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Spot Soybean To Trade Higher Next Week

12 Aug 2017 4:29 pm
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MUMBAI (Commodities Control) :

International Soybean Market Recap

CBOT November Soybeans gave a negative closing during the week ended 1.17 percent at 945’6 after opening at 965 and making a high of 988.50. The U.S. Department of Agriculture surprised traders on Thursday by raising its soybean yield estimate to 49.4 bushels per acre and a record soybean harvest of nearly 4.4 billion bushels.

The 2016-17 US ending stocks came in at 370 million bushels versus the average estimate at 399 million bushels and compared to the July ending stocks at 410 million bushels. The USDA raised old crop exports by 50 million bushels and lowered crush by 10 million bushels. The 2017-18 US ending stocks came in at 475 million bushels versus the average estimate of 433 million bushels and compared to July's 460 million bushels. The 2016-17 World ending stocks were estimated at 96.98 million tonnes versus the average estimate at 94.4 million tonnes and the 2017-18 World ending stocks were estimated at a record 97.78 million tonnes versus the average estimate of 92.3 million tonnes and compared to July's 93.5 million tonnes. Surprisingly the USDA left China's 2016-17 import total unchanged at 91.0 million tonnes after they raised US exports by roughly 2.0 million tonnes.

The 2016-17 Brazilian soybean production came in at 114 million tonnes versus the average estimate of 113.8 million tonnes and Argentina's soybean production came in at 57.8 million tonnes versus the average estimate of 57.8 million tonnes.

Many were caught off guard by the agency's estimates, coming amid ongoing concerns about the weather this growing season. Hot and dry conditions have hampered crop growth in key states like the Dakotas and Iowa in recent weeks, and many analysts expected the USDA to reflect those difficulties with lower forecasts.

The trade believes that the numbers posted by the USDA are at the top end of the range and will be lower in subsequent reports. Weather will still be the key factor in price movement in the nearby term.

The USDA said that private exporters reported sales of 120,000 metric tons of soybeans to China for delivery in 2016-17 and 2017-18. Meanwhile, a lower dollar and higher crude oil prices also helped the recovery, easing exports and helping money flow into the commodities.

Domestic Soybean Market Recap

Soybean prices in the spot markets during the week ending 12th August, traded range bound as per our expectation and closed flat at Rs 2,950/100kg amid less trades ahead of Rakshabandhan festival.
Total arrivals during the week, were reported at 0.60 to 1 lakh bags against 0.95 to 1.15 a week ago.

The demand from crushers had been weak on low sales of Meal in both domestic and international markets. Meanwhile, farmers are holding huge inventory of Beans, wanting to gain more on higher prices on below average crop conditions in Maharashtra and elsewhere in the country. Soybean crop is at flowering stage in areas of Madhya Pradesh and Maharashtra.

Report from the fields suggests crop condition in Madhya Pradesh is average, as soil moisture has depleted when compared to last week due to scanty rainfall. According to market sources, around 0.5 to 1 inch of rain is needed in 3-4 days for proper growth of the plants.Madhya Pradesh contributes around 50-55 percent of the total soybean production of India. Whereas, in Maharashtra which contributes around 30-35 percent of production, crop condition in the state is below average and the damage has started due to dry spell in last fifteen days.

Parbhani, Akola, Amravati, Latur and Sangli districts which contributes around 30 percent of total soybean production of Maharashtra is facing severe drought as rains have not occurred since last twenty days. Farmers said, the late sown crop is very vulnerable and is likely to fail along with early sown soybean crop which may face the moisture stress for another 3-4 days. Yield of soybean crop in these areas is likely to decline by around 10-20 percent over last year.

Kharif Soybean sowing in the country continued to lag behind last year due to shift in farmer’s interest amid sharp slump in prices.The drop in acreage was sharp in Madhya Pradesh, Rajasthan, Maharashtra and Telengana as poor realization prompted farmers to shift to other better alternative.

Soybean planting reached 101.594 lakh ha as of August 10 compared to same period last year at 111.913 lakh ha according to Ministry of Agriculture. Soybean planting has declined by 9.22 percent over last year.

Soybean arrivals and crushing during July month was same as June month. From the balance sheet it seems that carry over stock in 2017-18 crop year will be very huge.

In futures market, Soybean most active September contract during the week was up by 2.58 percent at Rs 3,139/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).


Soymeal at the benchmark Indore market declined by Rs 200 to trade at Rs 24,400 per tonne tracking sharp fall in CBOT soymeal futures in week ending 12th August.
Demand from poultry farmers is gradually increasing amid rise in the placement of chicks, however the international market is subdued with weak exports weighing on Meal prices.

Most active CBOT soymeal December futures have declined by 2.55 percent to trade at $304.70 due to bearish USDA report.

Indian Soymeal is priced at $406 per tonne FAS Kandla Vs $347 Argentina CIF Rotterdam (August) as of August 12, 2017. The difference between the two origin is $59 per tonne unchanged compared to a week ago making Indian Meal less attractive.


A bearish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh during the week on account of slack demand coupled with weak cues of CBOT soy oil futures. However, with the new notification of Government of India to increase the import duty of Soyoil from 12.5 to 17.5 percent, Soyoil prices rose by Rs 20 at Rs 650/10kgs. This will benefit the crushers, as the disparity in crushing will come down, which was previously Rs 500/tonne will be at Rs 130/tonne.

For Upcoming week, market focus will be to estimate the demand amid rise in Soyoil prices along with the festival season ahead.

In futures market, soy oil most active September contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends up by 2.60 percent at Rs 658.75/10kg.

NEXT WEEK: Soybean prices may see some uptrend based on the duty hike improving the Crush margins for Crushing industry, coupled with the festival season demand and Weather concerns.

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

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