exporter of cottonseed extraction around two decades ago. However, the demand for other oil meals like soymeal, has lowered the cottonseed demand globally. In addition, the low availability of decorticated meal in India has also been a major reason for the fall in exports.
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The major importers of Indian cottonseed meal (undecorticated) used to be Thailand. India in 2002-03 exported only 50 tons of decorticated cottonseed meal. In 2003-04, too there have been no significant exports. India does not import cottonseed meal.
Major Trading centres Akola, Parbhani, Nagpur, Yeotmal are the major trading centers where cottonseed from the cotton procured by the Maharashtra State Cooperative Cotton Growers Marketing Federation is auctioned off.
Trade Scenario
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Cottonseed is sold through weekly auctions in Maharashtra. In other states, there is an active cash market in the season. Cottonseed arrives in the market as a by-product of ginning operation carried on cotton. It is sold off immediately.
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The industry is largely un-organised, though several associations have been trying for the upliftment of the industry and scientific processing practices.
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The prices of oil and meal display good volatility, with it falling during the peak arrival period (October - January. The prices of meal are dependent on the prices of other commercially important oils like soymeal.
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Daily Variation in Undecorticated Cottonseed Meal Prices at Mumbai (2003-04) Variation in % In % <1 76.28 1-3 21.53 >3 2.19
Markets Influencing Factors
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Variations in cotton production and its effect on cottonseed, meal and oil production in the country.
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The arrival of cottonseed for crushing from the ginning centres of the country. Comparative price with other oilseeds, oil and meal in the domestic market. The demand from the cattle-feed industry, which is the major consumer of cottonseed mea.
Refined Soya Oil
General Characteristics
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Soybeans on crushing and solvent extraction yield soyoil at 18% recovery and soymeal. About 85% is crushed worldwide.
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Soybean and soyoil production of 170-185 and 25-31 million tons account for 55-58% and 25-30% of global oilseed and oil production respectively.
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US, Brazil, Argentina, China, India are the major producers in order of production. In US, India, China crop starts arriving from Aug-Sept, while it starts from Jan-Feb in S. America.
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In the world 55-60, 8-10 and 42-45 million tons of beans, oil and meal are traded annually. USA (20-30 million tons), Brazil (12-18 million tons), Argentina (5-10 million tons) are the exporters of beans, while China (18-20 million tons) and EU (15-18 million tons) are the major importers.
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Argentina (3-5 million tons) and Brazil (2-3 million tons) are the major exporters of oil. China (1.5-2.5 million tons) and India (1-2 million tons) are the major importers of oil.
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Crushers, refined oil manufacturers, animal feed manufacturers and farmers are the major stakeholders in the soy value chain worldwide.
Important World Soy Markets
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Chicago (CBOT), largest soy futures market China, where beans and meal are traded at Dalian Commodity Exchange
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y
Argentina and Brazil FOB determine the physical prices
Indian Scenario
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India produces 5-7 million tons of beans, 1 million ton of oil and 3-5 million tons of soymeal in a normal year.
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With imports, the total oil availability in the country is around 2.5 million tons. Madhya Pradesh (3.5-4.5 million tons), Maharashtra, Rajasthan are the major producers of soybean in India.
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The production is highly dependent on the monsoon and fluctuates between years. Soy is a Kharif crop, sown in June-July and harvested by September-October. Peak arrivals are from October-November.
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The prices follow the international sentiments and display very high volatility.
India In World Soy Industry (Rounded figs.) India World % Share
(In million tons) Annual Seed Production Annual Oil Production Annual Oil Imports Annual Oil Consumption Annual Meal Production Annual Meal Exports Annual Meal Consumption 6 1 1.5 2.5 3.5 2.5 1 180 30 9 30 130 43 130 3 3.3 16.7 8.3 3.5 5.8 0.7
Daily Price Volatility of Refined Soyoil in India Daily Volatility in %< % Occurrence <1 81.95 1-3 17.69 >3 0.36
Maximum Daily Variation in 2003-04 = 3.8%
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Major Trading Centres Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Nagpur in Maharashtra, Kota in Rajasthan are major trading centres.
Market Influencing Factors
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Weather at all the producing centers, domestic and international. The pod bearing period, being the most crucial.
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The area planted, determined by the price of soybean against that of competitive crops, viz., maize, jowar, bajra.
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International price movement, the futures market at CBOT being the major international reference market.
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Pests and diseases. The supply-demand and price scenario of competitive oils, viz., palmoil. Demand for soymeal from the feed sector and the entire fundamentals of this sector. The crush margin between meal, oil and seed
Soyabean
General Characteristics
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Soybean is an important global crop and processed soybean is the largest source of protein feed and second largest source of vegetable oil in the world.
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The major portion of the global and domestic crop is solvent-extracted with hexane to yield soy oil and obtain soymeal, which is widely used in the animal feed industry. It is estimated that above 85% of the output is crushed worldwide.
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Though, a very small proportion of the crop is consumed directly by humans, soybean products appear in a large variety of processed foods.
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The cultivation of soybean is successful in climates with hot summers, with temperatures between 20°C to 30°C being optimum. Temperatures below 20°C and over 40°C are found to retard growth significantly.
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It can grow in a wide range of soils, with optimum growth in moist alluvial soils with a good organic content.
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Modern soybean varieties generally reach a height of around 1 m (3 ft), and take 80-120 days from sowing to harvesting.
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Global Scenario
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The annual global soybean production has been in the range of 210-230 million tonnes in the recent years, accounting for 55-58% of total global oilseed output of around 390-400 million tonnes.
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US, Brazil, Argentina, China and India are the major producers in order of production with production in these countries ranging around 70-80, 55-60, 32-48, 14-16 and 8-10 million tonnes in the recent couple of years.
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Weather, acreage under other competitive crops like corn, cotton and pests & diseases are the major factors influencing production.
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While in US, India and China crop starts arriving from Aug-Sept, it starts from Jan-Feb in S. America.
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The annual global trade in soybean is estimated to be around 70-80 million tonnes. While, USA (30 -35 million tonnes), Brazil (23-28 million tonnes), Argentina (5-15 million tonnes) are the exporters of beans, China (35-40 million tonnes) and EU (12-16 million tonnes) are the major importers.
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In addition to soybean, soy oil and soymeal are also widely traded globally with annual trade of around 9 million tonnes and 52 million tonnes respectively. While, US is the largest exporters for soybeans, Argentina is the largest exporter of soy oil and soy meal globally.
Important World Soy Markets
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Chicago Mercantile Exchange, which acquired Chicago Board of Trade - the world's oldest soy futures market
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Dalian Commodity Exchange - trades the most liquid soybean contracts in the world Argentina and Brazil FOB determine the physical prices
India in World Soy Industry (Rounded figs.) Global India % Share
(In million tons) Soybean Production Soybean Trade Soy Oil Production 230 75 35 9 0 1.5 4 0 4
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Soy Oil Imports Soy Oil Exports Soy Meal Production Soy Meal Exports Soy Meal Imports 9 9 150 52 52 1 0 7 3.5 0 11 0 5 7 0
Indian Scenario
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India's annual production of soybean has been around 8.5-10 million tonnes in the recent years with India's production in 2009-10 estimated to be around 8.9 million tonnes by the Government of India.
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The acreage under this crop has more than doubled in the past two decades to around 11 million hectares currently being sown under this crop, with better returns encouraging more farmers to adopt this new crop.
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Madhya Pradesh, Maharashtra, Rajasthan and Andhra Pradesh are the major cultivators of this important oilseed, with their respective contributions usually around 60%, 25%, 6-7% and 1-2%.
