Weekly: Spot Soybean To Trade Range-Bound Next Week

MUMBAI (Commodities Control)-

International Soybean Market Recap

CBOT Soybean futures continued to move up during the week on European demand while the market awaited this month’s WASDE review, which brought small hiccups to the futures minutes after its release but was broadly in line with market expectations. CBOT soybean May futures contracts gained by 1.93% to end at $10.54 a bushel.



The USDA now expects Argentina to produce 40 million mt, down 7 million mt from its March report while it increased Brazil’s soy production to 115 million mt up by 2 million mt; a new record if realised.

USDA reported two additional US soybean sales for the 2018/19 season, with a 132,000 mt shipment destined to China, but more interestingly, a 120,000 mt destined to Argentina, which spooked the Argentinian market.

The USDA also reported a 279,000 mt sale in the current season to unknown destinations.

In other news, Brazil’s food statistics agency Conab also revised its 2017/18 soy forecast up to 115 million mt, as it expects higher plantings and yields compared to its last month’s view.

Despite the good news on Brazil’s soy crop prospects, its currency depreciated further on Tuesday due to political uncertainty, with the real now down 3% to the US dollar since the start of April.

That spurred buyers to step back into Brazil’s Paranagua market, with bids for June rising to a premium of $1.30 to July futures, after June/July traded at a $1.25.

The Rosario grains exchange on Wednesday cut its estimate of Argentina's soybean crop to 37 million tonnes, from 40 million previously which also supported the CBOT soybean prices.

Over in China, the Agricultural Department remains “highly concerned about Sino-US trade frictions,” but noted that its short-term supply is stable as the country seasonally switches from US beans to South American beans.

Domestic Soybean Market Recap

Soybean price in the benchmark Indore market traded steady to trade at Rs 3850/100kg during the week ended on 14th April at the benchmark Indore market.



Total crop arrivals during the week were reported at 0.40 to 1.30 lakh bags against 0.45 to 1.25 a week ago.

Domestic soybean started the weak on negative tone due to sluggish demand from millers at higher price level amid slow sales of soymeal in domestic as well as international markets.

However prices recovered towards the end of the week on low level buying interest by millers.

Soybean cushing is in parity of around Rs 70/tonne so millers can afford to procure soybean al lower level only.

On the other hand, 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.

However farmers and stockist will have to wait for a long time for level of Rs 4000 as demand of soymeal is very sluggish. Future direction of soybean will depend on soymeal demand in both domestic as well as international markets.

In futures market, Soybean most active April contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 0.61% at Rs 3,852/100kg.

SOYMEAL

Soymeal at the benchmark Indore market during the week declined by Rs 300 to trade at Rs 31,500 per tonne on sluggish demand from poultry feed manufacturers at higher price level.

Traders are reporting that demand of soymeal from poultry feed manufacturer has declined as poultry farmers are gradually reducing the placement of chicks. Summer season has started so the conumption of broiler chicken in retail market has declined which led to slow placement of chicks.

As far as intenational soymeal market is concerned Indian soymeal is tentatively priced at $502 per tonne CIF Rotterdam vs $445 Argentina CIF Rotterdam (March) as on April 14, 2017. India Soybean Meal is now at premium of $57/MT in international market compared to $64 last week.

Due to higher premium in International market Indian soymeal exports have dropped to 39,209 tonnes in March from 73,816 in February.

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 in benchmark Indore market of Madhya Pradesh during the week declined by Rs 5 to trade at Rs 770/10kg amid subdued demand in retail market.

CBOT soy oil futures declined by nearly 0.15% during the week to end at 31.48 c/lb on account of higher soy oil stock in U.S. due to higher crushing of soybean seed.

USDA pegged U.S. soy oil ending stock for April at 0.89 million tonnes vs 0.79 in March whereas it pegged world soy oil ending stock for March at 3.14 vs 3.12 in March.

As far domestic demand is concerned it is very sluggish as summer season has started and people don’t like to eat fried foods during the season.

Soy oil Degum price during the week ended on April 14, gained by $3 to trade at 814 per tonne in dollar terms (CNF) whereas it declined by Rs 7 to trade at Rs 725/10kg at Kandla port.

Further import of soy oil is in parity which is also weighing on soy oil prices. In addition to it stock of soy oil at port has incresed to 63,702 tone as of 9th April vs 58,283 on 26th March.

Soy Oil May futures on National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 1.52% at Rs 774.50/10kg.

NEXT WEEK: Domestic Soybean prices are likely to trade range-bound as lower demand from mills at higher price level will weigh on prices however lower supply will provide support.

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