Epic Research Daily Agri Commodity Report Of 28 May 2018

Expecting a bumper crushing season next year, Maharashtra Sugar mills plan to sign export contracts with neighbouring countries before the start of the next season. Mills are targeting 3-3.5 million tonnes (mt) exports of Raw Sugar to Bangladesh and China and another 2-2.5 mt of White Sugar to Sri Lanka to avoid a glut in domestic markets. Maharashtra’s current Sugar season officially ended on Wednesday with the last of the 187 mills ceasing operations. The state has produced 10.7 mt of Sugar, the highest in the last 10 years. Maharashtra produced just 4.2 mt of Sugar last year and the more than doubling of Sugar production has literally thrown the economics of the mills to the winds.

The central government has announced a 5 percent incentive on Onion exports to boost the root’s drooping prices in Maharashtra. It is expected that the price of the bulb will increase in the days to come. Onion prices have crashed in the wholesale markets of Maharashtra due to the bumper crop in the state. This year, Maharashtra reported plantation of over 3.5 lakh hectares of land, instead of the usual 3 lakh hectares. The increased arrival has subdued the price of Onions, which are trading at Rs 6-7 per kg in mandis. The price drop comes after an eight month bull run for the bulb in wholesale markets. From June last year till early March, average prices of the bulb hovered between Rs 25 per kg and 30 per kg.

India has raised import duty on Wheat to 30% from 20% earlier, according to a customs notice posted on the Central Board of Excise and Customs' website. The moves comes on the back of a record domestic Wheat production forecast of 98.61 million tonnes for the 2017-18 marketing year, up 100,000 tonnes from the year before, in the government's latest estimate released May 16. The world's second-largest Wheat producer had already raised the import duty to 20% from 10% in November 2017 on expectations of higher local output.

Economic News

Even as trade and farmer representatives have been trying to incentives for export of fresh onions, the Director General of Foreign Trade (DGFT) increased the Merchandise Export from India Scheme (MEIS) benefits for dehydrated onions from 3% to 5%, taking all stake holders by surprise. Speaking to ET, Pasha Patel, chairman of Maharashtra State Commission of Agricultural Costs and Prices said, "We have been demanding MEIS benefits at 7% for fresh onion from past several weeks. I had also apprised Union Finance Minister as well as the concerned authorities about it. However, there seems to have been some confusion while issuing the May 24 notification pertaining to de-hydrated onions, which account for a small percentage of the fresh onion." From the seven months between August 2017 to February 2018, onions had given good returns to farmers as average prices rules between Rs 20/kg to Rs 30/kg, hitting a high of Rs 36/kg. However, prices are now ruling below Rs 10/kg since March as rabi crop was being harvested. Onion prices normally remain subdued between March to May every year.

India's 2017/18 cotton exports are likely to jump nearly 30 percent from the year before to a four-year high of 7.5 million bales, as climbing global prices and a weaker rupee boost overseas demand, the head of an industry body told Reuters. Increased supply from India could drag on a rally in international prices for the commodity and would likely compete with shipments to Asia from exporters like the United States, Brazil and Australia. "We can end the season with exports of 7.5 million bales," said Atul Ganatra, president of the Cotton Association of India (CAI), adding that higher international prices would drive up shipments. The country has exported 6.3 million bales so far in the marketing year that started on Oct. 1 , he added. Each bale contains 170 kg of cotton. India shipped 5.82 million bales of cotton overseas last marketing year, according to data compiled by the state-run textile commissioner's office.

Trading Recommendations

SELL CORIANDER MAY BELOW 4490 TARGET 4460/4420/4370 SL 4540
BUY TURMERIC MAY ABOVE 7150 TARGET 7180/7220/7270 SL 7100
SELL GUARGUM5 MAY BELOW 8180 TARGET 8150/8110/8060 SL 8230

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