ChiniMandi, Mumbai: 1st April 2024

Domestic Market

Domestic sugar were mixed today

Domestic sugar prices in major markets were reported to be mixed, with prices falling in Uttar Pradesh while rising in Maharashtra. However, given the higher monthly prices, they are expected to remain under pressure in the coming days. Furthermore, demand is said to be weak in the major markets, which is likely to weigh on prices.

In Muzaffarnagar, M-grade sugar costs between Rs 3,750 and Rs 3,780 per quintal, while S-grade sugar is expected to cost between Rs 3,420 and Rs 3,460. Agrimandi expects the price of S grade sugar in the Kolhapur market to fall to between Rs 3,380 and Rs 3,460 per quintal within the next two weeks.

Ex-mill Sugar Prices as on  April, 1 2024 :

Destination-wise Spot Prices as on April, 1 2024 :

 

International Market

At the time of writing this update London White Sugar #5 front month contract is not trading today on an occasion of Easter Monday, whereas the New York Sugar #11 front month contract is trading at 22.62 c/lb.

Currency, Commodity & Indian Indices

The rupee traded against the US dollar at 83.393 whereas USD was trading with BRL at 5.0147, Crude futures traded at ₹6916, Crude WTI traded at $82.88 barrel. Sensex closed 363.20 points higher at 74014.55 whereas Nifty ended 135.10 points higher at 22462.00

News Round-Up

Sugar production in Maharashtra crosses more than 107 lakh tonnes; 140 mills end operations

Sugar production in Maharashtra crosses more than 107 lakh tonnes; 140 mills end operations

Industry needs to adopt forward-looking approach to produce sugar as per changing consumer behaviour and other factors

Industry needs to adopt forward-looking approach to produce sugar as per changing consumer behaviour and other factors

Sensex, Nifty hit new highs

Sensex, Nifty hit new highs

 

XAU/USD Current price: $2,239.91

• Upbeat United States data confirmed Federal Reserve’s conservative approach to rate cuts.
• Stock markets returned from the long weekend with a soft tone, Wall Street dips.
• XAU/USD retreats from record highs, retains its bullish stance.

Gold price retreats from a fresh record high of $2,265.58 a troy ounce. XAU/USD rallied during Asian trading hours but turned south during European ones. XAU/USD currently trades around $2,240, as the US Dollar gathered momentum following the release of a much-better-than-anticipated United States (US) ISM Manufacturing PMI. The report showed that economic activity in the manufacturing sector expanded in March after contracting for 16 consecutive months, with the index jumping to 50.3 from 47.8 in February.

S&P Global also released the final estimate of its Manufacturing PMI, which was confirmed at 51.9,  below the 52.5 expected but still with expansionary levels. The report added that “signs of improving wider economic conditions and market demand fed through to a further expansion of US manufacturing production in March, with the rate of expansion hitting a 22-month high. The rate of job creation also quickened, but new order growth softened.”

Meanwhile, Wall Street turned south. US indexes are down following the extended weekend, with the Dow Jones Industrial Average down over 200 points. Markets are posting a late reaction to Friday’s events. On the one hand, the Bureau of Economic Analysis (BEA) reported that the core Personal Consumption Expenditures (PCE) Price Index rose 0.3% MoM and 2.8% YoY in February, as expected. On the other hand, Federal Reserve (Fed) Chairman Jerome Powell participated in an interview open to questions, in which he repeated that the Fed is in no hurry to cut rates, as economic growth remains strong and inflation is above target.

Treasury yields are firmly up, with the 10-year note offering 4.33%, up 12 basis points (bps) and the 2-year note yielding 4.71% after adding 10 bps, both flirting with March highs.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it filled an opening gap and bounced back while currently trading unchanged around its daily opening. The same chart shows moving averages maintain their bullish slopes far below the current level, reflecting bulls’ dominance. At the same time, technical indicators have lost their upward strength but remain within positive levels, with the Relative Strength Index (RSI) indicator currently consolidating around 76, with no signs of giving up.

Spot gold is correcting near-term extreme overbought conditions, as the 4-hour chart shows technical indicators retreated sharply, heading south almost vertically although well above their midlines. At the same time, moving averages have partially lost their upward momentum but are developing below the current level, with the 20 SMA currently providing dynamic support at around $2,208.05.