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Soybean is exclusively grown in the khariff season in India, with sowing taking place after the first monsoon showers in late June or early July. Sowing can extend upto end of July in different parts of the country.
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The harvesting commences from September, with Maharashtra reporting the earliest arrivals. October and November are the peak arrival months, with all-India arrivals crossing 10 lakh bags of approximately 90 kg on the peak arrival days.
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The production is dependent on the monsoon and fluctuates between years. India is highly dependent on imports to meet domestic edible oil requirement. Government policies are in favour of developing the domestic crushing industry and supporting Indian farmers and do not promote import or export of soybean. Thus, there is virtually no import or export of soybeans.
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However, India out of its total soymeal production of around 6.5-7 million tonnes, exports around 3.5 million tonnes with Vietnam, Japan, Thailand, Indonesia, UAE, Greece being the major importers.
Major Trading Centres
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Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Akola, Sangli, Nagpur in Maharashtra, Kota in Rajasthan are major trading centres.
Market Influencing Factors
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Domestic prices are highly influenced by the global price movements, with prices highly correlated with the CME prices.
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Fundamentally, weather at all producing centers, domestic and international is the most crucial factor, with the pod bearing period, being the most crucial.
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United States Department of Agriculture makes progressive assessment of crops, stocks, global supply and demand and releases regular reports, which are widely looked upon by the global market to determine prices.
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The other major influencing factor is the prices of soy oil and soymeal, which are in-turn dependent on the fundamentals of global edible oil and global animal feed industry.
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Locally, prices are influenced by currency fluctuations, weather, acreage, pest & diseases, production estimates by industry associations, Government agencies.
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India imports more than 60% of its entire edible oil requirement and the entire edible oilseed and oil sector is a highly sensitive sector. Thus, new Government policies and apprehensions about new policies have a strong sway over prices, during periods when new announcements are made or are about to be made.
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The supply-demand and price scenario of competitive oils, viz., palmoil. The crush margin between meal, oil and seed
Barley
General Characteristics
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Barley (Hordeum vulgare L.) (Hindi name: Jau), a cereal grain derived from an annual grass is the fourth most important cereal crop in the world after rice, wheat and maize.
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Barley is very adaptable and is a widely grown crop. It is cultivated as a summer crop in temperate areas and as a winter crop in tropical areas. Barley has a short growing season and is also relatively drought tolerant. However, it is a tender grain and care has to be taken in all stages of its growth and harvest.
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Barley is used as livestock feed, human food and barley malt. While, historically, livestock consumed most of barley produced globally, this is no more the case now. Currently food
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and industrial consumption of barley is more prominent.
y
Barley along with corn/maize, sorghum (jowar), oats, pearl millet (bajra), finger millet (ragi) and other minor millets are grouped together as coarse cereals.
Global Scenario
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The annual global barley production has been in the range of 130-140 million tonnes in the recent years. However, in 2008-09 it is estimated to have risen sharply to 158 million tonnes. The total average production of all coarse cereals in the recent years has been around 1000 million tonnes.
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European Union, Russia, Ukraine, Canada, Australia, Turkey and USA are the major producers of barley accounting for around 75% of the total global production, with average production in these regions being around 55, 18, 10, 10, 6, 6, 4-5 million tonnes respectively in the recent years.
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Following corn, barley is the second largest coarse cereal traded globally. The global trade in barley is reported to be around 17-18 million tonnes, with Ukraine (4-5 million tonnes), Russia (2-3 million tonnes), Australia (2-3) and EU-27 (2-3 million tonnes) being the major global exporters.
y
The major importing nations are Saudi Arabia (6-8 million tonnes), China (1-1.5 million tonnes) and Japan (1-1.5 million tonnes. While, Saudi Arabia imports barley mainly for feed, Japan and China import it for both feed and malt production
y
The global malt production is estimated to be around 22 million tonnes, more than 90% of which is produced from barley. It is estimated that around 94% of global malt production is used for making beer. The EU accounts for approximately 42% of the world's malt production.
Indian Scenario
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Barley is cultivated as a rabi crop in India, with sowing being undertaken from October to December and harvesting from March to May. .
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India's annual production of Barley has been steadily around 1.2-1.5 million tonnes in the recent years, with production in 2008-09 estimated to be around 1.54 million tonnes. The area under cultivation has also stabilized at around 0.7-0.8 lakh hectares, with a per hectare yield of around 1944 kg.
Multi Commodity Exchange - products
y
Latest state wise data available is that of 2005-06 from the Ministry of Agriculture. But it gives a fair picture of land use for the crop of barley. The major producers of Barley in the country are Rajasthan (40%), Uttar Pradesh (34%), Madhya Pradesh (8%), Haryana (6%) and Punjab (5%). Some cultivation is also undertaken in Bihar, Himachal Pradesh, and Uttaranchal.
y
In addition, to direct human consumption barley is utilized by the beer industry, food processing industry and feed manufacturing industry in India. Annual demand from beer and feed industry is estimated to be around 60,000 tonnes and 25,000 tonnes respectively.
y
However, rising demand for beer among India's urban young consumers is leading to increased demand for barley malt from Indian beer manufacturing units. The country's beer consumption in volume terms is projected to grow by almost 51% percent between 2006 and 2011. During 2001-06, it is estimated to have grown by around 45% to over 907 million litres.
y
India's barley production is projected to increase to around 2 million tonnes in a couple of years to meet the rising demand for barley malt.
Major Indian Trading Centres The major markets are located in Rajasthan and Madhya Pradesh. The three largest markets are Kota, Ramganj Mandi and Baran in Rajasthan
Market Influencing Factors
y
Rising industrial demand is the main influencing factor in the Indian markets currently. While, demand from feed sector is more or less constant, demand from beer and food processing sectors are picking up.
y
The price of other coarse cereals influences the demand from the feed sector and in-turn influences barley prices.
y
Easier proximity to Middle-east countries has increased the export demand. The amount of exports undertaken influences prices significantly. It was the high export in 2007-8 and 2008-9 that resulted in the prices of Barley zooming to the high of almost 1300 in March 2008.
y
The reports of rising beer consumption in India is leading to major global barley / barley malt producers eyeing India as a probable buyer in the coming years. Currently, India does not import barley. Picking up of imports can alter the current Indian supply-demand
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dynamics and become a major price influencing factor.
y
The Government announces Minimum Support Price (MSP) for barley. However, Government procurement has been rarely undertaken, as there is no surplus production in the country.
Maize-Feed / Industrial Grade
General Characteristics
y
Maize (Corn), is of American origin, and after wheat and rice, it is the most important cereal grain in the world.
y y
It provides nutrition to both humans (33.3%) and animals (66.6 %). Serves as basic raw material for the production of starch, oil and protein, alcoholic beverages, food sweeteners and more recently fuel.
y
Special crops grown primarily for food include sweet corn and popcorn, although dent, starchy or floury and flint maize are also widely used as food. Flint maize is also used as feed. Immature ordinary corn on the cob either boiled or roasted is widely consumed.
Global Scenario
y
World corn production in the year 2003 was 614.3 million tons while in year 2004 total world corn production is expected to be 642.6 million tons.
y
Major producing countries are United States, China, EU-25, Brazil, Mexico, Argentina and India. These countries accounts for around 80 % of total world corn production.
y y
Major consuming nations of corn are China and USA. There has been continuous increase in the consumption demand of corn mainly owing to increase in the demand from meat and starch sector. There is growing requirement of maize from poultry sector, which uses corn as feed.
y
Major importing nations of maize are Japan, Korea, Taiwan, Mexico, Egypt, Malaysia, EU and Colombia.
y
Among the major exporters of corn, USA stands first followed by Argentina and Brazil. China, South Africa, Ukraine are minor exporters, their share is very low. Only USA dominates the international trade of corn as an exporter.
