Mumbai (commoditiescontrol) - Indian mustard edged lower in spot market during the current week ending on Saturday on slow demand and better crop prospect, while soybean seed was steady with negative sentiment on subdued demand for by-products with dismal outlook ahead.
MUSTARD SEED:
Mustard seed dropped this week traded higher this week on weak demand for mustard oil and cake in spot market, coupled with favorable crop weather.
Market sentiment was weighed by prospects of better production this season due to higher sowing area and favorable weather conditions for crop growth. Earlier there was some concern about crop due to drop in temperature in temperature, however agriculture scientists ruled out any significant losses to crop.
According to agriculture department, mustard seed sowing has been completed in 70.54 lakh hactare as on January 25, against 64.51 lakh hactare during same period last year. Last highest sowing was reported at 67 lakh hactare in 2013-14.
Analyst are expecting, this year mustard seed crop to be around 66-70 lakh tonnes.
Apart from big production this year, mustard seed prices were also pressured by weak demand for mustard oil which continued to trade Rs 8/kg higher than refined soy oil.
Due to highly priced in the complex, mustrd oil demand was shifted to other veg oil in the complex.
In addition to it, the other by-product mustard meal also witnessed low demand pressure, as other oil meals were available at cheaper rates.
Mustard seed prices dropped 2.9 percent this week in benchmark Jaipur market of Rajasthan, while mustard oil Kacchi gani was down 1.23 percent and mustard cake was lower 3.1 percent.
Mustard seed arrivals were steady at 80000 bags across the country on daily average.
In coming days, mustard seed prices will continue to remain under pressure on weak demand for by-products and expectation of big crop.
In futures market this week, mustard seed prices most active April contract closed 1.3 percent lower on the National Commodity & Derivatives Exchange Ltd (NCDEX), while forward May contract was down 1 percent.
SOYBEAN:
A steady tone was seen in soybean market despite low demand for soybean meal and weak cues from futures market.
Demand for soybean meal has been reducing from local poultry farms as other oil meals are available at cheaper rates, while demand from export market is not as per expected due to which prices for soybean meal and demand for raw material are not getting support.
Analyst are expecting the country should export 25 lakh tonnes of soybean meal till new arrival, then only crushing will improve and prices of raw material will rise.
However, in a cautious note market participants said such high export till new crop arrival may not be possible and even if exports are done, then also the country's production size is big enough to meet crushing demand and prices likely to remain stable and may not rise.
The Soybean Processors Association (SOPA) has estimated soybean production at 115 lakh tonnes for the season 2016-17 (Oct-Sept) against 69 lakh tonnes last year.
In addition to it, weather is improving in Argentina soybean areas which were under pressure with last month floodings in main farmland, and crop may not face severe damage as expected.
There are some reports of yields may rise in some areas and may coverup loss made in low lying areas affected with floods.
Traders are expecting soybean meal export demand in Argentina may be delayed but not squeezed and may keep lid prices in domestic market and demand shift from rival countries may not happen as expected.
Further to it, big crop in other South American countries may cover-up loss in Argentina.
The only positive point Indian origin soybean meal is getting from low prices against rival Argentine origin.
Currently local soybean meal is priced at $360 per tonne FAS Kandla Vs $398 Argentina CIF Rotterdam (Mar) as of January 28, 2016. The difference between the two origin is $38 per tonne.
The disparity in prices of Indian origin soybean meal and low farmer selling of raw material may support prices in near-term.
Farmers are hesitating sell their produce at lower prices, due to which the arrivals of raw material is easily absorbed by stockists and crushers.
Soybean seed prices were steady in range of Rs 2800-3050 by friday against last week close of Rs 2800-3000.
Soybean meal prices dropped by Rs 200 per tonnes at Rs 23000 against last week Rs 23200.
Soybean arrivals were steady at 2.65 lakh bags on daily average across country same as last week.
In global market, soybean futures in CBot market likely to witness highly volatility in near-term as funds will be focussing on Donald Trump's U.S trade Policy "Trans Pacific Partnership (TPP)", which may reflect China Import program of soybean and by-products from United states.
Soybean prices in CBot lost 1.7 percent while soybean meal dropped 1.6 percent on fear China import demand may shift to rival Brazil origin.
In domestic market, soybean prices will continue to focus on demand for soybean meal from local poultry farms and export market.
Soybean most active February contract was lower by 2.4 percent on the National Commodity & Derivatives Exchange Ltd (NCDEX) while forward March contract lost 2.3 percent this week.
NEXT WEEK: Outlook for oilseed market will continue to focus on demand for by-products.
(By Commoditiescontrol Bureau; +91-22-40015516)
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