Mumbai (Commoditiescontrol) – Indian soya market witnessed sharp gains during previous week on the back of surging meal demand from Iran amid panic buying by traders and millers in local market before end of BBY on 19th Jan. On w-o-w basis, NCDEX soybean futures gained 5% from INR 3625 (Last week closing) to INR 3806. However, the increase in soy oil was less compared to beans and the prices surged by 1.6% from INR 752.4/10 Kg to 764.2/10 Kg.
Monthly export meal data released by SEA and SOPA clearly stated high demand bulging from Iran for Indian soya meal. As per the latest report of SOPA, though the overall soya meal exports in Dec’18 were down at 2.78 lakh tons vs. 2.82 lakh tons exported last year, demand from Iran for Indian soya meal is continuously giving support to the domestic prices. Given the economic restrictions by the United States against Iran, the Persian country has stepped up its sourcing from India. The country has exported highest quantities of soybean meal and soya products to Iran during the past three months. At 1,36,755 tons of exports, Iran became the top destination for India’s soymeal and soy products. In October the exports to Iran stood at 1000 tonnes, which jumped sharply to 55,000 tonnes in November and 80,755 tonnes in December. Market is expecting the same to increase to 8-10 lakh tons of in coming months.
Further, as Bhavantar Bhugtan Yojana (BBY) ended this Saturday, most of the farmers rushed to the market to register their sale in the mandi auction records to make maximum benefit of the scheme. On the other hand, traders and millers also purchased significant amount with expectation of diminishing arrivals and increase in prices thereafter. As per the mandi officials, around 12 lakh (1.2 mln) farmers have sold closer to 22.5 lakh (2.25 mln) tons soybean under BBY scheme. The state government credits a flat 500 rupees per 100 kg into the accounts of registered farmers, irrespective of the selling price. The move is aimed at ensuring better returns for the farmers. The scheme was introduced in an attempt to boost the bargaining power of farmers with traders over the selling price for their crop. This was not the case in the last year's Bhavantar Bhugtan Yojana, under which traders bought the crops at way below the minimum support price on the pretext that the state government would pay the difference.
At Global front, herd losses in China due to African Swine Flu remined a major cause of concern through out the week. As per the market sources, pig stocks could fall by as much as 30% this year in China. Soymeal remains a major source of protein for pigs in the country and any significant downturn in the size of the pig herd shall strongly hit demand for soymeal and therefore export prices of soybeans in Brazil. In China, soymeal prices are the lowest that they have been in almost 20 months, according to data from the Dalian Commodity Exchange.
Brazilian consultancy Céleres has lowered its assessment of the country’s 2018/19 soybean production by 183.7 million bushels to 4.306 billion bushels, putting its latest projection mostly in line with other recent estimates for Brazil, which has suffered through some drought-damaging weather in recent weeks. However, crop damages concerns in South America front has already been absorbed by the market and might not be able to provide sufficient support to the prices.
Further by the end of week, US soya prices boosted after Wall Street Journal reports that the United States is considering lifting tariffs imposed on China to hasten a trade deal between the world's two largest economies. The news not only pushed up U.S. equities, but also led to expectations among CBOT traders for better soybean exports performances. On other nation’s demand front, fresh rumours that the EU will reopen is markets for Argentina soyoil-based biofuel (SME) added fuel to the fire.
Moving ahead, reduction in arrivals at domestic front after end of BBY scheme amid lack of any strong fundamentals will push Indian market to follow global cues. Though strong Iranian demand might provde some support to the prices, uncertain demand from China meal industry along with no fresh cues available on US-China economic war shall curb any further significant rally, keeping prices on a sideways note with negative bias.
(By Commoditiescontrol Bureau)
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