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Indian Scenario
y
India's maize production fluctuates between 10-14 million tons, with 80-90% of the production being in the kharif season.
y
Major states that contribute in Maize productions are Karnataka, Andhra Pradesh, Bihar, Punjab, Uttar Pradesh and Madhya Pradesh.
y
Around 6.5 million tons (roughly 50 % of total consumption) goes for feed use, primarily for poultry feed. Another 1 million tons of corn is used by the starch industry.
y
India is traditionally a maize importer, and Govt. permits a fixed quantity (determined each year) to be imported at 15%. Extra has to be imported at 50%.
y
However, in 2003-04, India exported around 3-5 lakh tons of maize, mainly to Southeast Asian countries.
y
Rising household incomes have shifted human consumption from maize to other cereals like rice and wheat. The rising incomes have also led to an increased consumption of meat, particularly of poultry, which has increased the demand for maize as feed.
Factors that Affects Rice/Wheat/Maize Prices
y
Role of weather in crop production is immense. Temperature, rainfall and soil moisture are the important parameters that determine the crop condition. Further, natural calamities like typhoon, floods, droughts and earthquake can also affect crops. Markets keep watch of these developments.
y
Changes in the minimum support prices (MSP) by the government also have immense impact on the prices of the commodity.
y
Availability of substitute products at cheaper rate may lead to weakness in demand. This situation happens especially when the main products price tends to become higher. For e.g., jowar/ bajra may be preferred by poultry feed manufacturers instead of maize, if its prices are high.
y
Seasonal cycles are present in agriculture crops, particularly in short duration annual crops. Price tends to be lower as harvesting progresses and produce starts coming into the market. At the time of sowing and before harvesting price tends to rise in view of tight supply situation.
y
Breakthrough in the technology may increase the productivity and would lead to more supply. This may bring some softness in the price. Wheat
General Characteristics
Multi Commodity Exchange - products
y
Wheat is one of the world's three most important cereal crops along with maize and rice. It is reported to be grown domestically from atleast as early as 9000 BC and is now grown in almost all parts of the world.
y
Wheat is a globally important source of dietary carbohydrate (starch) and protein (gluten). Its grain is a staple food used to make flour for leavened, flat and steamed breads, biscuits, cookies, cakes, breakfast cereal, pasta, noodles etc and for fermentation to make beer, alcohol, vodka, or biofuel. It is also used for feeding animals to a limited extent.
y
Different varieties of wheat are grown across the world. The three principal types of wheat used in modern food production are: Triticum vulgare (soft wheat), Triticum durum (hard wheat) and Triticum compactum
Global Scenario
y
The annual global wheat production has been in the range of 600-630 tonnes in the recent years. However, in 2008-09 it is estimated to have risen sharply to 689 million tonnes. The combined production of all cereals in 2008-09 is estimated to be 2525 million tonnes.
y
EU-27, China, India, USA and Russia are the five major producers of wheat accounting for close to 70% of the total global production, with 2008-09 production in these regions being 151, 112.5, 78.6, 68 and 63.8 million tonnes respectively.
y
Wheat is the most important cereal traded in the world market. The global trade in wheat during 2008-09 was sharply up at around 140 million tonnes in 2008-09 from an average of around 110 - 115 million tonnes in the recent previous years.
y
While US (25 - 35 million tonnes), EU-27 (15-25 million tonnes), Canada (15-20 million tonnes), Australia (8-18 million tonnes) and Argentina (6 - 12 million tonnes) are major exporters, there are a large number of countries importing wheat with maximum demand emanating from developing nations. The major importing regions are Middle-east Asia, South-east Asia and North-west Africa. Egypt, Brazil, Indonesia, Algeria are the most important importing nations.
y
Wheat crops around the world have their own unique production cycles of planting and harvest timeframes.
Important World Wheat Markets
y
Derivatives exchanges - Chicago Mercantile Exchange, which acquired Chicago Board of
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Trade, Kansas City Board of Trade, Zhenghzhou Commodity Exchange, South African Futures Exchange, MCX, NCDEX
y
US FOB and EU (France) FOB prices determine the physical prices
Indian Scenario
y
India has the largest area in the world under wheat cultivation. However, due to low productivity it is only the third largest producer after EU-27 and China.
y
India's annual production of wheat has been around 75-79 million tonnes from 2006-07, with production in 2008-09 estimated to be around 78.6 million tonnes. Wheat accounts for around 30-35% of India's total foodgrain production of around 220 million tonnes. India's annual wheat consumption is estimated to be around 72 million tonnes currently.
y
Green revolution and increased focus by Government on wheat has helped wheat production to surge sharply from around 6 million tonnes at time of independence to current levels. Close to 90% of the area under wheat is irrigated, which too has supported the rise in output over the years.
y
Uttar Pradesh (34%), Punjab (20%), Haryana (13%), Rajasthan (10%) and Madhya Pradesh (10%) are the main wheat producing states of India.
y
Wheat is cultivated as a rabi crop in India, with sowing being undertaken from October to December and harvesting from March to May. The official marketing season of wheat in India is assumed to commence from April.
y
Government plays a major role in the wheat value chain in India as the cereal is very important for the country's food security. The Central Govt. sets the Minimum Support Price (MSP) every year, which sets the mood for the upcoming season. As govt. agencies have been recently procuring close to 25-30% of annual production, open market prices too do not generally fall below this price. Historically, the procurement has been around 15-20%.
y
The procured wheat is used to maintain a minimum buffer stock for meeting unforeseen exigencies, for providing foodgrains required for Public Distribution System (PDS) and the other foodgrain based welfare programmes of the Government. In addition, the grain is also sold at pre-determined prices to the open market.
y
Though, India is not a major player in global markets India has resorted to imports, whenever there is a supply tightness. India has also exported around 5 million tonnes of wheat in 2003-04. Govt. agencies take the decision to bring in imports and the current
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policies are not in favour of exports.
Market Influencing Factors
y
Wheat is an annual, seasonal crop and prices usually tend to rise during the cultivation period, i.e. December to March due to scarcity in the market and dip during the peak arrival period (April and May).
y
Weather has a profound influence on production, especially in Haryana and Punjab as temperature plays a crucial role in determining the yield.
y
The Govt. policies with regard to MSP, buffer stocks, PDS sales, Open Market Sales, imports / exports are very important influencing factor with regards to Indian wheat prices.
y
Despite international trade being limited, the several variations in production or consumption at various major or minor producing or consuming country, which influence global prices, are reflected in the domestic long-term price trend. However, in the short-term normally there is no significant relation with international prices.
y
Several international agencies like US Dept. of Agriculture, International Grains Council, Food and Agricultural Organisation release regular, periodic reports on global supplydemand situation, which is widely looked upon by the global players.
doc_460853506.docx
Bullions Gold Gold Guinea Gold M Gold Petal Gold Petal (New Delhi) Mild Steel Platinum Silver Silver M Silver Micro Zinc Mini Plantations Rubber Ingot,Billets Nickel Tin Zinc Metals Aluminium Aluminium Mini Copper Copper Mini Iron Ore Lead Lead Mini Energy ATF Brent Crude Oil Crude Oil Electricity Monthly & Weekly Gasoline Heating Oil Imported Thermal Coal Natural Gas Weather Carbon (CER) Carbon(CFI) Oil & Oil Seeds Crude Palm Oil Kapasia Khalli Refined Soya Oil Soya Bean Cereals Barley Wheat Maize-Feed / Industrial Grade Fiber Kapas Cotton (29mm) Others Almond Gaur Seed Melted Menthol Flakes Mentha Oil Potato (Agra) Potato (Tarkeshwar) Sugar M Spices Cardamom Coriander Turmeric Pulses Chana
Gold
Gold is the oldest precious metal known to man and for thousands of years it has been valued as a global currency, a commodity, an investment and simply an object of beauty.
