China soybean futures hit 3-month highs on talk of import crackdown

BEIJING: China's soybean futures hit three-month highs on Monday, as talk that the world's top bean buyer has ramped up checks on imports of genetically modified (GMO) beans, spurred expectations of tighter supplies even as the market remained awash with supplies.

China allows imported beans to be used by crushers to make soymeal for animal feed but none of the beans, all of which are genetically modified, are permitted for use in food products.

Reports over the years have suggested however that several million tonnes of the cheaper imports could be flowing illegally into the food sector.

On Monday, the most-active soybean futures hit 3,996 yuan ($587.82), their highest since March 10, as talk circulated that China's quarantine authority had asked several east coast ports to strictly inspect and punish firms found to be illegally reselling imported beans to food companies.

CHS Inc is being probed as part of the investigation, according to a report by Bloomberg on Friday. Calls to the Chinese unit were directed to the headquarters in the United States.

Prices ended the day at 3,957 yuan ($582.08) a tonne on the Dalian Commodity Exchange, up 1.5 percent on the day. The gains came after prices jumped 1.8 percent on Friday in their biggest daily gain in more than a month.

Open interest - a measure of liquidity in the market - jumped by a quarter on Friday to 287,132 lots, equal to 2.9 million tonnes of beans worth about 11.4 billion yuan. Data for Monday will be released on Tuesday.

"Last week this news came out that the ports were investigating this problem of leaking of imported soybeans," said Liang Yong, an analyst with Galaxy Futures.

"If the trade in imported soybeans is subject to controls, the demand side will all fall on the domestic beans."

China's General Administration of Quality Supervision, Inspection and Quarantine did not immediately respond to a request for comment.

Beijing's efforts to crack down on leaking of imports into the food sector come after China imported record volumes this year and spurred hopes among some investors that the steps may help to erode big domestic oversupply.

Still, a prolonged crackdown will upset major exporting nations including the United States and Brazil.

Imports in the first five months of the year reached 37.12 million tonnes, 20 percent higher than the same period of last year.

China produces around 13 million tonnes of soybeans, all of which go to the food sector to make soymilk, tofu and other products.

Copyright Reuters, 2017

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Dubai gold prices up Dh14 in first half of 2017 | Gulfnews.com

During the first six months of 2017, the bullion soared in value, with the price of 24K gold alone going up by 10 per cent, from Dh139.50 per gram to Dh 153.50 per gram. That’s a whopping Dh14 increase per gram compared to January 1 prices.

Also as of 10am Sunday, 22K gold was trading at Dh144.25 per gram, up by Dh13.25 from Dh131 per gram in the beginning of the year.

Gold’s price performance so far has been consistent with previous predictions that the metal could fare better in 2017 due to uncertainties in the Eurozone and increase in uptake in the Asian market.

“Demand for gold as a diversification tool and hedge against political or economic event risks remains,” said Ole Hansen, head of commodity strategy at Saxo Bank on Sunday.

On Wednesday, total holdings in gold exchange-traded funds increased by 14.5 tonnes, the biggest one-day increase since last July, Hansen said.

“Total holdings have now recovered half of what was dumped in the aftermath of Last November’s US presidential election.”

Hansen said they maintain a positive outlook for gold, but he sees the short-term risk skewed towards a correction, initially towards $1,265 an ounce.

“Only a break below $1,245 an ounce (61.8%) is likely to attract accelerated selling as seen after the failed April attempt to break above $1,300 an ounce."

"Above $1,300 an ounce, gold is likely to target $1,315 ahead of the November 9 high at $1,337.“

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NSE’s global trading platform goes live at GIFT-IFSC | Business Line

Offers derivatives contract in stocks, index, currency and precious metals

Gandhinagar, June 5:  

The National Stock Exchange of India on Monday launched its international exchange, NSE IFSC, at GIFT International Financial Services Centre (IFSC) at GIFT City in Gandhinagar.

The newly launched exchange kicked off trading in popular index derivatives contracts on Nifty 50, Nifty Bank and Nifty IT.

