Mumbai (Commoditiescontrol) – Indian soybean market traded on bearish note during last week with not so encouraging reports from MPOB and WASDE end, along with weak fundamentals at domestic front due to higher mustard supply. At the end, benchmark May’19 soybean futures prices settled at INR 3778, down by almost 75 points (2%) compare to last week close of INR 3853 per quintal. On similar lines, soy oil market prices also decreased during previous week and finally May’ 19 futures settled at INR 723, almost down by 1% compared to previous week close price. Open Interest in May’19 bean futures were observed 162260 lots (Up by 10%) vs. 146930 lots during last week close.
Meanwhile, Indian market sources confirmed that 50 thousand tons of Argentina soymeal is been exported to Iran via Indian port by Indian exporters. In next month, more 15-20 vessels are expected to reach from Argentina at Indian ports to be delivered to Iran. Such trade practices are been considered illicit and hurtful for Indian farmers as well for domestic crushers. Traders have appealed government to take some strong action on such trade practices in coming days.
After lots of speculation, 2019-20 is been confirmed as the year of El-Nino by the global Climate Prediction Center, US. El Niño is a dreaded phenomenon and has the power to corrupt the Monsoon rains. El Niño is invariably linked with below normal rainfall during the Southwest Monsoon.
According to Skymet Weather, Monsoon 2019 is likely to see below normal rains to the tune of 93% with an error margin of +/- 5%. Core months of June and July would be the major sufferers, with rain probability of 77% and 91%, respectively. Looking at the historical trend, Indian soybean yield has always fallen during the episodes of El-Nino. This year as Climate prediction Center of US has declared confirmation of El-Nino, one might observe lower soybean yield in Kharif 2019-20 crop.
At global front, Soybean exports saw just 9.9 million bushels in old crop sales plus another 400,000 bushels in new crop sales for a total of 10.3 million bushels last week. That was steeply lower than the prior week’s total of 73.2 million bushels and significantly below analyst estimates of 37.7 million bushels.
Brazil’s Conab slightly raised its 2018/19 soybean production estimates from March, now at 4.182 billion bushels. Conab did not alter its estimates for soybean exports for this marketing year, however, still at 2.572 billion bushels.
There are rumors that the US and China are close to an agreement on the trade deal, even as US officials say that they are “not satisfying as yet” on the current developments. Anyhow, the high-level meeting between the two countries are going on, and an announcement is expected in the next four to six weeks. Market is anxiously waiting for the final decision as China is the largest buyer of soybean for US market and any optimism over trade talks shall once again open the door for Chinese purchase.
Moving forward, weak global cues with improving South American crop outlook and surplus stocks availability, poor demand shall keep overall veg oilseed complex on rangebound note with negative bias.
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