Mentha oil, bullion dominate

Updated: Jan 2 2006, 05:33am hrs
Energy and metals

Gold closed the year at an amazing $520/ounce its highest annual closing price in a quarter of a century in London buoyed by investors seeking to diversity their portfolios. Gold last ended a year above $500 an ounce in 1980. The metal has averaged $445.35 this year, its highest since 1987.

Gold reached a 24-year high of $544.5 an ounce on December 12 as investors diversified from stocks, bounds and currencies because of concern about inflation. Tracking gold silver also settled the year inching towards $9 mark.

Having reached a year high $9.34 it closed out the year strongly at $8.94. Crude oil rose and gasoline surged to a two-month high on concern that US supplies of the motor fuel will be insufficient to meet demand next year.

The rise in prices caps a year in which crude oil, gasoline, heating oil and natural gas jumped to records after hurricane Katrina shut production platforms, refineries, pipelines and ports along the US Gulf of Mexico coast.

Mentha oil was the surprise package of the year as the new kid on the block emerged from the shadows of being a speculative giant and proved that it was more than just that. It was looking strong enough to test the magical 4-figure mark early in 2006.

Pulses was the other commodity to make a mark ably led by urad that ended the year on a stronger note when compared with its compatriot chana. Even though both the commodities were traded in the same range a couple of months saw that there was more than a 50% change as urad tested new levels of 3,100 and closed the year at 2,700 mark. Chana also had a great year put its performance was dwarfed by that of urad. The major disappointment of the year was the speculative giant guarseed that ended the year on a dull note and also lost its tag as it entered into a ranging mode.

Spices

Cardamom continues to lead the way for the spices and was looking good for more especially on speculative interest as it was testing the Rs 300 mark, but the worrying part was the spot price hovering around the 240 mark.

Pepper prices, that were remaining firm on anticipation of a drop in pepper production during the next season worldwide, especially in India and Vietnam, has not impacted the domestic pepper market positively as it lost nearly 7% during the week in both NCDEX and MCX.

And there is more bad news for pepper with regard to exports as it looks to have out priced it self. Currently, markets worldwide remain rather dull as importing nations are not showing urgency in procuring pepper. Vietnam has reduced prices to $1,270 (500 gm/litre), $1,360 and $1,500 for ASTA grade. Brazil offers B1 ASTA for $1,325-1,350 while Indonesia is trading at $1,400-1,425.

On parity, Indian pepper is priced at $1,650-1,675. Other spices like chili, jeera and turmeric all had a dull week and was headed south. While chilli and jeera remained somewhat steady jeera plummeted to a 5 month low and was even testing the Rs 60 mark.

Plantations

The domestic rubber prices have to wait for another year to achieve its dream, as it was unable to do so during the current year. It looks, as there is some intervention from somewhere that is preventing it from achieving its long cherished dream of catching up with the Bangkok rubber prices.

It has come close for the second time during the past two months and on both occasions it fell marginally short. It looks as if they need some more help on the fundamental side to break the jinx because if they are able to break the psychological barrier then there wont be any holding back.

The domestic future is experiencing strong resistance around 7,300 mark and the year end profit booking saw the prices tumbling down by more than 3% from the dizzy heights.

With the winter reaching its peak one is sure about the impact on the production side and the things that matter is the falling leafs that is sure to affect the output in days to come. On the positive side there is good demand for rubber from the various sources even at higher levels.

Courtesy: Geojit Commodities Ltd