CO C

COMMODITY OUTLOOK DATE Oct 10, 2011 WEEKLY COMMODITY UPDATE

PRECIOUS METAL

WEEKLY COMMODITY OUTLOOK

Gold:
Gold traded choppily above 1600 last week. Finishing the week as +0.87%, the yellow metal indeed recorded the first positive reading in 5 weeks. Recent correction after surging to a record high of 1923.7 has been driven by a confluence of factors including CME' increase in margin requirements, profit-taking after the relentless rally since the beginning of the year and liquidation of long positions to cover losses in other markets. Despite the selloff, holdings in ETF and bullion sales remained firm. The chart `` below shows that, despite outflow over the past few weeks, gold holdings in SPDR Gold Trust, the world's largest ETF, stayed at record level.

Silver After dipping to 28.435, silver attempted a rally but failed below 33.58 retreat and lost momentum. Earlier in the week, financial markets got hammered as Greek budget deficit, expected to fall to 6.8% in 2012 of GDP from 8.5% this year, will miss the target of 6.5% agreed previously. The market concerned that Greece might not be able to tap the 6th tranche of funding from the EU/ECB/IMF. News that EU leaders were divided regarding expansion and leverage of the EFSF damped sentiment further. However, investors were thrilled after policymakers signaled the possibility of recapitalization.

STRATEGY
Exchange

Commodity

Recommendation
Prices exactly took resistance from the levels mentioned last week of 1680/1685 high made was 1681.50 and then prices corrected and moved towards our targets of 1580 low made was 1596.60. Favored view for the week is expect prices to consolidate between 1685 and 1585 range before the next big move. From the short term charts it looks like as long as lower range support at 1585 /1580 holds support we could see a corrective pullback rally towards 1700/1715 levels. Prices exactly took resistance from the levels mentioned last week of 27000/27200 high made was 27044 and then prices corrected and moved towards our targets of 25500 low made was 25820. Favored view for the week is expect prices to consolidate between 25500 and 27100 range before the next big move. From the short term charts it looks like as long as lower range support at 25600 /25500 holds support we could see a corrective pullback rally towards 27100/27500 levels. Prices moved in a narrow range neither hitting our targets nor the stop loss levels. Favored view for the week is expect prices to consolidate between 28.40 and 33.50 before the next big move starts; break of this range will decide the direction of prices. However from the short term charts it looks like as long as 28.40 the lower end support holds good we could see a corrective pullback towards 33.90/35.20 levels. Prices moved in a narrow range neither hitting our targets nor the stop loss levels. Favored view for the week is expect prices to consolidate between 48500 and 54500 before the next big move starts; break of this range will decide the direction of prices. However from the short term charts it looks like as long as 48500/48000 the lower end support holds good we could see a corrective pullback towards 55500/57000 levels.

COMEX

Gold Dec.

MCX

Gold Dec.

COMEX

Silver Dec.

MCX

Silver Dec.

PIVOT
Exchange
COMEX MCX COMEX Silver Dec. MCX Gold Dec. Silver Dec.

Commodity
Gold Dec.

