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Dear Readers,

Greetings!

As we go to press, it is heartening to note that a historic trade facilitation deal has been struck at WTO for the first time in its 19 year history, after a consensus on food security.

Globally, crude oil prices have come down by 32% since July’14. This is a huge relief for India and China that import over 70% of their requirements. Specifically, for India, lower crude oil prices would improve trade balance, stabilise value of rupee, reduce direct and indirect subsidies and help government manage its deficit better. Wish crude prices stabilise at the current level and stay there for a year or so.

The keynote of Mr. Rajeev Kher, Secretary, Ministry of Commerce and Industry, Government of India at the APEDA Export Award function was very insightful. Mr. Kher stressed that India should move ahead of ‘bulk exports’ approach through better packaging, branding and focus on retail markets. He stressed that exporters should capitalise on new market opportunities (such as opportunity to export meat to Russia, now) and consolidate on existing markets through value-addition. SPS measures may at times become a non-tariff barrier, although, through constant engagement and technology upgradation those challenges could be addressed, he opined. Lastly, he felt that India has a huge opportunity to increase its share in RTE segment (which is currently under 8% of the total agri-export of about USD 43 billion per year). Targeting RTE products at Indian diaspora living abroad is a good way to enter overseas markets, but over a period, these have to be scaled up through collaborative approach. The clear message to entrepreneurs is, “Government is ready to support, scale-up and seize the opportunity”.

This is the last issue for 2014. We have a host of specialists reviewing various sectors of the commodity markets in 2014 and presenting their opinions for 2015. I am sure you would find it exciting. If you have a view or suggestion, please write to us at [email protected]

With best wishes

G Srivatsava

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Comprehensive Agri-Commodity intelligenCe

4 December 2014

Here is a great opportunity to make this magazine your own. Kindly feel free to post your appreciations and criticisms about articles, analyses and opinions appearing in the magazine. Selected comments would be appearing in our magazine with your name from next month. Your contribution would be a great step in adding value to the magazine and making “CommodityIndia.com” address the needs of its readers. Kindly post your comments to:

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exchange traded Forwards: Stepping Stone to Create Unified National Agriculture marketAgrim sauda is a modernized form of forward contract. nCdeX has improved the instrument to make it more formal, structured, provided it firmer legal sanctity and guarantee, reduces risks and trading costs, and more farmer to seek ...

the modern Spice route – a Journey from Farm to Fork

satisfying the needs of the end user should be top priority of the

procurement partners – maximum feedback must be sought from the

buyer, so as to ascertain the real attributes we are looking for from a

spice – be it ...

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9 Base metals - review and outlook for 2015

13 Cardamom to Firm up in 2015

14 Historic moment for Wto as members agree on trade Facilitation deal

16 Crude oil: a Generational top

18 dollar rally to result in rupee Stagnation

23 Pepper & turmeric - an overview & outlook

26 edible oil : Higher Global availability to keep Prices Soft

34 Corporate news

36 Spot Prices

December 2014 5

ArtiClewww.CommodityIndia.com


exchange traded Forwards: Stepping Stone to Create Unified National Agriculture Market

Pallavi Oak, Knowledge Management, NCDEX

The growth prospects of Indian agriculture look bright with the new

government gearing up its efforts to introduce new set of reforms. The significant one among them being the creation of common national market for agriculture produce, which can address structural deficiencies plaguing this sector on proactive basis.

A single national market for agricultural produce does not imply a single price for the commodity across the country. It essentially seeks to eliminate inefficiencies due to information asymmetry and restricted market access. A single national agriculture market simply refers to a structure that provides

a seamless ability to do business across the existing market segments, viz. spot, forwards and futures markets and utilize their synergies to achieve their business goals.

It is said that commodity market participants look for reassurance when entering new or untested markets in the face of at least three major uncertainties: timely procurement or sale, counterparty risk and quality of goods being traded. Experience with commodity futures as well as electronic spot market reveals that both these market segments have successfully addressed these concerns by leveraging the institutional capacity. Electronic spot market developed by spot market arm of NCDEX, has provided for nation-wide participation along with anonymous and competitive price discovery mechanism bringing in more transparency in transactions and reducing operational costs. It has initiated the process of modernizing Regulated Agricultural markets (also known as APMC markets/ Mandis) using its e-spot market platform with an aim to enhance the efficiencies of the existing regulated markets and also has developed a

Unified Market Platform (UMP) to create a single market place for the state wherein all the APMC market functionaries like commission agents and traders can trade with one single license.

Futures market for agriculture commodities, in its decade-old span of operations, has showed a phenomenal growth. The reform process led by NCDEX has revolutionized the way commodity market participants used to do their business during the last decade. Availability of advanced price signals at the national-level has helped market participants make informed production, purchasing and investment decisions, while an efficient hedging platform enable them lock-in their margins and fetch secured returns. The delivery based trading in most of the futures contracts has resulted in the exchange acting as a strong catalyst in developing storage and grading infrastructure to support this market.The electronic form of spot and futures market segments available on the trading platform of NCDEX serves as a classic example where institutional structure and regulation framework have reduced operational

December 20146



expenses, strengthened market confidence and accelerated trading efficiency (rather than setting in inefficiencies) whilst enabling market participants protect their enterprise value and competitive advantage in an ever-changing business environment.

The forwards segment, which forms more than half of the country’s total commodity trade, however has remained a laggard in this regard. Forward contracts traditionally refer to highly customized arrangements that fit to particular needs of the trading parties. Forward market contracts are traded over-the-counter segment and thus are exposed to huge risks of counter-party defaults.

Though the Forward Contracts (Regulation) Act, 1952, contains enabling provisions for such contracts, the growing acceptability of the regulated futures and spot markets provides a favourable backdrop to bring forwards under the auspices of a similar kind of institutional framework.

Agrim Sauda - exchange-traded forward contract launched by NCDEX is set to overcome these limitations by helping the market participants curtail their risks, reduce trading costs while providing

for flexibiility and convenience to trade.

Agrim Sauda is a modernized form of forward contract. NCDEX has improved the instrument to make it more formal, structured, provided it firmer legal sanctity and guarantee, reduces risks and trading costs, and more significantly enables a participating farmer to seek counter-party from across the country instead of just the familiar neighbouring areas.

Exchange traded forwards allows buyers and sellers to execute their customized bilateral deals on the national electronic trading platform under the regulatory framework of the Exchange as well as Forwards Market Commission. Prudent risk management practices of the Exchange, viz. the system of margin collection, help them minimize their counterparty default risk by assuring compensation guarantee to the extent of margin collected.

A participant makes an Initial Margin at the time of making a trade. Then, there is an Incremental Margin, similar to Exposure Margin that is charged in futures trading, to cover risks that may arise from unusual fluctuations in commodity prices. If the participant fails to pay the Incremental Margin call, he is given two days grace time. If he is still unable to pay, the trade is deemed to be cancelled and the margin blocked amount is forfeited. Ninety percent of such amount collected

from the defaulting party is paid as compensation to the counter party and 10 percent is retained by the Exchange.

Unlike futures contracts, where contract specifications are standardized, Agrim Sauda allows buyers and sellers to customize terms of trade as per their preferences. The flexibility in customizing the contract terms enables commodity stakeholders with diversified requirements to participate in this market segment, while online trading mode facilitates a buyer or a seller from one part of the country to buy or sell any commodity in any other part of the country.

A sugar miller from Karnataka, willing to sell sugar can negotiate pricing date, packaging, moisture content, ICUMSA value, degree of polarization, delivery location and mode of delivery as he enters exchange traded forward contracts of sugar. He can enter the contract at flat price (at Rs 2700 per quintal) or link it to the NCDEX sugar futures contract quoting a premium or discount.