Major Characteristics
y y y y
Gold (Chemical Symbol-Au) is primarily a monetary asset and partly a commodity. Gold is the world's oldest international currency. Gold is an important element of global monetary reserves. With regards to investment value, more than two-thirds of gold's total accumulated holdings is with central banks' reserves, private players, and held in the form of highkarat jewellery.
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y
Less than one-third of gold's total accumulated holdings are used as ³commodity´ for jewellery in the western markets and industry.
Demand and Supply Scenario
y
Gold demand in 2010 reached a 10-year high of 3,812.2 tonnes, worth US$150billon, as a result of;
y y y y
strong growth in jewellery demand; the revival of the Indian market; strong momentum in Chinese gold demand and a paradigm shift in the official sector, where central banks became net purchasers of gold for the first time in 21 years.
y
China was the world's largest gold producer with 340.88 tonnes in 2010, followed by the United States and South Africa.
y
In 2010, India was the world's largest gold consumer with an annual demand of 963 tonnes.
y
The total supply of gold coming onto the market in 2010 reached 4,108 tonnes, a rise of 2% from 2009 levels.
Global Scenario
y y y y y
London is the world¶s biggest clearing house. Mumbai is under India's liberalised gold regime. New York is the home of gold futures trading. Zurich is a physical turntable. Istanbul, Dubai, Singapore, and Hong Kong are doorways to important consuming regions.
y
Tokyo, where TOCOM sets the mood of Japan.
Indian Scenario
y
India is the largest market for gold jewellery in the world. 2010 was a record year for Indian jewellery demand; at 745.7 tonnes, annual demand was 13% above the previous peak in 1998. In local currency terms, Indian jewellery demand more than doubled
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in 2010.
y
A 20% rise in the rupee price of gold combined with a 69% rise in the volume of demand, pushed up the value of gold demand by 101% to 1,342 billion. This compares with 2009 demand of 669 billon.
y
The rising price of gold, particularly in the latter half of 2010, created a 'virtuous circle' of higher price expectations among Indian consumers, which fuelled purchases, thereby further driving up local prices.
Factors Influencing the Market
y
Above ground supply of gold from central bank's sale, reclaimed scrap, and official gold loans.
y y y
Hedging interest of producers/miners. World macroeconomic factors such as the US Dollar and interest rate, and economic events. Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
y
In India, gold demand is also determined to a large extent by its price level and volatility.
Measurement Weight Conversion Table To convert from Troy ounces Million ounces Grams Kilograms Tonnes Kilograms Kilograms Kilograms Troy ounces Troy ounces To Grams Tonnes Troy ounces Troy ounces Troy ounces Tolas Taels Bahts Grains Avoirdupois ounces Multiply by 31.1035 31.1035 0.0321507 32.1507 32,150.70 85.755 26.7172 68.41 480.00 1.09714
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Troy ounces Avoirdupois ounces Short tonne Penny weights Troy ounces Metric tonne 20.00 0.911458 0.9072
Purity Gold purity is measured in terms of karat and fineness: Karat: pure gold is defined as 24 karat Fineness: parts per thousand Thus, 18 karat = 18/24 of 1,000 parts = 750 fineness
Silver
Major Characteristics
y y
Silver (Chemical Symbol-Ag) is a brilliant grey-white metal that is soft and malleable. Silver has unique properties such as its strength, malleability, ductility, electrical and thermal conductivity, sensitivity, high reflectance of light, and reactivity.
y
The main source of silver is in lead ore, although it can also be found associated with copper, zinc and gold and produced as a by-product of base metal mining activities.
y
Secondary silver sources include coin melt, scrap recovery, and dis-hoarding from countries where export is restricted. Secondary sources are price sensitive.
y
Silver is unique amongst metals due to the fact that it can be classified as both a precious metal and an industrial metal.
y
Today, silver is sought as a valuable and practical industrial commodity and as an investment.
y y
Silver is an important element of global monetary reserves. It is an effective portfolio diversifier.
Demand and Supply Scenario
y y
Silverware achieved an increase of 4.6%, owing to stock-related gains in India. Demand for coins and medals surged yet higher from 2008, rising by 20.7% to reach a new record high of 78.7 Moz (2,447 t) in 2009 on the back of strong investment demand.
y
In 2009, implied net investment soared to 136.9 Moz (4,258 t), buoyed by safe haven
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concerns, which led to strong inflows into both ETFs and physical investment.
y
Scrap supply continued to decrease in 2009 by almost 6% to 165.7 Moz, despite a strong recovery in prices over the year.
y
Most notable increases were seen in Bolivia and Argentina (both +6.8 Moz) with by largest single decline coming from Australia (-9.4 Moz).
y
Net government sales fell by just over one half to 13.7 Moz (426t) in 2009, primarily driven by lowest stock sales from Russia, coupled with the continued absence of any disposal from China and India.
Global Scenario
y
Silver is predominantly traded on the London Bullion Market Association (LBMA) and COMEX in New York.
y
LBMA, as the global hub of over-the-counter (OTC) trading in silver, is its main physical market. Comex is a futures and options exchange, where most fund activity is focused.
y
Silver is invariably quoted in the US dollars per troy ounce.
Indian Scenario
y
India's silver demand averages 2500 tonnes per year, whereas the country's production was around 206.95 tonnes in 2010.
y
Nearly 60% of India's silver demand comes from farmers and rural India, who store their savings in silver bangles and coins.
Factors Influencing the Market
y
Economic events such as national industrial growth, global financial crisis, recession, and inflation affect metal prices.
y
Commodity-specific events such as the construction of new production facilities or processes, unexpected mine or plant closures, or industry restructuring, all affect metal prices.
y
Governments set trade policy (implementation or suspension of taxes, penalties, and quotas) that affect supply by regulating (restricting or encouraging) material flow.
y
Geopolitical events involving governments or economic paradigms and armed conflict can
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cause major changes.
y
A faster growth in demand against supply often leads to a drop in stocks with the government and investors.
y
Silver demand is underpinned by the demand from jewellery and silverware, industrial applications, and overall industrial growth.
y
In India, the real industrial demand occupies a small share in the total industrial demand of silver. This is in sharp contrast to most developed economies.
y
In India, silver demand is also determined to a large extent by its price level and volatility.
Measurement Weight Conversion Table To convert from 1 Moz 1 Ton 1 Ton To Metric tons Troy ounces Grams Multiply by 31.103 32,511 1,000,000
Top Platinum
Platinum is the rarest of all precious metals. It has several unique chemical and physical properties that make it essential in a wide range of industrial and environmental applications. Platinum is also considered as one of the finest of all jewellery metals.
