Chile Sees Its 2014 Copper Output at Record, Cuts Price View

(Reuters) - Chile reduced its global outlook for copper prices to an average $3.05 per pound this year, down from its previous estimate of $3.15, as prospects for growth ease in top buyer China.

Prices are expected to further lose ground in 2015, falling to $3.00 per pound, state copper commission Cochilco said on Tuesday.

World No.1 copper producer Chile is expected to boost its output by 5.0 percent this year to a record 6.07 million tonnes of the red metal as the new Ministro Hales, Sierra Gorda and Caserones mines come on line, Cochilco added.

Chile, which produces a third of the world's red metal, is expected to further increase its production by 2.8 percent to 6.24 million tonnes next year.

Increased mining output is poised to trigger a global copper surplus of 373,000 tonnes this year, which Cochilco's new president Sergio Hernandez deemed "not significant."

Copper price rally comes to abrupt end

In late afternoon New York trade on Tuesday May copper changed hands at $2.995 a pound as weakening demand from China and a flood of new supply worry the market.

Earlier in the day the red metal fell as low as $2.965, down more than 2% from Monday's close.

Tuesday's decline marks something of a reversal in sentiment after weeks of steady gains as the copper price dug itself out of a near four-year low struck mid-March.

Copper is down nearly 12% from opening levels for the year as the market adjusts to slower growth in China which consumes more than 40% of the world's copper.

China's copper imports have not slowed down, rising a whopping 31% to 420,000 tonnes in March over last last year and bringing the first quarter total to a record-breaking 1.3 million tonnes.

Those deals are now being unwound supplying even more copper to the market.But those numbers may be misleading and do not reflect a sharp fall-off in end demand. That's because much of that copper has been tied up in finance deals as collateral for trade credit and is not being put to industrial use.

On top of that as activity in China slows it drags down the copper price thanks to the widespread use of the metal in construction, transport and manufacturing.China's copper imports are highly price sensitive and traders could have simply made the most of the fall to $2.92 a pound a month ago to stock up.

The copper market has also been disappointed at the lack of major policy stimulus in China.

A number of small steps taken by Beijing including bringing forward already announced infrastructure projects has encouraged hopes in the market of bolder action.

But last week Premier Li Keqiang poured cold water on the notion saying: "China will not resort to short-term stimulus policies just because of temporary economic fluctuations … we will pay more attention to sound development in the medium and long run."

The supply side is also driving down price expectations.

The closely-watched Thomson Reuters GFMS Copper Survey forecasts a period of copper market surpluses and predicts the average price to test $2.75 a pound ($6,000/tonne) in the second half.

Global mine production rose by 8% to 17.8 million tonnes last year, its fastest pace in over a decade thanks to marked expansion top producer Chile and the Democratic Republic of Congo.

Output is to top 22.2 million tonnes this year from just over 21 million tonnes in 2013 led by Codelco's new 160,000 tonnes-plus Ministro Hales mine, Glencore's Las Bambas project in Peru it sold to China's Minmetals this week, the first full year of production at Rio Tinto's Oyu Tolgoi mine in Mongolia and expansion at BHP Billiton's already giant Escondida mine.

Rupee shackled in a range

The Indian rupee has been stuck in a sideways range between 59.6 and 60.4 for more than two weeks. As the general elections kicked off last week, the currency weakened from its high of 59.78 on Monday to 60.34 on Friday before closing at 60.17, down 0.15 per cent for the week.

Weak macro-economic data releases in the past week could keep the rupee under pressure. The trade deficit for March hit a five-month high of $10.5 billion and exports declined 3.15 per cent year-on-year.

However, gold import curbs have narrowed the deficit for this fiscal to $138.59 billion from $190.33 billion. In addition, the index of industrial production for February fell 1.9 per cent after a 0.8 per cent rise in January.

Following these weak data releases, the market would be keenly watching the inflation data due for release in this truncated week, which has just three trading days.

Both consumer price and wholesale price inflation data are due for release on Tuesday. There is some mild good news for currency traders. SEBI has reduced the margin requirement for dollar-rupee contracts with effect from April 15. The margins were raised in July last year. Trading volumes are expected to pick up following the lower margin requirements. Though foreign institutional investors continue to buy Indian equities, the outflows from debt limit the rupee’s strength. FIIs bought $409 million in equity while selling $386 million of debt last week.

Dollar index

The dollar index tumbled 1.2 per cent last week as the euro and yen strengthened sharply. The index has crucial support at 79, which if broken could turn the outlook bearish for a fall to 77. On the other hand, a reversal from 79 would keep the 79-81.5 sideways range intact. The rupee is likely to hover in a range between 59.6 and 60.4 in the shortterm. The 21-day moving average at 60.43 is a key short-term support.

