Oil prices leveled up

According to Reuters, Oil prices have climbed for a second day after twin car bombs exploded in Saudi Arabia's capital, Riyadh, and the US Government reported another decline in lean winter heating fuel stocks. US light crude oil futures settled up $US1.87, or 4.47 per cent, at $US43.64 a barrel on the New York Mercantile Exchange. In London, Brent crude fell 90 US cents to $US39.40, catching up with heavy US losses earlier this week when the International Petroleum Exchange was closed. Saudi Arabia has been rocked by a surge of Islamic militant violence in which about 170 people have been killed, including Westerners, since May 2003.

Earlier, prices rose after the US Energy Information Administration said stocks of distillate fuel, including heating oil and diesel fuel, dropped by 800,000 barrels last week to 119.1 million barrels. Lower than normal temperatures last week helped pull down heating oil stocks, which are more than 12 per cent below last year.

Gold traded higher in the international markets

Weakening dollar and search for better investment avenues kept the metals price higher for most of the months this year. On the last trading session in the international market also, Gold futures closed higher in last-ditch trading. According to Mr Paul McLeod of Commerzbank, " The market should stay volatile into 2005, but gold's upward trend is likely to continue after prices rose nearly 6 percent this year. Gold for February in the Comex division rose $1.40 to $438.40, within a session range of $434.70 to $439.80. New York metals will be shut on Friday in observance of New Year's Day, which falls on a Saturday this year. According to news channels, the tsunamis that killed at least 120,000 people across the Indian Ocean coastline from Indonesia to Africa sparked limited safe-haven buying in gold this week because investors, especially those in earthquake-prone Japan, were already on holiday. In the foreign exchange, the dollar weakened after a below-consensus snapshot of regional U.S. business activity kept it under selling pressure. Again in the foreign currency market, euro rose to $1.3625 in late trade, not far from Wednesday's record high at $1.3646. Most currency traders believe the dollar's downtrend is intact and, therefore, the euro's Bull Run should have further to go in 2005, which again should bolster gold prices.

Buyers roll the rubber prices up

Rubber prices improved on renewed buying on Thursday witnessing a jump of 0.25 paise in the sheet rubber moving it to Rs54.25 a kg. The reson is attributed to supply deficits due to the Tsunami disaster in most of southern coastal region and that triggered the prices to inch up further. In the futures market, rubber showed a steady trend with January delivery at Rs 54.90 (Rs 54.77), February delivery at Rs 56.05 (Rs 55.93), March delivery at Rs 57.20 (Rs 57.02) and April delivery at Rs 58.39 (Rs 57.28) per kg for RSS 4. Rubber market is more dominated by the Japanese participants and due to year-end holidays in the continent, it went sideways with modest trade interest.

Sugar continues on a high tide

Sugar prices have started looking northwards on price movements and it is touching the mark of Rs20 a kg in the local markets. On the wake of supply constraints, retails segment prices have almost crossed this level and trading above the Rs20 mark. According to leading media sources, Spot prices at the wholesale level have reached Rs 19.50 a kg as tenders floated by mills were quoting higher by Rs 50 per 100 kg in a single day, which is an unusual rise in the recent past. Government has declared the quota for January at 12 lakh tonnes which is out of the 34 lakh tons free sale quota till March.

At Vashi wholesale market, medium grade-30 prices were up Rs 50 at Rs 1,830-1,885 per 100 kg. Spot prices of M-30 grade at Muzaffar Nagar mandi went up Rs 53 to Rs 1,898.60 per 100 kg over the previous day. At the leading futures exchange NCDEX, prices of sugar continued to rise and were quoting at Rs 1,952 per 100 kg , up about Rs59 for the February 2005 contracts.

Rapeseed / Mustard on a good crop cycle

The production of Rapeseed and Mustard this year might touch record levels on the back of good crop. Estimated production of Rapeseed is about 70-75 lakh tons as favorable weather conditions and good Rabi output. The higher minimum support price (MSP) announced by the Government for the Rabi season also has been favorable for the farmers as it has been increased by Rs 100 from Rs 1600 a quintal last year to Rs1700 a quintal. As per Mr D.P. Khandelia, President of the Solvent Extractors Association of India (SEAI), if weather remains favorable, for the next two months, the country would be harvesting the record rapeseed / mustard crop of 70-75 lakh tonnes. "Late rains and higher MSP are encouraging farmers this season. The MSP fixed by the Government should be comfortable for farmers" he added. Resources confirm from the Agriculture Ministry that area under mustard / rapeseed is up at 66.10 lakh hectares as on December 29. This is against 58.60 lakh hectares during the same period a year ago and the normal coverage of 53 lakh hectares.

Comm Daily 30th Dec

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