Major Characteristics
y
Platinum as a pure metal is silvery-white in appearance, lustrous, ductile, and malleable. It is widely used in several industrial applications as it possesses high resistance to chemical attack, excellent high-temperature characteristics, and stable electrical properties.
y
Platinum is corrosion resistant and is more precious than gold. Platinum's wear- and tarnishresistance characteristics are well suited for making fine jewelry.
y
Platinum is traded as a commodity with prices determined by market forces. It is also a widely sought after investment avenue in recent years. However, it is not widely treated as a
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monetary base like gold
Global Supply Demand Scenario
y
The supply of platinum is met by mine production, auto catalyst refining and jewellery refining with their respective contribution estimated to be 6.15 million ounces, 1 million ounce and 0.9 million ounce in 2008.
y
The annual production of platinum has averaged around 6.2 million ounces (193 tonnes) in the previous three years from 2006 with more than 90% of the production coming from South Africa (76%) and Russia. The other producers are United States of America, Canada and Zimbabwe.
y
The production of platinum is highly dependent on South Africa's production with 2009 output from South Africa, Russia, USA and Zimbabwe estimated to be 4.7 million ouces, 0.74, 0.25 and 0.33 million ounces respectively.
y
The platinum mining industry is very capital intensive and it is reported that approximately 10 tonnes of raw ore has to be mined to produce just one pure ounce of platinum.
y
Unlike other precious metals like gold and silver, there are no large above-ground platinum stockpiles to protect against significant supply disruptions. Some estimates predict that existing above ground reserves would last only for a year, if platinum mining was suddenly stopped.
y
The demand for platinum mainly comes from auto catalyst, jewellery, other industrial application and investment. The other industries uses platinum are electronics, glass and petroleum industry.
y
The total global demand for this rare metal is reported to be around 7.79 million ounces in 2008, with consumption by auto catalyst (used in automobiles), jewellery, investment and other industrial applications estimated to be around 3.8, 1.6, 0.45 and 1.9 million ounces respectively.
y
North America, Europe, China and Japan are the most important economies accounting for majority of the global platinum consumption.
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World Gold Markets The London Platinum and Palladium Market (LPPM), which provides the industry benchmark price µLondon fix¶ Derivative exchanges at New York ± CME (COMEX), TOCOM (Japan), MCX (Mumbai)
Indian Platinum Market
y
India's appetite for platinum has been steadily increasing in recent years on account of the country's economic progress leading to rising industrial demand and increasing preference for platinum jewellery in urban areas.
y
India's consumption of platinum in 2008-09 is estimated to be around 932 kgs, which is expected to rise to around 1200 kgs in 2009-10.
y
The approximate consumption by various sectors in India is estimated to be automobile (55%), petrochemicals (25%), jewellery (15%) and electronics & dental (5%).
Market Moving Factors
y
Indian platinum prices are highly correlated with international prices. However, the fluctuations in the INR-US Dollar impact domestic platinum prices and have to be closely followed.
y
The global prices are driven by a host of factors with macro-economic factors like strength of the global economy, currency movements, interest rates, rising importance of emerging markets being major influencing factors.
y
Economic situation in major consuming countries like USA, Europe, Japan and China influence consumption on account to its high demand from industrial sectors, especially automobiles.
y
Platinum production is highly skewed with just four mines and two countries producing almost 90% of the total annual production. Prices are influenced profoundly by production disruptions, policies taken in producing countries. The influence of this factor is enhanced by the absence of any significant global stocks of platinum in the world, unlike that of gold and silver. Additionally, platinum mining is a very capital intensive industry, which discourages entry of new players.
y
Any change in global stocks, of which a major portion is present in Russia do influence prices.
Multi Commodity Exchange - products
y
The price movement in other precious metals, especially gold is a major influencing factor.
Measurement Weight Conversion Table To Convert from Troy Ounce Troy Ounce Million Troy Ounce Kilograms Tonnes To Grams Kilograms Tonnes Troy Ounce Troy Ounce Multiply by 31.1035 0.0311035 31.1035 32.1507 32150.7
Crude Palm Oil
Palm oil is obtained from fresh fruit bunches (FFB) of oil palm cultivated in plantations. There are several commercial variants of palm oil available viz., Crude Palmoil, Crude Palmolein, RBD (Refined Bleached Deoderised) Palmoil, RBD Palmolien and Palm Kernel Oil. Crude Palmoil when subjected to refining results in the other factions.
Global Scenario
y
Palmoil with an annual production of 25-27 million tons is second most produced oil in the world.
y
Malaysia (13 million tons) and Indonesia (10 million tons) are the major producers. They together account for 85% of production.
y
Around 80% (21-23 million tons) of global production is exported. Malaysia and Indonesia with 12-12.5 and 6-7 million tons respectively are major exporters.
y y
India, China and EU are the major importers. Price competitiveness has been reason for increased consumption of this oil.
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Important World Palmoil Markets
y y
Bursa Malaysian Derivatives (BMD) is the largest futures market for crude palmoil. Malaysian & Indonesian FOB prices set the mood in the physical market.
Indian Scenario
y
India imports roughly 2.5-3.5 million tons of palmoil and its variants a year. The domestic production is very meager at 0.5 lakh tons.
y
India imposes 65% duty on crude oil and 75% (imposed in 2003-04 Union Budget) on RBD Palmoil. The import ratio is highly dependent on the duty imposed.
y
In addition to the customs duty, Government of India also imposes tariff value, on which the customs duty is calculated irrespective of the actual price at which the oil is imported.
y
In 2002-03 India imported 21.5 lakh tons of crude palmoil and 3.15 lakh tons of RBD Palmoil. However, in 2003-04 till July from November '03 India has imported 13.7 lakh tons of crude palmoil and 4.8 lakh tons of RBD Palmoil.
y
Kandla, Mumbai, Kakinada are the major ports for palmoil entry to India and the major trading points too.
India In World Palmoil Industry (Rounded figs.) India World % Share (In million Tons) Annual Oil Production Annual Oil Imports Annual Oil Consumption 0.05 3 3 26 22 26 0.2 13.6 11.5
Factors influencing Palmoil Prices
y y
The supply demand and price scenario of competitive oils, viz., soyoil. The supply-demand scenario of all oils and oilseeds in the consuming centers, viz., Inda, China and EU. This in turn is manifested as imports from these countries.
y y
The palmoil production cycle: April - December is peak production period. Import regulations imposed in the importing countries.
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Kapasia Khalli (Cottonseed Oilcake)
General Characteristics
y y
Kapaskhalli (cottonseed extraction/meal) is a byproduct of the cottonseed industry. Cottonseed is a by-product of the cotton plant, which is primarily grown for its fibre. Although cotton has been grown for its fiber for several thousand years, the use of cottonseed on a commercial scale is of relatively recent origin.
y
Cottonseed was a raw agricultural product, which was once largely wasted. Now it is being converted into food for people; feed for livestock; fertilizer and mulch for plants; fiber for furniture padding; and cellulose for a wide range of products from explosives to computer chip boards.
Global Scenario
y
Annually around 15 - 16.5 million tons of cottonseed meal is produced globally. Globally, the oil content of cottonseed is 18%, and the remaining portion is the cottonseed meal.
y
Most of the production of cottonseed meal is consumed in the country of production itself, limiting the global trade to just 5-6 lakh tons a year.
y
China (1-1.2 lakh tons) is the single largest exporter, while Europe (2 lakh tons), South Korea (1-1.5 lakh tons) are the largest importers of cottonseed meal.
y
Cottonseed is the second most commonly produced oilseed in the world just slightly ahead of soy. However, in 2003-04 rapeseed/mustard has marginally overtaken this seed.
y
The global production of cottonseed is around 35 million tons in the recent years. The major producers of cotton are also the major producers of cottonseed. China, USA, India, Pakistan, Uzbekistan and Brazil are the major producers globally.
Indian Scenario
y
Cottonseed is a traditional oilseed of India. It is estimated that cottonseed production will be around 33% of the cotton production in bales. Around 80% of the seed is marketable surplus and arrives in the market for being crushed to oil. The remaining is used as seed is fed to cattle.
y
India's cotton output and along with it the cottonseed, meal and oil output varies considerably from year to year in response to the vagaries of weather and pest attacks.
