Nidhi Nath Srinivas, ET Bureau
Chicago, New York, London and Shanghai bourses may be rocketing. But for making money, one needs to catch the action in desi markets.
So I did a quick reccy and guess what I found. There is plenty happening right here under our noses.
Here's my list (in no particular order) of the top 10 commodities on the upswing. Keep an eye on them.
Gold and Silver: Gold is inversely linked to the dollar. So when dollar weakens, investors switch from currency to a hard asset like gold.
Gold is attractive to everyone: those who believe the economy will recover and customers will start buying again; and those pessimistic ones who believe the worst is still ahead.
For the latter, gold becomes a safe shelter for impending bad times. That is why pure gold crossed Rs 15,000 on Monday.
Silver, the poor man’s gold, has tracked gold and risen to a 10-month high. They will continue to remain firmly bullish.
Tea and Coffee: Tea production in India, the world’s largest producer, is down 15%, affected by very poor rains in Assam and West Bengal. That comes when there is a global shortage of 45 mn kg, pushing Indian tea prices to an unprecedented Rs 98/kg. Exports have dropped by 12 million kg between January and March 2009, compared to last year. As consumption both locally and across the world continues to rise, this bodes well for tea companies, traders and exporters.
Coffee has been hit by disease and poor rains, too. Berry borer pest has hit 13,000 ha robusta coffee crop in the main growing districts of Chikmagalur, Coorg and Hassan in Karnataka. Last year too the crop was hit, albeit by heavy unseasonal rains. Currently, coffee prices are so high in the domestic market that traders are making more money selling locally than exporting overseas.
Gur and sugar: Sugar is hot because India produced only 14.5 million t in 2008-09 while it consumed 21 million.
This deficit has to be filled by imports. But if sufficient sugar is not imported, prices will remain at Rs 26/kg ex-factory. In 2009-10, India is expected to produce 21 million t sugar, going by current sugar cane planting reports from Maharashtra and UP.
But all depends on the rains, which could change yields. Even if India does produce 21 mn t in 2009-10, the supply pipeline will still be badly stretched. Traders are already licking their chops.
If sugar is hot, gur is even hotter. Gur is now more expensive than sugar and no one has seen these prices of Rs 28/kg in a long, long time. There is tremendous demand for gur because it can replace molasses and be brewed to make country liquor. Right now, molasses are so expensive, that all desi vends have switched to gur. So gur can say hic, hic, hurray.
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