Sugar, Oil and Vegetable Oil

• International Sugar Organisation said that sugar deficit will reach
7.8 million tonnes this year, the highest in a decade and more than the estimate of 4.3 million tonnes made in February 2009. Even a bumper harvest in Brazil has not improved the situation.

• International Energy Agency said that the annual global oil demand will be 83.2 million barrels per day, 3% lower than in the previous year. This is also the sharpest decline for oil demand in the past 28 years.

• Vegetable oil imports more than doubled in April due to lower-than-expected production of oilseeds and rise in consumption. Solvent Extractors Association of India said that edible oil import rose to 6.99 lakh tonnes in April against 3.47 lakh tonnes in April last year.

• The Kotak group will launch the country’s fifth national commodity exchange in association with the Ahmedabad Commodity Exchange in which it is picking up a majority equity stake as an anchor investor. Indiabulls has already got approval in-principle for launching an exchange with the public sector trading firm Minerals and Metals Trading Corporation.
 

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Wheat

The ban on futures trading in wheat has been lifted by the government after two years because wheat stocks are in surplus now. Futures trading in rice, tur and urad are still banned. Last month, BC Khatua, chairman Forward Markets Commission, had said that he hoped the ban on all three items would go before the elections and the Elections Commission’s approval had been sought for lifting the ban. The ban was imposed in early 2007 to curb inflation and also ensure sufficient procurement for the buffer stocks. The then finance minister, P Chidambaram had said the ban would be in force until a committee set up under Prof Abhijit Sen submitted its report. Though the Sen Committee argued that there was no correlation between futures trading and inflation and recommended that the ban be lifted, no decision was taken in view of rising food prices and, later, elections. The situation is different now with the rate of inflation running lower than 1% and the granaries overflowing.

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Steel, Copper, Gold and Aluminium

• Has steel turned around? In late April, John P Surma, chairman & CEO of US Steel, said that “we continue to face an extremely difficult global economic environment. We expect an operating loss in the second quarter as our order book remains at low levels and idled facility carrying costs continue to be incurred.” 

• World refined copper production outpaced demand by about 150,000 tonnes in January, compared with a deficit of about 20,000 tonnes a year earlier, according to International Copper Study Group which anticipates a surplus of 345,000 tonnes in 2009.

• Gold price is struggling to stay above $900 as there is increasing confidence in the world about US and global economic recovery. It is not clear whether that hope would eventually turn out to be misplaced but, right now, nobody is in a mood to play safe.

• The quarterly commodity review of Royal Bank of Scotland paints a bleak picture for aluminium because of the metal's heavy exposure to the transport and construction. Demand is expected to contract by 8% in 2009 while cutbacks in production have not been commensurate.

 

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