Mumbai (Commoditiescontrol) – Indian soybean market witnessed sharp fall during previous week due to surplus soy oil imports, lean demand and sluggish global markets. However, despite strong fall in bean market, soy oil futures fell slightly and recovered during end of week. At the end, benchmark April’19 soybean futures prices settled at INR 3633, down by almost 71 points compare to last week close of INR 3704. On other hand, soy oil market April’19 futures after making a low at INR 735.4, settled at INR 740.75 almost steady at previous week close price.
India’s soft oil imports have touched a four-month high in February. As per the data compiled by the Solvent Extractors’ Association of India (SEA), the total soft oil imports, including soya bean oil, sunflower oil and rapeseed oil, touched 430,359 tons -- the highest in the first four months (November, 2018 - February, 2019) of oil marketing year 2018-19.
On the other hand, palm oil imports in February, 2019 is reported at 751,703 tons. The share of palm oil in the overall vegetable oil imports has gone up from 65 per cent during same period in the previous year to 67 per cent now.
Among the soft oils, soyabean oil reported a sharp jump from 185,906 tons in January to 220,376 tons in February, which is about 18 per cent growth over the previous month.
The stock of edible oils as on 1st March, 2019 at various ports is estimated at 915,000 tons (CPO 470,000 tons, RBD Palmolein 235,000 tons, Degummed Soybean Oil 90,000 tons and Crude Sunflower Oil 120,000 tons to and about 12,80,000 tons in pipelines. Total stock at ports and in pipelines is reported at 2,195,000 tons, increased by 85,000 tons from 2,110,000 tons as on 1st February, 2019. India’s monthly requirement is about 19.0 lakh tons and operate at 30 days stock against which currently holding stock over 21.95 lakh tons equal to 35 days requirements.
SEA raised its concerns about the increasing imports of RBD palmolein after the reduction in import duty and shrinking of duty difference between crude and palm oil from 10 per cent to 5 per cent on palmolein to be imported from Malaysia. However, no final decision has been made by Indian Government on this issue.
At global front, Chinese Vice Premier Liu He spoke to U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer by telephone on Friday, While the news is positive, traders remained cautious over “When and What” deal will be made. Global veg oilseed market remained silent and trended bearish since last couple of weeks, waiting for some solution over US-China trade war, however no strong decision was made so far. Market shall certainly move upside only if some positive developments are been made in coming weeks.
The U.S. soybean processing pace slowed by more than expected in February, although the crush was still the largest on record for the month, according to National Oilseed Processors Association (NOPA) data released on Friday. NOPA members, which handle about 95 percent of all soybeans crushed in the United States, processed 154.498 million bushels of soybeans last month, down from 171.630 million bushels in January but up from 153.719 million bushels in February 2018, the previous record for the month.
Looking at other nations, Argentina's Rosario Grains Exchange has raised its forecast for Argentine soybean production by 1 MMT to 54 MMT. That's still below USDA's forecast of 55 MMT. The Buenos Aires Grains Exchange has been estimating production at 53 MMT.
In China soybean stocks fell 10.4% last week to 6.3 million mt despite lower crush volumes as arrivals started to fall below throughput levels. Crush rates were at 1.58 million mt, down 6% from 1.68 million mt a week ago, while soymeal stocks in China fell around 5% to 690,000 mt from 730,000 mt seven days ago.
On Friday, China’s government confirmed that pig stocks were down 17% on the year at the end of February and the herd available to breed sows was down 19% - the latest sign that the African swine fever outbreak was having a big impact on feed demand in China.
Moving ahead, overall domestic fundamentals still remains bearish with surplus soya and palm oil imports along with huge port stocks position and lean demand period for veg oils. At global front also, though most of the fundamentals remains negative for market, any decent developments at US-Sino trade talks could trigger the market to bounce upside. Meanwhile, role of Chinese purchase shall also remain crucial during next week as any improvement in demand from China shall provide support to falling market sentiments.
However, in case of lack of any strong fundamentals or latest developments at global front, Indian as well as global veg oil markets shall continue to trade with negative bias in coming week.
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