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Soybean Gains Capped Due to Weak Soymeal Exports; Range-Bound Prices Ahead

14 Aug 2020 7:44 pm
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Mumbai (Commodities Control) - Weak soymeal exports are keeping a lid on domestic soybean prices . Bean prices are not supported despite robust demand from China. It is to be noted that soybean futures on Chicago Board of Trade (CBoT) are close to two week highs, while on NCDEX platform the active soybean contract has slipped to one and a half months low.

Experts attribute the weakness in soybean prices to lacklustre soymeal exports. On an average, India exports around 15 lk tonnes of soymeal on an annual basis. However so far, in the current season less than one-third of soymeal could be exported.

According to Sandeep Bajoria of Sunvin Group, “Indian soymeal is facing a tough competition in terms of export demand due to availability of cheaper soymeal in global markets.”.

Bajoria adds, “ India will be price competitive in soymeal exports, if and only soybean prices slip to levels of Rs 3300-3400 per Quintal. This is not possible due to higher minimum support price (MSP) in place.”

Centre has set the MSP of soybean, for the new season starting October, at Rs 3880 per Quintal.

“I think for the next 45 days or so, domestic soybean will be range-bound and stick to Rs 3650-3800 levels. Prices may, thereafter, slip Rs 100-200 depending on the new crop arrivals”, added Sandeep Bajoria.

It is interesting to note that among all the oilseeds, mustard seed prices have soared this year. However, soybean did not witness such a price rally. Experts attribute this to the oil content in soybean seed, that is quite lower as compared with mustard or groundnut. This is one prominent reason why soybean price hasn’t moved higher despite strength in edible oils across the board.

Having said so, other oilseeds’ prices fared well due to higher oil content. Oil content of groundnut is around 35%, it is 40% in case of sunflower and oil content of Rape-Mustard seed is the highest at 42-44%. Meanwhile soybean’s oil content is just 18%.

Having said so, Chinese demand is on the rise. The U.S. Agriculture Department on Thursday said Chinese buyers booked deals to buy 197,000 tonnes of U.S. soybeans, the 7th consecutive weekday the government has reported a sale to the world's top buyer of the oilseed.

USDA weekly bean exports data reveals that nearly 73.8% of the oilseed was purchased by China, alone. The demand is likely to rise next year as well.

According to Commodity Research Head of Prithvi Finmart- Manoj Jain, “Soybean output is seen rising in Brazil and the U.S. along with India. Thus, soybean prices are seen range-bound for now.”

On the domestic front, soybean and meal prices suffered due to weak meal exports. Lockdown disrupted trade and mill operations, which along with labour shortage led to weak soybean consumption. This is likely to result in a record ending stock of 12.5-13 Lk tons for this year, while opening for the current season was 1.7 Lk tons.

Weak soybean crushing led to higher imports of soyoil in July. According to Solvent Extractors’ Association of India (SEA) soy oil imports upped 52% in July to 484,525 tons.

(Commodities Control Bureau)

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