Indian Soybean To Trade With Bullish Bias Next Week

MUMBAI (Commodities Control)

SOYBEAN

Soybean prices in most of the spot markets during the week ending 28th July traded with positive bias against our expectation of range bound and closed marginally up Rs 20 at Rs 2,950/100kg compared to week ago.

Surge in prices could be attributed to reduced arrivals at the spot markets as farmers are anticipating higher prices so they are selling soybean in market yards in restricted quantity to cover their near term financial need along with positive cues from mustard seed.

Total arrivals during the week, were reported at 0.75 to 1.15 lakh bags against 0.90 to 1.15 a week ago.

Demand for soybean from processors is gradually increasing as they are anticipating that sales of soymeal will increase in coming days as poultry farmers are slowly increasing the placement of chicks to meet the broiler chicken demand post shravan month which ends on 21st August 2017.

Soybean crop has entered the vegetative stage in the key soybean growing areas of Madhya Pradesh and Maharashtra.

Reports from the fields suggest that soybean crop condition in Madhya Pradesh is average and soil moisture is also good.

However in Maharashtra in Parbhani, Akola, and Amravati districts the rainfall from June to till date is deficit by around 20% to 31% so there is little moisture stress. Rains are needed in coming week for proper growth of the soybean crop. Weather forecasts suggest that there is no substantial rain in these areas in next week which may increase the stress potential.

Kharif Soybean sowing in the country continued to lag behind last year due to shift in farmer’s interest amid sharp slump in prices.

The drop in acreage was sharp in Madhya Pradesh, Rajasthan and Telengana as poor realization prompted farmers to shift to other better alternative.

Soybean planting reached 95.655 lakh ha as of July 27 compared to same period last year at 102.839 lakh ha according to Ministry of Agriculture. Soybean planting has declined by 10.32 percent over last year.

In futures market, Soybean most active August contract during the week was up by 1.80 percent at Rs 3,052/100kg on the National Commodity & Derivatives Exchange Ltd (NCDEX).

CBOT Soybean Futures

Expectations earlier this week that some of the dryness and heat that stressed crops so far this growing season were easing prompted selling. But prices did a U-turn after less rain fell than expected.

Dryness was likely to persist over the next week in parts of Illinois, Iowa and Missouri, said MDA Weather Services on Friday, though temperatures should be mild. A lack of rain going into August could cause greater harm to the soybean crop, which is entering its critical yield-forming phase.

Crop scouts who wrapped up a tour through the Iowa on Thursday forecast a yield, below last year and the five-year average.

Soybean futures ultimately gave back some gains towards the close of Friday's session, and closed lower for the week.

For the week CBOT soybean November futures closed one percent down at $10.12.

SOYMEAL

Soymeal at the benchmark Indore markets gained by Rs 100 to trade at Rs 25,100 per tonne during the week on limited demand by poultry feed manufacturers in week ending 29 July.

Demand for soy meal from poultry farmers is gradually increasing as they have increased the placement of chicks.

Price of broiler chicken has declined by Rs 18 to trade at Rs 62/kg at benchmark Delhi market amid poor demand due to on going shravan month.

Indian Soymeal is priced at $413 per tonne FAS Kandla Vs $372 Argentina CIF Rotterdam (July) as of July 29, 2017. The difference between the two origin is $41 per tonne increased by $12 compared to a week ago.

Indian soymeal is trading at a premium of $41 compared to Argentine soymeal which is on higher side so India can not get bulk export orders of soymeal.

Overseas buyers are ready to pay premium of $10 for Indian soymeal as it is non-genetically modified whereas Argentine soymeal is genetically modified.

Indian soymeal premium has increased due to appreciation of rupee by 0.40 percent to close at 64.11 during the week which makes the commodity expensive for overseas buyer.

SOYOIL

A mildly bullish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh on account of improving demand ahead of raksha bandhan festival. Soy oil at benchmark Indore market gained by Rs 2 to trade at Rs 636/10kg during the week.

Both wholesale and retail demand has improved during the week which boosted soy oil prices.

Further the price gap between soy oil and palm oil has increased in dollar terms to USD 140 so demand may shift to palm oil at higher price gap due to which sharp rally in soy oil prices is unlikely.

Soy oil prices prices were lower by USD 3 to trade at 798 per tonne in dollar terms (CNF) at Kandla port and were up by Rs 2 at Rs 587/10kg in rupee terms.

In other news CBOT Soyoil December futures gained 2.12 percent during the week hitting its highest since Jan. 24. A U.S. court said on Friday the U.S. Environmental Protection Agency erred when setting standards for how much renewable fuel must be included in fuel sold in the United States and ordered the agency to try again, according to a court filing. The EPA had sought to lower the amount of biofuels that needed to be mixed into U.S. fuel.

In futures market, soy oil most active August contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends up by 0.14 percent at Rs 646.80/10kg.

NEXT WEEK:

Soybean is likely to trade with bullish bias as demand from processors is slowly improving and on the other hand farmers are reluctant to sell soybean at current levels.