World Market Wrap:
For the week ending 13th May Soy market focus was on the USDA Supply and demand reports which stated higher production, Crush and stocks for the world markets.
Start of the week was driven by the weather fundamentals, its impact on the crop sowing and acreage shift for the new crops between Soy, Wheat and Corn in the US, followed by the reports of US imposing duties on Oil imports from Argentina & Indonesia, kept the Soy complex in bullish trajectory.
With the release of the USDA report on 13th for supply and demand higher estimates of production, crush and stocks for world exerted pressure on the prices. In the Crop progress report for US as on 7th May Soybean plantings have completed by 14% which is marginally down from 10 years average of 16% however lagging behind from last year’s 21%.
Soybean on CBOT have dropped by more than 12% since mid – January. Both the most active July and November contracts on CBOT have been trading in a consolidation within a range of 989 – 965 for July and 980 – 957 for November contracts.
India Markets:
Soybean prices slumped to lower levels for the week ending 13th May on higher output across the country and ample stock available with the farmers.
As per the latest release of Supply and Demand estimates from SOPA, the Soybean Processors of India has come out with soybean and soymeal supply-demand up to April for the current season Oct-Sept (2016-17).
The industry body pegged soybean arrivals in the country from October - April (2016-17) at 59 lakh tonnes, which includes 4.41 lakh tonnes from last year's carry-over stocks and rest from the estimated production of 114.91 lakh tonnes.
SOPA has estimated consumption at 57.17 lakh tonnes (including 1.72 lakh tonnes as exports, 0.70 as direct use and rest 54.75 lakh tonnes for crushing). The stocks left with plant/traders and crushers are pegged at 3.83 lakh tonnes and 45.91 lakh tonnes respectively. SOPA estimated 2016-17 soybean ending stock will be higher at 18.32 lakh tonnes from 4.41 lakh tonnes a year ago.
The balance sheet drawn by the SOPA for soybean meal revealed the country has exported 12.65 lakh tonnes up to April from total supply of 45.03 lakh tonnes, which includes 0.48 lakh tonnes of opening stocks followed by 44.55 lakh tonnes from production. As per the reports, India government in third advance estimates pegged 2016-17 soybean crop at 140.8 lakh tonnes against 85.70 lakh tonnes a year ago.
Soybean prices in the local markets opened firmed with the start of the week on 8th may to trade at Rs 2800 – 3025/100kgs amid farmer’s reluctance to sell at lower price levels. However, in mid - week arrivals improved exerting pressure on the prices. Soybean prices closed in the range Rs 2200 – 2775/100 Kgs across the markets in Madhya Pradesh and Maharashtra.
Plants rates in the major locations of Madhya Pradesh and Maharashtra have also dropped by Rs 20 – 30 per tonnes taking cues from the local market yards. Although farmers are selling their produce gradually, but selling pressure may rise further as they may need finance for rabi crop sowing, according to a trader from Indore. Soybean prices in the domestic markets are likely to trade subdued due to huge stocks with farmers along with forecast of normal monsoon this season.
Soybean is fundamentally bearish this year so far and upside is very limited as soybean meal exports are also not encouraging compared to robust crop.
In the futures markets, Soybean for most active June contract is trading lower by Rs 29 to trade at Rs 2900 / 100 kgs after making a low of Rs 2893 / 100 kgs on NCDEX.
Soymeal:
India's soybean meal export during April month rose sharply by 911.58 percent at 124,374 metric tonnes against 12,295 metric tonnes same period last year. The export data is better than last year, but is considered very poor compared with large crop in the country. Soybean meal, however stayed steady at Rs 25,000 per tonne in the Spot markets.
Indian Competitiveness of soybean meal in international market has further reduced in the month of May, resulting in slowing of shipment from India as per the industry experts.
According to industry sources the export of soybean meal should be more than 3-4 lakh tonnes in order to absorb such huge crop. Further domestic soybean meal demand is not very encouraging at present due to poor demand from poultry industry.
India soybean meal FOB average rate during April month was at $386 per tonnes against $369 a month ago. In the international market, Indian soybean meal FOB (Kandla ready) was priced at $395 per tonne on May 4 against $356 per tonne with Argentine origin (CIF-Rotterdam).
(By Commodities control Bureau; +91-22-40015516)