Gujarat Chief Minister Vijay Rupani marked the beginning of the trading at a function, in the presence of SEBI Chairman Ajay Tyagi and NSE Chairman Ashok Chawla.

In the commodity space, the exchange will offer derivatives contracts in gold and silver, and currency derivatives on leading global currency pairs of EURO-USD and GBP-USD.

The stock derivatives will include futures and options on 10 Indian stocks, including Axis Bank, HDFC Bank, ICICI Bank, Infosys, L&T, Maruti, Reliance Industries, SBI, Tata Motors and TCS.

‘On a take-off mode’

SEBI chief Tyagi termed the GIFT-IFSC as being on a take-off mode to cater to global financial markets.

“In January, Prime Minister Narendra Modi had launched BSE’s International Exchange here. In these initial months, the IndiaINX has garnered average a daily turnover of $45 million,” said Tyagi.

Initially, trading at NSE IFSC will take place for 16 hours, in two trading sessions, between 8 a.m. and 5 p.m. and between 5.30 p.m. and 11.30 p.m. The trade timing will be gradually expanded in line with market feedback.

Timed for overseas markets

With these trading hours, there will be an overlap with the London and Dubai markets, thereby allowing Indian investors to react to news developments overseas, said Chawla.

The NSE and the National Securities Clearing Corporation Ltd (NSCCL) have formed 100 per cent subsidiaries, NSE IFSC and NSE IFSC Clearing Corporation Ltd (NICCL), respectively, to operate as a stock exchange and clearing corporation, respectively, from GIFT.

The clearing and settlement of all trades executed on NSE IFSC will be managed by the NICCL. ICICI Bank and Kotak Bank are the two clearing banks onboard for funds settlement.

(This article was published on June 5, 2017)

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Gold prices hit highest since April after weaker US jobs data

LONDON: Gold prices hit a six-week high on Monday, buoyed by disappointing US jobs data that dimmed the prospects for an aggressive run of interest rate increases in the world's biggest economy.

US job growth slowed in May and employment gains in the prior two months were not as strong as previously reported, data showed on Friday, suggesting a loss of momentum in the labour market.

Higher interest rates put pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Spot gold was steady at $1,280.31 per ounce by 1350 GMT, after climbing 1.1 percent on Friday. It hit a peak of $1,282 early in the session, its highest level since April 21.

"Gold has got a bit of a lift from payroll numbers from Friday which has carried through to today but there is also support from terrorist events," ETF Securities commodities strategist Nitesh Shah said, referring to an attack in London at the weekend.

"Gold tends to be the port of call when people are anxious and events like that make people anxious," he said.

British Prime Minister Theresa May resumes campaigning on Monday for the national election due in three days. The vote is expected to be much tighter than previously predicted.

"(European elections have) been an underlying supportive factor for some time, providing some good safe-haven buying but not enough to spark any panic buying. That's why we think things will be relatively subdued," ANZ analyst Daniel Hynes said.

US gold futures were up 0.2 percent at $1,283.10 an ounce.

The dollar index, which tracks exchange rates against a basket of six major currencies, kept a lid on gains in bullion by edging higher on Monday. But it was not far from Friday's low of 96.654, its weakest since Nov. 9.

Elsewhere, palladium hit its strongest level since September 2014 at $847.90.

UBS analyst Giovanni Staunovo said it was likely that technical factors had supported palladium in recent days after the market broke through a previous high.

"I am a little bit cautious in the near term and expect setbacks due to elevated speculative positioning and relatively weak car (sales) in the main palladium markets."

Silver hit a high of $17.61 an ounce, its strongest since April 26. Platinum eased 0.3 percent to $955.70.

Copyright Reuters, 2017

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India 3% GST tax move adds to the lure of Dubai gold - Khaleej Times

India's move to tax gold at a rate of three per cent under an impending nationwide sales tax is expected to give an unexpected fillip to gold and jewellery business in the UAE, traders and analysts said.

