MUMBAI (Commodities Control) -
International Soybean Market Recap
CBOT Soybean futures suffered sharp losses on Wednesday after China said it would slap a 25 per cent tariff on soybean imports in retaliation for U.S. sanctions that had been placed on it.
The dominant May contract plummeted 55 cents to $9.83 a bushel, before bargain-hunters stepped in and staunched the bleeding.
By mid-morning, the contract had moved above the psychologically-important $10 mark, which lent some support to values. It ultimately settled at $10.15 a bushel, down 22 cents for the day, whereas CBOT soybean futures ended week down by 0.95% at $10.34 a bushel.
The tariffs don’t kick in immediately, though, lending support to the notion cooler heads could prevail and a settlement could be reached.
According to trade source China is also sitting on roughly 5.75 million tonnes of soybeans at its ports, which is enough to keep a 1.65 million-tonne crush rate going until the end of the month.
The Chinese tariffs could have hit at a worse time, too, as market participants had already started to shift their focus to South America.
There is speculation that once the initial shock of the tariffs wears off, soybean could take back the ground it lost and even move a bit higher.
China has already shut off imports of U.S. ethanol, Reilly noted, so that is already baked into the market. Anti-dumping duties also exist on U.S. sorghum.
In recent weeks, buying had kicked in once the May contract dropped below the $3.72 level — but all bets are off. It may try and carve out a new range for itself, given China’s shakeup to agricultural markets.
U.S. President Donald Trump said on Thursday he has asked the U.S. Trade Representative to consider slapping 100 billion U.S. dollars of additional tariffs on China, ratcheting up trade tensions and plunging economic growth into uncertainty.
The moves came after both sides earlier this week unveiled a list of products worth 50 billion U.S. dollars imported from the other side that will be subject to higher tariffs.
The U.S. Department of Agriculture on Friday said private exporters reported 130,632 tonnes of soybean for delivery to Mexico.
Further Brazilian farmers are finishing their soybean harvesting which is also weighing CBOT soybean futures, with 71% done nationally. Mato Grosso farmers almost finished their fieldwork, completing 99% of their soybean harvest by last week while, in the south, Rio Grande do Sul farmers have cut just 25% of their beans.
Domestic Soybean Market Recap
Soybean price at the benchmark Indore market ruled steady at Rs 3,750/100kg during the week ending 7th April.
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Total crop arrivals during the week were reported at 0.50 to 1.5 lakh bags against 1.5 to 1.75 lakh bags a week ago.
During the start of the week soybean prices started rising on account of bargain hunting at lower price level. Millers were the main buyers as their crush margin is positive. However they slowed down their purchases when soybean prices jumped by Rs 100/100kg as their crush margin started moving to negative territory.
Overall the demand from millers at higher price level is very limited due to slow sales of soymeal which has pulled down the soybean prices by Rs 100 towards the end of the week.
On the other hand, farmers and stockists are still reserved sellers which can be confirmed by tracking arrivals on a week-to-week basis, 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.
However farmers and stockists have to wait for a long time for level of Rs 4000 due to sluggish demand of soymeal.
Demand of soymeal at higher price level is poor in both domestic as well as international markets.
In other news Soybean arrivals in the country till March of the current season (2017-18) started from October fell 14.67% year-on-year at 62.50 lakh tonnes, said the Soybean Processors Association of India (SOPA) in a release on Friday.
The association said, “Total disposal (consumption) during the first six months of season stood at 52.39 lakh tonnes, including 1.59 lakh tonnes as export, 0.80 lakh tonnes as direct use and rest 50 lakh tonnes was used for domestic crushing.”
The left over stock with traders, farmers and crushers/plants is estimated at 32.11 lakh tonnes, as per release.
Meanwhile, soybean meal supply-demand report drawn by SOPA revealed that export of soybean meal during Oct-Mar declined at 10.25 lakh tonnes against 11.89 lakh tonnes during the same period a year ago.
SOPA has estimated 2017-18 soybean crop at 83.50 lakh tonnes and pegged ending stock to decline at 3.50 lakh tonnes against 13 lakh tonnes a year ago.
In futures market, Soybean most active May contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended up by 2.05% at Rs 3,876/100kg.
SOYMEAL
Soymeal at the benchmark Indore market during the week ruled steady to trade at Rs 31,500 per tonne on lacklustre demand at higher price level.
In March soymeal prices have declined by nearly Rs 1,400/tonne on account of sluggish demand.
Traders are reporting that demand of soymeal from poultry feed manufacturers is only at lower level as poultry farmers are gradually reducing the placement of chicks. From April onwards harsh summer season starts and conumption of broiler chicken declines which leads to slow placement of chicks.
Further poultry prices are on lower end which is affecting the profit margin of poultry farmers.
As far as intenational soymeal market is concerned Indian soymeal is tentatively priced at $500 per tonne CIF Rotterdam vs $442 Argentina CIF Rotterdam (April) as on April 6, 2018. India Soybean Meal is now at premium of $58/MT in international market unchanged from last week.
Overseas buyers 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 at benchmark Indore market of Madhya Pradesh during the week gained by Rs 10 to trade at Rs 778/10kg amid improved demand against the lower stock of soy oil at ports.
On 1st of March Indian government increased the import duty on palm oil to 44% from 30% and RBD palmolein to 54% from 40% as result of which the palm oil prices have gained by nearly Rs 80/10kg.
Post duty hike spread between RBD palmolein and soy oil has reduced to Rs 30 from Rs 85 of pre duty hike so some of the RBD palmolein demand has shifted to soy oil which has supported soy oil prices.
However the soy oil prices are not likely to rally sharply from current level as vessel line up suggest that around 1,23,290 tonnes of soy oil is likely to reach Indian ports by 14th April and which is sufficient to weigh on prices.
Further soy oil at both spot and futures markets is trading above the import parity so traders should avoid procuring the commodity in bulk quantities.
CBOT soy oil futures gained by nearly 1.23% during the week to end at 31.57 c/lb due to trade war between U.S. & China soy oil demand of China from U.S. may shift to Argentina.
Soy oil Degum price during the week ending April 6, declined by $1 to trade at 815 per tonne in dollar terms (CNF) whereas it gained by Rs 7 to trade at Rs 732/10kg in rupees term at Kandla port.
Soy Oil May futures on National Commodity & Derivatives Exchange Ltd (NCDEX) ended up by 0.07% at Rs 786.25/10kg.
NEXT WEEK: Domestic Soybean prices are likely to trade range-bound on limited demand at higher price level.
(By Commoditiescontrol Bureau; +91-22- 40015516)
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