Exchange-traded forwards facilitate traders give/take delivery at rake point or truck point within 100 km of agreed location. The locational flexibility thus offered helps them give/ take deliveries at those locations which are not covered by existing delivery network under futures market. Traders also can opt for direct delivery mode or may deliver at

December 20148



exchange-approved warehouses through COMTRACK®, to track the movement of goods. Multiple delivery options improve trading convenience and also reduce overhead costs.

As the contract period under the exchange-traded forwards varies from minimum 12 days to maximum 180 days, commodity stakeholders do not have to buy /sell their stocks at one go, instead they can enter a series of exchange-traded forward contracts of different maturities and adjust their delivery schedule accordingly. This helps farmers avoid distress sale, processors or traders overstocking the commodity and reduce the short-term liquidity crunch.

The electronic mode of trading and customised nature of the exchange traded forward contracts helps increase the geographic reach of buyers and sellers and that too at minimal efforts and cost as against huge investments they might have incurred in doing the same.

Agrim Sauda is thus opening up new opportunities and possibilities that most traders didn’t have access to until now. Launched on Sept 25, 2014, Agrim Sauda has enlarged the market to national from just local or regional, reduced overhead costs for its participants and has instilled confidence with regard to minimizing counterparty default risks. Benefits can only multiply as the number of participants increase. Agrim Sauda Transactions Stats: Total Turnover: Rs 982.11 lakh, Total volume: 3310 MT, as on November 14, 2015, MembershipExisting NCDEX members and clients can participate in this new segment with their existing membership/client codes. Alternatively, a special membership category, ‘Commodity Participant Members’, is also available for participating in forward segment.Commodities CoveredActive trading in maize and sugar 24 additional commodities (including all 21 commodities that are on future trading platform) are

in pipeline

Bringing forward trade under the regulatory framework along with spot as well as futures trade and integration of these three segments will, ultimately, provide market participants with

a more efficient and effective means of managing exposure to commodity-price volatility. For instance, a sugar purchaser/trader can make use of electronic spot platform to purchase the produce to fulfil his immediate requirements. He can enter into exchange-traded forward contract to lock-in his trade price by customizing the contract tailor-made to his specific needs to fulfil his short term requirements or he can hedge his purchase on the futures platform by trading in highly standardized contracts to cover price as well as counterparty risks.

Agrim Sauda is a best blend of physical and futures trade. Once implemented on larger scale, the exchage-traded forwards have the potential to facilitate all participants in the food and agriculture value chain to tap a much larger pool of liquidity. The resulting synergies can provide more accurate reflection of the actual supply/demand situation, prices and eliminate information asymmetries. Agrim Sauda would go long way in improving the overall market efficiency and developing commodity market ecosystem in the form of augmenting support service infrastructure (logistical, storage and transport services), creating increased employment opportunities, effective supply management, reduction in price volatilities, and easy access to institutional credit.

December 2014 9



Base metals - review and outlook for 2015

Mr. Naveen Mathur, Associate Director - Commodities & Currencies, Angel Broking

Base metals have witnessed a lot of ups

and downs in 2014 as dynamics of geopolitical tensions in Russia and Ukraine dominated the global picture in the first half followed by faltering growth in China amid financing and construction sector probe in the latter part.

In addition to this, Euro Zone possibly slipping into a third recession since the financial crisis has been a matter of concern. The only saving grace for the industrial metals this year has been strong rebound in the US economy which has supported demand and provided some respite to base metal prices.

In this article, we shall look into the specific fundamentals of all the base metals like Copper, Aluminium, Nickel, Lead and Zinc.

Copper, an indicator of the strength of the global economy, has been the worst performer in the base metals space. Till date in this calendar

year, prices tumbled after weak economic data from EU and China alongside slew of scams from China resulted in a threatening demand outlook from the biggest consumers.

Moreover, Newmont and Freeport mines which account for 97 percent of Indonesia’s copper output have resumed copper concentrate exports after both the mining giants agreed to pay a revised duty of 7.5% on its exports, thereby adding to supply. Amidst these concerns, the International Copper Study Group (ICSG) forecast a lower deficit of 270,000 tonnes before swinging into surplus the next year.

On the other hand, US has ended its Quantitative Easing (QE) program owing to strong recovery in their economy while keeping its “considerable time” stance for interest rates unchanged. Also, certain significant Copper mines in Peru and Indonesia have been shut due to strikes, putting a cap on rising supply and providing a temporary respite to prices.

On the stockpiling front, China’s State Reserves Bureau (SRB) continues to place orders for 150,000 to 200,000 tonnes of copper cathode after buying 200,000 tonnes of copper in March and April 2014, when copper was at its weakest price point in years.

Going forward, the red metal is likely to trend lower in 2015 as copper market is

December 201410



expected to show a production surplus after five years in a row of deficit. Although it was revised downwards to 390,000 tonnes in October from April’s estimate of 595,000 tonnes after a number of strikes in Peru and Indonesia, still supply exceeding demand will be a matter of concern. Chinese economy in absence of any major monetary policy breakthrough will further be a drag on prices. Chinese demand is expected to rise just 4.5 percent next year to 11.2 million mt compared with growth of 9% this year, citing a tight scrap market and the drop in the use of copper as loan collateral post warehousing scams.

All the factors discussed above will likely lead Copper prices in the international markets lower towards $5600/tonne, while MCX Copper prices can possibly head lower towards Rs.350/kg in 2015.

Aluminium has been the best performer till date this year as global aluminium supplies finally appear to be turning to deficit after years of structural surplus on back of accumulating capacity closures.

In 2014, the world’s biggest aluminium producers have announced production cuts. Russia’s Rusal cut its production by 8% in 2013 and by a further 12% y-o-y in Q1 2014 to the annual capacity of 883,000 tonnes. Alcoa, another major producer, cut its production to 551,000 tonnes in 2014 and has permanently closed about 30% of its global aluminium smelting capacity over the last five years. On the flip side, consumption rose 6 percent to 27 million tonnes in the first half of the year, and is expected to grow over the next four years as auto makers like BMW, Ford and Mercedes use more aluminium in cars and strive to design a new generation of lighter, more fuel-efficient vehicles with reduced life-cycle emissions.

Chinese producers were very dependent on Indonesian bauxite, of which there is a lack as of now, and next year this will become a serious concern as smelters become short of bauxite. Not only this, the aluminium market is expected to tighten significantly next year to show a 102,500 tonne deficit, from an earlier prediction of a 4,444 tonne deficit and will also be supportive of the metal prices.

All the factors discussed above will likely lead Aluminium prices in the international markets higher towards $2400/tonne, while MCX Aluminium prices can possibly head towards Rs.150/kg in 2015.

Lead has been the worst performer this year second only to Copper owing to sharp drop in Chinese apparent demand for refined lead metal. Demand growth is expected to slow to 2.5% in 2014 and 2.9% in 2015 despite a further increase in automotive output and an expansion in the construction of mobile phone base stations that require industrial lead-acid batteries for back-up power.

Further, ILZSG(International Lead and Zinc Study Group) estimated a refined lead deficit of mere 38,000 tonnes in 2014 and 23,000 tonnes in 2015. Even though closure of several mines has affected both metals, lead has not had as strong price gains or held onto them as well as zinc. This is due to lead’s huge secondary market, with almost all lead being recycled.

In 2015, lead prices are likely to trade lower as battery production remains main consumption draw for the metal, so advances in technology translates directly into higher lead demand by prompting new infrastructure projects. But with both China and the EU’s faltering economic conditions, lead demand is likely to take a knock. Also, deficit expected is too small to boost the prices.

All the factors discussed above will likely push Lead prices in the international markets lower towards $1700/tonne, while MCX Lead prices can possibly head lower towards Rs.100/kg in 2015.

