Spot Soybean To Trade Steady To Negative Next Week

MUMBAI (Commodities Control) :

International Soybean Market Recap

U.S. spot soybean futures closed above US$10 a bushel on Friday, the highest in 2-1/2 months, on follow-through buying a day after the U.S. Department of Agriculture lowered its estimate of the U.S. average soybean yield.

Chicago Board of Trade November soybeans settled up 8-1/4 cents at $10.00-1/4 per bushel after reaching $10.03-1/4, the contract’s highest since July 31.

Soybeans climbed as the trade digested Thursday’s monthly USDA report, in which the government lowered its U.S. soybean yield estimate to 49.5 bushels per acre, from 49.9 in September, bucking analyst expectations for an increase.

USDA also cut its forecast of the amount of soybeans left at the end of the 2017-18 marketing year — the “carry-out” — to 430 million bushels, from 475 million a month ago.

The report was considered friendly on soybeans; carry-out was lowered more than expected, and we had a little yield reduction.

Soybean futures drew additional support from strong weekly U.S. export sales data. USDA on Friday reported export sales of U.S. soybeans in the latest week at more than 1.7 million tonnes.

Concern about weather in top soy exporter Brazil, where planting is under way, lent support as well.

Brazil’s dry soybean regions, Mato Grosso in particular, look unlikely to get enough rain to broadly raise soil moisture for another week.

Strength in the broader commodity sector added to bullish sentiment in soybean. The 19-market Thomson Reuters Core Commodity Index rose 0.8 per cent after reaching its highest since May.

Domestic Soybean Market Recap



Soybean prices in the spot markets during the week ending 14th October closed down by Rs 30 at Rs 2,850/100kg, in line with our expectation. Soybean prices are trading below the MSP for second consecutive week and there are no signs that soybean price will trade above MSP in short term. Total new crop arrivals during the week, were reported at 4.55 to 3.55 lakh bags against 2.50 to 3.75 a week ago.

Soybean November Futures also exhibited the same trend of spot market which closed lower by 0.57% at Rs 2,938/100kg.

During the start of the week soybean prices declined amid higher supply due to increased selling by farmers but towards the end of the week soybean supply declined as farmers slowed down the sales of soybean as they were reluctant to liquidate the stock of soybean at lower price level which led to the recovery in soybean prices at lower level.

Most of the traders are of the view that soybean prices are likely to remain under pressure till 15th December due peak supply period of soybean but they expect that price of good quality soybean in most of the market yards may not fall below Rs 2,700 as farmers are reluctant to sell below this price.

In its first production estimate for kharif 2017, the Soybean Processors Association of India (SOPA) estimated India’s soyabean output at 91.45-lakh tonnes, which is about 17 per cent lower than the revised estimate for kharif 2016 at 109.92-lakh tonnes.

The fall in the acreage and reduced yield conditions has added to the decline in output. Soyabean acreage in the country stood at 101.5-lakh hectares, against 109.7-lakh hectares reported last year, down 7.5 per cent. For the current year, SOPA estimates yield at 901 kg per hectare, against 1,002 kg per hectare reported in 2016.

The acreage in Madhya Pradesh declined from 54-lakh hectares to 50-lakh hectares, with yield estimated to be lower at 905 kg per hectare against 1,020 kg per hectare reported last year. However, Madhya Pradesh will continue to be the largest soyabean producer with 45.35-lakh tonnes of estimated production for the current year.

According to SOPA officials, with huge carryover stocks of about 1.5-2-million tonnes, availability of the seeds for the crushing industry will not be an issue. Even as the production estimates are lower, the prices are likely to remain under check due to huge carryover stocks.

Industry sources, however, maintained that due to large carryover stocks, the volatility in prices will be less even as the production estimates suggest lower crop.

With the prices of soybean ruling below minimum support prices (MSP) of Rs 3,050/100kg, procurement of the commodity at MSP under the Centre’s price support scheme (PSS) will begin from October 16 in Maharashtra by NAFED.

On the other hand in Madhya Pradesh most of the farmers are waiting for the Bhavantar Bhugtan Yojana(Price Deficit Financing Scheme) which will commence from 16th October.

The objective of the scheme is to provide the compensation for agriculture products whenever its price fall below the announced minimum support prices (MSP) by the central government.The farmers will have to register themselves with mandis to leverage the benefits of Bhavantar Bhugtan Yojana.

SOYMEAL





Soymeal at the benchmark Indore market traded steady at Rs 22,700 per tonne amid limited demand from poultry feed manufacturers.

Indian Soymeal is priced at $372 per tonne FAS Kandla Vs $380 Argentina CIF Rotterdam (October) as of October 14, 2017. The difference between the two origin is $8 per tonne up by $1 compared to a week ago.

There are chances that India may get good export orders in OND period as Indian soymeal is trading at discount of $8 in international market, which will boost both soybean and soymeal prices.

CBOT soymeal futures have gained by 2.88% during the week tracking gains of soybean futures due to bullish USDA September monthly report which is the main reason that Indian soymeal has turned into discount to Argentine soymeal which was trading at premium till September.

The global demand for soybean meal is gradually increasing as protein diets is getting credit for the increased soybean sales.

SOYOIL



A bearish trend followed in refined soy oil in benchmark Indore market of Madhya Pradesh during the week which declined by Rs 3 to trade at Rs 660/10kg amid poor demand.

Traders are very much disappointed that demand of soy oil did not improved as per expectation considering the upcoming Diwali festival season.

Soy oil prices prices were higher by USD 18 to trade at 833 per tonne in dollar terms (CNF) at Kandla port however it traded steady at Rs 625/10kg in rupees term.

The USDA Oct report was bullish for soy oil as the ending stock for the 2017/18 was reduced to 1537 million pounds compared to 1757 in Sep report. USA soy oil stock has been trimmed for the third consecutive month. Gains in CBOT soy also supported the CIF soy oil price.

Argentina Soy Oil use in Bio Diesel is reviving as per trade source. Almost 1.50 lakh tonnes is booked for exports to Europe in Oct. USA Soy Oil stock is said to be declining on higher demand in Bio Diesel.

CBOT soy oil futures have gained by 2.30% during the week to end at 33.71 cents per pound which has provided support to local soy oil prices.

In futures market, soy oil most active November contract during the week on the National Commodity & Derivatives Exchange Ltd (NCDEX) ends up by 1.04 percent at Rs 668.75/10kg.

NEXT WEEK: Soybean prices may trade sideways to negative as demand for soybean by-products is dull so millers won’t be interested in procuring soybean in bulk quantities and on the other hand supply of new crop will increase which will further weigh on soybean prices.

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