Mumbai (commoditiescontrol) - A steady tone was witnessed in mustard and soybean this week as demand matched supply.
MUSTARD SEED:
Mustard seed prices in benckmark Jaipur market of Rajasthan was steady this week with negative sentiment on better than expected crop outlook coupled with weak demand for oil and cake.
Mustard seed hovered around Rs 4,100-4,200/100kg during the week as prices were largely pressured by favorable weather condition for harvesting and production size is seen 65-70 lakh tonnes which is better than expected. Earlier in the season, trader were expecting output between 60-65 lakh tonnes. Last year production was 55 lakh tonnes.
In addition to it, demand for mustard oil was tepid as other veg oil in the complex is available at much lower level.
Mustard oil is trading at Rs 8/kg discount to refined soy oil, where market participants are focussing on blended oil due to high profit margin. Currently Rice bran oil and Canola oil is used for mixing with mustard oil and both are also trading around Rs 8/kg lower to mustard oil.
Demand for the other by-product mustard cake was also weak, which also added negative sentiment for for raw material.
Mustard oil Kacchi gani was down 0.9 percent this week in Jaipur market while mustard cake was lower 2.6 percent.
According to analyst, with current price gap with other oil, mustard oil will have to fall by another Rs 3-4/kg to be competitive with other oil in the complex and the same fall will result weakness in mustard seed prices.
And in another case, if mustard oil continued to remain blended with other cheap oil like rice bran or canola or palm, then crushing of mustard seed will slow as mustard oil requirement will be less and less crushing will also result to price depreciation.
The trader said, mustard seed prices in Jaipur market may fall upto Rs 3,800-3,850/100kg for crushing to be in parity with mustard oil trading at Rs 730-740/10kg to be competitive with other edible oil, whereas and If mustard cake prices remain steady at Rs 1,850/100kg.
Currently, mustard seed crushing is in disparity of Rs 100/100kg at raw material trading at Rs 4,150 at Jaipur market.
Mustard seed arrivals for this week average 65,000 bags on daily average, inclusive of 25,000 bags from new crop with 16-20 percent moisture.
In another news, China has been reported not to import of Mustard meal from India, after being banned in 2012 for chemical contamination in consignment. In such situation the country will be left with bumper stock of mustard seed by season end.
Some marke participant are optimistic that China will lift the ban as falling inventories of mustard in China may prompt the county to turn towards India.
In coming days, outlook for mustard seed is down as arrivals likely to rise in coming days, where as demand for mustard oil and cake continued to laggard in spot market.
In futures market this week, mustard seed prices most active April contract closed down 0.85 percent on the National Commodity & Derivatives Exchange Ltd (NCDEX), while forward May contract was lower 1.3 percent.
SOYBEAN:
A steady tone was seen in soybean market despite low demand for soybean meal coupled with low arrivals in spot market.
Demand for soybean meal from local poultry farms were steady at regular intervals due to which prices of raw material were getting support.
In addition to it, farmers were reluctant to sell their produc at lower level, which also supported market sentiment.
But upside was capped as demand for soybean meal is not as expected and country has big crop in hand.
According to CC-Analyst nearly 80 lakh tonnes of raw material is still in hand with farmers and stockists, against country's production of 115 lakh tonnes for the season 2016-17 (Oct-Sept), which is sufficient to meet any immediate demand.
The analyst said, India has to export nearly 4-5 lakh tonnes soybean meal with regular local demand to support and pushup prices of raw material.
Global cues for soy complex were also weak as U.S soybean futures close 2.1 percent this week, due to growing estimate of soybean crop in Brazil and favorable weather condition in Argentina.
Analyst have also revised Argnetina crop to 530 lakh tonne from 510 lakh tonne estimated earlier.
In latest report, global analyst have revised brazil soybean production estimate to 1070 lakh tonnes from 1030-1040 lakh tonne estimate earlier.
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.
The only positive point Indian origin soybean meal is getting support from low prices against rival Argentine origin.
Currently local soybean meal is priced at 366 per tonne FAS Kandla Vs $386 Argentina CIF Rotterdam (Mar) as of February 03, 2017. The difference between the two origin is $20 per tonne.
The disparity in prices of Indian origin soybean meal and low arrivals 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 down margina and trade in range of Rs 2800-3000 by friday against last week close of Rs 2800-3050.
Whereas, Soybean meal prices gained by Rs 200 per tonnes at Rs 23,200 against last week Rs 23000.
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 China demand amid aggressive action by Donald Trump U.S trade Policy, which may reflect China Import program of soybean from United states, whereas supply from South America is large enough with lower prices.
Currently, Brazil exports are not picking due to restricted farmer selling on depreciating local currency Real.
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 and March contract was steady on the National Commodity & Derivatives Exchange Ltd (NCDEX) this week.
NEXT WEEK: Outlook for oilseed market will continued to focus on demand for by-products.
(By Commoditiescontrol Bureau; +91-22-40015516)
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