Close 1642.2 26350 31.23 52297

Pivot 1600 26327.00 30.80 52200.00

R3 1730 26922.00 33.50 55024.00

R2 1680 26750.00 32.50 54737.00

R1 1650 26599.00 31.50 53487.00

S1 1620 26276.00 30.50 51950.00

S2 1580 26104.00 29.50 50663.00

S3 1550 25900.00 28.50 49413.00

ENERGY
Oil gained as led by the +4.77% increase in WTI crude oil price. Brent crude also added +3.01% during the week. Downside risks remained in the short-term for oil amid intensifying uncertainty in the global economic outlook. Sharp selloff cannot be ruled out should economic data disappoint ` and more negative news come debt-ridden European countries. Concerning the fundamentals, the oil market remains resilient. Global oil demand is expected to growth 1.4-1.5% in each of 2011 and 2012. NonOPEC supplies are restrained while the OPEC is unable to fully substitute the loss of Libyan output. Tensions in Libya eased but it will probably take some time for its oil production to return to pre-crisis levels. US gas prices plunged -5.05% last week. The DOE/EIA reported that gas storage rose +97 bcf to 3409 bcf in the week ended September 30. Stocks were 78 bcf less than the same period last year and 28 bcf, or +0.8%, above the 5-year average of 3381 bcf. Separately, Baker Hughes reported that the number of gas rigs rose +12 units in 935 in the week ended October 7. Oil rigs added +10 units to 1070 and miscellaneous rigs were flat at 7 units, sending the total number of rigs to 2012 units.

STRATEGY
Exchange NYMEX

Commodity
Crude oil Nov

Prices exactly moved as per the expectation met our targets of 75 mentioned last week. Favored view for the week is dips to 80.60/79.50 could find support for a move higher towards 85 followed by 87.50; risk will be set at 76.70. Prices exactly moved as per the expectation met our targets of 3800 mentioned last week. Favored view for the week is dips to 3970/3920 could find support for a move higher towards 4150 followed by 4250; risk will be set at 3790. Prices did not move as per the expectation during the week. Favored view for the week is once prices closes above 3.65 we could see a pullback towards 3.80/3.90, risk will be set at 3.50. Prices did not move as per the expectation during the week. Favored view for the week is once prices closes above 178 we could see a pullback towards 190/195, risk will be set at 170.

Recommendation PIVOT

MCX

Crude oil Oct

NYMEX

Natural Gas Nov.

MCX

Natural Gas Oct

Exchange
NYMEX MCX NYMEX MCX

Commodity
Crude oil Nov Crude oil Oct Natural Gas Nov. Natural Gas Oct

Close 82.98 4071 3.48 172.3

Pivot 81.50 4060.00 3.80 171.70

R3 85.00 4126.00 4.25 175.20

R2 84.00 4101.00 3.90 173.90

R1 83.00 4085.00 3.50 173.00

S1 82.00 4044.00 3.30 170.80

S2 81.00 4019.00 3.00 169.50

S3 80.00 4003.00 2.80 168.60

INVENTORY WEEKLY CHANGE

WEEKLY INVENTORY
COMMODITY Crude oil inventory Natural Gas inventory 28/09/2011 05/10/2011 CHANGE

1.9M 111B

-4.7M
97B

-2.8M -14B

BASE METALS
Base metal ended upside last week .The European Central Bank (ECB) introduced the system of purchasing covered bonds in a bid to encourage bank lending. The ECB will also introduce year-long loans so as to give the banks a steady supply of cash through January 2013. This is bullish for base metals and Energies. Payroll and Employment data from the US showed that employers employed more people in September while increasing earnings and working hours. This is bullish for metals and Energies. From Europe, watch out for the French and Italian industrial production due next week. Also look out for German trade data. The ECB president Trichet is also expected to speak next week.

STRATEGY

Exchange
LME

Commodity
Copper

Recommendation
Prices moved in line with our expectation and met our targets of 6700 given last week. Favored view for the week is dips to 7090/6990 could find support for a move higher towards 7450 followed by 7700; risk will be set at 6790. Prices moved in line with our expectation and met our targets of 335 given last week. Favored view for the week is dips to 351/345 could find support for a move higher towards 367 followed by 377; risk will be set at 337. Prices almost met our targets of 850 given last week, low made was 863.10. Favored view for the week is dips to 915/900 could find support for a move higher towards 970/1000; risk will be set at 875. Prices moved as per the expectation and took supports from the levels mentioned last week of 92/90. Favored view for this week is expect prices to consolidate between 92 and 98 range. Short term charts suggest as long as 92/91 holds support we could see a pullback rally towards 100/102 levels. Prices exactly took supports from 90/88 zones given last week and moved higher. Favored view for the week is dips if any could find support towards 91.50/90.50 and move higher towards 94.30/95.50, risk will be set at 89. Prices met our targets of 105 given last week. Favored view for the week is as long as 105/104 holds support we could see a pullback towards 109.50/111 levels.