Support levels: 2,228.40 2,208.05 2,184.70

Resistance levels: 2,250.00 2,265.60, 2,280.00

XAU/USD Current price: $2,239.91

• Upbeat United States data confirmed Federal Reserve’s conservative approach to rate cuts.
• Stock markets returned from the long weekend with a soft tone, Wall Street dips.
• XAU/USD retreats from record highs, retains its bullish stance.

Gold price retreats from a fresh record high of $2,265.58 a troy ounce. XAU/USD rallied during Asian trading hours but turned south during European ones. XAU/USD currently trades around $2,240, as the US Dollar gathered momentum following the release of a much-better-than-anticipated United States (US) ISM Manufacturing PMI. The report showed that economic activity in the manufacturing sector expanded in March after contracting for 16 consecutive months, with the index jumping to 50.3 from 47.8 in February.

S&P Global also released the final estimate of its Manufacturing PMI, which was confirmed at 51.9,  below the 52.5 expected but still with expansionary levels. The report added that “signs of improving wider economic conditions and market demand fed through to a further expansion of US manufacturing production in March, with the rate of expansion hitting a 22-month high. The rate of job creation also quickened, but new order growth softened.”

Meanwhile, Wall Street turned south. US indexes are down following the extended weekend, with the Dow Jones Industrial Average down over 200 points. Markets are posting a late reaction to Friday’s events. On the one hand, the Bureau of Economic Analysis (BEA) reported that the core Personal Consumption Expenditures (PCE) Price Index rose 0.3% MoM and 2.8% YoY in February, as expected. On the other hand, Federal Reserve (Fed) Chairman Jerome Powell participated in an interview open to questions, in which he repeated that the Fed is in no hurry to cut rates, as economic growth remains strong and inflation is above target.

Treasury yields are firmly up, with the 10-year note offering 4.33%, up 12 basis points (bps) and the 2-year note yielding 4.71% after adding 10 bps, both flirting with March highs.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows it filled an opening gap and bounced back while currently trading unchanged around its daily opening. The same chart shows moving averages maintain their bullish slopes far below the current level, reflecting bulls’ dominance. At the same time, technical indicators have lost their upward strength but remain within positive levels, with the Relative Strength Index (RSI) indicator currently consolidating around 76, with no signs of giving up.

Spot gold is correcting near-term extreme overbought conditions, as the 4-hour chart shows technical indicators retreated sharply, heading south almost vertically although well above their midlines. At the same time, moving averages have partially lost their upward momentum but are developing below the current level, with the 20 SMA currently providing dynamic support at around $2,208.05.

Support levels: 2,228.40 2,208.05 2,184.70

Resistance levels: 2,250.00 2,265.60, 2,280.00

• Gold price kicks off Q2 and Easter Monday at a new all-time high above $2,250.
• US Dollar stays subdued amid upbeat mood, soft Core PCE inflation data.
• Gold price hits the Bull Flag target at $2,251, a correction in the offing?

Gold price is consolidating the latest uptick to a new all-time high of $2,260, kicking off Easter Monday and the second quarter of 2024 on a positive note. Extended Easter holiday-induced thin liquidity conditions aid the Gold price uptrend amid a broadly subdued US Dollar.

A June Fed policy pivot bets underpin Gold price

The US Dollar remains defensive, as markets set off the new quarter with optimism, especially after China’s Manufacturing and Services PMI data surpassed expectations in March. On Sunday, China’s official Manufacturing Purchasing Managers’ Index (PMI) jumped to 50.8 in March, compared with the 49.1 contraction reported in February and above the estimates of a 49.9 figure. The Non-Manufacturing PMI rose to 53.3 in the same period vs. February’s 51.4. Meanwhile, China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) edged higher to 51.1 in March on Monday, beating estimates of 51.0.

Additionally, increased bets that the US Federal Reserve (Fed) will begin lowering interest rates in June, following Friday’s US Personal Consumption Expenditures (PCE) Price Index, exert downside pressure on the US Dollar, keeping Gold price underpinned.

Inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, increased slightly to 2.5% on a yearly basis in February, data released by the US Bureau of Economic Analysis (BEA) showed Friday. The reading met the consensus forecast and followed January’s 2.4% increase. The Core PCE Price Index, which excludes volatile food and energy prices, rose at an annual pace of 2.8%, in line with the market expectations but slowing from a 2.9% increase reported previously.

Markets are currently pricing a 68% probability of a June Fed rate cut, up from 63% seen before the PCE data release. Heightened expectations of a June Fed rate cut come even after Fed Chair Jerome Powell said Friday that “the economy is strong” and there is “no hurry to cut rates.” Powell participated in a discussion at the Macroeconomics and Monetary Policy Conference, in San Francisco, on Friday.

Looking ahead, the US Nonfarm Payrolls data, due on Friday, will be critical to sealing in a June Fed rate cut, having a significant impact on the value of the US Dollar and on the Gold price direction. In the meantime, the return of full markets in the US after the long Easter weekend break could trigger a bout of profit-taking in Gold price, as markets resort to position readjustment, in anticipation of the US employment data, trickling in from Tuesday.

Later on Monday, the US ISM Manufacturing PMI data will be also closely scrutinized for fresh hints on the strength of the US economy, influencing the market’s pricing of the Fed rate cut expectations and, in turn, the non-interest-beating Gold price.

Gold price technical analysis: Daily chart

As observed on the day chart, Gold price achieved the Bull Flag target measured at $2,251 on its way to renewing the lifetime highs at $2,260 on Monday.

The 14-day Relative Strength Index (RSI), lies in the extremely overbought zone near 80.0, suggesting that Gold price remains primed for a corrective pullback any time soon.

If that happens, the immediate support could be found at the previous record high of $2,236 set on Thursday. A breach of the latter could fuel a sharp drop toward the $2,200 threshold.

Further south, Thursday’s low of $2,187 will be challenged, followed by the bullish 21-day Simple Moving Average (SMA) at $2,168.

Should Gold buyers manage to defy the bearish odds, a test of the $2,270 round level cannot be ruled out.

The next on Gold buyers’ radars will be the $2,300 psychological level.

 

The United Arab Emirates (UAE) is slashing exports of its Upper Zakum grade as it is diverting more volumes of the medium sour crude to a huge domestic refinery, traders and analysts have told Reuters.

ADNOC, the state oil and gas firm of one of OPEC’s top producers and exporters, is estimated to have shipped around 650,000 barrels per day (bpd) of Upper Zakum crude in March, compared to a monthly average of around 940,000 bpd throughout 2023, according to Rystad Energy data cited by Reuters.

At the same time, ADNOC has exported more volumes of the lighter and sweeter grade Murban to replace lower volumes of Upper Zakum, according to traders and analysts.  

More Upper Zakum crude is now being run at ADNOC’s refurbished Ruwais refinery, which has a capacity to process 837,000 bpd of crude. 

Back in 2018, ADNOC said it would invest $3.1 billion to introduce crude processing flexibility at its Ruwais oil refinery. Since then, the refinery has been modified to enable ADNOC’s Ruwais Refinery-West complex to process up to 420,000 bpd of Upper Zakum crude or similar crude types. This has freed more volumes of the UAE’s Murban crude, which fetches a higher price on the global oil markets, to be utilized for export sales.

Commenting on the refinery modification at the time, ADNOC said that “we can maximise the benefit of price differentials to enhance refinery margins, improve the middle distillate products and release valuable Murban crude into the market.”

ADNOC began using Upper Zakum at its domestic refinery in September last year, traders told Reuters.

Later in the autumn of 2023, sources familiar with ADNOC’s plans told Reuters that the Abu Dhabi firm had already notified some of its term customers that it would reduce the volume of Upper Zakum supply in 2024. 

On the other hand, the UAE has said it would boost supply of the more expensive Murban crude, especially as the Middle Eastern producer won a higher quota under the OPEC+ agreement for 2024.

“Barrel-for-barrel, Murban brings more revenue for equal compliance,” Adi Imsirovic, director of Surrey Clean Energy, told Reuters.

