Soyoil will stay firm on supply cut; gold to see correction

WEEKLY COMMODITIES OUTLOOK

In soyoil, downward movement of prices will be restricted as farmers have cut supplies owing to falling prices of soy complex. Today's soybean arrivals in Madhya Pradesh (MP) stood at 2.5 lakh bags (each containing 90 kg), compared with 4 lakh bags last week.

In Maharashtra, today's arrivals stood at 1.5 lakh bags and in Rajasthan at 50,000 bags, both about 35 per cent lower than last week.

Today, bean was selling at Rs 1,045-1,060 per 100 kg in spot markets of MP. Crushers were buying soybean in the state at Rs 1,100-1,110 per 100 kg. In Rajasthan, soybean was being sold at Rs 1,050-1,060 per 100 kg while oil extractors were buying the crop at 1,125 per 100 kg.

Overseas, however, soyoil is seen as the weakest leg of the complex, following the current oversupply scenario. It will also help keep buyers at bay in the domestic market this week.

Today, a speculative rally was seen on the futures at Indore-based National Board of Trade. A Refco note suggested that this rally, speculative in nature, was due to a new membership card issued last week.

Soyoil prices are seen moving in a range-bound manner, said Si Kannan, an analyst with Sharekhan Commodites. NBOT December contract is seen trading between Rs 350 and Rs 355 per 10 kg, while NCDEX December contract is likely to be Rs 352-358 per 10 kg.

Gold: Profit-booking of the highly overbought yellow metal is likely after its price touches the psychological $500 an ounce mark. "It (gold) is likely to rise a bit higher than $500 (an ounce), say $503-504, before it gets into the correction mode. Correction is likely to be about $10-15 (an ounce)," said Hemal Doshi, precious metals analyst with Refco Commodities.

Overall, though fundamentals are bullish, the yellow metal is currently overbought. "This week's net long positions, as per the CFTC data, suggest a 30 per cent rise on week," said an analyst with Altos Broking.

Further, Asian markets "� especially India "� are sitting on huge pile of unsold gold stock. In India, festive season gold sales have been lower by about 40 per cent on year. Besides, domestic sales were hit as prices remained on the higher side on the back of the rupee weakening against the US dollar, having made gold imports into the country slightly expensive.

The fundamentals that are keeping gold bullish in the medium term are overseas speculative fund-buying supported by inflation concerns, news that various overseas central banks are keen on increasing their current gold reserves and rise in crude oil with the winter setting in.