Mumbai (Commoditiescontrol) – Indian soybean market exhibited bearish trade during previous week due to lack of any strong positive factor at domestic front along with weak trend in global CBOT and Palm markets pressurizing the market sentiments. At the end, benchmark April’19 soybean futures prices settled at INR 3681, up by almost 26 points (0.7%) compare to last week close of INR 3707 per quintal. On similar lines, soy oil market fell during previous week and at the end April’19 futures after making a low at INR 728.2, settled at INR 728.75, almost down by 1% compared to previous week close price.
Meanwhile, the price difference between Mustard and Soybean in Rajasthan market has once again improved to more than Rs 60 per quintal during previous week which earlier dropped to less than Rs 20/quintal. With this, crushers focus has once again shifted back to soybean purchase as its cheaper to buy. Along with that, the crush margin in soybean at current rates was also realized higher at INR 1300/Mt. This shall further support crushers and buyers to reinitiate soybean buying in coming period..png)
Moreover, as per 3-year seasonal trend soybean prices generally improves in month of April compared to March. This is because the mustard arrivals pace starts which is at peak level in March, starts decreasing from April onwards and thus buyers focus returns to soybean markets in major market of Rajasthan and MP. This could keep soybean prices on rangebound note during next month with minor upside bounce.
At global front, USDA is expecting bigger drop in acreage this year than analysts had previously anticipated, moving from last year’s total of 89.2 million acres all the way down to 84.617 million acres. Analysts predicted a smaller drop with an average trade guess of 86.2 million acres.
Soybean stocks are expected to rise significantly, moving from 2.109 million bushels a year ago up to 2.716 billion bushels, per the latest USDA estimates. That figure was very close to analyst expectations, which offered an average trade guess of 2.728 billion bushels.
Moreover, ahead of USDA’s monthly fats and oils report, scheduled to release next Monday afternoon, a group of analysts estimate the agency will show a U.S. soybean crush totaling 165.1 million bushels for February. If realized, February’s crush will be moderately below January’s tally of 182.8 million bushels but incrementally higher year-over-year.
U.S. soybean growers are once again caught in the crossfire of the trade war with China, even as truce talks are underway again. Resumption of the negotiations in December brought an initial burst of buying with promises for more. But with officials from the two sides meeting in Beijing, with another round likely in Washington soon, China’s buying has mysteriously dried up.
Moreover, proposals by the Trump administration to keep tariffs on Chinese imports in place as part of any future trade deal with China has angered US soybean farmers. It had been expected that a removal of US tariffs would in turn cause China to remove its retaliatory 25% tariff on US soybean imports. But new proposals would see tariffs remain because of US administration concerns about Chinese compliance to any future deal.
As per Safras & Mercados, by 29 Mar 2019, Brazilian Soy harvesting pace was 75.5% vs 68.1% of last week, 71.8% of last year and 70.4% of 5-year avr. The harvestings are virtually over in Mato Grosso and Mato Grosso do Sul. Weather is not also risky soon to complete the harvestings.
Moving forward, with improvement in crush margins and slight decline in mustard arrivals, buyers focus could once again shift to soybean crop. This might provide minor support to domestic soybean prices for short term. However, pessimism over US-China trade relation on agriculture trade issues could keep global prices on weak note which shall once again pressurize Indian veg oil seed market.
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