analysis of key commodities march 7 2011 - By Ruchi Jain

analysis of key commodities march 7 2011 - By Ruchi Jain ; The weekly returns of select commodities, a set of agricultural, metals and energy products based on their spot prices are calculated to look at the performance of commodities as an investment alternative.

There are a number of factors that affect the returns of the commodities which not only emanate from the domestic front but also reflect the global demand-supply equations. While it is true that the returns delivered in the past are not a reflection or indication of the returns that would accrue in the future, it is nevertheless interesting to compare the same and analyze these differences.

Returns
Crude Oil prices gained 5 percent in the week ending on 5th March. Oil prices continued its upward movement amid concerns over the unrest in Libya; moreover there are concerns about the unrest spreading to other oil-producing nations. Uncertainly over energy prices and political instability supported the precious metals prices.

In spices complex, Pepper prices did not show any significant move in either direction during the week. Market development at different sources remained mixed with limited activity. As the largest pepper producing and exporting country, Vietnam has a significant role in determining pepper market direction. Vietnam’s crop is expected to be harvested in February/March. During January 2011, Vietnam was reported to have shipped around 7,000 MT of pepper. The shipment was sourced from previous year’s crop as new material from this year crop is only expected to arrive in the market during March 2011.

According to the latest estimates released by the Ministry of Statistics and Programme Implementation, Agriculture sector growth for October- December 2010 is estimated at 8.9 percent compared to -1.6 percent in the corresponding period last year.

As per the data received from States, wheat has been sown in 294.06 lakh hectares, which is 10.46 lakh hectares more than last year by this time. The pulses acreage is up by 12.86 lakh hectares and oilseeds by 3.52 lakh hectares compared to last year.

The total area coverage under coarse cereals (millets) in the country has declined from 290.25 lakh hectares during 2004-05 to 270.68 lakh hectares during 2010-11 (2nd Advance Estimates). The decline in the area under coarse cereals has been on account of shift of area to more profitable crops such as wheat, rice, cotton etc.

To increase production of coarse cereals in the country, the Government is implementing a Centrally Sponsored Scheme “Integrated Cereals Development Programme in Coarse Cereals Based Cropping Systems Areas (ICDP-Coarse Cereals)” subsumed under Macro Management Mode of Agriculture.

Methodology
Weekly return for each commodity is calculated as ln (price on w/price on w-1) where w is the weekend day and w-1 is the weekend day of previous week. Read More... For the latest updates PRESS CTR + D or visit Stock Market news Today

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