Spices, Cotton and Soya Oil

Spice exports from India fell 10% between April 2009-August 2009. The country’s export earning has slipped 9% to $429.68 million from $546 million a year ago. However, in August 2009, exports rose 3.5%.

Indias cotton exports in the 2008-2009 season which ended in September 2009, are estimated to have plunged a massive 55% to about 38 lakh bales due to higher prices in the domestic market. The country had exported 85 lakh bales in the 2007-2008 season. In October 2008, the Cotton Advisory Board had estimated cotton exports to be at 75 lakh bales during 2008-2009. Last year, the government had raised the minimum support price (MSP) by 50%. The MSP has not been hiked for the 2009-2010 season. India is now left with over 71 lakh bales of carry-over stock for the 2009-2010 season.

According to the Solvent Extractors Association of India (SEA), during the season ending September 2009, Indias crude soya oil import is estimated to have surged by 40%, to over one million tonnes, against 731,000 tonnes last season. The government has allowed crude soya oil import at zero duty and refined variety which attracts 7.5% duty.

Coking Coal
According to a report by Citi Investment Research and Analysis, a division of Citigroup Global Markets Inc, global prices of coking coal, which are floating around $160-$170 a tonne, are expected to harden further and reach $200 a tonne in 2010-2011, thanks to higher coking coal imports by China.

 

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Crude Oil to Natural Gas Ratio

In the Moneylife issue dated 24 September 2009, we had written about crude oil to natural gas ratio hitting its highest level indicating that oil is vastly expensive relative to natural gas. The conclusion was that either natural gas would go up sharply or oil would fall. Since then, natural gas has shot up 62%, while oil has been weak. Natural gas prices surged mainly because gas supply was expected to be in line with demand, resulting from the brisk pullback in US drilling activity. The number of rigs drilling for natural gas in the US has decreased 56% since last year.
 

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Tea, Caprolactam and Cardamon

Tea import by India, the world’s largest producer after China, has shot up 28% in July 2009, despite high prices. In July 2009, India imported 2.85 million kg of tea compared with 2.05 million kg a year earlier. India produced 460.88 million kg till July 2009, about 16 million kg less than a year earlier. Drought in Assam, the largest producing state, has raised fears of a decline in domestic output prompting rise in import and higher prices. The import price of tea went up to Rs83.93/kg in July 2009 from Rs73.71/kg in July last year. However, the average export price of tea rose to Rs133.80/kg between January 2009 and July 2009 from Rs106.27/kg in the previous year.

Caprolactam is the principal raw material for Nylon-6, and is used for producing nylon filament yarn (NFY) and nylon tyre cord fabric (NTCF). Its demand from automobile and textile manufacturers has been rising. The international price has surged 66% from the February low of Rs70,000 per tonne to Rs1,16,000 a tonne as on 15 September 2009.

Cardamom output may fall 15%-20% this season as plantations in Kerala were devoid of showers during June 2009 that lowered crop output. Last year, production was 10,000 tonnes. Heavy rains during the latter half of August 2009 have further affected the crop.

 

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