A $1rise in crude: says OPEC

Average crude oil prices of the Organization of Petroleum Exporting Countries (OPEC) rose by 1.18 U.S. dollars to 36.90 dollars per barrel last week, according to the OPEC Secretariat early this week. OPEC oil prices witnessed a five-day consecutive jump last week, from 35.67 dollars per barrel on Monday to 39.35 dollars on Friday, which is the highest OPEC oil price since Dec. 1, 2004. As per the expectations of oil cuts from OPEC, the experts believed it fuelled the prices to firm up. Sources say, OPEC member countries have decided to hold a ministerial meeting in Vienna on Jan. 30 to discuss crude oil output policies in next phase. It's possible that OPEC will discuss the plan to cut daily output by 1.5 million barrels. Oil prices have been in their recent highs in October 2004, since then the prices have dropped almost 20%.

Gold touches upper levels

At the Comex division of NYMEX, gold for February contract closed at US$422.40, which is highest since last week on 5^th January. "Short term, gold is still open to further downside pressure, which is likely to be triggered by further dollar advances, with the barrage of U.S. economic data due this week a potential trigger", said Mr. James Moore, famous analyst with thebulliondesk. He is also of the view that short-term gold is still open to further downside pressure, which is likely to be triggered by further dollar advances with the barrage of US economic data due this week a potential trigger. Also we see the ECB and BoE meet to set interest rates this week which could be another catalyst for price weakness and even with the RSI at 31, there is still room before gold reaches oversold territory, indicating there is potential to test as low as $409. Longer-term our outlook is still bullish with the Iraq elections at the end of the month, G7 meeting in February and general geo-political picture all increasing gold’s ‘safe-haven’ allure with last weeks correction likely to prove healthy, enabling the metal to extend above last years $458 high.

Back home in the domestic segment, Gold for February contract at MCX closed at Rs6124 for 10gms from the metals last closing of Rs6111 the previous day.

Reduced speculation: Open interest says it all

Decision taken by the ministry to consider import of white sugar and the exchange NCDEX to hike the margin in sugar futures have impacted the prices substantially and the market is witnessing reduced speculative activity with stabilized trades. This is clearly visible by the open interest positions of Sugar –M grade continuously drifting down that has been reached a peak of 87,810 ton on January 4^th, 2005 to down almost 63,000 tons on January 10^th. According to the resources, the sudden surge in open positions since December, particularly pronounced from the second half — that too, without any new information on supply or demand fundamentals pouring in — obviously suggested that the trading taking place was largely speculative in nature. Another indication of excess speculation was that the closing price of January 2005 futures, which stood at Rs 1,643 per quintal on November 1 and Rs 1,693 per quintal on December 1, had soared to Rs 1,968 per quintal by December 31.

Grain traders to face tax burden, calls for strike

Mumbai, traders and wholesalers are brought under the tax purview and will be levied 10.2% service tax, which was earlier subjected to the transporters only. On the wake of this announcement, the traders dealing in essential commodities such as food grains, sugar, jaggery and coconut have called for a strike from 12^th January and about to stop both loading and unloading of commodities. A notification on 3^rd December was issued which mentions the service tax of 10% and education cess of 0.2% to be levied from traders and not transporters caused a much heated discussions among Grain, Rice and Oilseeds Merchants' Association (GROMA) and other major wholesale trade organizations.

According to the news bureau, the traders who are responsible for payment of freight for goods brought by road transport are also responsible for service tax payment. Those responsible for the payment have to obtain registration from the Excise Department and pay the service tax within 25 days from the end of the month. Essential commodities such as food grains, pulses, oilseeds, consumed by both the higher and lower income groups, are subject to 10.2 per cent service tax.

Pre-Budget concerns: Expert view

As part of the pre-budget consultation, Hon. Finance Minister Mr. P. Chidambaram discussed with the farm sector experts about creating a Rs 500-crore revolving fund under the Food Corporation of India to facilitate expeditious payment of support prices to oilseeds and pulses growers. The experts believe India’s position to rise on the commodity exports side and this move will boost producers and farmers to shift in their producing pattern. The resources said, a strong case was also made for making the recently announced National Rural Employment Guarantee Scheme more universal and not confining it to the below poverty line families alone. The participants also sought the strengthening of the co-operative rural credit delivery system through appropriate restructuring and expansion of capital base, besides exempting marketing co-operatives from income tax. The experts were of the view that the existing mechanism of Minimum Support Price is not suited for the commodities sector and rather their should be an administered participatory price insurance scheme that will boost the sector for any unexpected event and calamity.

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