The year 2012 is ending on a happy note for commodity investors . This year, till December 6, agricultural commodities, precious metals, spices and base metals have returned 20 per cent, 17 per cent, 10 per cent and 9 per cent, respectively. Among farm commodities, soyameal, wheat and chana have risen 55 per cent, 33 per cent and 27 per cent to Rs 26,300 per tonne, Rs 1,560 per quintal and Rs 4,234 per quintal, respectively.
In base metals, lead has risen 14.8 per cent to Rs 121 per kg, followed by zinc (12.69 per cent to Rs 109 per kg) and copper (9.79 per cent to Rs 443 per kg). In precious metals, gold and silver are up 12.5 per cent to Rs 30,625 per 10 gram and 22 per cent to Rs 61,780 per kg, respectively.
But will the rally continue in 2013? Yes, say experts. "The year 2013 is expected to be more positive than this for some commodities," says DK Aggarwal, chairman and managing director, SMC Investments and Advisors.
We spoke to experts to find out commodities likely to give good returns in 2013 -
Between January 2 and December 6, cardamom surged over 60 per cent to Rs 964 per kg. Vibhu Ratandhara, assistant vice president, commodity, Bonanza Portfolio, is positive for 2013 as well. Cardamom is likely to give positive returns till June due to production shortfall. Traders say production in the current season is likely to be 10,000-12,000 tonnes, 30-40 per cent lower than last year.
There is huge demand for Indian cardamom abroad and any surge in exports will cause a big mismatch between demand and supply in the next few months. India exports cardamom to North Africa, West Asia and Saudi Arabia.
Exports from India have been increasing over the years, according to the Spice Board. India exported 500 tonnes Cardamom S variety in 2007-08. In 2010-11, the figure was 1,175 tonnes. In 2011-12, it is expected to be 4,650 tonnes.
There is another reason prices may rise. "Cardamom production in Guatemala was hit by bad weather and an earthquake in November. Production was projected at 23,000-25,000 tonnes. Now, it is expected to be 19,000-21,000 tonnes," says Ratandhara. Guatemala is the world's biggest producer and exporter of cardamom.
Lower production pushed up prices by 32 per cent to Rs 1,560 quintal between January 2 and December 6. The buoyancy is likely to continue in 2013 on account of tight supply in global markets.
The International Grains Council has cut production estimate for 2012-13 by one million tonne (mt) to 654 mt. The year ending stock will be 173 mt as against 196 mt in the 2011-12 marketing year. In India, this year, wheat has been sown over 4.96 million hectares, 2.84 per cent less than last year.
Market analysts say supply has fallen due to drought in the Black Sea region, dry weather in Australia's producing regions and frost strike in Argentina. In India, late rainfall, heavy government buying and exports pushed up prices.
CP Krishnan, whole-time director, Geojit Comtrade, says, "Dry weather in the US and drought in the Black Sea region may boost exports from India later. Wheat could trade in the range of Rs 1,400-1,900 a quintal next year." India has exported over three million tonnes wheat since September 2011.
Ashok Mittal, CEO, Emkay Commotrade, says, "Technical charts are positive for the medium term with a price outlook of Rs 1,850 per quintal. Corrective declines can't be ruled out towards Rs 1,400-1,450 a quintal, where buying interest could emerge."Maize:
This year, till December 6, the price of maize has risen 20 per cent to Rs 1,500 per quintal on the National Commodity and Derivatives Exchange (NCDEX). The momentum may continue in 2013.
Advance agriculture ministry estimates peg the 2012-13 kharif production at 15.89 mt, 6.5 per cent down from the final estimate of 2011-12. Exports may rise as Indian prices are lower than what rivals from South America are quoting. The US Department of Agriculture says global production in 2012-13 is likely to be 839 mt, 4.5 per cent less than last year.
SMC's Aggarwal says, "Maize may move in the higher range of Rs 1,700-1,750 and find strong support at Rs 1,350 on the NCDEX."
According to the International Lead and Zinc Study Group, the demand for zinc exceeded production in the third quarter. The September demand was 10.42 lakh tonnes as against production of 10.40 lakh tonnes.
This year till December 6, prices have risen over 12 per cent to 110 per kg. Amarsingh Deo, head of commodities and currencies, Aditya Birla Money, is bullish on zinc for 2013. "We expect revival of demand from China as the country is indicating a reversal in slowdown. Zinc has resistance at Rs 111 per kg and support at Rs 103 per kg. Any break above Rs 111 will most likely take prices towards Rs 115 per kg and then towards Rs 120 per kg."Copper:
The global demand for refined copper in 2012 is expected to exceed production by about 240,000 mt. This will be the third consecutive deficit year. The world refined copper market faced a 522,000-tonne deficit from January to August, according to the International Copper Study Group (ICSG), as against a deficit of 77,000 tonnes in the same period of 2011. The global refined copper production was 13.14 million tonnes in the first eight months of the year compared with the demand for 13.66 million tonnes, ICSG said.
China consumes nearly 41 per cent global copper production. Jayant Manglik, president, retail distribution, Religare Broking, says, "China's demand for copper, which has been growing at 15 per cent a year since 2000, is likely to slow to 6.6 per cent in 2012 and then pick up at the start of the next year."
In 2012, copper rose 10 per cent between January 2 and December 6. Sumit Mukerjee, research analyst, Karvy Comtrade, says, "The demand may continue to outpace supply, widening the deficit to nearly 300,000 mt in the first six months of 2013. The price of copper on the Multi Commodity Exchange is likely to stay in Rs 380-520 range in 2013."
The price of the yellow metal has been rising consistently for the last 12 years. This year, the rise has been 13 per cent to Rs 30,625 per 10 gram.
"With concerns about inflation and currency devaluation and anticipation that governments across the globe will do more to boost growth, the demand for the yellow metal is expected to scale a new high in 2013," says Krishnan of Geojit Comtrade.
"We do not expect any meaningful solution to the European debt crisis. We feel gold can move up further if the European debt crisis worsens in 2013. Therefore, one can go long at Rs 31,200-31,400 per 10 gram with a stop-loss below Rs 29,900 and a target of Rs 33,000-33,500 on the upside," says Kunal Shah, head, commodities research, Nirmal Bang Commodities
Possible pickup in demand from India could also assist prices. The World Gold Council says the Indian market is showing recovery signs with jewellery demand rising 7 per cent and investment demand 12 per cent in the July-September quarter.Silver:
By giving over 20 per cent return this year till December 6, silver has again beat gold in 2012. The metal, used in various industries, may shine again if growth in big economies such as China and the US picks up. Efforts by European policymakers to curtail the debt of the region's nations is expected to trigger recovery in the manufacturing sector and increase the demand for industrial metals, including silver.
"In the next six months, silver is likely to trade between Rs 65,000 and Rs 67,000 per kg," says Nalini Rao, senior research analyst, international commodities & currencies, Angel Commodities. On December 6, it was at Rs 61,780 per kg.
GFMS, a metals research firm, says the industrial demand is expected to rise 7 per cent to 484 million ounces in 2013 and around 6 per cent to 511.6 million ounces in 2014.