Importers of the UAE’s medium sour grade Upper Zakum, most of all China, will now have to scour the market for other sources of heavier crude.   

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

U.S. natural gas producers are slashing production in response to multi-year low prices. But they are also looking beyond the current slump, preparing to turn on more output by flexible operation of their inventory of wells.  

“Natural gas is currently pricing at or below costs of production,” an executive at an exploration and production company said in comments in the quarterly Dallas Fed Energy Survey released this week. 

Prices are historically low due to weak winter demand amid milder weather, record output at the end of 2023, and higher-than-average natural gas stocks.  

Working natural gas stocks in the week to March 22 were 41% more than the five-year average and 23% higher than last year at this time, per the latest EIA data. 

The oversupply and low prices have prompted many producers to start reducing production. But some are also stocking up inventories of wells ready to start pumping – or to be turned in line – as soon as prices rebound. Producers expect natural gas prices to recover next year amid growing demand for LNG exports and new LNG export plants that are slated to begin operations in 2025. 

“All of us in the natural gas business are pinching as many pennies as we can right now,” Josh Viets, Executive Vice President and Chief Operating Officer at Chesapeake Energy, told the audience at Hart Energy’s DUG GAS+ Conference & Exhibition 2024 in Louisiana this week. Related: Against All Odds American Oil Soars Under Biden

But Chesapeake Energy, set to become the top U.S. natural gas producer after the planned merger with Southwestern Energy, is also deferring production from around 80 wells this year, which would give it up to 1.0 bcf/d of productive capacity available from deferred turn in line wells (TILs) by the end of 2024. 

“The way I like to think about it is we’re using the reservoir as storage,” Viets told the conference, as carried by Bloomberg. 

“When the market says, ‘hey, I need more gas,’ we’ll be in a position to quickly restore that to help meet the needs of consumers.”

In the Q4 2023 earnings release in February, Chesapeake Energy said it would be building productive capacity to align with consumer demand. By year-end, the company plans to have deferred around 35 drilled but uncompleted wells (DUCs) and about 80 TILs. A measured approach to production activation would be responsive to market demand, Chesapeake noted. 

Other U.S. natural gas drillers, including the current top producer EQT Corporation, have also reduced output in response to the low domestic prices. 

“The low prices we are experiencing now are causing us to tuck it in and keep our powder dry,” an executive at an E&P company said in comments to the Dallas Energy Survey. 

“While companies are certainly protective of cash flow, they all want to be ready to service the next wave of LNG projects coming online in 2025,” Erin Faulkner at Enverus wrote this week. 

Despite multi-year low natural gas prices in the United States, domestic producers continue to be optimistic about the long-term prospects of gas as a fuel, both in America and abroad.  

Recent deals for LNG supply and midstream expansion point to an optimistic view in the industry about global gas demand and the role the U.S. could play in meeting said demand, despite the halt to LNG permit reviews.  

Chesapeake, for example, signed in February its first LNG Sale and Purchase Agreements to buy around 0.5 million tonnes per annum of LNG from Delfin LNG at a Henry Hub-linked price with a targeted contract start date in 2028. Chesapeake will then deliver the LNG to commodity trader Gunvor on an FOB basis with the sales price linked to the Japan Korea Marker (JKM) for a period of 20 years.  

Pipeline giant Enbridge announced this week a joint venture to build and operate natural gas pipelines connecting gas supply from the Permian to the U.S. Gulf Coast to tap into growing LNG export demand. 

Henry Hub prices are set to rise by the end of 2024, and further still in the medium term, according to executives polled in the Dallas Fed Energy Survey. 

Survey participants expect a Henry Hub natural gas price of $2.59 per million British thermal units (MMBtu) at year-end, compared to an average price of $1.44 per MMBtu through most of March when the survey responses were collected. Executives see Henry Hub prices at $3.18 per MMBtu two years from now, and at $3.94 per MMBtu five years from now.   

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

By Doug Tenney, Leist Mercantile

Following a great dinner at home recently, Cindy asked, “So, Doug, if you were preparing tomorrow night’s meal, what would you make?” Hmn…My response, “Remember that time I made a baloney omelet?” I was immediately disqualified. Producing a meal requires skill, planning, experience, and common sense — just like producing crops. No baloney about that!