Multi Commodity Exchange - products
y
India's cottonseed production in 2002-03 and 2003-04 is estimated at 36.3 and 43.4 lakh tons respectively.
y y
India produces around 2 million tons of cottonseed meal a year. The protein content of the scientifically produced meal is 40-42% against 20-22% in the traditionally processed meal. The cattlefeed manufacturers prefer this meal as it contains lesser amount of gossypol, which if consumed in larger amounts is a poison for cattle.
y
However, in India mainly undecorticated meal is largely produced. Several associations are promoting the production of decorticated cake in India and the production of this is expected to increase in the country.
y
India used to be a major exporter of cottonseed extraction around two decades ago. However, the demand for other oil meals like soymeal, has lowered the cottonseed demand globally. In addition, the low availability of decorticated meal in India has also been a major reason for the fall in exports.
y
The major importers of Indian cottonseed meal (undecorticated) used to be Thailand. India in 2002-03 exported only 50 tons of decorticated cottonseed meal. In 2003-04, too there have been no significant exports. India does not import cottonseed meal.
Major Trading centres Akola, Parbhani, Nagpur, Yeotmal are the major trading centers where cottonseed from the cotton procured by the Maharashtra State Cooperative Cotton Growers Marketing Federation is auctioned off.
Trade Scenario
y
Cottonseed is sold through weekly auctions in Maharashtra. In other states, there is an active cash market in the season. Cottonseed arrives in the market as a by-product of ginning operation carried on cotton. It is sold off immediately.
y
The industry is largely un-organised, though several associations have been trying for the upliftment of the industry and scientific processing practices.
y
The prices of oil and meal display good volatility, with it falling during the peak arrival period (October - January. The prices of meal are dependent on the prices of other commercially important oils like soymeal.
Multi Commodity Exchange - products
Daily Variation in Undecorticated Cottonseed Meal Prices at Mumbai (2003-04) Variation in % In % <1 76.28 1-3 21.53 >3 2.19
Markets Influencing Factors
y
Variations in cotton production and its effect on cottonseed, meal and oil production in the country.
y y y
The arrival of cottonseed for crushing from the ginning centres of the country. Comparative price with other oilseeds, oil and meal in the domestic market. The demand from the cattle-feed industry, which is the major consumer of cottonseed mea.
Refined Soya Oil
General Characteristics
y
Soybeans on crushing and solvent extraction yield soyoil at 18% recovery and soymeal. About 85% is crushed worldwide.
y
Soybean and soyoil production of 170-185 and 25-31 million tons account for 55-58% and 25-30% of global oilseed and oil production respectively.
y
US, Brazil, Argentina, China, India are the major producers in order of production. In US, India, China crop starts arriving from Aug-Sept, while it starts from Jan-Feb in S. America.
y y
In the world 55-60, 8-10 and 42-45 million tons of beans, oil and meal are traded annually. USA (20-30 million tons), Brazil (12-18 million tons), Argentina (5-10 million tons) are the exporters of beans, while China (18-20 million tons) and EU (15-18 million tons) are the major importers.
y
Argentina (3-5 million tons) and Brazil (2-3 million tons) are the major exporters of oil. China (1.5-2.5 million tons) and India (1-2 million tons) are the major importers of oil.
y
Crushers, refined oil manufacturers, animal feed manufacturers and farmers are the major stakeholders in the soy value chain worldwide.
Important World Soy Markets
y y
Chicago (CBOT), largest soy futures market China, where beans and meal are traded at Dalian Commodity Exchange
Multi Commodity Exchange - products
y
Argentina and Brazil FOB determine the physical prices
Indian Scenario
y
India produces 5-7 million tons of beans, 1 million ton of oil and 3-5 million tons of soymeal in a normal year.
y y
With imports, the total oil availability in the country is around 2.5 million tons. Madhya Pradesh (3.5-4.5 million tons), Maharashtra, Rajasthan are the major producers of soybean in India.
y y
The production is highly dependent on the monsoon and fluctuates between years. Soy is a Kharif crop, sown in June-July and harvested by September-October. Peak arrivals are from October-November.
y
The prices follow the international sentiments and display very high volatility.
India In World Soy Industry (Rounded figs.) India World % Share
(In million tons) Annual Seed Production Annual Oil Production Annual Oil Imports Annual Oil Consumption Annual Meal Production Annual Meal Exports Annual Meal Consumption 6 1 1.5 2.5 3.5 2.5 1 180 30 9 30 130 43 130 3 3.3 16.7 8.3 3.5 5.8 0.7
Daily Price Volatility of Refined Soyoil in India Daily Volatility in %< % Occurrence <1 81.95 1-3 17.69 >3 0.36
Maximum Daily Variation in 2003-04 = 3.8%
Multi Commodity Exchange - products
Major Trading Centres Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Nagpur in Maharashtra, Kota in Rajasthan are major trading centres.
Market Influencing Factors
y
Weather at all the producing centers, domestic and international. The pod bearing period, being the most crucial.
y
The area planted, determined by the price of soybean against that of competitive crops, viz., maize, jowar, bajra.
y
International price movement, the futures market at CBOT being the major international reference market.
y y y y
Pests and diseases. The supply-demand and price scenario of competitive oils, viz., palmoil. Demand for soymeal from the feed sector and the entire fundamentals of this sector. The crush margin between meal, oil and seed
Soyabean
General Characteristics
y
Soybean is an important global crop and processed soybean is the largest source of protein feed and second largest source of vegetable oil in the world.
y
The major portion of the global and domestic crop is solvent-extracted with hexane to yield soy oil and obtain soymeal, which is widely used in the animal feed industry. It is estimated that above 85% of the output is crushed worldwide.
y
Though, a very small proportion of the crop is consumed directly by humans, soybean products appear in a large variety of processed foods.
y
The cultivation of soybean is successful in climates with hot summers, with temperatures between 20°C to 30°C being optimum. Temperatures below 20°C and over 40°C are found to retard growth significantly.
y
It can grow in a wide range of soils, with optimum growth in moist alluvial soils with a good organic content.
y
Modern soybean varieties generally reach a height of around 1 m (3 ft), and take 80-120 days from sowing to harvesting.
Multi Commodity Exchange - products
Global Scenario
y
The annual global soybean production has been in the range of 210-230 million tonnes in the recent years, accounting for 55-58% of total global oilseed output of around 390-400 million tonnes.
y
US, Brazil, Argentina, China and India are the major producers in order of production with production in these countries ranging around 70-80, 55-60, 32-48, 14-16 and 8-10 million tonnes in the recent couple of years.
y
Weather, acreage under other competitive crops like corn, cotton and pests & diseases are the major factors influencing production.
y
While in US, India and China crop starts arriving from Aug-Sept, it starts from Jan-Feb in S. America.
y y
The annual global trade in soybean is estimated to be around 70-80 million tonnes. While, USA (30 -35 million tonnes), Brazil (23-28 million tonnes), Argentina (5-15 million tonnes) are the exporters of beans, China (35-40 million tonnes) and EU (12-16 million tonnes) are the major importers.
y
In addition to soybean, soy oil and soymeal are also widely traded globally with annual trade of around 9 million tonnes and 52 million tonnes respectively. While, US is the largest exporters for soybeans, Argentina is the largest exporter of soy oil and soy meal globally.