Nickel the primary raw material to produce steel, started the year on a positive note but has slipped in the past few months. It has given up most of the gains and stands just 9.5 percent higher since the start of 2014. It was the best performing commodity in the overall base metal pack as prices jumped by around 35 percent in 2014(Jan-Aug’14), the reason for which was primarily Indonesia; the biggest producer of the metal, imposed a ban on metal exports to encourage local processing.

December 201412



However, anticipated shortages following an ore export ban in Indonesia failed to emerge as the Philippines filled the gap in ore supply by much more than expected. On the contrary, seasonal rains are expected to disrupt nickel mining in the Philippines out to February, crimping exports to top buyer China and stoking a shortfall in the global supply of ore. With a ban on raw metal shipments by former top exporter Indonesia in place, the seasonal decline in the Philippines' output could force China's vast stainless steel industry to run down its stocks of nickel ore, reigniting a rally in nickel prices.

In totality, the nickel market balance in 2015 is likely to slip into deficit bringing an end to the glut seen in the past four years. This should remain the way going

forward till 2017, when facilities to process nickel, bauxite and other metal in China (capacity of about 20 million tonnes of ore) will start production and bring back supplies into the market.

All the factors discussed above will likely lead Nickel prices in the international markets higher towards $19500/tonne, while MCX Nickel prices can possibly head towards Rs.1250/kg in 2015.

Zinc prices have soared to three-year highs in 2014 as intensifying deficit in the global market as one of the biggest mines, Century open pit in Australia is due for closure next year and the delayed start-up of its Dugald River project boosted prices. Several large, aging mines are scheduled to close next year, and miners need higher prices to justify the cost of finding and developing new sources of metal. Miners may not produce enough zinc to meet the needs of steel companies and coin makers until 2018.

Owing to this, zinc production is expected to fall short of demand for the second consecutive year in 2014. Moreover, zinc stored in the London Metal Exchange's warehouses is down 26% since the start of 2014, equivalent to only about 20 days of global production. The International Lead and Zinc Study Group(ILZSG) further stated that refined zinc demand is expected to exceed supply by 403,000 tonnes in 2014 and 366,000 tonnes in 2015. Also, global zinc consumption is growing 7% a year, catalyzed by an automobile industry that requires zinc to protect steel components from rust and corrosion. Supply constraints could propel the metal even higher over the coming years.

For the coming year, zinc prices will continue to climb as some of the world's largest zinc mines run dry amidst spurt in demand coupled with expectations of a sharp deficit. Moreover, MMG Ltd, which owns Century, planned to open a new mine in Australia next year, but it’s being delayed back to late 2016 due to technical issues, thereby fuelling supply concerns further.

All the factors discussed above will likely lead Zinc prices in the international markets higher towards $2650/tonne, while MCX Zinc prices can possibly head towards Rs.170/kg in 2015.

Overall, 2015 will be a crucial year for base metals as Chinese economy will be carefully watched over for long pending stimulus measures after it fails to reach 7.5 percent growth target for 2014. While some base metals do have an advantage of supply crunch, it will be interesting to see whether Chinese demand concerns will be a dominant factor for prices.

Moving on to other major consumers, the US and Euro Zone economy are diagonally placed when it comes to economic improvement. So, another parameter to look out for price direction will be how contrasting significant economies will weigh on prices. Major turnaround could be expected as the Federal Reserve

December 2014 13



Cardamom to Firm up in 2015Chowda Reddy, Inditrade Derivatives and Commodities Ltd

Cardamom prices are in range for last 8 months and trading in the range of Rs 800-1130 levels.

It had bounced strongly in the first 2-3 months of 2014 from Rs 580 levels to 1130 levels due to weather concerns in the initial months. However, better rains in the late monsoon have benefited the crop. Arrivals are in peak period at present and may decline by January. The arrival season delayed due to delayed monsoon this year. As per trade sources, the production is expected to remain normal at 18000-20000 tonnes. As per spices board data, exports during April-June 2014 stood at 645 tonnes (including small and large), down by 20 percent compared to same period last year.

Broad trend remains bullish in this commodity and in 2015; the market is expected to move up in the first half of the year with end of peak arrival season and improving demand. However, major rally may not be seen as observed in 2010. Market has touched Rs 550 levels thrice after falling from record high of Rs 2100 levels in June 2010. The prices may not fall below Rs 550 in 2015 as well. On higher side, it might touch Rs 1250-1300 levels. Historically, the prices tend to move up during first 2-3 months of the calendar year and it might repeat in 2015 also. For the second half of the year, the market may depend on production during Aug-Dec season.

Technical analysisCardamom prices have been trading in

a range of 200 points, between 1000 and 800, for nearly 8 months with neither bulls nor bears being able to wrest control of the proceedings. After posting record highs at Rs 2097/kg in 2010 markets have been in a steady decline posting lows at Rs 545 levels. While there was some pullback in between the broad direction has been mostly on the weaker side. Since 2013, markets have been trading within 750 on the lower side and 1000 on the higher side. The OBV (On Balance Volume) indicator is suggesting that the strength has been steady. However, the average volume has been on the decline since mid 2013. Open Interest is also pretty low, suggesting that participants aren’t sure about the direction of the market and as such are reluctant to keep their positions open.

RSI (Relative strength Index) is treading sideways and is in neutral territory supporting neither bullish nor bearish move. MACD is below the ‘0’ or base line as well as signal line indicating weakness in the markets. Momentum is also in negative zone, though only marginally, indicating lack of strength for now.

Given the overall situation, we expect prices to remain range bound in the near term and only a close beyond 1000 or 750 can give proper direction for the markets. A close below Rs 750 looks less likely at this juncture since markets have been consolidating after a decline. A close above Rs 1000 levels can push prices towards 1400-1500 levels initially, though such a move may not happen in the near term.

December 201414



Historic moment for Wto as members agree on trade Facilitation deal

WTO Director-General Roberto Azevêdo, at a meeting of the General

Council congratulated members for adopting decisions related to public stockholdings for food security purposes, the Trade Facilitation Agreement and the post-Bali work. Below are the highlights of the speech delivered in the meeting.

Since July, we had an impasse in the implementation of the Bali issues, which had a paralyzing effect on the negotiations in all the areas. In an impasse related to the political link that was established between two Bali decisions. One on public stockholdings programmes for food security reasons. The other one on the trade facilitation agreement.

The first decision clarified the Bali decision on public stockholding for food security purposes. It makes clear that the peace clause that was agreed in Bali will remain in force until a permanent solution is reached. It also states that members shall make all efforts to negotiate a permanent solution by 31 Dec 2015. Now this is an advance of the original target date.So if no solution is reached by this new target

date, the peace clause will simply remain in the place and in fact until negotiations do conclude and a permanent solution is adopted.

The second decision, adopts the protocol of the amendments which formally inserts the trade facilitation agreement into the WTO rule book. This clears the pact for the trade facilitation agreement to be implemented and come into force. Members will go ahead and ratify the agreement. Of course they could follow the internal procedures of the each country. The countries will follow their domestic procedures to ratify the agreement and to hand to the WTO the instrument of acceptance of the protocol. So that is a process that varies from country to country. This decision also means that the trade facilitation agreement facility is also now operational. This facility is designed to ensure that the developing and LDC countries can get the help that they need to implement the provisions of the trade facilitations agreement and of course to reap its benefits.

We have already received a great deal of support and interest from donors on this initiative, and we

have built strong partnerships with a number of organizations in support of it, including the World Bank.

The third decision taken concerns the WTO post-Bali work. With this decision, members committed that this work will resume immediately and that they will engage constructively on the implementation of all Bali Ministerial decisions including the work programme on remaining DBA issues. Members agree that the deadline for agreeing the work programme will be July 2015.

This is a very important moment for the WTO. By agreeing to these decisions we have put ourselves back into the game. We have put all negotiations back on track. We have given ourselves a chance to pay for the post-Bali programme.

