Mumbai, 23 Oct (Commoditiescontrol):The CBOT Soybean reports its second consecutive weekly gain. This was due to the drought in Brazil, even as US harvests bring more supply to the market. Notably, Brazil, a major player in soybean exports, is currently grappling with these drought conditions.
On Friday, the Benchmark November futures closed slightly lower at USD 13.02 a bushel, down from the previous week's USD 12.87. In parallel, December's soy oil from the CBOT ended a little lower at USD 53.11 per pound, compared to the previous week's USD 53.38.
Due to the robust performance in the futures market and notable basis gains, cash prices have risen above USD 13 a bushel in numerous areas, leading to an uptick in soybean sales by farmers.
The demand for US meal is currently strong. This demand can be attributed to Argentina's below-average soybean harvest, which has put the US in a leading position as a meal supplier.
NOPA recently stated that the US saw a significant increase in soybean crush in September. However, soy oil stocks have reached their lowest in nearly ten years. The primary reason is the increased use of soyoil in biodiesel production.
Low water levels in Brazil's reservoirs and insufficient rainfall are causing transport disruptions, which in turn is boosting soybean prices. The market is paying close attention to Brazil's planting conditions. The ongoing severe drought hinders grain shipments and delays soybean planting, leading to higher prices.
Brazil's soybean competition with the US has diminished due to shipment halts in northern Brazil caused by the severe drought that led Amazon River tributaries to their lowest levels in over a hundred years. Additionally, strong domestic demand for soybean crush and consistent export demand for soy meal support robust US soybean prices.
During the week, soybean oil prices in Indore have increased slightly in India. They traded at INR 900 per 10 kg on Friday, which is an increase of INR 27 from the week before. Similarly, imported soybean oil prices in Kandla and JNPT have also risen by INR 35-40 per 10 kg.
Domestically, with stockists being active in major mandis, processors are compelled to offer higher prices to secure supplies. While there has been some drop in soybean productivity, they still retain a substantial amount of stock. Over the past week, the recent rise in soybean prices has made farmers more cautious. However, if prices begin to correct, farmers might increase the pace at which they bring soybeans to the mandis.
For Kandla delivery, DOC buyers were previously quoting around INR 42,500 per MT for export purposes. However, with ex MP prices now ranging from INR 41,500 to 42,000 per MT, sellers might be reluctant to engage at these rates. The sustainability of exports primarily hinges on potential increases in global soy DOC prices. As a result, Indian exporters are closely monitoring the situation of Brazil's soybean crop for guidance.
If Brazil's drought continues, India's soy DOC exports might sustain a steady pace, subsequently bolstering domestic soybean prices. On the other hand, without a significant uptick in global soy DOC prices and no apparent supply constraints domestically, there may not be a substantial increase in domestic soybean prices.
In the short term, domestic soybean prices appear to remain stable to strong. However, the medium-term outlook is somewhat uncertain, mainly hinging on global trends in soybean and DOC.
Lastly, port data suggests that we can expect around 40-50 KTs of degummed soy oil to arrive at Indian ports soon. As of 20 October, soybean supplies stood at about 100 KTs.
(By Commoditiescontrol Bureau: 09820130172)
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