Coal: On The Ebb

NEWCASTLE COAL futures are hovering near $120 per tonne, primarily due to an oversupply in the Chinese coal market, driven by an increase in domestic production and a substantial surge in imports. This shift in market dynamics reflects a significant departure from the conditions experienced a few years ago when the coal market faced scarcity, resulting in widespread power shortages. Lower prices may have repercussions on e-auction prices and could impact the premiums earned by Coal India.

Gold: Burning Bright

GOLD EXPERIENCED a notable resurgence, reaching $2,003 per ounce, closer to its highest levels since May. The surge in gold prices is primarily attributed to a significant decline in the value of the dollar, fuelled by increasing expectations that the U.S. Federal Reserve may initiate interest rate cuts in the coming year. The rise in gold prices may lead to increased import costs for India, potentially influencing the nation’s trade balance and current account deficit. India’s October gold imports had surged 60% year-on-year to a 31-month high of 123 metric tonnes.

Wheat: Withering Lows

WHEAT FUTURES in the U.S. have declined to $556 per bushel, nearing a three-year low. This drop is primarily driven by anticipations of abundant supply and subdued demand in the market. This adjustment is attributed to significant upgrades in estimates for beginning stocks among major global market participants. FMCG companies, which rely on wheat as primary input, could face pressure on margins even as they grapple with inventory challenges.