Spot Soybean Likely 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 marginally up Rs 10 at Rs 2,940/100kg compared to week ago amid restricted farmer selling and improved buying by processors.


Total arrivals during the week, were reported at 0.90 to 1.15 lakh bags against 1 to 1.15 a week ago.

Good rainfall occurred during the week in key soybean growing regions of Madhya Pradesh and Maharashtra. Soybean crop which was sown during last week of June has entered vegetative stage.

Some districts of Maharashtra such as Amravati, Akola ,Parbhani and Dewas in Madhya Pradesh condition of soybean crop is below average and in rest of the areas it is average, according to traders.


Soybean sowing progress is lower by 17.76 percent at 84.571 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 14.95 percent to 30.001 lakh hectares.

According to market participant they are not very much worried about the production of soybean crop in 2017-18 even if the production declines by around 5-10 lakh tonnes due to high end stock of 2016-17.

India would have over 20 lakh tonnes of soybean left as carryover stocks in the beginning of October 2017. This is a record quantity of soybean carryover stock remaining for the next season.

The major reason for such a large carryover stock is falling soybean prices in domestic market and cheap import of refined RBD (refined, bleached and diodized) and crude palm oil (CPO) from world’s two large producing countries including Malaysia and Indonesia. Therefore, farmers are facing huge problems in terms of realisation.

In futures market, Soybean most active August contract during the week was up by 0.40 percent at Rs 3,012/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).

CBOT Soybean Futures
Chicago Board of Trade soybean futures dropped on Friday after a round of profit-taking following three straight sessions of gains but gave higher weekly close at $10.21up by 2.81 percent.

Weather continues to be the main driving force of the markets direction. With the radar lighting up with rain in central and northern Iowa last night and yesterday some of the weather premium that was put in earlier in the week was pulled out.

Market anticipate weather will continue to be the main driving force behind the bean markets until the critical pod filling portion of the growth cycle, which happens in August.

July 15 was the midpoint for Iowa's soybean blooming. Allendale's crop model suggests the midpoint for pod set for the nation’s top soybean producer will average August 1. Even though the dryness issues plaguing portions of the Northern Plains, Iowa, Nebraska, and central Illinois is dominating the trade's attentions, traders need to remember that we can get too much of a good thing as parts of the eastern Midwest continue to get flooding rains, (Wisconsin, northern Ilinois, and parts of Illinois were hammered again last night) which is stunting the bean crop and causing disease problems.

SOYMEAL

Soymeal at the benchmark Indore markets gained by Rs 300 to trade at Rs 25,000 per tonne during the week on improved demand by poultry feed manufacturers in week ending 22 July.

Poultry feed manufacturers which were away from the market activity during first fifteen days of July have started procuring soymeal in marginally higher quantities to add stock in their inventory.

From next week placement of chicks are likely to increase as shravan month in western part of India will get over by 21st August in western and southern India. After shravan month demand of broiler chicken is likely to increase and it takes around 25-30 days for a full grown chicken. Price of broiler chicken has gained by Rs 8 to trade at Rs 80/kg at benchmark Delhi market amid lower supply.

Indian Soymeal is priced at $412 per tonne FAS Kandla Vs $383 Argentina CIF Rotterdam (July) as of July 22, 2017. The difference between the two origin is $29 per tonne decreased by $1 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.


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 635/10kg during the week.

Retail demand is not at all improving as most of the traders have sufficient stock with them which can meet the near term demand.

According to traders rural demand is very sluggish as rains are occurring very heavily and also farmers are busy in kharif crop sowing.

Around Raksha Bandhan there can be good demand which will give boost to soy oil prices. Refined soy oil prices will also get support in near-term as rival mustard oil Kacchi Ghani is still trading at a premium of Rs12/Kg versus soy oil.

Market is expecting that Imports of sunflower oil, perceived to be a healthier option by many Indians - could surge 33 percent to 2 million tonnes this year as it has started trading at a discount to soyoil.

In June the landed cost of sunflower oil was $9 a tonne lower than soyoil at Indian ports. A year ago, sunflower oil was $99 a tonne more expensive than soyoil, according to SEA data.

That means most of the drop in edible oil imports will come in soyoil purchases, which are expected to fall nearly 17 percent to 3.5 million tonnes From long term perspective demand of soy oil will be steady to down.

Soy oil prices prices were lower by USD 7 to trade at 796 per tonne in dollar terms (CNF) at Kandla port and were steady at Rs 585/10kg in rupee terms.

In futures market, soy oil most active August contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends down by 0.28 percent at Rs 642.35/10kg.
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)