Dollar-rupee outlook

The rupee could weaken to test this level while it remains below 60. A decline below 60.43 could drag the currency lower to 60.7 in the short-term. However, 60.7 is a strong support that can limit the short-term weakness. A close above 60 is needed for the short-term bias to turn positive and test 59.6 again. A breach of 59.6 would see the rupee strengthen to 59.45 and 59.3. The medium-term outlook is bullish for the rupee to test 59 and even 58.

However, an intermediate fall to 61 and 62, key medium-term supports, cannot be ruled out.

Palm oil to test supports, rise.

A break above Malaysian ringgit 2,672/tonne could push prices higher

Malaysian palm oil futures on the Bursa Malaysia Derivatives were higher on Monday buoyed by strength in the energy complex, firm soya oil markets and a slightly weaker local currency. Higher energy prices could result in higher bio-diesel demand for palm oil.

WTI crude oil rose above $104 a barrel in early trade on Monday as increasing geopolitical tensions between Ukraine and Russia supported buying sentiment. Market participants are also watching for cargo surveyor export data for the first half of April, due on Tuesday, to gauge global demand for palm.

CPO active month June futures are moving on expected lines.

As mentioned in the previous update, though prices have bounced from Malaysian ringgit 2,610/tonne, break below MYR 2,595 could drag prices towards 2,550-65 levels, from where a possible intermediate bottom can be seen. However, since prices have closed on weaker note, it could consolidate in the 2,595-2,650 range.

A decisive break above MYR 2,672 could hint at strength again which could potentially push prices towards MYR 2,730-35 levels being a strong resistance level in the coming sessions. Favoured view: Expect prices to edge higher either after testing the above mentioned supports or directly moving above MYR 2,660/tonne levels. Only a direct fall below 2,573 could dash our bullish hopes.

As mentioned earlier, prices met an intermediate wave target at MYR 2,135 and corrective decline to MYR 2,345-50 levels, followed by a sharp third wave move to MYR 2,575-2,600 materialised.

Price structures suggest a possible third wave move ending at MYR 2,690 and a corrective, fourth wave with targets at MYR 2,450 or even lower. The fifth wave possibly ended at MYR 2,898 and a corrective A-B-C in progress with an equality target at MYR 2,615-20 levels and an extension even to MYR 2,545-50 .

RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone below the zero line of the indicator hinting at a bearish reversal. Only a crossover again above the zero line could at resumption in the bullish trend.

Therefore, look for palm oil futures to test the support levels and climb again in the coming sessions.Supports are at MYR 2,595, 2,575 and 2,545. Resistances are at MYR 2,665, 2,705 and 2,735

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Refineries raise palmolein rates

Edible oils ruled firm on Monday, tracking firm Malaysian palm oil futures which extended gain for second consecutive day. Local refineries increased their rates for palmolein and soya oil by ₹3 for 10 kg on the back of higher demand. Sources said that local stockists came forward with fresh orders for forward purchase. 

Liberty, Ruchi and Allana together have sold about 750-800 tonnes of palmolein at ₹603-605 and 100-150 tonnes sunflower refined oil at ₹662. Resellers offloaded 150-200 tonnes palmolein at ₹600-601. Indigenous edible oils were also showing slight current on renewed demand from brands.

Vikram Global Commodities (P) Ltd quoted ₹630/10 kg for Malaysia super palmolein. Liberty was quoting palmolein at ₹608, super palmolein ₹628 and soyabean refined oil ₹655. Ruchi quoted palmolein at ₹605, soyabean refined oil ₹655 and sunflower refined oil ₹665. Allana was quoting palmolein at ₹604-605, soyabean refined oil ₹656 and sunflower refined oil ₹665.

At Rajkot, groundnut oil telia tin was flat at ₹1,110 and loose (10 kg) at ₹700. In Mumbai nominal spot rates (₹/10 kg) were: groundnut oil 735 (730), soya refined oil 655 (652), sunflower exp. ref. 610 (605), sunflower ref. 670 (665), rapeseed ref. oil 675 (672), rapeseed expeller ref. 645 (642) cottonseed ref. oil 658 (655) and palmolein 601 (598).

Chinese Yuan And Copper Tumbles As Money Supply Growth Plunges To 13-Year Lows

Today's 'bounce' in US equity markets is not translating into Asian equity market strength as China, India, Indonesia, and Thai stocks are fading. Copper is crumbling and just stopped out Dennis Gartman's long. 

In China, the PBOC withdrew 172bn Yuan (highest since Feb 2013) and pushed the currency back towards its weakest since Feb (which is the weakest since the PBOC began its erstwhile carry-killing-policy. Lots of odd moving-parts in Chinese data tonight with M2 YoY growth tumbling to 12.1% (missing expectations) - its slowest since Jan 2001 but Total Social Financing smashed expectations at 2.07tn Yuan (vs 1.86tn expected). It seems, try as the PBOC might to control it, credit creation continues to balloon in China.

China's Yuan is rapidly heading back towards 15-month lows... (despite Jack Lew's insistence that it strengthen)

Copper futures plunged below Dennis Gartman's long stop - closing out another losing trade (or winning if you faded him?)

