Indian Soybean Trends Bearish For 2nd Consecutive Week Ending May 27

MUMBAI (Commodities Control)

SOYBEAN :

Indian soybean market exhibited bearish trend for the second consecutive week as processors were away from heavy buying on account of sluggish demand in soymeal.


Arrivals of Beans during the week, were reported to be lower at 0.75 to 1.15 lakh bags. Farmers were reluctant sellers amid lower realizations since the arrivals of the new crop in October. We may see a big carry over stock for next year on higher production and less usage.

Soybean prices last traded at Rs 2,975-2,875/100Kg in benchmark Indore market of Madhya Pradesh against Rs 2,900-2,980 a week ago.

In futures market, Soybean most active June contract during the week was down by 2.65 percent at Rs 2,759/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).

On 26th May soybean futures marked a fresh five month low of Rs 2,706/100kg on account of selling pressure by traders following subdued cues of spot market.

SOYMEAL :

Soymeal prices in the local markets dropped by Rs 800 to trade at Rs 23,000 per tonne amid low buying from poultry feed manufacturers in week ending 27th May.


Buying from the feed manufactures have been on hand to mouth basis due to lower offtake of broiler chicken in the retail market by 15 – 20%. Price of broiler chicken were steady at Rs 115/kg at benchmark Delhi market in week ending 27th May on account of limited demand.


Another factor that is weighing is the poor export during October to April period for 2016-17. Although, there had been a rise in the exports in the month of April by 911.58% at 124,374 MT Vs 12,295 MT a year ago, however Indian meal competitiveness has reduced in the exports which has led to a slow down.


India may export 1.5 million tonnes of soymeal during the 2016/17 marketing year that runs from October to September, said B.V. Mehta, executive director of a Mumbai-based trade body Solvent Extractors' Association (SEA).

At the beginning of the season, the SEA was expecting shipments of 2 million tonnes during the 2016/17 marketing year because of higher soybean output.


Indian soymeal is out-priced right now due to strengthening rupee. At the same time, global prices are coming down due to weakening of Brazilian real. India’s rupee has strengthened more than 5 percent so far in 2017, while the Brazilian real fell 4 percent last week.


Soymeal prices in India have risen nearly 10 percent in the past three months to $390 per tonne on a free-on-board (FOB) basis, while global prices dropped 8 percent to $307 during the same period.


The slowdown in exports has pulled local soybean prices to the lowest level in more than five years, which could prompt farmers to shift to other crops in the next season. Indian farmers start the sowing of summer-sown crops in June with arrival of monsoon, which is expected to deliver normal rainfall this year. It will also prompt farmers to cut soybean cultivation and shift to other crops like cotton in the upcoming sowing season.


SOYOIL :

A bearish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh on weak global cues coupled with poor demand at higher level. Soy oil at benchmark Indore market declined by Rs 8 to trade at Rs 632/10kg.


Indian soy oil prices were majorly under pressure on account of weak trend in CBOT soy oil which declined by 4.50 percent to trade at 31.59 cents per pound during the week.


Traders have sufficient inventory of soy oil to meet the near-term requirements however, they are on the side-lines for any bulk purchasers more so due to import disparity.

Indian Rupee also showed volatile movement. During the start of the week rupee depreciated to 64.96 but towards the end of the week it closed at 64.51 unchanged over the previous week.


Soy oil prices prices were lower by USD 21 to trade at 793 per tonne in dollar terms (CNF) at Kandla port and also declined by Rs 15 to trade at Rs 580/10kg.


In futures market, soy oil most active June contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) was down 2.35 percent this week, while forward July contract was also lower 2.10 percent.


NEXT WEEK :


Soybean in the spot as well as futures market is likely to trade bound with a bearish sentiment amid poor demand to weigh with slow arrivals to support the market.

(By Commodities control Bureau; +91-22-40015533)