It has been a tough period for our negotiating work. But we have got the results right today. We showed in Bali. Now, we can deliver now we need to figure out how deliver more and faster. So we should be pleased that our work is back on track, but in fact this is where the real work begins.

December 201416



Crude oil: a Generational top

Kushal Thaker, Independent Analyst & Investor

Does Opec blame a slowing global economy and rising global production

for the drop in oil price? Of course not. The Culprit they say is the oil Speculator!

We had heard the same lame excuse when oil prices went from $60 to $ 147. “Its speculation and nothing else.”

So, you see when prices go up or down it is always the speculator that is to blame. The real reason why speculators reduced their net long positions is the fundamentals of oil are weak. They are not driving prices lower but reflecting the realities of weaker demand, a recession in Germany, a stronger dollar, questionable demand growth in China and a continuing boom US oil production against a backdrop of weaker product demand.

Yet that seems to be lost on a cartel that is looking to place blame for oil price misfortune. Its not the fact that the Cartel over produced in anticipation of loss supply of Iraq that never happened or the sudden

return of the Libyan oil production. It of course is those evil speculators.

Now lets come to the real reasons of why the oil prices are going to go so low that in todays writing it seems unimaginable. Short term as well as long term demand fears are sinking oil prices. Oil did try to rally only to fall in the face of weakening demand expectations after a misinterpreted report on Saudi oil production. While the report suggested that Saudis exports had slowed, production actually went up. The Saudis are actually supplying 9.36 million barrels a

day. US with its shale production has actually touched 10 million barrels a day and likely to produce above 12 million barrels in the next 2 years. US that used to be the largest importer of oil will by 2017 be a net exporter. This changes all equations. With this situation Iran, once its nuclear deal is reached will be returning back to the global arena with a whopping 4.5 million barrels a day. Iraq will be able to manage the same. And, with the Britishers introducing modern technology in Libyas oil fields, they too will be able to extract close to 4 million barrels by 2018.

December 2014 17



Now over to the largest consumers like China and India, where they no longer need to keep on building their strategic reserves as there is a significant change in the geopolitical circumstances. This results in an incremental demand fall of 4 million barrels a day in combination. Though, with cheaper oil prices the demand may rise in the next 2 years. It is likely to be offset with an equivalent rise in production coming on-stream.

Oil also had to ponder a hit to longer term demand expectations as EU leaders in Brussels to cut green house gas emissions by 40% by 2030, as compared with 1990 levels with 27% of that to come from renewable fuels. As world tries to wean itself off of oil, producers will try to maneuver to maintain market share. This is one more reason that Opec led by Saudi Arabia is trying to crash the oil market in an attempt to put off any new shale projects that are the biggest threat to their

long term economic health. Opec is also feeling the heat from Russian production that hit 10.61 million barrels a day which is a post-Soviet era high last month.

The Saudis seem content with the falling price and its potential fallout. Opec Secretary, Genral El-Badri said that it is unlikely that Opec will change output levels in 2015. So, Opec is more interested in trying to break the US oil producers than they are trying to save some of their own financially challenged members. The Saudis also know that if they cut their production it will only benefit Russia whose production has started hitting a high and the advantage of a stronger rouble will workout in its favour.

While Russia, Iran and Venezuela might turn out to be collateral damage in this Saudi oil production surge the message from the above reasons is quite clear. The plan is to maintain their market share in

the US and bury the US energy producers because they are the biggest threat to them and because the Saudis feel that US is allowing their production to explode.

Again there are people talking that one needs to maintain a $70 crude for shale production to be feasible, but I have reasons to believe otherwise. New technologies are being introduced and water that was important to remove oil incase of shale production is being replaced by propane in times to come. This will result in major cost reduction of close to 10% and can result in major challenges to the Cartel.

One has to remember that very cheap high quality oil is going to hit the markets from MENA(Middle East and North Africa region) in the coming three years from Libya, Iraq, Jordan and also from new oil wells that will be commercially commissioned from Southern Russia, without speaking of Kazakhstan that is likey to join the production bandwagon in near future. The cost of production is not going to be more than $35-37 of these wells. And, looking at risk premiums evaporating at a fast pace, I do see oil to be closer to $45 a barrel in the next 2 years. At that point we have to see how the world moves with new pricing and a new world order.

December 201418



dollar rally to result in rupee Stagnation

Shriram Pitre, Senior Vice President, Head - Commodity & Currency Research, AnandRathi

In anticipation of major reforms by the new

government, 2014 has experienced strong FIIs(Foreign Institutional Investor) inflows to the equity and debt segments. From the start of this year FIIs have

invested $15.43 billion in equity and $23.74 billion in debt. What is surprising to note, however, is that the rupee failed to react to the robust inflows. The US economy has been steadily recovering and, against its key crosses, the dollar continues to strengthen. Yet, despite the dollar appreciation, the rupee continued to consolidate within a narrow range. What was the reason, then, behind this consolidation?

The RBI’s prime roleIt proved to be the Reserve Bank of India (RBI) curtailing volatility in the currency. In 2013 the rupee had weakened against the dollar and had, on 30th August 2013, dropped to a low of 68.84. Measures then introduced by the RBI governor assisted the rupee in appreciating towards 58.34. The RBI, at its policy meetings, has affirmed the need to curtail inflation and has admirably

done so, reflected in the recent inflation figures. The drop stemmed not only from domestic factors but also due to the fall in global crude oil prices. This helped to narrow the fiscal deficit. If inflation continues on its downward trajectory, the rupee could appreciate slightly in coming months. In its Dec.2 policy meeting the RBI is less likely to take a call on cutting rates; it would wait for another couple of months of healthy data. For the next three months, therefore, the rupee is likely to quote sideways, though with a negative bent.

Steady recovery in the USRecently the Federal Reserve ended its quantitative-easing (bond-buying) program, but has not yet indicated when it would consider raising rates. The unemployment rate in the US has dropped to the lowest in six years and jobless claims have, for some time, stabilised below 300,000. Upbeat manufacturing data and a marginal recovery in inflation and in the housing sector in the US all helped strengthen the dollar. Concerns about a recovery in the euro zone and in Japan further supported the dollar. Market participants are worried about the divergent policies of the US and the euro zone, which could further add to favorable bets

concerning the dollar. The European Central Bank and the Bank of Japan are expected to introduce further stimulus, which in turn could generate further inflows to emerging economies, and India is expected to be one of the favorite destinations. Overall, we expect the strength in the dollar against its key crosses to continue in the coming quarter, but the Indian central bank will continue to keep a watch on inflows and outflows in order to curtail volatility in the local currency.

What could disturb overall sentiment in the markets? The ongoing tension concerning Russia and Ukraine. Apart from this, market participants will keenly await the Federal Reserve’s stance on the economy and when it would consider raising rates. If the Fed hints at an early rate hike, the trend in the dollar against a basket of major currencies would be strong as investors would then consider shifting money from emerging economies to developed ones. This would lead to outflows from India and, eventually, to weakness in the rupee. So it will be important for exporters to cover their receivables toward 62.35 and 63.55 and, in the case of importers, payables should be between 60.40 and 59.20.

December 2014 23



PepperPepper retained its previous year gains and escalated

towards record peak owing to supply concerns and steady demand. Posting an all time high of Rs. 822 per Kg in the major spot market Kochi, the commodity had given wonderful return throughout the year. Prices had been volatile during the first half of the year, but remained stable later. Limited arrivals to major markets and uncertainties on 7000 tonnes of pepper seized by FSSAI (Food

Safety and Standards Authority of India) over reports of adulteration raised concerns over the product availability.

