Spot Cottonseed Oilcake To Trade Range-bound Next Week

MUMBAI(Commoditiescontrol) – Cottonseed oilcake traded higher at the benchmark Kadi market amid improving demand during the week ending April 8.

Cottonseed oilcake rose 1.14 percent, or Rs 25 at Rs 2,200/100kg in Kadi during the week on account of improved demand from cattle feed manufacturers and stockists. Business volume in the spot market turned better as market re-opened after long financial year-end followed by Ram Navami this week.

A trader from Kadi said that stockists are still holding a huge quantity of stock with them as they were unable to offload the stock which they earlier bought during September to December period at the higher level. Cottonseed oilcake prices dropped between January to March that prompted them to hold stocks.

Now stockists will give priority to get rid of old stocks and then only they will think of buying cottonseed oilcake at current level.

However they can do some fresh buying for cottonseed oilcake in small quantity in case prices dropped further by Rs 25-50/100kg.

On the other hand demand from cattle feed manufacturers is as per requirement and most of the cattle feed manufacturers have shifted to other feed alternatives which are available in the range of Rs 1,300-1,500/100kg.

Demand from cattle feed manufacturers of cottonseed oilcake may not increase at higher level as there input cost will increase and they may incur loss, so they are likely to buy on correction, which will provide support to prices at lower level.

While prices of substitutes such as guar churi, pulses churi, and mustard seed meal, among others, do have some bearing on the demand of cottonseed oilcake as they are available at a far cheaper rate than cottonseed oilcake. However cottonseed oilcake is a unique product and only a portion of the consumption shifts to other substitutes.

Ginners are also holding a good quantity stocks of cottonseed as they did not get the prices they were anticipating and crushing of cotton seed is also in huge disparity due to which demand from crushers is subdued and likely to remain lower in coming months.

If cottonseed oilcake price increases substantially then only demand of cotton seed from crushers is likely to improve.

Price of Cottonseed in Kadi was last traded flat in the range of Rs 2,400-2,450/100kg against previous week.

On the other hand cottonseed oilcake futures dropped nearly three percent on the National Commodity & Derivatives Exchange Ltd (NCDEX) amid selling pressure.

Cottonseed oilcake futures prices are trading at a discount of Rs 50 over spot prices which is indicating that prices in spot market may not rally in near future.

Coming week cotton cake prices are likely to trade range-bound as there is demand for cottonseed oilcake on lower level whereas higher supply of raw material i.e. cottonseed and lackluster demand from cattle feed manufacturers will weigh on prices at higher level.