Local commodity market plunges on broad selling, falling equities

MUMBAI: Tracking the equity markets, the local commodity markets witnessed a broad-based sell-off on Monday, with farm and non-farm counters registering intraday declines of 1-4%. Agri commodities also came under pressure on IMD (India Meteorological Department) forecast of rains over the next few days in the north-east, sub-Himalayan West Bengal, Sikkim and Bihar.

According to analysts, the sell-off was triggered by clients rushing to meet mark-to-market margin calls in the equities space. In line with the fall in stocks across the globe, the Sensex closed down over 4% at 14,784.92 on Monday.

Said Debjyoti Chatterjee from Admisi Commodities: ���I don���t expect the losses of Monday being extended in a major way in forthcoming sessions though a further correction cannot be ruled out. However, this will be tempered by buying at lower levels.���

According to Ajeet Kumar from SMC global securities, base metal prices could come under pressure in the near term due to a firm dollar and economic uncertainty. ���Agri commodities are likely to be influenced by international sentiment, progress of the monsoon and government actions to curb prices,��� he added.

At the time of going to Press, crude for September delivery on Nymex was down 2.25% from Friday���s close at $65.99 per barrel level. Spot gold was down by 1.2% at $936.9 an ounce (31.10 gm) in London. On Bursa Malaysia Derivatives (BMD) exchange, crude palm oil fell as much as 4.6%. The benchmark November contract on the BMD ended Malaysian Ringgits (MYR) 102 down at 2,335 a tonne.

On LME at 5 pm locally, copper was down 3% at $6,056 per tonne, while nickel had shed 3.8% at $18,800 per tonne and tin traded 4.6% down at $13,925 per tonne. Similarly, on local bourse MCX, gold was trading 0.3% down at Rs 14,852 per 10 gm, silver 2.6% down at Rs 23,098 per kg, while crude oil September contract traded 1.4% down at Rs 3,334 per barrel. Base metals such as copper, nickel and zinc were down by 1.5% each.

The IMD forecast supported the fall on farm counters. Soyabean September contract on NCDEX fell by 2.5% at Rs 2,299 per quintal and soya refined oil contract closed 1.6% down at Rs 470 per 10 kg.

Among spices, chilli fell by 4% with the October contract on NCDEX closing at Rs 5,854 per quintal, while jeera September contract closed 1.6% down at Rs 11,587 per quintal. Wheat, mentha oil and chana also fell by approximately 1%.