Important World Soy Markets
y
Chicago Mercantile Exchange, which acquired Chicago Board of Trade - the world's oldest soy futures market
y y
Dalian Commodity Exchange - trades the most liquid soybean contracts in the world Argentina and Brazil FOB determine the physical prices
India in World Soy Industry (Rounded figs.) Global India % Share
(In million tons) Soybean Production Soybean Trade Soy Oil Production 230 75 35 9 0 1.5 4 0 4
Multi Commodity Exchange - products
Soy Oil Imports Soy Oil Exports Soy Meal Production Soy Meal Exports Soy Meal Imports 9 9 150 52 52 1 0 7 3.5 0 11 0 5 7 0
Indian Scenario
y
India's annual production of soybean has been around 8.5-10 million tonnes in the recent years with India's production in 2009-10 estimated to be around 8.9 million tonnes by the Government of India.
y
The acreage under this crop has more than doubled in the past two decades to around 11 million hectares currently being sown under this crop, with better returns encouraging more farmers to adopt this new crop.
y
Madhya Pradesh, Maharashtra, Rajasthan and Andhra Pradesh are the major cultivators of this important oilseed, with their respective contributions usually around 60%, 25%, 6-7% and 1-2%.
y
Soybean is exclusively grown in the khariff season in India, with sowing taking place after the first monsoon showers in late June or early July. Sowing can extend upto end of July in different parts of the country.
y
The harvesting commences from September, with Maharashtra reporting the earliest arrivals. October and November are the peak arrival months, with all-India arrivals crossing 10 lakh bags of approximately 90 kg on the peak arrival days.
y y
The production is dependent on the monsoon and fluctuates between years. India is highly dependent on imports to meet domestic edible oil requirement. Government policies are in favour of developing the domestic crushing industry and supporting Indian farmers and do not promote import or export of soybean. Thus, there is virtually no import or export of soybeans.
y
However, India out of its total soymeal production of around 6.5-7 million tonnes, exports around 3.5 million tonnes with Vietnam, Japan, Thailand, Indonesia, UAE, Greece being the major importers.
Major Trading Centres
Multi Commodity Exchange - products
Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Akola, Sangli, Nagpur in Maharashtra, Kota in Rajasthan are major trading centres.
Market Influencing Factors
y
Domestic prices are highly influenced by the global price movements, with prices highly correlated with the CME prices.
y
Fundamentally, weather at all producing centers, domestic and international is the most crucial factor, with the pod bearing period, being the most crucial.
y
United States Department of Agriculture makes progressive assessment of crops, stocks, global supply and demand and releases regular reports, which are widely looked upon by the global market to determine prices.
y
The other major influencing factor is the prices of soy oil and soymeal, which are in-turn dependent on the fundamentals of global edible oil and global animal feed industry.
y
Locally, prices are influenced by currency fluctuations, weather, acreage, pest & diseases, production estimates by industry associations, Government agencies.
y
India imports more than 60% of its entire edible oil requirement and the entire edible oilseed and oil sector is a highly sensitive sector. Thus, new Government policies and apprehensions about new policies have a strong sway over prices, during periods when new announcements are made or are about to be made.
y y
The supply-demand and price scenario of competitive oils, viz., palmoil. The crush margin between meal, oil and seed
Barley
General Characteristics
y
Barley (Hordeum vulgare L.) (Hindi name: Jau), a cereal grain derived from an annual grass is the fourth most important cereal crop in the world after rice, wheat and maize.
y
Barley is very adaptable and is a widely grown crop. It is cultivated as a summer crop in temperate areas and as a winter crop in tropical areas. Barley has a short growing season and is also relatively drought tolerant. However, it is a tender grain and care has to be taken in all stages of its growth and harvest.
y
Barley is used as livestock feed, human food and barley malt. While, historically, livestock consumed most of barley produced globally, this is no more the case now. Currently food
Multi Commodity Exchange - products
and industrial consumption of barley is more prominent.
y
Barley along with corn/maize, sorghum (jowar), oats, pearl millet (bajra), finger millet (ragi) and other minor millets are grouped together as coarse cereals.
Global Scenario
y
The annual global barley production has been in the range of 130-140 million tonnes in the recent years. However, in 2008-09 it is estimated to have risen sharply to 158 million tonnes. The total average production of all coarse cereals in the recent years has been around 1000 million tonnes.
y
European Union, Russia, Ukraine, Canada, Australia, Turkey and USA are the major producers of barley accounting for around 75% of the total global production, with average production in these regions being around 55, 18, 10, 10, 6, 6, 4-5 million tonnes respectively in the recent years.
y
Following corn, barley is the second largest coarse cereal traded globally. The global trade in barley is reported to be around 17-18 million tonnes, with Ukraine (4-5 million tonnes), Russia (2-3 million tonnes), Australia (2-3) and EU-27 (2-3 million tonnes) being the major global exporters.
y
The major importing nations are Saudi Arabia (6-8 million tonnes), China (1-1.5 million tonnes) and Japan (1-1.5 million tonnes. While, Saudi Arabia imports barley mainly for feed, Japan and China import it for both feed and malt production
y
The global malt production is estimated to be around 22 million tonnes, more than 90% of which is produced from barley. It is estimated that around 94% of global malt production is used for making beer. The EU accounts for approximately 42% of the world's malt production.
Indian Scenario
y
Barley is cultivated as a rabi crop in India, with sowing being undertaken from October to December and harvesting from March to May. .
y
India's annual production of Barley has been steadily around 1.2-1.5 million tonnes in the recent years, with production in 2008-09 estimated to be around 1.54 million tonnes. The area under cultivation has also stabilized at around 0.7-0.8 lakh hectares, with a per hectare yield of around 1944 kg.
Multi Commodity Exchange - products
y
Latest state wise data available is that of 2005-06 from the Ministry of Agriculture. But it gives a fair picture of land use for the crop of barley. The major producers of Barley in the country are Rajasthan (40%), Uttar Pradesh (34%), Madhya Pradesh (8%), Haryana (6%) and Punjab (5%). Some cultivation is also undertaken in Bihar, Himachal Pradesh, and Uttaranchal.
y
In addition, to direct human consumption barley is utilized by the beer industry, food processing industry and feed manufacturing industry in India. Annual demand from beer and feed industry is estimated to be around 60,000 tonnes and 25,000 tonnes respectively.
y
However, rising demand for beer among India's urban young consumers is leading to increased demand for barley malt from Indian beer manufacturing units. The country's beer consumption in volume terms is projected to grow by almost 51% percent between 2006 and 2011. During 2001-06, it is estimated to have grown by around 45% to over 907 million litres.
y
India's barley production is projected to increase to around 2 million tonnes in a couple of years to meet the rising demand for barley malt.
Major Indian Trading Centres The major markets are located in Rajasthan and Madhya Pradesh. The three largest markets are Kota, Ramganj Mandi and Baran in Rajasthan
Market Influencing Factors
y
Rising industrial demand is the main influencing factor in the Indian markets currently. While, demand from feed sector is more or less constant, demand from beer and food processing sectors are picking up.
y
The price of other coarse cereals influences the demand from the feed sector and in-turn influences barley prices.
y
Easier proximity to Middle-east countries has increased the export demand. The amount of exports undertaken influences prices significantly. It was the high export in 2007-8 and 2008-9 that resulted in the prices of Barley zooming to the high of almost 1300 in March 2008.
y
The reports of rising beer consumption in India is leading to major global barley / barley malt producers eyeing India as a probable buyer in the coming years. Currently, India does not import barley. Picking up of imports can alter the current Indian supply-demand
Multi Commodity Exchange - products
dynamics and become a major price influencing factor.
y
The Government announces Minimum Support Price (MSP) for barley. However, Government procurement has been rarely undertaken, as there is no surplus production in the country.
Maize-Feed / Industrial Grade
General Characteristics
y
Maize (Corn), is of American origin, and after wheat and rice, it is the most important cereal grain in the world.
y y
It provides nutrition to both humans (33.3%) and animals (66.6 %). Serves as basic raw material for the production of starch, oil and protein, alcoholic beverages, food sweeteners and more recently fuel.
y
Special crops grown primarily for food include sweet corn and popcorn, although dent, starchy or floury and flint maize are also widely used as food. Flint maize is also used as feed. Immature ordinary corn on the cob either boiled or roasted is widely consumed.