Recent price activity for CBOT wheat has been extremely disappointing. During the first half of December 2023, July CBOT rallied to $6.66 in the midst of a 3-day buying spree when China bought 41 million bushels of US wheat. Fast forward to the week of March 11. Disappointment was plentiful when in 3 successive days China announced several cancelations of U.S. wheat purchases totaling 18 million bushels. That same week China was also canceling wheat purchases from Australia and France. Corn, soybeans, and wheat all took huge price declines from December into February. While corn and soybeans reached contract lows the week of Feb. 26, wheat continued to move lower into the first half of March when July CBOT reached its most recent contract low at $5.37 ¾. It made multiple new contract lows in both February and March.

U.S. wheat producers last fall were obviously optimistic on prices as total acres estimated by USDA for 2023-2024 were expected to reach 49.6 million acres, up 3.8 million acres or 8% from 2022-2023. While many producers were applying nitrogen the last half of March and into early April, some producers were at least contemplating destroying wheat due to the price declines since December. Instead, they would plant corn or soybeans.

There continues to be growing confusion on world soybean imports into China. On one hand, the March USDA WASDE Report detailed China would be importing 105 million tons, a furious appetite of world soybeans for the current marketing year which ends August 31. That is an increase of 3 million tons from the Feb. 8 WASDE Report. The 105 million tons of soybean import is a monstrous number, the equivalent of 3.858 billion bushels, using nearly 93% of U.S. soybean production from 2023 if China imported exclusively U.S. soybeans. Of course, that will never happen but the comparison is mentioned only to highlight the vast import number. Here’s the confusion. To date, China has been buying very little of Brazil soybeans, while the latest U.S. soybean sale of 11 million bushels was on Jan. 19.

Into early March, Brazil farmers were extremely disappointed with the snail-like pace of soybean sales to China. Noticeably absent from the headlines has been any mention of Brazil soybean sales to China, which weeks earlier accounted for only 3 to 8 cargoes, roughly 2 million bushels per cargo, each week on several instances in January and February. Brazil’s soybean harvest to date was progressing faster than normal. It proved to be frustrating that soybean prices were declining along with the basis also widening as harvest progressed.

May 2024 CBOT soybeans reached a recent high at $12.17 ½ on March 14 up 20 cents on the day. That morning, Brazil farmers were heavy sellers of soybeans, putting an end to the mid-morning rally, as soybeans were down one penny on the close. Evidently, the 2-week rally of nearly 90 cents caught lots of attention when it was recognized for the steep climb in just two short weeks from its contract low of $11.28 ½ on Feb. 29.

Why is there a big spread between USDA and Conab, Brazil’s food agency on Brazil’s production numbers for soybeans and corn? USDA projected Brazil’s soybean production at 155 million tons and the Brazil corn production at 124 million tons. Conab has projected the Brazil soybean production at 146.8 million tons with the Brazil corn production at million 112.7 tons. You would think the numbers would be much closer.

Last month I was with a group from the Fairfield Soil & Water Conservation District touring two solar farm projects in Ross County. We were able to see their construction methods which included racking systems and panel placements that followed the contour of the topography. Their use eliminated the need for moving huge amounts of soil to have table top consistency across the project. In addition, the projects utilized a special mix of grasses grown onsite before the project started, then baled for future seeding efforts. This eliminates the need for straw to be imported from outside the project area, preventing plant species not already present at the project sites.

Thought for the day, “When you don’t know what you’re talking about, it’s hard to know when you’re finished.” – Tom Smothers.

When the energy boom took off in eastern Ohio, the general thought was that the Utica shale was an area primarily rich in natural gas.

Now oil production is also starting to surge.

Oil production in Ohio hit a record 27.8 million barrels in 2023, up 41% from 2022, according to researchers at the Levin College of Public Affairs and Education at Cleveland State University who have tracked production since 2011. In December alone, eastern Ohio oil wells pumped 93,000 barrels of crude, up one third from December 2022, according to federal data.

Ohio has become one of the top 10 oil producers in the country. It already was one of the biggest producers of natural gas.