Pepper production has been declining over the past few years and in the last year it hit the lowest level in three decades, at 35000 tonnes. Acreage from kerala, the major producer of the spice has been on the lower side mainly due to labour shortage. Owing to high labor cost, farmers are reluctant to replant their crops with new vines that affected the overall productivity. Meanwhile, production from Karnataka has been increasing because of a swell in acreage. Report says production from

Karnataka is almost at par with that of Kerala, rising yield by six times compared with 2007-08 period. Karnataka has been cultivating pepper along with coffee, coupled with irrigation and fertilization make them yield more produce due to better care.

Pepper cultivation requires a warm and humid climate along with appropriate rainfall. For flowering, the crop needs adequate rain at suitable intervals. Any dry spells, even for a few days, during the flushing and flowering period will result in an extensive decline in output. Also the optimum temperature of 20-30 degree centigrade and porous, light and

Pepper & turmeric - an overview & outlook

Hareesh V, Research Head, Geojit Comtrade Ltd

December 201424



well-drained soil rich in organic matter should be maintained. Apart from that, selection of site, mother plants, planting, water management, nutrient management, weed, pest and disease management are also critical for a good yield. Proper harvesting and processing of the crop is essential for superior quality too.

Even though prices have been remaining firm for the past few months, higher crop estimates for this and next year, signals a correction in prices in the medium term. In the 2014 season, pepper production in India is expected to go up to 50,000. Meanwhile, anticipated production for 2015 will be around 70,000 tonnes, the highest level seen in 2002, due to higher carryover stocks. At the same time, imports to the country are more or less similar with the previous year. Traders have been importing the crop to the country due to good price advantage. During the year our imports are estimated to be around 20,000 tonnes.

Global production is also likely to be on the higher side. The international Pepper Community report says that global production during 2015 is likely to be on the higher side by 38,000 tonnes from the current year’s estimate of 336,200 tonnes. Production from the top producer, Vietnam is anticipated to be up with a forecast of 1.25 lakh tonnes. Other major producers, Indonesia and Malaysia are also anticipated to generate higher production in the coming year.

Trading in pepper through futures market is almost nil. Pepper futures are currently available in National Multi Commodity Exchange (NMCE) only, but it has not picked up satisfactorily due to insufficient volume. NCDEX has not resumed the Pepper futures trading after they had suspended trading in pepper in May last year following the seizure of adulterated by FSSAI pepper from accredited warehouses. Looking ahead, the ongoing positive sentiments are

less likely to continue due to higher crop expectations during the season coupled with expectations of releasing of FSSAI seized produce that may lead to a supply glut in the market. A choppy trade inside Rs 520-700 per kg is anticipated for the next year.

TurmericTurmeric prices witnessed a steady move during the year. In the most active NCDEX futures trading platform, prices have been congested inside Rs 5740-7528 per quintal levels. Prices have been supported by demand from North India and concerns over crop loss due to cyclone ‘Hudhud’ that hit Andhra Pradesh in October. Report says acreage of turmeric from the major producer Andhra Pradesh will be on the downside. The area under new crops is still a major concern in states like Tamil Nadu and few areas in Karnataka due to delayed monsoon and poor price realization. Meanwhile, production for 2013-14 is reported around 40 lakh bags, down by 10-15 percent. Anyhow the export has been increased by 5 percent as per the Spices Board data.

Looking ahead, if concerns over production linger on, prices are likely to edge higher. On the NCDEX platform, Rs. 6750 per quintal would be a strong upside obstacle for prices, which if cleared convincingly would be an early signal of further strong upside journey towards Rs. 7100/7500 or even higher levels.

December 201426



edible oil : Higher Global availability to keep Prices Soft

Venkatraman, Sr Commodity Analyst, Foretell Business Solutions Pvt Ltd

Indian monsoon season started on poor note with most of major oilseeds growing regions

not receiving adequate rains till first week of July. South West monsoon coverd the entire country on 17th July. Since rainfall activity picked momentum and rained well in most of the oilseeds growing states and South West monsoon withdrawal started from middle of September and was withdrawn fully by the end of September.

The area under oilseeds in kharif this year was reduced by 8.41% to 17.85 million hectare when compared with last year acreage of 19.49 million hectare. However the acreage was more or less in line

with normal five year average area of 17.92 million hectare.

MoA 1st adv. estimatesThe Ministry of Agriculture has released its first advance estimates of 2014 kharif crops on Sep 19th. Total oilseeds crop in 2014-15 is estimated at 19.66 million tonnes as against 22.41 million tonnes produced in 2013-14. Soybean production for 2014-15 is estimated at 11.81 million tonnes; groundnut at 5.02 million tonnes.

Soybean production estimate differsBut various trade bodies as well as research done by FORETELL differs with MoA in terms of

soybean production in the last two seasons. In 2014-15 soybean production estimated by FORETELL research in the region of 10.26 and 10.82 million tonnes. Various trade bodies and

others estimated soybean crop size in the region of 9.5 and 10.4 million tons.

For 2013-14 soybean production was scaled down by MoA from 15.68 million tonnes (1st adv estimate) to 12 million tonnes(4th adv estimates).

Imports of edible oils likely to be in excess of 12 milion tons in 2014-15 oil year. India imports vegetable oils surged in 2013/14 oil year and has imported 11.82 million tonnes from other countries to meet its growing domestic consumption when compared with 10.68 million tonnes imported during 2012-13, up by 11.7%.

In 2014-15 also imports are likely to grow higher by 4-5% when compared with last year and may touch a new record of 12-12.1 million tonnes. Since 2005-06 India’s edible oil imports are growing at a CAGR (compounded annual growth rate) of 10.78%. India’s per capita consumption of edible oil is likely to increase from about 14.4-14.50 kg in 2013-14 to about 15 kg in 2014-15.

December 2014 27



Sharp fall in Soy meal exports Indian soybean meal exports in the first seven months of this financial year is 0.14 million tonnes vs 1.05 million tonnes exported in 2013-14, said SEA(Solvent Extractors’ Association). Soy meal exports in 2013-14 declined by 87% when compared with 2012-13 (first seven months Apr-Oct).

Impact on dollar strength and fall in crude oil prices US dollar index is currenlty quoted well above 88, the highest since June 2010. Dollar surges as US FED unwinds Quantitative Easing programme. US economy in Q3 grew at a faster than projected rate of 3.5%. The USD is expected to hit multi-year highs going froward.

But the impact on Indian rupee is likley to be limited to 63-64 against the dollar considering new government intentions to bring in more economic reforms to boost the economic growth, as evident from reforms in coal sector, deregulation of diesel and so on. The bigger

picture is likely to emerge during the presentation of budget in Feb’2015.

Brent Crude oil declined to multi-year lows of close to $76.75 per barrel during first half of November on ample global supplies. How much brent crude will fall in the coming months? In case stays below $75 per barrel for a week or so will significanlty result in further weaknening of global edible oil markets.

Indian Soybean Production in 2014-15 Indian soybean production in the kharif production is estimated by us during third week of September in the region of 10.3 and 10.8 million tonnes.

We would like to consider the lower end of our estimate at 10.3 million tonnes in 2014-15 kharif with minor changes. Based on that Madhya Pradesh is expected to produce 5.65-5.93 million tonnes of soybean. So far in MP, new crop arrivals started on brisk note since the middle of October and arrivlas intensified aftermath of diwali festival. Currently arrivals across MP on a daily basis reported in excess of 3 lakh bags(each about 100 kg).

Soybean Indore Spot Soybean Indore spot declined by more than 40% after having made the top of Rs 4849 during May this year. Soybean reached the low of Rs 2862 during last month and rebounded sharply to settle above Rs 3150 per quintal.

In the candlestick techncial chart after a sharp fall, formed hanging man, signaling downside is limited. Moreover soybean rebouned after having reached the double bottom around Rs 2862 (very close to previous bottom of Rs 2858 formed during Oct 2012), is also lending credibility that it has bottomed out. Soybean is likley to witness gradual upward bias in the coming months and to touch the higher resistances of Rs 3600 and Rs 3750 per quintal. At the same time support is seen in the region of Rs 3100 and Rs 2850 per quintal and unlikely to weaken further.