Global Scenario
y
World corn production in the year 2003 was 614.3 million tons while in year 2004 total world corn production is expected to be 642.6 million tons.
y
Major producing countries are United States, China, EU-25, Brazil, Mexico, Argentina and India. These countries accounts for around 80 % of total world corn production.
y y
Major consuming nations of corn are China and USA. There has been continuous increase in the consumption demand of corn mainly owing to increase in the demand from meat and starch sector. There is growing requirement of maize from poultry sector, which uses corn as feed.
y
Major importing nations of maize are Japan, Korea, Taiwan, Mexico, Egypt, Malaysia, EU and Colombia.
y
Among the major exporters of corn, USA stands first followed by Argentina and Brazil. China, South Africa, Ukraine are minor exporters, their share is very low. Only USA dominates the international trade of corn as an exporter.
Multi Commodity Exchange - products
Indian Scenario
y
India's maize production fluctuates between 10-14 million tons, with 80-90% of the production being in the kharif season.
y
Major states that contribute in Maize productions are Karnataka, Andhra Pradesh, Bihar, Punjab, Uttar Pradesh and Madhya Pradesh.
y
Around 6.5 million tons (roughly 50 % of total consumption) goes for feed use, primarily for poultry feed. Another 1 million tons of corn is used by the starch industry.
y
India is traditionally a maize importer, and Govt. permits a fixed quantity (determined each year) to be imported at 15%. Extra has to be imported at 50%.
y
However, in 2003-04, India exported around 3-5 lakh tons of maize, mainly to Southeast Asian countries.
y
Rising household incomes have shifted human consumption from maize to other cereals like rice and wheat. The rising incomes have also led to an increased consumption of meat, particularly of poultry, which has increased the demand for maize as feed.
Factors that Affects Rice/Wheat/Maize Prices
y
Role of weather in crop production is immense. Temperature, rainfall and soil moisture are the important parameters that determine the crop condition. Further, natural calamities like typhoon, floods, droughts and earthquake can also affect crops. Markets keep watch of these developments.
y
Changes in the minimum support prices (MSP) by the government also have immense impact on the prices of the commodity.
y
Availability of substitute products at cheaper rate may lead to weakness in demand. This situation happens especially when the main products price tends to become higher. For e.g., jowar/ bajra may be preferred by poultry feed manufacturers instead of maize, if its prices are high.
y
Seasonal cycles are present in agriculture crops, particularly in short duration annual crops. Price tends to be lower as harvesting progresses and produce starts coming into the market. At the time of sowing and before harvesting price tends to rise in view of tight supply situation.
y
Breakthrough in the technology may increase the productivity and would lead to more supply. This may bring some softness in the price. Wheat
General Characteristics
Multi Commodity Exchange - products
y
Wheat is one of the world's three most important cereal crops along with maize and rice. It is reported to be grown domestically from atleast as early as 9000 BC and is now grown in almost all parts of the world.
y
Wheat is a globally important source of dietary carbohydrate (starch) and protein (gluten). Its grain is a staple food used to make flour for leavened, flat and steamed breads, biscuits, cookies, cakes, breakfast cereal, pasta, noodles etc and for fermentation to make beer, alcohol, vodka, or biofuel. It is also used for feeding animals to a limited extent.
y
Different varieties of wheat are grown across the world. The three principal types of wheat used in modern food production are: Triticum vulgare (soft wheat), Triticum durum (hard wheat) and Triticum compactum
Global Scenario
y
The annual global wheat production has been in the range of 600-630 tonnes in the recent years. However, in 2008-09 it is estimated to have risen sharply to 689 million tonnes. The combined production of all cereals in 2008-09 is estimated to be 2525 million tonnes.
y
EU-27, China, India, USA and Russia are the five major producers of wheat accounting for close to 70% of the total global production, with 2008-09 production in these regions being 151, 112.5, 78.6, 68 and 63.8 million tonnes respectively.
y
Wheat is the most important cereal traded in the world market. The global trade in wheat during 2008-09 was sharply up at around 140 million tonnes in 2008-09 from an average of around 110 - 115 million tonnes in the recent previous years.
y
While US (25 - 35 million tonnes), EU-27 (15-25 million tonnes), Canada (15-20 million tonnes), Australia (8-18 million tonnes) and Argentina (6 - 12 million tonnes) are major exporters, there are a large number of countries importing wheat with maximum demand emanating from developing nations. The major importing regions are Middle-east Asia, South-east Asia and North-west Africa. Egypt, Brazil, Indonesia, Algeria are the most important importing nations.
y
Wheat crops around the world have their own unique production cycles of planting and harvest timeframes.
Important World Wheat Markets
y
Derivatives exchanges - Chicago Mercantile Exchange, which acquired Chicago Board of
Multi Commodity Exchange - products
Trade, Kansas City Board of Trade, Zhenghzhou Commodity Exchange, South African Futures Exchange, MCX, NCDEX
y
US FOB and EU (France) FOB prices determine the physical prices
Indian Scenario
y
India has the largest area in the world under wheat cultivation. However, due to low productivity it is only the third largest producer after EU-27 and China.
y
India's annual production of wheat has been around 75-79 million tonnes from 2006-07, with production in 2008-09 estimated to be around 78.6 million tonnes. Wheat accounts for around 30-35% of India's total foodgrain production of around 220 million tonnes. India's annual wheat consumption is estimated to be around 72 million tonnes currently.
y
Green revolution and increased focus by Government on wheat has helped wheat production to surge sharply from around 6 million tonnes at time of independence to current levels. Close to 90% of the area under wheat is irrigated, which too has supported the rise in output over the years.
y
Uttar Pradesh (34%), Punjab (20%), Haryana (13%), Rajasthan (10%) and Madhya Pradesh (10%) are the main wheat producing states of India.
y
Wheat is cultivated as a rabi crop in India, with sowing being undertaken from October to December and harvesting from March to May. The official marketing season of wheat in India is assumed to commence from April.
y
Government plays a major role in the wheat value chain in India as the cereal is very important for the country's food security. The Central Govt. sets the Minimum Support Price (MSP) every year, which sets the mood for the upcoming season. As govt. agencies have been recently procuring close to 25-30% of annual production, open market prices too do not generally fall below this price. Historically, the procurement has been around 15-20%.
y
The procured wheat is used to maintain a minimum buffer stock for meeting unforeseen exigencies, for providing foodgrains required for Public Distribution System (PDS) and the other foodgrain based welfare programmes of the Government. In addition, the grain is also sold at pre-determined prices to the open market.
y
Though, India is not a major player in global markets India has resorted to imports, whenever there is a supply tightness. India has also exported around 5 million tonnes of wheat in 2003-04. Govt. agencies take the decision to bring in imports and the current
Multi Commodity Exchange - products
policies are not in favour of exports.
Market Influencing Factors
y
Wheat is an annual, seasonal crop and prices usually tend to rise during the cultivation period, i.e. December to March due to scarcity in the market and dip during the peak arrival period (April and May).
y
Weather has a profound influence on production, especially in Haryana and Punjab as temperature plays a crucial role in determining the yield.
y
The Govt. policies with regard to MSP, buffer stocks, PDS sales, Open Market Sales, imports / exports are very important influencing factor with regards to Indian wheat prices.
y
Despite international trade being limited, the several variations in production or consumption at various major or minor producing or consuming country, which influence global prices, are reflected in the domestic long-term price trend. However, in the short-term normally there is no significant relation with international prices.
y
Several international agencies like US Dept. of Agriculture, International Grains Council, Food and Agricultural Organisation release regular, periodic reports on global supplydemand situation, which is widely looked upon by the global players.
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