MUMBAI (commoditiescontrol) - Oilseed market traded steady this week due to limited activity.
MUSTARD SEED: Mustard seed prices traded steady during the week ending April 1, 2017, as most of the market participants were busy in account related work ahead of financial year-end. Mustard seed daily supply fluctuated in the range of 2.50 lakh bags to 6.15 lakh bags. Mustard seed ruled mostly flat this week in benchmark Jaipur market of Rajasthan, due to limited trade activity in market yards. Steady tone was observed in the spot market mainly due to slow demand from crushers due to disparity as mustard seed prices rose more than mustard oil. Crushers demand is likely to slowdown in the coming weeks.
Mustard supply in the country is expected to increase from next week as most market will re-open after financial year-end holiday.
According to trade sources around 90 percent of mustard oil has been already harvested.
Long term out-look for mustard seed seen dismal as India's mustard output in 2016-17 is estimated higher at 72 lakh tonnes (including 1.2 lakh tonnes of taramira and toria) against 58 lakh tonnes a year ago as favorable weather led to better yield, according to the Solvent Extractors Association of India. Apart from large production size, new crop quality seen better than expected and oil content is said to be 41-42 percent due to favorable weather conditions after good monsoon season last year. Mustard oil prices are still trading Rs 12/kg premium to refined soy oil so most of the retail demand has shifted to soy oil and consumers are ready to pay only Rs 3-4/kg premium for mustard oil. Higher supply of mustard seed also likely to weigh on mustard oil. In case mustard seed supply rose more than market expectations then mustard oil prices may drop to Rs 720/10kg from present level of Rs 765/10kg.
In addition to it, blending of mustard oil is likely to improve in coming weeks as other oil like palm are available at cheaper rates and seen more profitable in adulteration. Demand for the other by-product mustard cake has improved from local cattlefeed manufacturers due to higher price gap with cotton cake. Mustard seed was last priced at Rs 4,040/100Kg in Jaipur market, while mustard oil Kacchi Ghani was flat at Rs 765/10kg. On derivatives, the most active April delivery mustard seed dropped 0.25 percent this week on the National Commodity & Derivatives Exchange Ltd (NCDEX), while forward May contract was lower 0.45 percent. SOYBEAN: Soy bean prices during the week traded steady in thin trade activity with limited demand from crushers. In coming week soybean prices are likely to track mustard seed prices due to peak supply season. Demand from crushers for soybean is hand-to-mouth due to negative crush margins. Soybean was last traded at Rs 2,900-2,975/100Kg in benchmark Indore market of Madhya Pradesh. In addition to it, soybean meal traded steady due to limited demand from poultry feed manufacturers. Soybean meal was flat at at Rs 24,000 per tonne in Indore. Upside for soybean seen limited as this year's production seen higher than demand, which is likely to keep its prices under stress.
According to analyst, soybean meal demand may remain under pressure as poultry farmers are incurring losses on the sales of broiler chicken, so demand of soymeal is likely to remain as per requirements. Crushing activity was limited in the recent weeks as demand for mustard meal didn't pick up as was anticipated earlier.
India's soy meal exports are likely to clock around 200,000 tonne this month, way higher than last March's record low of 430 tonne, as demand from European and Asian countries have been robust, trade bodies said.
Though meal exports was better so far this marketing year 2016-17 (Oct-Sept), but lower than expectations and bumper production estimates. According to market participants above mentioned export is less and if India exports around 3-3.5 lakh tonnes of soy meal every month then only soy meal prices may trade higher. India at least need to export 3.5-4 lakh tonnes of soymeal for next five to six months on monthly basis, then only it may offset bumper supply of raw material i.e. soybean. According to analysts, "If soybean meal demand don't improves from domestic and export market, then a big amount of raw material will be carry-forward to next year."
In International news the USDA grain stocks report for soybeans was considered bearish versus trade estimates as March 1, 2017 soybean stocks came in at 1.734 billion bu. compared to the average estimate of 1.684 billion bu. (1.627-1.885 range).
The USDA Prospective Plantings report for U.S. was considered negative versus trade estimates as well as planting intentions came in at 89.5 million acres versus the average estimate of 88.3 million acres. NEXT WEEK: Outlook for oilseed market will focus only on demand for by-products. (By Commoditiescontrol Bureau; +91-22-40015516)
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