Indian Soy Complex To Trade With a Bullish Bias - Weekly 10th June

MUMBAI (Commodities Control)

SOYBEAN

Soybean prices traded steady across the country during the week amid limited demand due to ongoing farmers strike for waving of loans, in major producing states of Madhya Pradesh and Maharashtra.

Start of the week, Crushers were the active buyers amid improved sales of Soymeal at lower price of Rs 22,600, however during the week soybean prices advanced further limiting the trade activity.

Prices at the benchmark Indore market declined on Friday as buyers and sellers were active to close few trades and arrivals were higher pushing the price by Rs 30 at Rs 2,840/100kg.

Total arrivals during the week, were reported to be lower at 0.35 to 0.75 lakh bags on farmer’s reluctance to sell at current prices and anticipating better prices at Rs 3,000/100kgs for the crop.




Soybean prices last traded at Rs 2,745-2,840/100Kg in benchmark Indore market of Madhya Pradesh against Rs 2,775-2,870 a week ago.


In futures market, Soybean most active July contract during the week was up by 2.65 percent at Rs 2,785/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX). On 5th June soybean futures marked a fresh five-month low of Rs 2,713/100kg due to selling pressure but recovered as sellers were winding their short positions on account of profit booking.

The agriculture ministry had proposed about Rs 175 per quintal hike in the MSP of soybean, a major crop in Madhya Pradesh which provided support to soybean futures prices.

In yesterday’s USDA report U.S. Soybean inventories for 2016-2017 were seen at 450 million bushels, higher than estimates for 433 million bushels and May's 435 million bushels New-crop carryout is forecasted at 495 million bushels, topping projections for 485 million. The USDA last month pegged 2017-2018 stocks at 480 million bushels.

Whereas soybean inventories for 2016-17 were seen at 93.21 million metric tonnes. New-crop carryout is forecast at 92.22 million metric tonnes. The USDA last month pegged 2017-2018 stocks at 88.81 million tonnes.

SOYMEAL

Soymeal at the benchmark Indore markets gained by Rs 600 to trade at Rs 23,300 per tonne during the week amid low buying by poultry feed manufacturers and less export orders in week ending 10 June.

Poultry industry profit margins gets affected with higher input cost of Meal, inducing them to place less chick over the last year by 5 – 10 %.

Off late, Price of broiler chicken has declined by Rs 6 to trade at Rs 92/kg at benchmark Delhi market in week ending 10th June due to lower demand in the summer season.

USDA keeps India 2016-17 soymeal exports at 14 lakh tonnes, unchanged over May report. For 2016-17, USDA estimated India domestic soybean meal consumption at 51.50 lakh tonnes against May forecast of 52 lakh tonnes.

Soybean meal production in 2016-17 likely at 71.20 lakh tones unchanged from May report and sharply up from 46.40 lakh tonnes in 2015-16.

The competitiveness of Indian soymeal in the world market has deteriorated pronouncedly in recent weeks. The premium of Indian export prices versus Argentine origin widened to USD 30-35 per tonne from 20-25 compared to month ago so most of the market participant are expecting that India will receive less export orders in coming days.

SOYOIL

A bullish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh on account of improving demand at lower price. Soy oil at benchmark Indore market gained by Rs 10 to trade at Rs 627/10kg. Refined soy oil prices will also get support in near-term as rival mustard oil Kacchi Ghani is trading at a premium of Rs 8/Kg versus soy oil.

Soy oil prices prices were higher by USD 9 to trade at 799 per tonne in dollar terms (CNF) at Kandla port and also gained by Rs 2 to trade at Rs 577/10kg.

Wholesale traders are buying soy oil and adding stock to their inventory as they are anticipating that demand is likely to increase in monsoon season. Also, the price gap between palm oil and soy oil is less leading to a shift in the consumers preference to soy oil as it is considered as premium oil than palm oil.

Import of soy oil is still expensive keeping the imports on need basis and if the disparity in importing soy oil continues for long time then we may see supply getting tight in spot market providing support to prices.

In futures market, soy oil most active July contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends up by 2.42 percent at Rs 634/10kg.

NEXT WEEK:

Soybeans in the Local markets is likely to trade steady or with a bullish bias due to the ongoing farmers strike keeping the supplies tight which may lift the prices marginally. There could be some panic buying as well by the crushers if this strike continues. Drop in the Soymeal prices may attract some buyers in the Asian region, along with some poultry industry buying setting in to support. Soy oil may trade strong with the seasonal demand setting for the ongoing Ramadan festival.