MCX

Copper Nov.

MCX

Nickel Oct.

MCX

Lead Oct.

MCX

Zinc Oct.

MCX

Aluminum Oct.

PIVOT
Exchange
LME MCX MCX MCX MCX

Commodity
Copper Nickel Lead Zinc Oct . Oct . Oct .

Close 7292.5 932.8 95.8 93.7 107.75

Pivot 7000.00 932.00 95.60 93.70 107.00

R3 7700.00 980.50 100.50 98.30 111.65

R2 7500.00 960.70 98.20 96.10 109.25

R1 7400.00 940.80 96.90 94.90 108.40

S1 7200.00 930.10 95.30 93.50 106.15

S2 7100.00 910.30 94.00 91.30 104.75

S3 7000 880.40 92.70 90.10 103.90

Aluminum Oct .

LME WARHOUSE INVENTORY WEEKLY CHANGE

WEEKLY LME INVENTORY

METALS COMMODITY REVIEW

COMMODITY COPPER ZINC LEAD ALUMINIUM NICKEL

30/9/2011 473700 821325 373600 4567325 96738

07/10/2011 467100 807925 380400 4548725 94266

Change % 6600 13400 -6800 -18600 -2472

AGRI COMMODITY REVIEW

SOYA COMPLEX

Soybean futures fell last week tracking weak global markets amid higher arrivals of soybean from the producing regions.So far as fundamentals are concerned, Indian supply situation seems quite comfortable as it production is expected to surpass the last years figure. Indian soybean Industry people estimates new soybean crop to touch nearly 116..5 lakh tons vs 101.2 lakh tons last year. MP which is the biggest soybean producing state is expected to produce nearly 61.6 vs 60.9 lakh tons, Maharashtra 35.6 vs 27.5, Rajasthan 12.4 vs 7.6, Andhra 1.6, Karnataka 2.3, Chhattisgarh 1.53 and other states 1.2 lakh ton.

STRATEGY

Exchange
NCDEX

Commodity
Soya Bean. Oct.

Recommendation Prices almost met our targets of 2150 given last week, high made was 2123. Favored view for the week is break of 2000 and 2150 will decide the direction of prices, until then we could see a consolidation between this ranges. Prices moved as per the expectation and met our targets of 610 given last week. Favored view for the week is as long as 593/590 holds support we could see a pullback towards 623/628 levels. Prices moved as per the expectation and moved towards our targets of 2830, high made was 2790. Favored view for the week is as long as 2670/2650 holds support we could see a pullback towards 2830/2860 levels.

NCDEX

Soya Oil Oct..

NCDEX

RM Seed Oct.

PIVOT
Exchange
NCDEX NCDEX NCDEX

Commodity
Soya been Oct.. Soya oil Oct. Rm seed Oct..

Close 2040 604.55 2747

Pivot 2044.00 606.00 2757.00

R3 2087.50 621.30 2821.00

R2 2074.50 617.60 2803.00

R1 2057.00 609.70 2775.00

S1 2026.50 598.10 2729.00

S2 2013.50 594.40 2711.00

S3 1996.00 586.50 2683.00

SPICES

Jeera
Short covering at the lower levels supported the falling rates for Jeera to some extent. Overall exports still remained low however amidst low trading activities in the mandis. There are expectations of sentiments remaining weak in the markets till exports rise in coming weeks as per traders. Firmness in International market rates from Turkey and Syria could support the Indian rates as per traders. M term trend looks firm from expected rise in export demand but short term trend is expected to remain volatile. A firmness in Dollar vs Re too could support the export factor. Reports of adverse weather conditions in other major producers like Turkey and Syria have created apprehensions of lower output there. Syrian production expected at 40000 tonnes and that in Turkey lower at 12-15000 tonnes.

