Spot Soybean To Trade Range Bound Next Week

MUMBAI (Commodities Control)

SOYBEAN

Soybean prices in most of the spot markets traded range bound as per our expectation and closed flat at Rs 2,930/100kg compared to week ago.



During the start of the week i.e. on Monday spot soybean prices rallied by Rs 40/100kg amid restricted farmer selling and improved buying by processors.

On Wednesday Soybean prices snapped two day gains and traded lower for rest of the week amid weak demand from crushers at higher price level coupled with bearish cues from CBOT soybean futures.

Total arrivals during the week, were reported at 0.90 to 1.15 lakh bags which is lower than average of 1.25 to 1.50 during this time of the year.

Stress of hot and dry weather conditions impacting the planting and emergence stage of soybean crop has encountered some relief after a good spell of rainfall in Madhya Pradesh this week.

Meanwhile, light rainfall reduced tension in some parts of Maharashtra but it requires more rain in coming days for proper growth.



Soybean sowing progress is lower by 11.67 percent at 73.439 lakh hectares over last year as most of the farmers in Madhya Pradesh has shifted to cotton and maize crop whereas in Rajasthan farmers have shifted to Urad crop.

In Maharashtra area of soybean has increased by 45.47 percent to 24.721 lakh hectares.

In futures market, Soybean most active August contract during the week was down by 1.60 percent at Rs 2,993/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).

CBOT Soybean Futures

Earlier this week on Wednesday USDA released monthly World Supply and Demand Report which stated that the 2016-17 world ending stocks came in at 94.78 million tonnes versus the average estimate of 93.1 million tonnes and world ending stocks for the 2017/18 season came in at 93.53 million tonnes versus the average estimate of 92.2 million tonnes which triggered major sell off in CBOT soybean market.

But forecasts showed difficult growing conditions lingering in some places through the weekend so CBOT soybean futures recovered on Friday and November contract closed up by 1.40 percent to trade at 10.01 cents per bushel.

SOYMEAL

Soymeal at the benchmark Indore markets declined by Rs 300 to trade at Rs 24,700 per tonne during the week on poor demand by poultry feed manufacturers in week ending 15 July.

Price of broiler chicken has declined by Rs 8 to trade at Rs 72/kg at benchmark Delhi market amid weak demand.

Shravan month have started from 10th July in Rajastahn, Uttar Pradesh, Bihar, Punjab, Madhya Pradesh and Himachal Pradesh which will end on 7th August while in Andhra Pradesh, Maharashtra, Karnataka, Tamilnadu shravan month will start from 24th July and ends on 21st August, during this period demand of broiler chicken will decline so market participant are expecting that chicken prices may drop to Rs 60/kg in coming days.

Poultry farmers have reduced the placement of chicks so the consumption of soymeal has declined which is weighing on soymeal prices.

Demand of broiler chicken is likely to increase after 21st August in full swing so poultry farmers are likely to increase the placement of chicks from 28th July-1st of August. It takes around 25-30 days for full grown broiler chicken.

Indian Soymeal is priced at $406 per tonne FAS Kandla Vs $376 Argentina CIF Rotterdam (July) as of July 15, 2017. The difference between the two origin is $30 per tonne decreased by $2 compared to a week ago.

Indian soymeal is trading at a premium of $30 compared to Argentine soymeal which is on higher side so India can not get bulk export orders of soymeal.

Overseas buyers are ready to pay premium of $10 for Indian soymeal as it is non-genetically modified whereas Argentine soymeal is genetically modified.

If rally in CBOT soymeal continues in coming days and Indian soymeal price remains stable or declines then the premium of Indian soymeal will decrease to certain extent which will increase export demand of soymeal.

SOYOIL

A bearish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh on account of poor demand. Soy oil at benchmark Indore market declined by Rs 5 to trade at Rs 640/10kg during the week.

As most of the wholesale trader have completed their bulk purchases last week so there was not much buying interest in the market which weighed on soy oil at higher price level.

Now monsoonal rains have occured in almost all parts of the country so retail demand for the commodity will be good as people like to eat fried foods during rainy season.

Demand of soy oil is likely to improve in western and southern part of India.

Refined soy oil prices will also get support in near-term as rival mustard oil Kacchi Ghani is still trading at a premium of Rs 10/Kg versus soy oil.

Soy oil prices prices were lower by USD 15 to trade at 791 per tonne in dollar terms (CNF) at Kandla port and also declined by Rs 4 to trade at Rs 583/10kg in rupee terms.

India is likely to hike import duty on refined and crude vegetable oils, like palm and soy oil after sharp drop in oilseed prices which will help soy oil prices to trade higher.

Port stock of Soy oil has increased to 1,45,114 tonnes as of 10th July 2017 vs 1,36,778 on 3rd July.

Indian Government has increased the tariff value for second half of July by USD 9 to 812 per tonne.

In futures market, soy oil most active August contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends down by 0.57 percent at Rs 643/10kg.

NEXT WEEK:

Soybean is likely to trade range bound next week on restricted farmer selling at lower level will support prices whereas lackluster demand at higher price level will keep check on prices.

(By Commoditiescontrol Bureau; +91-22-40015516)