Traders are advised to accumulate soybean on dip in the region of Rs 3050 and Rs 2900 levels going forward.

Kandla Spot Market CPOCPO kandla price declined sharply after having touched the high of Rs 610 per 10 kg during march this year, the highest since April 2012. Recently CPO reached the low of close to Rs 440 per kg and yet to signal change in current bearish trend.

Strong support is seen in the region of Rs 400-Rs 390/10 kg and most probaly to hold those supports. On the higher side resistance is seen at around Rs 500-510 per 10 kg, which also coincides with 100-week Simple Moving Average (SMA) and unlikely to breach that level in a hurry.

December 201428



CPO Kandla spot price downside seems to be limited to Rs 400-390 per 10 kg and expect gradual recovery towards Rs 500 to Rs 510 per 10 kg and unlikely to gain further going forward till Q1 of 2015.

Refined Soy oil IndoreRefined soy oil price in the Indore spot market since August 2012 trading within the broader descending channel formation. Soy oil after hitting the all time high of Rs 763.5/10 kg in the first week of September last year, declined sharply to tests the low of Rs 613/10 kg during first week of October 2012.

This year soy oil touched the high of Rs 731 during second week of February and subsequent in March and may this year failed to move above the stiff resistance of Rs 719 per 10 kg and since then declined sharply to trade currently at Rs 574 per 10 kg as on Nov 21st.

On the lower side strong support is seen at around Rs 550 per 10 kg and breach of that on weekly basis to signal violation of channel support and may signal further weakness towards Rs 535-510 per 10 kg.

Refined soy oil may trade in the broader region of Rs 510 and Rs 650 level going forward and buy on dip advised in the region of Rs 550-530-520.

Crude Palm Oil: Global Supply and Demand ScenarioGlobal palm oil production witnessed dramatic growth since

2009-10 with the emergence of Indonesia which replaces Malaysia as the top producer and exporter. Indonesia and Malaysia together contributes 86 percent of the global palm oil production and both of them are expected to produce record crop in 2014-15 season.

Global palm oil ending stocks are forecasted to increase by 5% when compared with previous season.

Malaysia:Malaysian palm oil production in the first ten months of this year (2014) has increased by about 5.55% to 16.55 million tonnes vs 15.68 million tonnes produced during the same period last year. Production in September registered a new record at 2.03 million tonnes, surpassing the previous record of 2 million tonnes registered in September 2012.

The export trend was not encouraging, which has forced the Malaysian government to fully exempt export tax till the end of this year, which was in force since September 2014. Exports in the first ten months of 2014 were down by about 5.70% to 14.24 million tonnes as against 15.10 million tonnes exported during the same time in 2013. Malaysia’s palm oil stocks so far in the current year has increased by 11.92% to touch 2.16 million tonnes in October this year, the highest since March 2013. However when compared with the same duration last year palm oil ending stocks in October this year was higher by about 17%.

Indonesia Indonesia Crude palm oil output is likely to raise to 31.5 million tonnes in 2015, from 29.5 million tonnes this year, said Derom Bangun, chairman of the Indonesian Palm Oil Board.

Indonesia’s crude palm exports will fall to 19.5 million tonnes next year versus 20 million tonnes in 2014, Bangun said, mainly due to increase in palm usage in bio-diesel.

Bangun estimated that Indonesian crude palm oil stocks were currently 2.3 million-2.4 million tonnes, up from 2.1 million tonnes at the start of the year.

Exports of crude palm oil (CPO) and CPO derived products from Indonesia in the first nine months of 2014 only reached 15 million tonnes, down 1.75 percent from the same period last year.

Global soybean and other oilseeds crop scenarioGlobal oilseed production for 2014-15 is projected at 528.4 million tonnes, according to USDA latest monthly report released in October. Global soybean production is projected at 311.2 million tonnes. US oilseed production for 2014-15 is projected at 116.3 million tonnes, of which soybean production is forecast at a record 3,927 million bushels.

Global oilseed stocks for 2014-15 are projected close to 103.6 million, a 29 percent increase from 2013-14.

Disclaimer - There is risk of substantial loss in futures trading. If you do not understand these

risks, or are unable or unwilling to accept these risks, please do not trade.

December 2014 31



the modern Spice route – a Journey from Farm to Fork

Gopaal Ahuja, Chairman, Komal Exotic Spices Pvt. Ltd.

The quintessential Spice Bowl to the rest of the world, India now faces the need to

‘outsource’ certain spices (import in whole and bulk), particularly for Industry usage. Several factors, amassed over the last few decades, have caused this need – ranging from rise in population, income, changing weather patterns, etc. And whether procured locally or imported, spices today go through a gamut of processes and procedures before finding their way to the consumers’ tables or cooking pans.

Most recently, over the last few months, Indian ginger prices went through the roof. Had it not been for the imported ginger from China, Ethiopia and Nigeria, the prices would have crossed Rs.500/kg,

instead of Rs.350/kg. The domestic prices were reined in mainly due to imports from Nigeria. Similar was the case for Turmeric from Vietnam, and Coriander from Romania, etc.

To counter such situations, the supply chain manager of a manufacturer/retail chain has to be clear in mind about the end use of the spice in short supply. It is also important to posses a complete understanding of whether these supply interruptions are unique or usual; the time of the year when such needs arise; etc. These basics help in sourcing the spice/commodity from various countries near and far and take advantage of prices depending on their crop/harvest cycle.

However, the challenges for relying on overseas supplies are many; with the price factor being one of the most important, and also not easy to arrive at. The cost variables are another issue, besides the volatility of the inherent price of spices. These include the exchange rate of Indian Rupee vis a vis Dollar or Euro or Yen etc., basic import duties, refundable Special Additional Duty, (rightly called SAD…!) and of course VAT or CST(Central Sales Tax) as the case may be. These are administered under various wings of

Finance Ministry and sometimes by Ministry of Commerce, in case any Import licenses are involved.

Further to these, there are also the non-tariff barriers that include Phytosanitary Certification (Ministry of Agriculture) and Food Safety Standards implemented by Ministry of Health and Family Welfare.

The real harrowing experience yet, is the time when the consignment actually arrives in the port from a new source and/or from an old supplier with new crop. The cargo has to bear the vagaries of high and low temperatures in the ship, while is sealed in a metal box. Even minor excess of moisture plays havoc on the goods (Thus, one of the most important aspects of a purchase contract, is- moisture content).

Moreover, the perception of good quality and standard quality may vary at the two corners of the world, since the end use of the commodity may be different. Classic example of such a predicament is Cloves. This versatile commodity is used as a popular spice condiment in India, but as a tobacco blend & cigarette ingredient in Indonesia (which also happens to be the world’s largest producer and consumer of Cloves).

December 201432



The quality perception for such manufacturers changes based on oil content.

Strange are the ways in which laws are imported and copy pasted on Indian populace without coming to terms with ground realities and infrastructure required to implement them. Strange are the ways some technical aspects which are required to be met before these can pass as positive, case in point being headless cloves - as per Indian Food Standards any batch of cloves should not have more than 2% headless cloves, giving more importance to the looks than the product’s inherit value. A clove head consists only pollen dust, which has little or no flavor/oil. The maximum limit of 2% headless cloves, forces customers to pay for more than just the clove.

Overcoming such issues can be very costly – in terms of money, time & efforts spent; and therefore should be entrusted to existing players who are old-timers at this, lest you end up losing huge monies and reputation. Moreover these issues also need expert and immediate advise on minimizing the impact of domestic taxes like, VAT, CST, LBT, APMC,Cess, Mandi Cess, etc. Once you have selected a financially reliable supplier of spices with all the necessary quality assurances in place, all the above challenges can be easily overcome.

