Mumbai (commoditiescontrol) - India oil seed market traded higher due to improved demand for by-products during the week ending April 15, 2017.
MUSTARD SEED:
Mustard seed prices during the start of the week rallied and maintained its positive tone throughout the week to close higher on account of improved demand from local millers so prices gained by Rs 20 to last trade at Rs 3,930/100kg in benchmark Jaipur market of Rajasthan.
During the week arrivals ranged between 2.50 lakh bags to 5.50 lakh bags(85kg) against 3.50 to 6.50 a week ago.
Arrivals have declined as most of the farmers are busy in marketing of wheat crop and this trend is likely to continue till 20th April.
New crop arrivals were higher year on year in the month of March mainly due to higher production over last year. Arrivals of new crop in the month of March are estimated at 13 lakh tonnes up by 38% as compared to corresponding period last season.
Mustard seed crush margins improved in March over February but continued to remain in negative zone. Mustard seed new season crush has started. Mustard seed crush for the month of March is estimated at 7 lakh tonnes, steady year on year.
As of now crushers are facing huge disparity in crushing of mustard seed due to poor realization of mustard by-products so they are not sourcing the commodity in bulk quantities at higher level.
Crushers and stockists have started procuring mustard seed in small quantities whenever the prices fall around Rs 3900/100kg.
Further to it market participants are anticipating that mustard seed arrivals are likely to increase after 20th April due to which prices are likely to drop to Rs 3,800-Rs 3,850/100kg.
Stockiest are likely to source the commodity in bulk quantities at lower level but this season they are not likely to get much return on their investments as higher supply of mustard seed is likely to exceed demand.
Demand of mustard kachhi ghani oil is likely to remain subdued in near future as most of the retail demand has shifted to soy oil as mustard oil is trading at a premium of Rs 12/10kg.
At the same time summer season has also started so the core consumption of mustard oil will also decline as people don’t prefer to eat fried foods.
In addition to it, blending of mustard oil 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 cattle feed manufacturer due to higher price gap with cotton cake.
Also due to disparity in crushing of mustard seed crushers are crushing seed as per requirement which has resulted in limited availability of mustard cake which will prevent any sharp fall in mustard oil cake prices.
In futures market this week, mustard seed prices most active May contract gained by 0.12 percent on the National Commodity & Derivatives Exchange Ltd (NCDEX), while forward June contract was also higher 0.20 percent.
In coming week, mustard seed prices are likely to trade range bound due to strong demand for mustard seed from crushers at lower level whereas improving supply will weigh on prices at higher level.
SOYBEAN:
Soy bean prices during the week ending 15th April traded higher on improved demand from processors due to higher off take of soymeal.
During the week sales of soymeal has increased due to improving demand from poultry feed manufacturer.
Soymeal prices has gained Rs 500 at Rs 24,700 per tonne.
As soymeal prices have improved due to which the soybean crushing disparity has reduced drastically so it is allowing processor to crush the soybean in bulk quantities.
Soybean prices last traded at Rs 2,975-3,050/100Kg in benchmark Indore market of Madhya Pradesh against Rs 2,900-2,975 a week ago.
Farmer selling has also reduced as the soybean prices in most of the market yards are trading around Rs 3,000/100kg due to which processors are not able to procure soybean in bulk quantities for crushing requirement.
Farmers are ready to liquidate bulk quantities of soybean around Rs 3,200/100kg.
Price of broiler chicken declined by Rs 10 to Rs 86/kg during the week on account of poor demand at higher level.
In coming months the demand of broiler chicken is likely to decline as most of the consumers don’t prefer eating non-veg during summer season.
According to analyst, soybean meal demand at higher level may remain subdued as poultry farmers are incurring losses on the sales of broiler chicken.
Exports of soymeal has shown good growth, but still much lower than market expectations, which may weigh on soybean prices in the domestic market.
India Soymeal is priced at $403 per tonne FAS Kandla Vs $370 Argentina CIF Rotterdam (Apr) as of April 15, 2017. The difference between the two origin is $33 per tonne.
India soymeal is in disparity of $33 compared with Argentine soymeal and the parity has been drastically reduced in last two month from a high of $40 due to appreciation of Rupee and trade experts believe that India soymeal should be in parity of at least $10 then only overseas buyer will buy soymeal from India.
Upside for soybean seen limited as this year production seen higher than demand, which may continue to pressure on prices on most of the year.
In futures market, Soybean most active May contract was down by 2.45 percent at Rs 2,994/100kg while forward June contract was up by 1.80 percent at Rs 3,064/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).
NEXT WEEK: Outlook of soybean for next week is range bound as processors demand is likely to continue at lower level whereas farmer selling will increase at higher level which will cap the gains of soybean.
(By Commoditiescontrol Bureau; +91-22-40015516)
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