Mumbai (commoditiescontrol) - Oilseed market witnessed steady to down in spot and futures market this week largely due to low demand for by-products.
MUSTARD SEED:
Down trend was witnessed in mustard seed and oil market, while mustard cake was positive this week with negative sentiment on low demand.
Mustard seed prices in benchmark Jaipur market of Rajasthan was down 0.6 percent this week due to low demand for mustard oil and better than expected production.
However, the exact crop size is unclear as on date as harvesting is still in progress, the earlier estimates revealed mustard seed output likely to be between 65-70 lakh tonnes market expectation of 60-65 lakh tonnes. Last year production was 55 lakh tonnes.
Demand for mustard oil in spot market was weak as other veg oil in the complex were available at much lower level, while blended oil is most favored against pure oil.
Mustard oil traded at Rs 8/kg premium 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 as per requirement due to which prices gained 1.6 percent this week in Jaipur market, while mustard oil Kacchi Ghani was down 0.6 percent this week.
According to analyst, with current price gap with other oil, prices of 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.
According to CC-Analyst, with easy availability of other edible oil, demand for mustard oil may not rise in near-term.
Adulterated (Blended) mustard oil demand is said to be good to cheaper rates and may hurt pure mustard oil if the current trend persistent long in higher quantity.
The trader continued to say, mustard seed prices in Jaipur market may fall upto Rs 3,800-3,850 per 100kg for crushing to be in parity with mustard oil trading at Rs 730-740 per 10kg to be competitive with other edible oil, whereas and If mustard cake prices remain steady at Rs 1,850 per 100kg.
According to market participants carry over stock of mustard seed as of 1st February is around 3.5-4 lakh tonnes which will weigh on prices when the new crop arrivals starts in full swing.
Mustard seed arrivals for this week average 65,000 bags on daily average across the country, inclusive of 25,000 bags from new crop with 15-22 percent moisture.
Arrivals are reported on lower side as Kota, Baran and Bundi mandi were close due to labor strike.
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 continues to laggard in spot market.
In futures market this week, mustard seed prices most active April contract close lower 0.7 percent on the National Commodity & Derivatives Exchange Ltd (NCDEX), while forward May contract was down 0.6 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 reduced pressure from market.
But upside was capped as demand for soybean meal in local and export market is not as expected and country has big crop in hand.
According to CC-Analyst nearly 78 lakh tonnes of raw material is still in hand with farmers and stockists as on January 31, 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.
Monthly data released by The Solvent Extractors Assoc. of India (SEA), the soybean meal export has slump 35 percent to 1.55 lakh tonnes in month of January'17 against 2.41 lakh tonnes in December'16.
Currently, soybean meal is trading $18 per tonnes discount to rival Argentina origin.
Prices of Indian origin soybean meal was quoted $362 per tonnes (FAS Kandla Ready) while Argentina quoted $380 (Cif Rotterdam).
Global cues for soy complex were strong on wake of strong export demand from China as supply from Brazil was delayed due to bad weather, while Argentina is still in process of harvesting.
Apart from slow harvest in Brazil, farmers were reluctant to sell their crops on expectations of higher returns due to weakening currency "Real".
CC-Analyst say, despite strong global cues, prices of soybean could not move higher due to low demand for soybean meal and big crop still in hand.
By weekend, United States Department of Agriculture (USDA) has released its monthly demand and supply data, reporting U.S production and season ending stock, Brazil production remains unchanged. While world season ending stock and Argnetina output were trimmed.
In coming weeks, soybean arrivals likely to rise as farmers are facing losses in other agri-commodity produce.
Soybean prices were steady this week in range of Rs 2800-3000/100kg, while soybean meal gained by Rs 200 per tonnes at Rs 23400 against last week Rs 23200 on low crushing.
Soybean arrivals were steady at 2.65 lakh bags on daily average across country same as last week.
Soybean most active February dropped 1.6 percent while forward March contract was lower by 1.26 percent on the National Commodity & Derivatives Exchange Ltd (NCDEX) 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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