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OIL PRICES SPRING BACK

World oil prices rose on Thursday, a day after hitting 10-month lows, but market sentiment remained negative because the global crude glut has persisted despite OPEC-led output cuts.

Brent crude futures ended 40 cents higher to $45.22 a barrel, after falling as low as $44.53. Brent fell 2.6 percent the previous session to $44.35, lowest since November.

US crude futures ended up 21 cents a barrel at $42.74 a barrel. On Wednesday, they hit a low of $42.05, their lowest intraday level since August 2016.

Crude has dropped around 20 percent since late February, erasing gains after OPEC and other countries agreed to cut crude output 1.8 million barrels per day (bpd) for the first six months of 2017.

Last month, the Organization of the Petroleum Exporting Countries and other producers extended the output cut deal for nine months. But the global crude glut has persisted, with output rising in Libya and Nigeria, OPEC members exempt from the cuts.

In the United States, heavy oversupply in gasoline stocks has caused demand on the Colonial pipeline to hit a six-year low.

Crude output is still increasing in the United States, where some shale producers can profit even if oil prices drop below $40 a barrel.

Oil stocks in Europe’s Amsterdam-Rotterdam-Antwerp hub hit 64.2 million barrels in the week to June 16, the highest in a year, according to data from industry monitor Genscape.

UPWARD MILK PRODUCTION TREND CONTINUES IN US

The upward milk production trend has continued across the US, with an increase of 1.8 percent reported during the month of May. Milk production in the 23 major states during the month of May totaled 17.8 billion lb, the latest figures released by the US Department of Agriculture (USDA) show. The USDA also decided to revise production figures for the month of April to 17.2 billion lb; this meant that production in April increased by 2.2 percent, compared to the same month in 2016. The April revision represented an increase of 36 million lb, or a climb of 0.2 percent, from last month’s preliminary production estimate by the USDA.

PAKISTAN SUGAR MILLERS NOT TO GO FOR MORE EXPORTS WITHOUT GOVT REBATE

Pakistan Sugar Mills Association (PSMA) has demanded the Ministry of Commerce for rebate of Rs15/kg on the export of additional 600,000 tons sugar, as the international price has dropped to $400/ton from $540/ton.

The Sugar Advisory Board (SAB) had recommended the Ministry of Commerce to allow exporting 1.2 million metric ton surplus sugar without any time restriction, as the total surplus sugar till season closing would be 1.884 million tons. However, the ministry followed half the recommendation, and permitted export of 600,000 tons of sugar.

INDIA FARM PROTESTS PUSH FOR INCREASE IN EDIBLE OILS IMPORT TAX

India’s government is facing mounting pressure to raise import duties on edible oils after farmers staged mass protests in key farm states amid a slump in oilseed prices to below government support levels.

Local oilseed crushers are struggling to compete with cheaper edible oil imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans, even after prices tumbled by a third over the past 14 months due to bumper global production.

 

GOLD, SILVER INCH HIGHER

Gold and silver were trading higher in early trade on Thursday on account of buying in precious metals by jewellers, retailers and industries. MCX Gold was up 0.33 per cent, or Rs 95, at Rs 28,672 per 10 gram, while MCX silver was trading 0.84 per cent, or Rs 320, up at Rs 38,297 per 1 kg.

PALM OIL MAY DECLINE FURTHER

Palm oil Sept. contract may fall more to 2,420 ringgit per tone, as suggested by its wave pattern and a Fibonacci ratio analysis.

The contract is riding on a wave c, the third wave of a three-wave cycle from the June 19 high of 2,515 ringgit. This wave is capable of traveling to 2,421 ringgit, its 100 percent Fibonacci projection level.

A Fibonacci retracement analysis on the downtrend from the May 18 high of 2,605 ringgit to the June 8 low of 2,390 ringgit reveals that palm oil has briefly pierced below the support at 2,438 ringgit, the 61.8 percent level. It is highly likely to extend its fall to 2,420 ringgit, which almost coincides with 2,421 ringgit. A break above 2,453 ringgit could lead to a gain to 2,467 ringgit.

IRON ORE RATE RESUMES FALL IN CHINA

The Northern China import price of 62 percent Fe content ore turned weaker again on Tuesday trading near one year-lows of $54.40 per dry metric tone. The price of the steelmaking raw material is now down by more than 40 percent from its mid-March peak. A new note by analysts from Citigroup added to the pressure on iron ore.

Experts sees the commodity at $51 a tone in the third quarter compared with a previous estimate of $64, and at $48 in Q4 2017, down from $60 in its previous prediction: Even with prices dropping, global supply continues to rise, according to Citigroup, which forecasts a surplus of 118 million tons in 2017 after a glut of more than 60 million tons last year. Ongoing expansion by large miners, notably Vale’s biggest project S11D and Roy Hill, will probably contribute about 60 million tons of additional supply this year, the bank estimates.

INDIAN FERTILIZERS TO COME UNDER 12PC TAX SLAB, PRICES LIKELY TO RISE

India’s landmark tax reform, the goods and services tax (GST), may not be good news for farmers. Retail prices of commonly used fertilizers and micronutrients are likely to increase, not only raising the cost of cultivation but also leading to imbalanced use of fertilizers.

Last week, the GST Council fixed a 12 percent rate on fertilizers, up from the current 4-8 percent rates, depending on raw materials used and in which states the products are sold. For urea, the most commonly used fertilizer, prices may go up by Rs300 to Rs400 per tone. For other fertilizers such as diammonium phosphate (DAP) the hike in retail prices could be as high as Rs3,000 per tone in states such as Punjab, Haryana and Uttar Pradesh, where there are no taxes at present on the farm nutrients.

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