CBOT soybean futures started the week on bullish note as per our expectation amid crop loss in Argentina and hit 7-month high of $10.28 on Friady and finally ended the week, up by 3.86% at $10.21 a bushel.
U.S. soybean futures fell from their highest level since late July on Friday as traders locked in profits from this week’s weather-driven rally.
Soymeal futures were mixed, with the most active contract snapping an eight-session winning streak after rallying to its highest in more than a year and a half. Deferred soymeal contracts remained firm.
Concerns about dry conditions in Argentina continued to underpin soybean prices but traders were in risk-off mode following gains this week.
The soybeans have had a good run over the last four to five days. Going into a long weekend traders preferred to book profits. U.S. grains markets will be closed for the Presidents Day holiday on Monday.
Weather forecasters still expect light rains that are well short of the soaking that some of Argentina needs to arrest declining crop conditions.
A bounce in the dollar after a three-year low earlier in the day against a basket of currencies also encouraged prices to consolidate.
Further slow soybean harvest due to wet fields in major soybean growing region of Mato Grosso in Brazil also boosted the market sentiment.
Heavy rains in north-central Mato Grosso have resulted in localized harvest loses for Brazilian soybean producers. The weather had been good during the growing season and farmers were expecting yields similar to last year in the range of 55 sacks per hectare (50.8 bu/ac), but two weeks of constant rain has frustrated their efforts to harvest their soybeans.
These problems are localized in Mato Grosso. In areas not impacted by the heavy rains, farmers are reporting soybean yields above 60 sacks per hectare (52.2 bu/ac). Fortunately the forecast for northern Mato Grosso is calling for lighter and more scattered rains, at least in the near term.
Domestic Soybean Market Recap
Soybean price in the benchmark Indore market gained by Rs 50 to trade at Rs 3800/100kg on 16th February amid firm global soybean cues.
Total crop arrivals during the week were reported at 1.65 to 1.85 lakh bags against 1.60 to 1.80 a week ago.
Farmers and stockists are still reserved sellers which can be confirmed by tracking arrivals week on week, as most of them are anticipating higher prices in near term. They are expecting soybean prices to rise to Rs 4,000/100kg in near term and then they might gradually liquidate their stock.
Another supporting factor is that farmers will be busy in harvesting and selling of Rabi crops so they are likely to slow down the sales of soybean in coming weeks.
Meanwhile, millers are also not getting the required quantity of soybean seed from the market yards. Daily crushing requirement by millers is 25,000 tonnes whereas they are able to procure around 20,000 tonnes on daily basis.
As of now millers are fulfilling their crushing requirement by mixing soybean held in inventory+daily procured soybean but if slow pace of arrival continues another two weeks then we may see soybean price touching Rs 4000/100kg. Soybean crush has turned into disparity of Rs -353 per tonne versus the parity of Rs 632 in last week.
In futures market, Soybean most active March contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended up by 1.08% at Rs 3,830/100kg.
SOYMEAL
Soymeal at the benchmark Indore market declined by Rs 300 to trade at Rs 30,500 per tonne on sluggish demand from poultry feed manufacturer at higher price level.
Traders are reporting thatdemand of soymeal from poultry feed manufacturer is likely to decline from next week onwards as poultry farmers are gradually reducing the placement of chicks. From March on wards summer season starts and conumption of broiler chicken starts declining which leads to slow placement of chicks.
Indian soymeal is tentatively priced at $502 per tonne CIF Rotterdam vs $435 Argentina CIF Rotterdam (February) as on February 17, 2017. India Soybean Meal is now in disparity of $65/MT compared to $110 last week, in international market.
In other news Indian government is likely to increase the incentive for soymeal exports from 7.5% to 10% which is supportive for soymeal price. If incentive is increased the current Indian soymeal premium of $65/tonne in international market may drop to $52.
However Overseas buyer are ready to pay premium of around $10-15/tonne for Indian soymeal which is non genetically modified whereas the Argentine soymeal is genetically modified.
SOYOIL
Refined soy oil in benchmark Indore market of Madhya Pradesh during the week declined by Rs 5 to trade at Rs 735/10kg amid lackluster demand in retail market and sluggish CBOT soy oil futures.
CBOT soy oil futures declined by nearly 1.30% during the week to end at 31.73 c/lb on account of higher soy oil stock in U.S. due to higher crushing of soybean seed. U.S. Soyoil stocks as of January 31 increased to an eight-month high of 1.728 billion pounds, up from 1.518 billion at the end of December. Bearish cues of CBOT soy oil futures weighed on domestic soy oil market.
Soy oil Degum price during the week ended on February 17, declined by $23 to trade at 789 per tonne in dollar terms (CNF) whereas it declined by Rs 3 to trade at Rs 692/10kg in rupees term at Kandla port.
As per SEA India imported 2,24,870 tonnes of soy oil in January compared to 79,250 tonnes in December. Imports have increased due to appreciation of Rupee. In January rupee has averaged at 63.65 whereas in December it was at 64.24. Strong rupee makes the import of edible oil cheaper.
Import of soy oil is likely to be on higher side in February as spread between palm oil and soy oil has narrowed to $124 from $161 on 1st February.
However the stock of soy oil at port has decreased to 1,18,459 as of 12th Feb vs 1,58,412 on 5th Feb which is likely to provide support to soy oil price at lower price level.
There is news in the market that Indian government is likely to increase the import duty on soy oil which is positive for the commodity.
Soy Oil March futures on National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 0.75% at Rs 738.50/10kg.
NEXT WEEK: Soybean prices are likely to trade higher on lower crop and firm global soybean cues.
(By Commoditiescontrol Bureau; +91-22- 40015516)
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