Mumbai (Commoditiescontrol) – Indian soybean futures traded on a sluggish note during previous week with surplus imported veg oil stocks at domestic front along with bearish global market keeping the overall sentiments on lower end.
With only three active days of trade during last week, benchmark May’19 soybean futures prices settled at INR 3700, down by almost 78 points (2%) compare to last week close of INR 3778 per quintal. Open Interest in May’19 bean futures were observed 144790 lots (down by 9%) vs. 162260 lots during last week close.
On other hand, demand for veg oil remained high due to festive purchase. With this soy oil market prices also increased during previous week and finally May’ 19 futures settled at INR 726.75, almost up by 0.5% compared to previous week close price.
A surge in the import of vegetable oils in India has prompted the domestic oilseed crushing and refining industry to cut operating capacity to a historic low in order to sustain in the business for future.
The apex industry body, Solvent Extractors’ Association (SEA), reported 26 per cent jump in India’s import of vegetable oils (both crude palm oil or CPO and refined, bleached and deodorized or RBD) to 1.45 million tons in March 2019 versus 1.15 million tons in the corresponding month last year. In February also, import of vegetable oil had risen by 7.4 per cent to 1.24 million tons from 1.16 million tons in the comparable month a year ago.
At soya oil front, total imports in March’19 were reported near, 292,925 tons vs. 220,376 tons imported during previous month. Total imports during Nov’18 to March’19 were observed close to 988,345 tons vs. 826,937 tons during last year, same period.
Despite being a deficit country with around 60 per cent of India’s demand being met through imports primarily from Malaysia, Indonesia and Argentina, sustained growth in import has caused a major worry for domestic oilseed crushing and refining units. Since the imported refined oil is cheaper than the domestic counterpart, packaging units here prefer to buy refined oil from overseas suppliers and pack in local units for a safe profit margin. Consequently, domestic refineries have been forced to reduce their operating capacity to a historic low of below 30 per cent in the absence of viability.
At global front, The US and China are reported to have agreed to two more face-to-face meetings between their top-level trade negotiators in the hope that their respective presidents, Donald Trump and Xi Jinping, may sign a deal, possibly by the end of May.
China is considering a U.S. request to shift some tariffs on key agricultural goods to other products so the Trump administration can sell any eventual trade deal as a win for farmers ahead of the 2020 election. Under the proposed agreement, China would commit by 2025 to buy more U.S. commodities, including soybeans and energy products, and allow 100 percent foreign ownership for U.S. companies operating in China as a binding pledge that can trigger retaliation from the U.S.
Argentina’s government expects the country’s 2018/19 soybean harvest to climb nearly 50% higher year-over-year to reach 2.054 billion bushels, with the latest estimates from the Buenos Aires grains exchange slightly coming in slightly lower than that tally.
Moving forward, surplus veg oil imports, bumper rapeseed and palm oil stocks in domestic markets and apprehensions over US-Sino trade talks shall keep overall veg oilseed complex on rangebound note with negative bias.
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