MUMBAI (Commodities Control)-
International Soybean Market Recap
CBOT soybean futures started the week on bullish note as per our expectation amid crop loss in Argentina and finally ended the week, up by 1.55% at $10.48 a bushel.
CBOT soybean futures inched closer to one-year high on Friday as concerns mounted about crop losses from a severe drought in Argentina, the world’s biggest exporter of soymeal and soyoil.
Argentina, which is also the world’s No. 3 supplier of soybeans, has been grappling with dry weather since late last year. The effects are becoming apparent as crops are in the sensitive yield-formation stages.
Bottom line is we are still losing the yield, traders said.
Large speculators raised their net long positions in soybean in the week ended on Feb. 20, according to U.S. Commodity Futures Trading Commission data. The moves signal investors have grown more bullish on the markets.
Weather forecasts in Argentina show no sign of a pattern change yet. However some analysts project a record-large soybean harvest in Brazil, the world’s top exporter of the oilseed, will help offset Argentina’s crop losses. Brazil-based consultancy Agroconsult raised its estimate for the country’s soybean harvest in the 2017-18 crop cycle.
However, traders still added premium to the soy market ahead of the weekend to offset the risk of more damage to Argentina’s harvests.
After moderate showers moved across the grain producing regions of Argentina last weekend, hot and dry weather returned to this week worsening an already worrisome situation. As a result, local crop analysts in Argentina continue to lower their crop estimates for the 2017/18 growing season.
In their latest monthly crop estimate, The Rosario Grain Exchange lowered their soybean estimate 5 million tons from their last estimate to 46.5 million tons.
The consultancy Agritrend is estimating the Argentine soybean crop at 47.0 to 48.0 million tons.
In their latest weekly report, the Buenos Aires Grain Exchange is estimating the soybean crop at 47.0 million tons.
For their part, the USDA is estimated the Argentine soybean crop at 54.0 million tons. They will issue a new estimate in their March WASDE report.
Traders expect global buyers to shift purchases of soymeal, a livestock feed, to the U.S. from Argentina. But weekly U.S. soymeal export sales, reported on Friday by the U.S. Department of Agriculture, were weak at 131,900 tonnes. Analysts had expected 200,000 tonnes to 450,000 tonnes.
Separately, USDA projected the 2018 U.S. soybean harvests will be smaller than last year. Soybean ending stocks were seen falling by 13 per cent to 460 million bushels.
Domestic Soybean Market Recap
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Soybean price in the benchmark Indore market declined by Rs 100 to trade at Rs 3700/100kg during the week ending on 24th February at the benchmark Indore market.
Total crop arrivals during the week were reported at 1.50 to 1.75 lakh bags against 1.60 to 1.85 a week ago.
At present, Indian soybean market is delinked with international soybean market amid sluggish domestic cues.
As per traders, demand of soybean from millers has declined during the week due to slow off take of soymeal in domestic as well as international market.
Amid poor demand of soymeal, millers have been compelled to sell soymeal at lower price level which has affected their crush margin. Soybean crushing has turned into disparity of Rs 1,323/tonne against parity of Rs 632 last week.
On the other hand, farmers and stockists are still reserved sellers which can be confirmed by tracking arrivals week on week, as most of them are anticipating higher prices in near term. They are expecting soybean prices to rise to Rs 4,000/100kg in near term and then they might gradually liquidate their stock.
In futures market, Soybean most active March contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 3.82% at Rs 3,673/100kg.
SOYMEAL
Soymeal at the benchmark Indore market during the week declined by Rs 300 to trade at Rs 30,200 per tonne on sluggish demand from poultry feed manufacturer at higher price level.
Traders are reporting that demand of soymeal from poultry feed manufacturer has declined as poultry farmers are gradually reducing the placement of chicks. From March on wards summer season starts and conumption of broiler chicken starts declining which leads to slow placement of chicks.
As far as intenational soymeal market is concerned Indian soymeal is tentatively priced at $490 per tonne CIF Rotterdam vs $435 Argentina CIF Rotterdam (February) as on February 24, 2017. India Soybean Meal is now in disparity of $55/MT compared to $65 last week.
However Overseas buyer are ready to pay premium of around $10-15/tonne for Indian soymeal which is non genetically modified whereas the Argentine soymeal is genetically modified.
SOYOIL
Refined soy oil in benchmark Indore market of Madhya Pradesh during the week gained by Rs 8 to trade at Rs 735/10kg amid improved demand in retail market and firm CBOT soy oil futures.
CBOT soy oil futures gained by nearly 2.39% during the week to end at 32.79 c/lb on account of lower soy oil stock in Argentina due to lower crushing of soybean seed. Farmers in Argentina are reserved sellers as they are aware of the fact that new crop production is likely to decline sharply due to dry weather so they are expecting soybean prices to appreciate sharply in near term.
Soy oil Degum price during the week ended on February 24, gained by $808 to trade at 808 per tonne in dollar terms (CNF) whereas it gained by Rs 10 to trade at Rs 802/10kg in rupees term at Kandla port.
Soy Oil March futures on National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 0.75% at Rs 738.50/10kg.
NEXT WEEK: Domestic Soybean prices are likely to trade rangebound as lower demand from millers at higher price level will weigh on prices whereas lower supply will limit the fall.
(By Commoditiescontrol Bureau; +91-22- 40015516)
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