Rural Demand To Push Commodities Market
One of the triggers for rural demand is that the agriculture ministry has projected a good crop in the first advance estimates for the Kharif season at over 150 million tonnes
During the recent fortnight, commodity markets have exhibited an overall positive performance. Among all the commodities, the cotton futures ramped up, gaining up to 12.54 per cent and being in the spotlight. Strong demand from China and Turkey and some unforeseen rains in the US have caused a surge in the prices of cotton. On MCX, the soft commodity hit the price of Rs28,500 for the first time ever. Also, cotton exports from the US have been recorded at 15-year highs. The domestic markets also were impacted due to sluggish imports. In North India, the crops were affected by the Pink Ball Worm disease, leading to loss of some crops.
On the positive side, rural demand is expected to reach around Rs11,000 crore due to the push from a record Kharif harvest coupled with marginal hike in minimum support price. The agriculture ministry has projected a good crop in the first advance estimates for the Kharif season at over 150 million tonnes. Following cotton, the next commodity registering attractive gains was oil. WTI crude oil price zoomed by 5.43 per cent whereas Brent crude oil price gained 5.23 per cent. Crude oil prices were trading in an upward trajectory due to the supply squeeze with output disruptions and higher demand.
"The industrial metals were under pressure due to shutdown of Chinese factories on account of power crunch and rationing. As silver is majorly used as an industrial metal, it was seen lagging behind gold."
The OPEC-plus nations are having a tough time to meet increased output quota due to maintenance work. Besides, the lesser supply from the Gulf of Mexico has caused large weekly inventory drawdowns to respond to higher demand for oil to replace costly natural gas and coal. Meanwhile, the aluminium futures on MCX rose by 2.55 per cent during the fortnight while the bullions, gold and silver, gained 1.13 per cent and 0.93 per cent, respectively. In the global markets, gold rates faced some pressure as a stronger US dollar dampened the appeal of safe haven asset.
The gold market witnessed a strong pullback at the end of the fortnight as US Federal Reserve Chairman Jerome Powell indicated that the US is far from its full employment, thus boosting gold prices. The industrial metals were under pressure due to shutdown of Chinese factories on account of power crunch and rationing. As silver is majorly used as an industrial metal, it was seen lagging behind gold. On MCX, zinc, lead and copper futures were the weakest performing commodities. MCX Zinc traded flat with a gain of mere 0.23 per cent and MCX Lead and MCX Copper slipped by 1.67 per cent and 1.77 per cent, respectively.