EIA report causes 3% drop in crude

Wednesday 22^nd Dec, a report from the government agency declared a record increase in weekly oil stockpiles in US. The Energy Information Administration confirmed the distillate inventories rise by 0.6 mn barrels extending the pile to 50.5 mn barrels. This has caused the crude to fall in one session. February delivery Light crude witnessed a low of $43.65 following the inventory news and at at the end of session recorded a fall of $1.52 (3.3%). The crude price reached $44.24 a barrel. London Brent also dropped $1.73 to and reached $40.64 a barrel.

Comex gold in the international market fell $1.50 for the day and reached at $441.40. The international market trades indicate a slower movement due to year-end holidays and the better than expected US GDP report. The market sentiments are still positive and the traders also looking at a price of $500 in 2005. Adding to it James Moore at TheBullionDesk.com comments "With a bundle of data out tomorrow, there are still plenty of opportunities for price moves". Back home at the domestic front Gold for February contract opened at Rs6367 but not much of volume was made and the prices fell to close at Rs 6352. White metal silver also fell Rs 84 and closed at Rs 10,434.

Sugar prices to skyrocket

On the wake of demand for raw sugar increasing to record levels and lesser and lesser sugar available in market, the prices are awaiting a steep rise in shorter run of next quarter. The decision taken by the CCEA on raw sugar imports in huge quantities has remained unimplemented even after the declaration of importing raw sugar for domestic release by the center. The industry sources claim that the recent hike in prices is justified and they are pegging it to prices prevailing in 1999-2000. Industry is blaming the government for exaggerating the sugar production of 2004-2005 at 135 lakh tonnes, whereas they claim it to be far lower at 120 lakh tonnes.

The ongoing festival season also is the reason for rising demand in sugar and drawing prices to new highs. On Wednesday, spot prices continued to rule firm whereas the small sugar quality gained Rs11 and reached to Rs 1771 at the closing.

Indian cotton on a tumble

This year due to favorable weather conditions and good crop in neighboring Pakistan, it sets the country to aggressively market its produces and that again will give a big hit to the Indian producers. It is the 4^th largest cotton producer in the world and the production level averages to 8 mn bales annually. Expectations are the production will be record 10mn bales and in that case a 29% rise from last year. According to news agencies, Pakistan has aggressively prepared to compete in the world textile and apparel markets. Its apparel and textile exports increased by 116% between ’01-02 and ’03-04. During the same period, Pakistani exports of cotton fabric also grew 26%. News agencies confirm that Pakistan's Federal Bureau of Statistics estimate its cotton fabric exports in ’03 exceeded 2bn square meters, showing a 0.2% growth over a year ago. Both knitwear and bed wear exports, with growth rates of 32.3% and 23.9%, respectively, reached new records in ’03.

Soya prices continues to fall

Due to trader’s strike at Madhya Pradesh mandis, soya trading came to a halt since last week, but still the prices continued to drift lower at the local markets and have fallen down to Rs 38-39 per kg from Rs 41-42 per kg a week ago. Apart from soyabean, sales of maize, gram and other grains too have come to a halt. We have been witnessing the weakening prices of crude soya oil in the international market during the past four months, triggered by higher production of soyabean in the US and Brazil. In India's import of the oil, almost doubled to 6.6 lakh tonnes in August-November ’04. Stock off loading by exporters and large producers like Cargill India and Ruchi Soya Industries also curbed the sentiments indicating of price hikes.

Center’s assurance boosts rubber prices

Domestic rubber market shown a positive trend due to the declaration by Union Commerce Minister, Mr Kamal Nath of protecting the farmers interest if the prices falls below Rs 50. Buyers were active during the day and the prices also gained momentum. Farm producers also were more confident and shown sentiments of holding the stocks in anticipation of higher quotations in future. The January delivery at NMCE was quoted at Rs 54.23 (54.02), February delivery at Rs 55.49 (55.02), March delivery at Rs 56.70 (56.11) and April delivery at Rs 57.80 (57.26) per kg for RSS 4. The spot market rates per kg were: RSS 4 Rs 53.25 (52.75), RSS 5 Rs 50.50 (50.00), ungraded Rs 49.00 (48.50), ISNR 20 Rs 50.75 (50.50), latex 60% Rs 40.50 (40.00).

Statistics 22nd Dec (Wednesday)

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