While the gold trade in India heaved a sigh of relief at the lower-than-expected Goods and Services Tax on the precious metal, in Dubai, jewellery traders welcomed the move as positive, arguing that it would make domestic jewellery market more price competitive.

The three per cent GST on gold announced on Saturday by the Indian government, lower than industry expectations of around five per cent, will come into effect on July 1 and will replace a number of federal and state levies.

"With gold prices in India set to go up slightly following the rollout of GST next month, the UAE's thriving jewellery trade will emerge more attractive vis-a-vis India and other consumer markets, at least until the introduction of a five per cent VAT [value added tax] across the GCC," said Chandu Siroya, vice-chairman of Dubai Gold & Jewellery Group, a body representing the retail and wholesale gold trade.

The UAE and other GCC countries are pressing ahead with their path-breaking tax reforms to be implemented by January 2018, when a uniform region-wide five per cent tax will be imposed on most goods with the exception of several food items and other essential services.

"We don't yet know exactly the full impact of five per cent VAT on local jewellery trade. We are waiting for further clarity whether such a tax is refundable at the airport for both tourists and expatriate residents. If the five per cent VAT is refundable for both tourists and residents, gold and jewellery trade in the UAE will continue to glitter by benefiting from the new price advantage in the long-term," said Siroya.

Joy Alukkas, chairman of Joyalukkas Group, said the five per cent GST is not only a welcome relief for traders in India, who have been anticipating a higher tax rate, but also for Dubai jewellery trade, the key overseas market for India jewellery buyers.

"For jewellery consumers in India, a three per cent GST will result in a half-per cent price hike. They are currently paying one per cent excise duty and 1.5 per cent VAT on gold. With the GST coming into force, it will be three per cent total," Alukkas said.

"However, when compared to jewellery purchased from Dubai, Indian market will be 13 per cent costlier when the customs duty of 10 per cent will be added to three per cent GST, making the lure of Dubai and other Gulf markets all the more tempting," said Alukkas.

MP Ahammed, chairman of Malabar Group, said the decision to fix GST on gold at three per cent is appreciable as it is lower than five per cent or more the industry was expecting.

Kerala Finance Minister Thomas Isaac had made a case for five per cent tax on gold instead of one per cent being demanded by industry on the premise that the precious metal is not an essential commodity.

"It is a luxury product and is not an essential commodity. What is the principle or idea of tax being imposed on it at 1 per cent rate? It is not a commodity for the poor," the minister was quoted as saying.

Ahammed said a uniform three per cent tax on gold in India would have a good impact for the gold jewellery trade in the UAE. "We expect more Indian tourists will travel to Dubai, the City of Gold, to buy jewellery to take advantage of competitive price."

Announcing the widely speculated tax rate on gold, Indian Finance Minister Arun Jaitley said in New Delhi after a meeting of the GST Council that it was after keeping various factors in mind the government had finally reached a consensus of taxing gold at three per cent.

Under the GST tax regime, apart from gold jewellery, silver and processed diamonds will be taxed at three per cent, while the tax on rough diamonds will be 0.25 per cent.

According to Jaitley, the landmark tax reforms would create one of the world's biggest single markets and make commodities cheaper and tax evasion difficult.

In India, the world's second-biggest gold consumer, the gems and jewellery industry welcomed the tax rate, saying it will help the sector become more compliant and mature.

Currently, the industry pays taxes around two to 2.5 per cent; so three per cent is almost as good as no impact. "With this taxation, many unorganised players will be encouraged to enter organised trade," precious metals analysts said.

Indian Prime Minister Narendra Modi's government is pinning hopes on the GST to boost economic growth that slumped to 6.1 per cent in the quarter to March.

The India head of the World Gold Council said the government's decision on gold was an encouraging step and would help stabilise an industry in which millions are employed.

Under GST, the tax on cotton will be five per cent, ready-made garments 12 per cent and hand-rolled Indian cigarettes or bidis 28 percent. Apparel costing less than 1,000 rupees ($15.53) and footwear below 500 rupees will attract a tax of five per cent.

