Commodity Outlook: Oil may slug it out near Rs 4,100

Here's what brokerage SMC Global Securities projects for various commodities.

ET Spotlight
Gold prices trended lower on Thursday morning as the dollar recouped losses after cautious comments from the US Trade Representative Robert Lighthizer dented investors’ hopes for a closure to the tariff war with China.

MCX Gold was trading 0.11 per cent down at Rs 33,248 per 10 grams at around 10.30 am (IST). On the other hand, silver was 0.12 per cent up at Rs 39,809 per kg at around the same time.

Here's what brokerage SMC Global Securities projects for various commodities today.

Gold and silver: Gold can dip lower towards Rs 33,150 while facing resistance near Rs 33,450. Silver can test Rs 39,700 while facing a hurdle near Rs 40,300. On investors’ radar are US-China trade relations, with US President Donald Trump indicating that he may soon sign a deal with Chinese President Xi Jinping to end a dispute blamed for slowing global economic growth.

Base metals: Base metals prices may trade with sideways to negative bias on China slowdown concerns. Copper may test Rs 460 with a likely resistance near Rs 470 on MCX. Copper prices were steady early Thursday, with concerns over low stocks balancing out a contraction in China manufacturing and a US warning that it was too early to say what the outcome of trade talks with Beijing will be.

Copper is on course to rise 5.5 per cent in February amid supply concerns and earlier optimism over the trade talks, which would mark its best month since December 2017. Copper inventories in LME registered warehouses, near 1,30,000 tonnes, are close to their lowest in 10 years. Zinc can test Rs 195 while facing resistance near Rs 198. Lead can trade on mixed path in range of Rs 149-153. Nickel can also test Rs 918 while facing a barrier near Rs 930. Aluminum prices may trade in range of Rs 133-136.

Energy: Crude oil can test Rs 4,000 while facing a wall near Rs 4,100. Still, oil markets remain relatively well supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-affiliated producers like Russia, known as ‘OPEC+’, agreed late last year to reduce output by 1.2 million bpd to prop up prices. Natural gas may test Rs 205 while taking support near Rs 198 on MCX.

Spices: Turmeric futures (April) are expected to take support near Rs 6,150. Spot turmeric prices increased at the markets in Erode on the back of quality arrivals. The traders have received fresh upcountry demand and are interested in buying good quality old turmeric and all the new crop. It is reported that 4,000 bags of turmeric including 2,000 bags of new crop were put up for sale and 75 per cent stocks were sold.

Jeera futures (March) are expected to consolidate in the range of Rs 15,300-15,640 levels. Coriander futures (April) are likely to face resistance near Rs 6,400-6,415 levels. The upside may remain capped due to sluggish demand for the new crop as heavy rainfall in Rajasthan last week resulted in higher moisture content. Cardamom futures (March) are expected to witness lower level buying near Rs 1,440 levels.

Oilseeds: Soybean futures (March) may test Rs 3,600 levels on the downside. In physical market, demand from most of the millers and crushers remained subdued after the prices started hovering above the levels of Rs 3,800 per quintal. Further, this oilseed is being imported mainly from some least-developed African countries which India has signed treaties with for concessional or duty-free imports. The landed cost of imported soybean is Rs 3,500 per quintal.

Refined soy oil futures (March) are expected to test Rs 755-752 levels on the downside. On the spot markets, soy oil and bean traded low due to weak demand with soy refined being quoted at Rs 775-Rs 780 for 10 kg while soy solvent ruled at Rs 740-Rs.745. CPO futures (March) are expected to trade sideways and consolidate in the range of Rs 548-555 levels.

Other agri commodities: Cotton futures (March) are likely to trade sideways trend and hover in the range of Rs 20,400-20,600 levels with upside getting capped. The fundamentals cite that the imports are subdued as the arrival season is at its peak and there is sufficient supply in the market.

For the time being, Indian spinning mills await for clarity on market trend in the wake of uncertainties over the US-China trade talks and currency moves. In the international market, Cotton futures saw 30-34 point gains in most contracts on Wednesday. Chana futures (March) are likely to test Rs 4,050 levels on the downside. The sentiment is bearish due to weak trend of pulses in the spot markets.

The demand in chana dal and besan was sluggish from consumption centres. Sentiment is still weak due to availability of the government stock and the rise in selling of chana by the NAFED, especially in the states of Madhya Pradesh and Rajasthan. Mentha oil (March) is likely to witness selling facing resistance near Rs 1,640 levels.

The sowing of the crop has started towards the end of last month, and with couple of weeks passing, the initial estimates are showing up that production of mentha oil is expected to rise to Rs 48,000-50,000 tonnes in 2019 from 33,000-35,000 tonnes last year.





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