CBOT soybean futures on Friday rose, hitting a 1-week high of $9.77 a bushel in March contract and gave weekly close of $9.60 up by 0.74% as weather concern continues in Argentina which is likely to affect the production of soybean crop drastically.
Dryness in Argentina has provided enough fuel for soybean prices to find footing with multi-day gains this week. Signs of strong export demand also lent support to soybeans which notched their biggest weekly gain in three months. The U.S. Agriculture Department on Friday said weekly export sales of soybeans totalled 1.528 million tonnes, topping market forecasts that ranged from 0.80 to 1.4 million tonnes. A slow start to harvest in Brazil could keep export interest focused on the United States for longer than usual. Brazil’s 2017-18 soybean crop harvest is lagging last year’s pace and the long-term average for this time of the year, which will result in a sharp reduction in the amount of soy available in the market by the end of January. Persistent dryness in Argentina has raised concern about harvest prospects in the world’s third-largest soybean producer. It’s certainly a concern, given that Argentina is the biggest soymeal exporter and we see soymeal prices leading the soy complex. CBOT soymeal ends up by 4.16% during the week to trade at $331.60/short tonne. The Buenos Aires Grain Exchange could reduce its 2017-18 soybean planting area estimate further after sowing delays caused by dry weather in northwestern Argentina. Domestic Soybean Market Recap Soybean prices in the benchmark Indore market during the week ending January 19, closed up by Rs 125 at Rs 3,400/100kg. Soybean price hits 16-month high on strong demand for soymeal from local poultry feed manufacturer coupled with positive cues from CBOT soybean.
Total new crop arrivals during the week were reported at 2 to 3.2 lakh bags against 2.85 to 3.45 a week ago. Arrivals have declined as most of the farmers have become reserved sellers as they are anticipating higher prices in near term. Farmers of Madhya Pradesh are holding good quality soybean as they have liquidates the inferior quality soybean in Bhavantar Bhugtan Yojana which closed in December. Further, millers are also not getting the required quantity of soybean seed from the market yards which also supporting soybean prices. Daily crushing requirement by millers is 30,000 tonnes whereas they are able to procure around 24,500 tonnes on daily basis. In coming week some stockiest may liquidate the stock of soybean as they have got good returns in short span of time so soybean price may decline slightly in coming week. In early October soybean prices were trading around Rs 2,700/100kg and as of 19th January it is trading at Rs 3,400/100kg up by 25.90%. In addition to it millers having parity of around Rs 70/tonne in crushing of soybean seed so they have very less room to offer higher price to farmers for procuring soybean. In futures market, Soybean most active February contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended up by 3.92% at Rs 3,363/100kg. SOYMEAL Soymeal at the benchmark Indore market gained by Rs 1200 to trade at Rs 26,200 per tonne on improved demand from local poultry feed manufacturers for the commodity.
Local poultry demand has improved during the week as the demand for broiler chicken has improved due to ongoing winter season.
Poultry farmers are still comfortable in procuring soymeal at current prices level as the overall feed cost of broiler chicken is on lower side. Lower feed prices have offered a cushion to their margins. While egg prices have gone up marginally over recent months to trade currently at Rs 4 each, broiler chicken prices remain fairly stable at Rs 86 a kg in benchmark in Delhi market. Poultry farmers are seeking nearly 10-15 percent of profit margin at the current rate of chicken and eggs due to lower feed prices. On the other hand, soybean exports have shown revivals during the month of December but in January it may decline as the Indian soymeal has turned costlier in international market. Indian soymeal is tentatively priced at $439 per tonne CIF Rotterdam vs $384 Argentina CIF Rotterdam (January) as on January 19, 2017. India Soybean Meal is now in disparity of $55/MT in international market compared to Argentine soymeal. SOYOIL Refined soy oil in benchmark Indore market of Madhya Pradesh during the week declined by Rs 4 to trade at Rs 738/10kg amid poor demand coupled with sluggish CBOT soy oil cues. CBOT soy oil futures declined by nearly 2.56% during the week which kept the bullish momentum intact in domestic market. Price declined tracking the higher than expected inventory estimated by NOPA. Soybean-oil inventories in U.S. at end of last month were 1.538b lbs, compared with 1.434b a year earlier; est. 1.378b. Decline in BMD palm oil price also weighed on soy oil price. Soy oil Degum price during the week ended on January 19, declined by $18 to trade at 801 per tonne in dollar terms (CNF) whereas it gained by Rs 7 to trade at Rs 685/10kg in rupees term at Kandla port. Further stock of soy oil at ports has increased to 1,55,873 as of 15th Janauary from 1,53,484 tonnes on 25th December 2017. Supply seems to be exceeding demand as the availability of soy oil including (port stock+local crushing+pipeline stock) is around 3.25 lakh tonnes whereas demand is around 3 lakh tonnes so sharp rally in soy oil price in near term is unlikely. Sun oil CIF discount to soy oil has narrowed to $6/tonne from $26 on 6th January as World supplies of sunflowerseed & products are seen tightening in Jan/Sept 2018. Slowly the demand may shift to soy oil as the spread narrows further.
In futures market, Soy Oil most active February contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ended down by 0.81% at Rs 734.70/10kg.
NEXT WEEK: Soybean prices are likely to witness some profit booking in domestic market in first half of the next week but overall trend is up so traders can use buy on dip strategy.
(By Commoditiescontrol Bureau; +91-22- 40015516)
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