However, the decision to rely on imported spices in lieu of the domestic should first be indulged on a smaller batch, until complete satisfaction is achieved with regards to the quality of the finished

product. For instance, turmeric from Vietnam may not be as bright Yellow as Indian, but its cur-cumin content may be just enough for some extractors.

Very often, reputed and well-known Chefs complain about the differing taste (few notes, only a discerning foodie may notice) despite using the same recipe/ingredients. The reason the finer notes may differ is if the spice is sourced from different countries. This is remarkably seen in Ginger and Cloves.

Satisfying the needs of the end user should be top priority of the procurement partners – maximum feedback must be sought from the buyer, so as to ascertain the real attributes we are looking for from a spice – be it color, shape, size, aroma, flavor, etc.

With the Food laws becoming tough and rightly so, the post harvest handling of spices until it reaches the end user is another huge challenge in itself. The model we at Komal Exotic Spices (KES) adopted is to bulk store them in a controlled environment and process smaller lots as per demand. This not only maintains the freshness but also prevents infestation and loss of moisture (and money!) due to drying, leading to evaporation of volatile oils i.e. loosing flavour.

We have also implemented very unique systems, which have not yet been adopted by our competition;

and have a well-trained team, be it procurement, logistics or processing. Our domain knowledge of the individual spices is something we have built over the last four decades of doing business in India, right from the pre-partition days at Chaman at the Afghan-Pak border– the hub of dry fruit trade in the good old days.

..........................................................

About the author:Mr. Gopaal Ahuja is a successful businessman of great repute., His company - ‘Komal Exotic Spices’ headquartered in Mumbai is in the business of importing & processing exotic spices & dry fruits into India. He is also Chairman of India Indonesia Business Association and has been instrumental in the drafting stages of Indo-ASEAN free trade agreement. He is a Post Grad in Medical Research (M.PHARM, Pharmacology) from Ahmedabad; and holds an MDP from IIM-Ahmedabad.

For more details about Komal Exotic Spices, please visit our website www.komalexoticspices.com

CorporAte neWswww.CommodityIndia.com


34 December 2014

Amul products to hit US market soonAmericans and the Indian Diaspora there will finally get the 'Taste of India'. Kaira District Co-operative Milk Producers Union popularly known as Amul Dairy has started production of three dairy products at its US plant located at Waterloo village in upstate New York. The plant, located 350 miles away from New Jersey, is home-grown Amul's first manufacturing facility outside India. The facility has been set up under a tripartite agreement between Amul Dairy, the Gujarat Co-operative Milk Marketing Federation (GCMMF) that markets brand Amul and New Jersey based NRI businessman Piyush Patel.Source : http://retail.economictimes.indiatimes.com

3F Industries enters branded edible oil businessThe consumer business division of 3F Industries Ltd (formerly Foods Fats & Fertilisers Ltd) announced its entry into the branded packaged oil business by launching Sunsolite, its refined sunflower oil brand. 3F Industries Ltd (3FIL), with a current turnover of Rs 1,143 crore (on standalone terms), has a pan-India presence in the extraction and refining of edible oils like sunflower, rice bran, palmolein and palm kernel. The company is eyeing a 10 per cent share in the sunflower oil market by the end of the next financial year and is aiming at an annual business growth of 10 per cent. 3FIL intends to cover the entire south India by 2015-16 and subsequently expand to western and eastern geographies by 2017, helping it to fully utilise its refinery capacity of 2,500 tonnes per month.Source : http://www.business-standard.com

Rabobank, EID Parry and WWF India ink pact Netherlands-based Rabobank, Murugappa Group Company EID Parry and WWF India have signed an agreement to collaborate on sustainable sugarcane production. The partnership will produce tools that will track and measure two key issues related to sugarcane production, water use and Green House Gas emissions. The three year project will be carried out across

EID Parry's sites in South India with Rabobank being the facilitator and WWF India providing the knowledge input. The project would be executed in EID Parry's select facilities in Karnataka, Tamil Nadu and Andhra Pradesh which would provide for testing in conditions with different rainfall patterns, irrigation resources and natural water resources. Source : http://economictimes.indiatimes.com

Mother Dairy to enter Chennai, eyes Rs 10,000 crore business by 2017 After test marketing its products for almost two years in southern parts of the country, New Delhi-based Mother Dairy will formally launch its dairy products in Chennai in a month, a top official said. The company which is currently growing at a CAGR of 20 percent is also eyeing Rs 10,000-crore business by 2017. "We are looking at Chennai market very closely. It offers huge potential. In a month or so, we will launch products in Chennai", Mother Dairy Fruit and Vegetable Pvt Ltd Business Head (Milk, Mother Dairy Fruit and Vegetable), Sandeep Ghosh said.Source : http://economictimes.indiatimes.com

Tata Global planning to launch new green tea products, tap smaller towns Tata Global Beverages is looking to cash in on the growing awareness on health and wellness to reinforce its dominance in the green tea segment in the country by launching new products and tapping small towns. Green tea accounts for just Rs 300 crore or 1.5% of total tea sales of about Rs 20,000 crore in India, Grover said, but added that the segment is growing at 50% a year. TGBL has been selling green tea through its Tetley brand for the past seven years, but consumption has been mostly confined to major cities. Tetley green tea bags and packets have about 30% share of the green tea market in the country.Source : http://economictimes.indiatimes.com

ITC likely to set up food processing park in Telangana ITC Limited has shown interest in setting

CorporAte neWswww.CommodityIndia.com


35December 2014

up a food processing park in Telangana, state IT Minister K T Rama Rao said. ITC have approached us with a proposal for setting up a food processing park. We suggest them to set it up at Gajwel as it is nearer to the state capital and more apt," Rao said on the sidelines of a national conference on packaging. Source : http://economictimes.indiatimes.com

Coke takes cue from Narendra Modi’s suggestion; may launch fizzy fruit drink by next summer Less than two months after Prime Minister Narendra Modi urged cola companies to add fruit juice in their fizzy drinks, Coca-Cola has already started working on such a beverage that it plans to launch by the next summer season. The new drink, under wraps still, is being developed entirely in the country according to the senior officials. "A series of variants are being researched on a priority basis. The firm is clear it wants to bring in fruit-based drinks hopefully before next season kicks in," according to the company. Source : http://economictimes.indiatimes.com

Dabur Chyawanprash to be launched in biscuits and bars variants to attract young customers Dabur will soon roll out Chyawanprash in biscuit and snack bar variants as part of its bid to make the 'traditional' brand appealing to young consumers and make the 130-year-old company 'future ready'. KK Chutani, chief marketing officer and executive director for consumer care business at Dabur, said the company plans to modernize its over half-a-century-old brand Dabur Chyawanprash, along with other brands in its portfolio such as Hajmola digestive candy and Pudin Hara. While biscuits is an over Rs 10,000-crore category with Parle and Britannia leading it, snack bars as a category has not yet picked up in the country. Dabur dominates the Rs 550-crore chyawanprash category with close to 65% share followed by Emami. Source : http://economictimes.indiatimes.com

Arjuna Natural Extracts bags turmeric patent from US Arjuna Natural Extracts, a leading

domestic manufacturer and exporter of botanical extracts, has been granted a US patent related to a turmeric extract used for treatment of Alzheimer's disease. "We have received composition and method patents for the formula from the US for BCM-95. This is the first time we are getting a patent for specifically using the product for the treatment of Alzheimer's disease," said Benny Antony, joint managing director of the company and the inventor of the product. Source : http://economictimes.indiatimes.com