M2 Growth tumbles to its lowest since Jan 2001...

BofA says Copper is on the edge.

"Copper is on the edge of resuming its downtrend," is how BofA begins it brief note on the evolution of China's crucial credit-collateral commodity (as we noted earlier). Copper futures limped lower today - fading even as the exuberant stock market ripped on 3.30pm fundamentals today.

The early April break of 3wk Bearish Wedge support says that the counter 

trend rally of the past several weeks has come to a conclusion and that the larger bear trend is poised to resume. HOWEVER, we need to see a closing break of the Apr-07 6577 low to confirm, until then, bears must stay patient.

Data for the week 12-Apr-14 to 18-Apr-14

Investors pay close attention to the announcement of these events because of the high probability that it will affect the direction of the market. You can get the same Economic Calendar at https://www.dynamiclevels.com/economic-calendar.

Exp.:	Expected or Anticipated value calculated from the recent survey conducted.
Prior:	Represents the last actual for each indicator. In case there is a revision to the last actual, the prior column reflects the prior figure as revised.
Exp. change today:	Exp. - Prior
Avg. change of last 1 year:	Average Change in Actual data calculated for last 1 year.
Expected impact on price:	This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below: Very Good Good Neutral Bad Very Bad
Actual:	Refers to the actual/latest figures after its release.

Data for the week 12-Apr-14 to 18-Apr-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
12-15 Apr-2014	--	China	Money Supply M2 YoY	13.0%	13.3%	-0.30	0.71	Neutral
12-Apr-2014	9-30 PM	European Monetary Union	ECB'S Draghi Holds Press Conference In Washington
14-Apr-2014	02-30 PM	European Monetary Union	Industrial Production w.d.a. (YoY)	1.5%	2.10%	-0.60%	0.59	Neutral
14-Apr-2014	06-00 PM	United States	Retail Sales (MoM)	0.9%	0.3%	0.60%	0.63	Neutral
10-15 Apr-2014	--	China	Money Supply M2 YoY	13.0%	13.3%	-0.30	0.71	Neutral
15-Apr-2014	07-00 AM	Australia	RBA Meeting - April Minutes					Neutral
15-Apr-2014	12-00 PM	India	Wholesale Prices YoY	5.3%	4.68%	0.62	0.46	Bad
15-Apr-2014	02-00 PM	United Kingdom	Consumer Price Index (MoM)	0.20%	0.50%	-0.30%	0.00	Very Good
15-Apr-2014	02-30 PM	Germany	ZEW Survey - Current Situation	51.5	51.3	0.20	5.46	Neutral
15-Apr-2014	02-30 PM	Germany	ZEW Survey - Economic Sentiment	45	46.6	-1.60	12.25	Neutral
15-Apr-2014	02-30 PM	European Monetary Union	Trade Balance s.a.	€15.0B	€14.1B	0.90€	2.05	Neutral
15-Apr-2014	06-00 PM	United States	Consumer Price Index (MoM)	0.10%	0.10%	0.00%	0.26	Neutral
15-Apr-2014	06-00 PM	United States	Consumer Price Index (YoY)	1.4%	1.1%	0.30%	0.25	Neutral
15-Apr-2014	06-15 PM	United States	Fed's Yellen to Speak by Video to Financial Markets Conference					Neutral
16-Apr-2014	07-30 AM	China	Gross Domestic Product (YoY)	7.3%	7.7%	-0.40%	0.48	Neutral
16-Apr-2014	07-30 AM	China	Industrial Production (YoY)	9.0%	0.0%	9.00%	0.67	Neutral
16-Apr-2014	07-30 AM	China	Retail Sales (YoY)	12.2%	0%	12.20%	0.78	Neutral
16-Apr-2014	02-00 PM	United Kingdom	ILO Unemployment Rate (3M)	7.1%	7.2%	-0.10%	0.07	Good
16-Apr-2014	02-30 PM	European Monetary Union	Consumer Price Index (MoM)	1.0%	0.3%	0.70%	0.65	Bad
16-Apr-2014	02-30 PM	European Monetary Union	Consumer Price Index (YoY)	0.5%	0.5%	0.00%	0.07	Neutral
16-Apr-2014	06-45 PM	United States	Industrial Production (MoM)	0.5%	0.6%	-0.10%	0.97	Neutral
16-Apr-2014	07-30 PM	Canada	Bank of Canada Rate Decision	1%	1%	0.00	0.00	Neutral
16-Apr-2014	08-00 PM	United States	EIA Crude Oil Stocks change	--	4.030	-4.03	3.45	Neutral
16-Apr-2014	09-55 PM	United States	Fed's Yellen Speaks to Economic Club of New York					Neutral
17-Apr-2014	06-00 PM	United States	Initial Jobless Claims	310K	300K	10.00	14.63	Neutral
17-Apr-2014	08-00 PM	United States	EIA Natural Gas Storage change	--	4.00	-4.00	33.60	Neutral