Commodity – 26, February 2007

Increase in VAT rate

Central and state governments have agreed upon increasing basic VAT rate to 6% from the existing rate of 4%. The new rate will be effective April 2009.

Commodities like branded bread, paddy, pulses, wheat, rice and edible oil will primarily face the rate increase. The tax rate on these commodities will be at 5% from April 2008 and will increase to 6% from April 2009.

The rate on tobacco will be 12.5% effective April 2007 hence tobacco consumers need to make higher provisions from this year.

Conference on Potato disease

The Ontario Potato Board and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) will host the first International Conference on potato to be held in Guelph, Canada.

The Conference will run for two days, 5th and 6th of March 2007. The main objective will be to discuss common scab a disease caused by the bacterium Streptomyces scabies. Experts around the world will come together to discuss current and potential management practices to reduce the incidence of this disease.

The conference is useful for growers, researchers and crop consultants.

Other commodities update

Flying prices of onion is expected to come down as fresh arrivals of onion are expected from Kurnool and Tandur. Low onion arrivals have caused the price to touch a high of Rs 1190 per quintal.

Irregular and insufficient rainfall has affected cardamom production drastically and consequently the production of cardamom is expected to be lower by 5-10 percent this season.

Out of total national output of 12540 tons in 2005-06, Kerala produced 9765 tons while Karnataka and Tamil Nadu produced 1,775 tons and 1,000 tons cardamom respectively.

Pepper future showed a down trend last week on reports of possible stoppage of trading in pepper futures in the commodity market.
On NCDEX the March contract fell by Rs 142 a quintal compared to its Thursday’s close and closed at Rs 12422 per quintal.

On NMCE the March contract fell by Rs 186 a quintal compared to its Thursday’s close and closed at Rs 11850 per quintal.
The total turnover on NCDEX increased by 2,544 tons to 26,550 tons, while on the NMCE it increased by 1,376 tones to 6,019 tons.

Commodity- 19-February, 2007

Wheat export banned for the whole year 2007

Government banned export of wheat for whole year 2007. The measure is taken to control prices of essential food items. Agro commodities including wheat had contributed substantially for the inflation. The inflation for the week ended on 27th January, 2007 was stood at 6.58 %.

The estimated production of wheat for the year 2007 is stood at 72.5 million tones and ban on export has been ordered to ensure that Food Corporation of India (FDI) has sufficient stock for the year 2007.

In Punjab and Hariyana, a sudden competition between FDI and large trading houses to procure wheat has converted market in to battlefield. The government has increased the support prices to Rs 750 per quintal, from Rs 650 per quintal. However from market sources it is learned that large trading companies has booked a huge amount of wheat at Rs 850 per quintal.


Other Commodities

Unfavourable weather conditions and irregular rainfall may damage potato crop substantially. The production is expected to reduce this year and resultantly potato future rose sharply on good demand from trader’s expectations of fall in production.

Both Agra and Tarkeswar varieties were closed with positive note. During the week potato gained almost Rs 93 per quintal. On Friday, 9th February potato touched a low of Rs 508 and it has seen a high of Rs 601 on Thursday, 15th February.
Potato gained almost 18 percent compared to its 15 days low however traders preferred to book profit on Thursday and hence it closed at Rs 586 per quintal.

Pepper contract for February has declined by Rs 15 and closed at Rs 12350 per quintal. All other contracts except August were declined in the range of Rs 44 to Rs 102 per quintal while August contract has been closed at Rs 13735, up by Rs 119 per quintal.

Commodity Round Up- 5-February-2007

The Commodity Market Spreads its wings

The Commodity market is becoming popular day by day. Various steps are being taken by its fans to increase its popularity. One such activity is taking place in Mumbai on 10th and 11th February 2007.

This mega event covering multiple commodities of economic significance to the country is being arranged in Mumbai, where well known industry experts will critically analyse major sectors like food grain, sugar, biofuel, fiber etc.

Another attraction of the event is the seminar on emerging global and domestic issues in production, quality, marketing, foreign trade, packaging, risk management and price outlook for various commodities.

Quality check on chillies

If we want to compete in the international market then it is essential to maintain the quality as per international standards. Realizing this fact, the Spice Board decided to set up a quality evaluation laboratory of international standards at Guntur in Andhra Pradesh.

The aim of the laboratory is to maintain the quality of chillies in the states having production of at least 60 percent of India's total production. The laboratory will be equipped with latest testing instruments and will be handled by the qualified scientists.

Agro Commodity zone

For most commodities, last week was overall a good time. Most of them on NCDEX and MCX closed in positive state.

Rape Seed/Mustard Seed production for this year is expected to be 55 lakh tonnes compared to 68.7 lakh tonnes last year. The Rapeseed/Mustard seed contract for February gained 1.09 percent and closed at Rs 404 per 20 Kg.

Wheat futures on NCDEX closed at Rs1044 per quintal after recording a gain of 1.64 percent. Guar seed futures closed at Rs 1967 after gaining 1.50 percent.

Jeera futures too maintained the rally with others and closed at Rs 9084 per quintal with a gain of 0.80 percent.

Cardamom continued its upward movement. The increased export demand and the fall in supply due to unfavourable weather conditions boosted the market rate for cardamom.
The price of cardamom rose by around Rs 35 per Kg and closed at Rs.352 per Kg.
Official sources pointed out that the weather conditions will continue to be unfavourable and this is likely to have further negative impact on the crop.