With 9th plant in Tumkur, Eastern plans to enter ready-to-cook segmentKerala-based processed spices manufacturer Eastern Group plans to foray into the ready-to-cook and ready-to-eat segments by January 2015 with a range of products, and set up its ninth plant in Tumkur, Karnataka. The eight existing production facilities are spread across India and in Dubai, have aimed at a turnover of Rs 800 crore in the current fiscal, a 45 percent rise over the previous year. “The products to be launched by the company would include both vegetarian and non-vegetarian delicacies. There would be offerings appealing to regional tastes in India,” said Firoz Meeran, group managing director, Eastern Group.Source : http://www.fnbnews.com

Future Group acquires Nilgiris grocery chain for about Rs 300 croreFuture Group has acquired the century-old Nilgiris grocery chain for about Rs 300 crore in an all-cash deal that will give Kishore Biyani much-needed access to markets in the southern states. The deal also marks the exit of majority stakeholder, private equity firm Actis Capital. According to the deal, Future Group will own all of Nilgiris. This includes the 65% stake of Actis Capital and that held by the Mudaliar family. Biyani said the acquisition of the 109-year-old Nilgiris brand - made through FMCG unit Future Consumers Enterprise Ltd - will bolster the company's presence in south India, especially in Tamil Nadu. "We are not strong in Tamil Nadu. This is a big entry for us in Tamil Nadu." Source : http://articles.economictimes.indiatimes.com

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36 December 2014

Quarterly averages Monthly averages

Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar August September October

Commodity Unit 2013-Q1 2013-Q2 2013-Q3 2013-Q4 2014-Q1 2014 2014 2014Energy

Crude oil, Brent a/ $/bbl 112.91 103.00 110.1 109.40 107.09 101.09 97.03 87.03Crude oil, Dubai a/ $/bbl 108.03 100.80 106.2 106.70 104.04 101.09 97.00 86.06Crude oil, West Texas Int. a/ $/bbl 94.32 94.20 105.8 97.40 98.07 96.04 93.02 84.04Natural gas, Europe a/ $/mmbtu 11.84 12.40 11.6 11.40 11.03 9.01 9.20 9.08Natural gas, US a/ $/mmbtu 3.49 4.00 3.6 3.80 5.02 3.09 3.09 3.08Natural gas LNG, Japan a/ $/mmbtu 15.77 16.00 16 15.30 15.30 15.05 17.02 17.08

Softs & BeveragesCoffee, Arabica (ICO indicator price) b/ ¢/kg 335.50 319.90 298.2 284.00 383.00 470.00 464.00 498.00Coffee, robusta (ICO indicator price) b/ ¢/kg 227.80 214.30 203.6 185.00 212.00 221.00 222.00 231.00Sugar EU domestic b/ ¢/kg 43.06 42.70 43.3 44.00 45.00 43.00 42.00 41.00Sugar US domestic b/ ¢/kg 47.56 43.40 44.6 46.00 47.00 56.00 56.00 58.00Sugar, world b/ ¢/kg 40.90 38.60 37.7 39.00 37.00 38.00 35.00 37.00Tea, Colombo auctions b/ ¢/kg 338.40 328.5 337.5 377 372 349 334 342Tea, Kolkata auctions b/ ¢/kg 258.10 297.9 276.1 256 256 290 265 262Tea, Mombasa auctions b/ ¢/kg 287.30 235.4 222.9 213 229 203 189 191

Fats and Oils Coconut oil - Indonesia (c.i.f-Rotterdam) b/ $/mt 837.00 839 913.3 1175 1343 1177 1181 1144

Copra - Indonesia (c.i.f-N.W.Europe) $/mt 553.00 560 603.3 791 896 770 785 769Groundnut oil - any origin (c.i.f-Rotterdam) b/ $/mt 2002.00 1400 1,693.7 1575 1311 1260 1308 1338

Palm oil - Malaysia (c.i.f-N.W.Europe) b/ $/mt 853.00 850.7 827.3 897 911 766 709 772Palmkernel oil- Malaysia (c.i.f-Rotterdam) $/mt 824.00 836.7 872.3 1057 1278 947 904 935

Soybean meal-any origin (c.i.f-Rotterdam) b/ $/mt 531.00 528.3 551.7 570 582 510 468 459

Soybean oil- Dutch b/ $/mt 1160.00 1070.3 1,006.7 991 977 857 851 835Soybeans-US (c.i.f. Rotterdam) b/ $/mt 592.00 505.3 527.3 555 552 460 432 424

GrainsBarley - Canadaian b/ $/mt 239.50 229.7 191 150.7 129.05 134.06 123.5 124.06Maize- US b/ $/mt 305.00 291.3 241.9 199.4 209.09 176.04 163.1 163.01Rice, Thailand, 5% broken white rice b/ $/mt 562.10 546.4 477.3 442.7 443.07 445 432 429Rice, Thailand, 25% broken white rice b/ $/mt 538.00 509.4 420.3 408.9 375 414 411 410Rice, Vietnam 5% 401.50 387.8 433.2 397.2 391.02 460.06 449.09 437.08Sorghum, US $/mt 292.00 259.9 385.9 202.1 224.02 185.04 174.3 187.08Wheat, Canada $/mt NR NR NR NR NR NR NR NRWheat, US, Hard Red Winter b/ $/mt 321.40 313.8 305.8 308 275.05 263.04 243.7 245.04Wheat ,US ,Soft Red Winter $/mt 297.60 275.2 257.7 276.4 264 220.04 202.08 220.01

Other Raw MaterialsCotton A Index b/ ¢/kg 198.2 204.3 202.4 192.0 207.0 163.0 162.0 155.0Rubber RSS3, SGP b/ ¢/kg 315.5 290.5 259 259.0 225.0 185.0 165.0 162.0Rubber TSR20, SGP (New) ¢/kg 296.2 244.6 234.8 235.0 198.0 166.0 153.0 151.0

Metals and MineralsAluminum (LME) b/ $/mt 2000.0 1836.1 1,782.8 1767 1709 2030.0 1990.0 1946.0Copper(LME) b/ $/mt 7918.0 7161.3 7,086.3 7162 7030 7002.0 6872.0 6737.0Gold (UK) $/toz 1631.0 1415.1 1,328.6 1272.0 1293.0 1295.0 1237.0 1222.0Iron ore, spot, cfr China $/dmt 148.5 125.5 132.7 135 120 93.0 82.0 81.0Lead (LME) b/ $/mt 229.0 205.3 210.2 211.4 2101 2237.0 2117.0 2034.0Nickel (LME) b/ $/mt 17296.0 14967.1 13,956 13909 14461 18600.0 18035.0 15812.0Tin (LME) b/ $/mt 24,018 20,902 21,314 22,910 22,636 22231 21091 19830Zinc (LME) b/ $/mt 202.9 NR 186.1 190.8 202.6 2327 2295 2277

a/ Included in the energy index (2000=100) b/ Included in the non-energy index (2000=100) c/ Steel not included in the non-energy index $ = US dollar, ¢ = US cent, bbl = barrel, dmtu = Dry Metric Ton Unit, kg = kilogram, mmbtu = million British thermal units mt = metric ton, toz = troy ounce, n.a-Not available, SGP = Singapore

Source: World Bank

arrIVaLS & PrICeSwww.CommodityIndia.com


37December 2014

Arrivals and Prices of Major Commodities

Source :Chart-1:Trade Source, Chart-2:Krishi marata vahini, Chart-3,8_Krishi marata vahini, Chart-5,7 -Trade Sources Chart4: MSAMB, Chart6: RSAMB, Chart9,10:NHRDF

arrIVaLS & PrICeSwww.CommodityIndia.com


38 December 2014

Disclaimer : Prices & arrivals are taken from the authenticated sources. Every care is taken to remove any discrepancy in data. However, www.CommodityIndia.com is not responsible for any divergence.

Source : Chart11:Cotton Association of India, Chart-12,13 ,14 Trade Sources, Chart 15 RBI Reference Rate Chart 16 Mcx Spot, Chart 17,18 Ncdex Spot, Chart 19,20 Trader Sources

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