Mumbai (Commoditiescontrol) – Indian soybean after falling continuously during last one month finally recovered during previous week with short covering at lower levels and improvement in demand at physical front due to festive mood supporting the overall sentiments.
At the end, benchmark April’19 soybean futures prices settled at INR 3707, up by almost 74 points (2%) compare to last week close of INR 3633 per quintal. On other hand, soy oil market fell during previous week following global palm and CBOT market trend. In the end April’19 futures after making a low at INR 734, settled at INR 737.6 almost down by 0.5% compared to previous week close price.
Lack of any fresh positive fundamentals and weak buying interest shall keep soybean trade on subdued note in days to come. Further, as rabi mustard seed harvest is in its full pace, entire veg oilseed industry focus has been shifted towards mustard seed buying and stocking. Moreover, price difference between mustard seed and soybean has dropped significantly in last couple of weeks, making mustard seed more preferential to purchase. .png)
During previous month mustard seed prices in physical market were on premium of INR 250 per quintal compared to soybean price. During last week, the same gap between mustard and bean has been reduced to only INR 30/qntl due to surplus mustard stock arrivals, thus making it more attractive oilseed commodity for the buyers.
At global front, U.S. President Donald Trump warned on Wednesday that the United States may leave tariffs on Chinese goods for a "substantial period" to ensure that Beijing complies with any trade agreement. The stance could complicate U.S.-China trade talks set to resume next week, as Chinese officials have been pressing for a full lifting of U.S. tariffs as part of any deal.
Low prices and uncertainty over a trade deal with China convinced farmers to slash soybean seedings this spring to 85.9 million.That would be down 3.3 million (or 3.7%) from 2018 totals but would be higher than the 85 million USDA forecast recently.
Brazil's vegetable oil association has trimmed its forecast of the nation's soybean crop, but its figure remains above most other analyst predictions. Abiove, whose members include major international trading houses that own crushing facilities, predict the crop will reach 116.9 million mt, down 1 million mt on its previous estimate in January. At the same time the association boosted its esimate of last year's harvest from 121.3 million mt to 123.1 million mt, meaning ending stocks at the end of next year will be almost 3 million mt, more than 1 million mt on its previous estimate. Most analysts, including Brazil's official estimates, think the country's crop will reach between 113-115 million mt this year and was 119 million mt last year, markedly lower than Abiove's forecast.
Vietnam's feed industry, which typically consumes around 6.5 million mt of soybean meal and 10.25 million mt of corn each year, is reported to be delaying purchases of the ingredients amid the ongoing outbreak of African swine fever, a move that could hit Argentinian crush spreads. On Tuesday, the UN urged Vietnam to declare a state of national emergency over the outbreak, which has slashed the size of China’s pig heard by 15-20%. The existing problem of ASF in China and Vietnam shall affect the total demand of soymeal by around 20% which will further pressurize the market sentiments.
Moving forward, sluggish demand in domestic market amid weak cues from global market with poor Chinese demand, outbreak of ASF and pessimism about US-China trade deal shall keep overall soya complex on bearish note.
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