"The 12 per cent tax on ready-made garments and five per cent tax on footwear will also have a positive impact on the UAE's textile market by making it more competitive, traders said.

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author

Issac John

Associate Business Editor of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.

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Emerging Markets Volatility boosts DGCX Currency Volumes | Wealth Monitor, Get Your Money's Worth

June 4, 2017 | 11:00 | Dubai

As volatility slowly crept back into Emerging Markets, the Dubai Gold & Commodities Exchange (DGCX) witnessed a spike in FX products’ trading during the month of May. DGCX, which is the region’s largest and most diversified exchange currently lists thirteen currency pairs. The increase in volatility helped the Exchange record its highest traded volume of the year with over 1.43 million lots traded in May.

Trading volumes in DGCX’s Non-INRUSD FX segment grew 53% from the same period last year. Amongst the G6 currency pairs, Japanese Yen saw a seven-fold increase in volume. While the Euro, Canadian Dollar and Australian Dollar futures saw significant year-on-year increases of 102%, 94%, and 64% respectively which marked the latter two pairs best performance to-date.

Among the precious metals products, the recently listed Shanghai Gold futures traded an impressive volume of 2,889 contracts valued at CNH 805 million. The Yuan (CNH) denominated gold product has had a positive knock-on effect on DGCX’s other gold products including the Loco Dubai Spot Gold which continued to shine recording strong growth of 1131% from last year. Trading in Silver futures also saw volume growth of 101% from April 2017.

DGCX has also increased its focus on expanding its educational initiatives and enhancing its risk management systems.

The Exchange has been actively involved in educating the trading community, ranging from avid traders to students, through its Trading Campus – launched in collaboration with the Envision Trading Centre. Trading Campus and the DGCX signed a MoU with Amity University Dubai to deliver a specialised course on financial markets with exposure to real-time markets by using live trading simulators during the month of May.

Gaurang Desai, CEO of the DGCX, commented: “We are focused on creating long-term value for our stakeholders and market participants. Whether it is building liquidity in products, raising awareness or imparting the right knowledge; we want to make sure traders and investors are prepared for the challenges of fast moving markets.

The economically turbulent landscape of 2017 has highlighted the need to make ‘informed choices’ in order to protect oneself from market adversities. ‘Informed choices’ can only be made by possessing the appropriate knowledge and skills with regard to investing and trading whilst trying to achieving the balance between risk and reward. This is why we are adding increased emphasis on our educational agenda, and hope to educate as many traders and investors in the UAE and the wider region to benefit from ‘informed choices’.”

The Exchange also recently launched a highly efficient and improved Risk Management System called ActiveRisk. The state-of-the-art risk management system will identify the aggregate counterparty credit risk during default scenarios. It has been implemented by the Dubai Commodities Clearing Corporation (DCCC), DGCX’s Central Counter Party (CCP), to enhance regulatory compliance with the IOSCO-PFMI and ESMA standards.

“We are constantly improving our processes, systems and compliance standards to match them with international benchmarks. As the leading exchange in the region, we are committed to provide our community with robust risk management tools and cutting-edge knowledge to trade and transact with confidence,” concluded Gaurang.


About DGCX: Established in 2005, DGCX is the region’s leading derivatives exchange and the only one allowing global participants to trade, clear and settle transactions within the Gulf region. The Exchange has played a pioneering role in developing the regional market for derivatives and financial infrastructure. DGCX is an electronic commodity and currency derivatives exchange with over 200 members from across the globe, offering futures and options contracts covering the precious metals, energy and currency sectors. DGCX is a subsidiary of DMCC (Dubai Multi Commodities Centre), a Dubai Government Authority for trade, enterprise and commodities. For more information: www.dgcx.ae

DGCX also owns and operates the region’s largest and only multi-asset Clearing House – Dubai Commodities Clearing Corporation (DCCC). DCCC is federally regulated by the Securities & Commodities Authority (SCA) and is recognized as a Third-Country CCP by European Securities Markets Authority (ESMA) with over 80 clearers from across the globe. For more information: www.dccc.co.ae

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