Weekly: Spot Soybean Declines Amid Higher Supply; Lackluster Demand

MUMBAI (Commodities Control) :

International Soybean Market Recap

CBOT soybean futures firmed on Friday as rising crude oil futures helped lift soy oil and gave a weekly close of $9.62 up by 0.31% but soybean still recorded a yearly loss of about 4 percent,

reflecting big 2017 harvests in South America and the United States.



The biggest disappointment for hedge funds may be the soybean complex, given improving weather conditions in South America for the harvest early next year. The thinking is that above-trend yields in Brazil could offset losses in Argentina.

In addition to it more stringent specifications for U.S. soybean imports in China, the top global buyer, are adding to the bearish headwinds for soybeans. U.S. shipments to China as of January 2018 will be required to have reduced foreign material content to expedite unloadings, the U.S. Department of Agriculture said.

China accounts for roughly two-thirds of global soybean imports, buying primarily from the United States, Brazil and Argentina. Exports of U.S. soybeans to China in 2016 were valued at more than $14 billion, according to USDA.

Ensuring soybeans contained only 1 percent foreign material could add 15 cents per bushel in costs for U.S. exporters, and processors in China will likely buy from South America to avoid any potential delays in unloading.

Domestic Soybean Market Recap

Soybean prices in the benchmark Indore market during the week ending December 29, closed down by Rs 30 at Rs 3,050/100kg on higher arrival. Soybean price managed to trade above MSP for third consecutive week.



Total new crop arrivals during the week were reported at 3.4 to 4.3 lakh bags against 3.1 to 3.9 a week ago.

Arrivals increased as it was the last week of 3-Month Bhavantar Bhugtan Yojana in Madhya pradesh started in October, which will close on 31st December.

The objective of the scheme was to provide the compensation for agriculture products whenever its price fall below the announced minimum support prices (MSP) by the central government.The farmers have to register themselves with mandis to leverage the benefits of Bhavantar Bhugtan Yojana.

As of now, traders are anticipating that soybean arrival are likely to decline from January as most of the farmers are holding good quality soybean and they will liquidate once the price trades around Rs 3,300-3,500/100kg.

Further sales of soymeal is not improving as per millers expectation in domestic as well as international market which is keeping the market sentiment subdued at higher price level.

Millers are having parity of around Rs 200/tonne in crushing of soybean seed so they have very limited room to offer higher prices to farmers.

SOYMEAL

Soymeal at the benchmark Indore market during the week declined by Rs 100 to trade at Rs 23,400 per tonne amid subdued demand of Soymeal at higher price level from local poultry feed manufacturers for the commodity in domestic market.



In December soymeal price have gained by nearly Rs 900/tonne but on the other side price of wholesale broiler chicken were steady around Rs 92/kg in benchmark Delhi market.

Procuring soymeal at higher price level reduces the profit margin of poultry farmers so they have slowed down the purchase of soymeal in bulk quantities. Soymeal is the major constituent of feed which is given to chicks.

As far as export of soymeal is concerned it is likely to improve in December but that has already been factored in the soybean price.