Global 2020-21 cotton ending stocks highest in 6 yrs, Basmati rice prices up by 10% in a month, & US Fed to keep interest rates lower until 2022

29th Jun – 03rd Jul

1. Global 2020-21 cotton ending stocks highest in 6 yrs: USDA

Jun 30, 2020

Cotton projections for 2020-21 (August-July) indicate that global cotton ending stocks are forecast at their highest in 6 years, the June month's Cotton and Wool Outlook released by the US Department of Agriculture (USDA) said. World stocks are projected to rise for the second consecutive season in 2020-21 to 104.7 million bales, 4 per cent above 2019-20. World stocks at the end of the 2020-21 season, are projected to be the second largest on record behind 2014-15, the Economic Research Service of the USDA said. At the end of 2014-15, global stocks totalled 106.7 million bales, with China accounting for 62 per cent of the total, as government policies out there resulted in surplus stock accumulations.

Source: USDA

2. Spurt in domestic and export demand pushes basmati prices by 10% in a month

Jul 1, 2020

India’s demand shot up sharply since the start of Unlock 1.0, as stockists rushed to fill their pipelines, amid uncertainty in market operations over an exploding number of Covid-19 cases. Prices of basmati rice have gone up by 10 per cent, or almost $100 in June, from a sudden emergence in demand from domestic, as well as international markets. There has been a sharp jump in overseas orders, despite increasing cases of Covid-19  across the world.

Source: Business Standard

3. US Nonfarm payrolls surged by 4.8 million in June, indicating recovery in economic activity

Jul 2, 2020

In the U.S., nonfarm payrolls surged by 4.8 million in June, according to the U.S. Labour Department. The figure smashed expectations by economists surveyed by Dow Jones, of a 2.9 million increase in jobs created. The unemployment rate dropped to 11.1%, lower than the 12.4% forecast by economists surveyed by Dow Jones.  June data reflected a big improvement in the US labour market; the recent sharp acceleration in new virus cases, plus the prospect of an end to unemployment benefits by the end of July are two big layers of uncertainty.

Source: CNBC

4. China’s services sector grew in June

Jul 2, 2020

A private survey showed that China’s services sector grew at its fastest pace in over a decade in June, according to Reuters, with the Caixin / Markit services Purchasing Manager’s Index (PMI) coming in at 58.4 for the month, which was the highest point since April 2010, according to Reuters, and compared with May’s 55.0 reading. The 50 level in PMI readings separates growth from contraction on a monthly basis.

Source: Reuters

5. US Fed to keep interest rates lower until 2022

Jul 1, 2020

The Federal Reserve on Wednesday released the Minutes from its June 9-10 meeting, during which it held interest rates steady, and said that it expects the loose policy to prevail until the economy gets back to normal. However, the Fed’s minutes released on Wednesday point to the fact that it will “keep rates low until 2022”. In its last meeting, it voted to hold their benchmark short-term borrowing rate in a range of 0%-0.25%.

Source: CNBC

6. The global nickel market surplus narrowed to 8,800 tonnes in April

Jul 1, 2020

The global nickel market surplus narrowed to 8,800 tonnes in April from a downwardly revised 10,900 tonnes the previous month, data from the International Nickel Study Group showed. Rising demand in the spot market from alloy makers mainly supported the price rise in nickel futures.

Source: Reuters

7. Copper prices higher on expectations of a rate cut in China

Jul 1, 2020

Shanghai copper prices on Wednesday rose to their highest levels in more than five months, as traders pinned hopes on potential rate cuts in China, while better-than-expected manufacturing numbers in the top consumers also boosted the sentiments. China’s central bank will cut the re-discount and re-lending rates by 25 basis points in a move that will reduce funding costs for smaller firms and rural sectors. Copper prices also rallied after China’s factory activity grew last month at its fastest level since December.

Source: Financial Post

8. Geopolitical issues and spike in coronavirus cases are keeping gold prices firm

Jul 1, 2020

In global markets, gold prices rose to their highest levels in nearly eight years on Wednesday, while gold prices in India rallied to new lifetime high levels, as a spike in coronavirus cases sparked concerns over the economic recovery from the pandemic, and boosted demand for the safe-havens.

The United States recorded its biggest one-day spike in COVID-19 cases since the start of the pandemic on Tuesday this week. Gold prices also found support from worries over reigniting of the US-China trade war, which is giving a boost to safe-haven demand for gold. Reflecting high investor demand, holdings in the world's largest gold-backed exchange-traded fund, or ETF, SPDR Gold Trust, increased by 211.9 tonnes, or nearly 22%, in the second quarter.

Source: Livemint