Mumbai (Commoditiescontrol) – Indian soybean futures traded on bearish tone during previous weak with lack of demand in local markets along with surplus soy oil stocks available due to high imports. NCDEX benchmark soybean market after making a low at INR 3669, finally settled at INR 3726, down by almost .5% on w-o-w basis.
In the meantime, SEA published its latest report on Veg oil imports data for the month of Jan’2019. Import of vegetable oils during January 2019 is reported at 1,275,259 tons compared to 1,291,141 tons in January 2018, consisting 1,210,603 tons of edible oils and 64,656 tons of non-edible oils i.e. down by 3% on y-o-y basis. However, on monthly basis, the total imports were higher by 5% from Dec month where in country imported 1,211,164 tons of edible oil. The overall import of vegetable oils during November 2018 to January 2019 is reported at 3,620,316 tons compared to 3,628,734 tons more or less the same.
Looking at the soy oil front, there was more than 100% growth in soy oil imports on monthly basis as country imported almost 185,906 tons vs. 85,404 tons imported in Dec’18. Total stocks position at ports as on Feb 1st 2019 was reported near 21 lakh tons compared to 20.25 lakh tons observed a month earlier. Huge piled up stocks and bumper soy imports shall keep the mid-term fundamentals on bearish note.
Meanwhile, Indian governments has once again revised the base import tariff value taking market average of last fortnight. As per new structure, tariff value on CPO would be 575 (+23), Oilen at 611 (+28) and Soya oil would be 758 (+13)
Looking at global front, CBOT market exhibited mixed trade during previous week with prevailing bearish fundamentals and optimism hovering around US-China trade discussions.
The National Oilseed Processors Association released some slightly bullish soybean crush data in its latest monthly report, during end of previous week. NOPA pegs domestic crush for January at 171.630 million bushels, which is slightly below December’s tally of 171.759 million bushels but moderately higher than last January’s total of 163.111 million bushels, making it the highest January total on record and the fourth-largest monthly total overall.
Brazilian consultancy Safras & Mercado slightly lowered its 2018/19 soybean production estimates by 0.3 Million metric tons to 115.4 MMT (4.240 billion bushels), after noting the worst of Brazil’s drought problems are now in the past.
Further, in Brazil, the statistics agency Conab provided crop estimates earlier that included a soybean production of 115.34 MMT. Conab also expects Brazilian soybean exports for 2018/19 to reach 2.627 billion bushels (71 mmt), down 14.5% from a year ago. So far in February exports have reached 1.4 million mt in the first 8 days of the month, according to statistics from the ministry of commerce, with line up data showing an expected 6.9 million mt throughout the course of the month. Brazilian exports of soybeans are to reach almost 7 million mt over the course of February, according to statistics and line-up data compiled by Agricensus, with just 5.4 million mt headed to China.
Market focus has once again shifted to US-Sino trade war and hovering optimism around the same shall support the market sentiments. Once the trade talks succeed, market will thereafter shift its focus to other major fundamentals. United States officials said on Friday that they had made “progress” during a week of trade talks with their Chinese counterparts, but big sticking points remain and the two sides plan to continue negotiations next week in Washington to try to end the trade war. The United States and China are trying to reach an agreement ahead of a March 2 deadline, when President Trump has threatened to raise tariffs on $200 billion worth of Chinese goods to 25 % from 10 %. On Friday, Mr. Trump suggested for the second time in a week that he would push the deadline back if the two sides were edging closer to a deal.
To conclude, lack of any strong fundamentals at domestic front shall force Indian markets to follow global trend. At global markets, fundamentals remain bearish, despite a few helpful trends. Brazil’s crop is getting smaller and is likely around 75 million bushels less than USDA currently projects. China is buying and taking delivery on U.S. soybeans again, as negotiators try to hammer out a trade deal that’s about much more than agriculture.
Moving forward, global as well as domestic market shall temporary remain mixed waiting for the final conclusion over US-Sino trade discussion which will be later followed by bearish trend during next week.
(By Commoditiescontrol Bureau)
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