Pepper
Pepper futures rose last week on ther back of thin supply in the physical markets amid limited stocks from the producing regions.Traders expect that with low stocks, lower global production and rising export demand, trend is likely to remain Bullish for the commodity from a medium to long term point of view. Vietnam is having low stocks as per reports. The production there too is expected to fall this year as per some estimates. Brazil and Indonesian crop expected to be lower. Low carryover stock in Brazil and Indonesia is likely to raise exports here in coming months.

STRATEGY
Exchange
NCDEX

Commodity
Jeera Oct..

Recommendation Prices met our targets of 14100 given last week. Favored view for the week is as long as 14300/14000 holds support we could see a pullback towards 15200/15450 levels. Prices did not move as per the expectation during the week. Favored view for the week is as long as 34500/34200 holds support we could see 37500/38300 levels.

NCDEX

Peeper Oct..

PIVOT
Exchange
NCDEX NCDEX NCDEX

Commodity
Jeera Peeper Oct.. Oct..

Close 14720 36100 4388

Pivot 14696.33 36133.33 4382.67

R3 15200.67 37100.67 4590.33

R2 14997.33 36813.33 4472.67

R1 14808.67 36506.67 4430.33

S1 14607.67 35926.67 4340.33

S2 14495.33 35753.33 4292.67

S3 14406.67 35546.67 4150.33

Guar Seed Oct.

WEEKLY ECONOMIC CALENDAR

Date
10/10/2011 10/10/2011 10/10/2011 10/10/2011 11/10/2011 11/10/2011 11/10/2011 12/10/2011 12/10/2011 12/10/2011 13/10/2011 13/10/2011 13/10/2011 13/10/2011 13/10/2011 13/10/2011 13/10/2011 14/10/2011 14/10/2011 14/10/2011 14/10/2011 14/10/2011 14/10/2011

Time
11:30am 12:15pm 1:30pm 2:00pm 1:00pm 2:00pm 2:00pm 11:00am 11:30am 2:00pm 11:30am 2:00pm 6:00pm 6:00pm 8:00pm 8:30pm 11:30pm 6:00pm 6:00pm 6:00pm 7:25pm 7:25pm 7:30pm

Event
EUR German Trade Balance EUR French Industrial Production m/m EUR Italian Industrial Production m/m EUR Sentix Investor Confidence ECB President Trichet Speaks GB PManufacturing Production m/m GBP Industrial Production m/m French CPI m/m EUR German WPI m/m EUR GBP Unemployment Rate EUR German Final CPI m/m GBP Trade Balance USD Trade Balance USD Unemployment Claims USD Natural Gas Storage USD Crude Oil Inventories USD Federal Budget Balance USD Core Retail Sales m/m USD Retail Sales m/m USD Import Prices m/m USD Prelim UoM Consumer Sentiment USD Prelim UoM Inflation Expectations USD Business Inventories m/m

Forecast
9.8B -0.7% 0.2% -19.2
-

Previous
10.1B 1.5% -0.7% -15.4
-

-0.1% -0.2% 0.3% -0.1% 7.9% 0.1% -8.8B -46.2B 407K

-

0.1% -0.2% 0.5% 0.1% 7.9% 0.1% -8.9B -44.8B 401K 97B -4.7M -134.2B 0.1% 0.0% -0.4% 59.4 3.3%

-65.0B 0.2% 0.5% -0.3% 60.2

0.4%

0.4%

Research Desk
PRIYANK UPADHYA
(AVP-RESEARCH)

Priyank.upadhyay@ssjfinance.com anupsahu@ssjfinance.com Sunil.rokade@ssjfinance.com

+91 22 4300 8861 +91 22 4300 8870 +91 22 4300 8862

ANUP SAHU

(RESEARCH ANALYST)

SUNIL ROKADE

(RESEARCH ANALYST)

1st Floor, Merchant Chambers, Opp. Patkar Hall, 41, New marine Lines Mumbai 400 020, INDIA Tel: + 91 22 3300 8800, Fax: + 91 22 3300 8899 Email: commodityresearch@ssjfinance.com

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