Commodity Spikes

Maize likely to be range-bound
After a bearish close in the previous week, maize near-month futures gathered strength on the back of rising procurement activity from the government agencies. According to commodity analysts, maize futures are likely to move range-bound with a firm bias as rising wheat rates are supporting the maize rates along with good demand from poultry and starch manufacturers.

Last week, the market showed strength right from the opening trading session and maintained its upward movement to reach as high as Rs 723 a quintal on Thursday against the previous weekend's close of Rs 703 a quintal on the National Commodity and Derivatives Exchange (NCDEX). The country has exported around one lakh tonnes of maize so far, mainly to South East Asian countries. Market sources added that exports were expected to grow at faster pace as the prices of the US corn are still uncompetitive for South East Asia. This has resulted in huge export orders in the market, consequently firming the rates. The domestic production (kharif) is expected to be up by around 10-12 per cent as against last season's around 11 million tonnes.

Though starch manufacturers and poultry industry have showed reservations against the export of maize fearing the repeat of the last year's situation when maize rates had inched closer to Rs 1,000 a quintal on the back of shortage for domestic consumption.

On Friday, the near-month maize contract on NCDEX closed at Rs 720 a quintal, down Rs 3 from the previous close of Rs 723 a quintal.

Chilli bearish under arrival pressure
Chilli futures are likely to head for a bearish phase following the arrivals from Madhya Pradesh and expectations that fresh arrivals from Karnataka and Maharashtra are to start within a few days. Arrivals apart, the demand in the domestic and overseas markets is reported to be weak. This has resulted in lower take-off while the arrivals are on the rise.

According to commodity analysts, the selling pressure is denting chilli futures on the National Commodity and Derivatives Exchange (NCDEX). Though Andhra Pradesh, the largest chilli producing state, witnessed rains recently, trading sources maintained it would not affect the prices.

However, analysts said if rains persisted, the market could see some strengthening. They added unless demand comes in, chilli might head for a bearish phase. Already, the country is anticipating a bumper chilli crop this season. Earlier estimates suggested it might surpass 28 million bags (each of 35 kg) against the last year's crop of 23 million bags.

Mumbai-based traders said levels of Rs 3,500 a quintal could be foreseen this season. On the basis of technical analysis, lower support was put at Rs 4,380 a quintal, which the November contract of chilli had already broken when it closed at Rs 4,379 a quintal on Thursday.

It signals that the commodity is expected to move sideways to a weak trend in the coming week.

On NCDEX, the chilli near-month contract closed at Rs 4,380 a quintal against the previous week's close of Rs 4,493 a quintal, down 2.52 per cent.