NCDEX Soybean futures surrenders its early profits to closed lower on Tuesday in arrivals pressure, higher carryover stocks and higher edible oil imports reported by SEA for 2016/17 oil year. Prices are still trading at lower levels as soybean arrivals have peaked. As per Agmarknet data, the arrivals in 1-10 Nov increased to 5.34 lt compared to 4.6 lt last year for same time. Arrivals since October in 2017 is about 17 lt as compared to 15 lt last year same period. Good demand for soy meal exports kept the prices supported prices last week. Total exports of soy oilmeal in the first seven months of the fiscal started April is almost 5 times higher to 5.37 lakh tons compared to 1.07 lakh tons last year.
U.S. soybean futures rose on Tuesday supported by bargainbuying after the market dropped to a one-month low on Monday. The USDA reported that the US soybean harvest was 93% done as of 11/12, with the average pace of 95%. USDA export Inspections report showed 2.087 mt in soybean exports for the week ending 11/9, which is drop of 16.27% from last week and still lags last year by 29.12%. Soybean export commitments are now 51% of the full year USDA export estimate vs. the average of 67% for this date and last year’s 64%.
RMseed (Mustard seed)
Mustard Dec futures closed lower on Tuesday due to good sowing progress and steady demand for rapeseed crushing. However, due to winter demand the prices have been stabilized above Rs. 3,900 per quintals.
As per rabi sowing report from the government, the area under mustard as on10 Nov 2017 is little lower than last year’s acreage at 37 lakh ha. The area planted in Madhya Pradesh crossed 5 lakh ha compared to 60,000 ha last year as farmers switched from rain-dependent crops to mustard after poor rains in the state while in Rajasthan, the largest producing state, the acreage dropped by 27.5% to 10 lakh ha compared to 16.3 lakh ha last year. Support price for mustard in 2017-18 rose by 8.1% on year to 4,000 rupees per 100 kg.
According to data compiled by Mustard Oil Producers Association of India, country is still holding about 20 lakh tonnes of mustard from the last year as it is estimated that millers have crushed about 48 lt last year against the marketable surplus of 67.8 lt.
Soybean futures are expected to trade sideways due to balanced demand and supply scenario. Improved demand at lower prices but higher arrivals from new season crops may keep the prices sideways. The demand for new season crop is steady as import duty is not raised by the government.
Mustard seed futures expected to trade sideways on anticipation of good physical uptake by oil mills on expectation of good winter demand for crushing. Moreover, higher stocks with the oil mills and good start to rabi sowing can keep the prices steady.
Refine Soy Oil
Refined Soy Oil Dec future falls for second consecutive day on fresh selling at higher levels in thin trade, the prices have stabilize in last two trading sessions as import duty was not hiked. As per latest SEA import report, Soybean oil imports slumped 21 % to 220,200 tons in October from a year earlier while imports dropped during the oil year ended Oct. 31 22 % to 3.32 mt.
Recently, Government hike the tariff value for soy oil by $15 per ton to $839 for the first half of Nov also support prices.
Moreover, firm international prices, higher import duty and good demand from the stockists is supporting edible oil prices in India despite higher stocks and good oilseed production.
Crude Palm oil
MCX CPO continues to fall this week on Tuesday on reports that palm oil import into the country climb for ninth month on Festive Boost. Moreover, weak prices of edible oils in International markets too pressurize prices. However, the prices are still supported at 10 month high in the futures market on expectation of hike in import duty for edible oil. But, the government did not take any decision on increasing import duty on edible oil for now which slow down the price surge.
For the second first half of Nov, the base import price for crude palm oil and refined, bleached and deodorised palm oil were raised by $2 and $3 per tn, respectively. According to SEA release, during Nov-Sep period, crude palm oil import is 57.34 lakh tonnes, up 9.5% from 52.34 lt during the same period of the previous oil year.
Malaysian palm oil futures hit their lowest in nearly four weeks on Tuesday evening, weighed down by overnight losses in the Chicago Board of Trade (CBOT) soyoil and weakness in related oils on China's Dalian Commodity Exchange.
A weaker export outlook also contributed to the market's decline as the demand for the tropical oil tails off towards the year end as northern hemisphere enters winter, curbing demand from key markets like China and Europe as palm oil solidifies in cold temperatures.
Moreover, MOPA data shows larger-than-expected Malaysian production of the vegetable oil, and slow start to November exports. The cargo surveyor ITS showing exports down 2.5% so far this month, while rival SGS put the rate of decline at 4.8%.
We expect Ref Soy oil to trade sideways to lower today on report that government has postpone hike in import duty. Moreover, sufficient edible oil stocks in the country may pressurize prices at higher levels. Weak rupees may support prices. CPO futures may further correct on weak Malaysian palm oil prices. Higher stocks and deferred in import duty hike may help to ease prices.
Chana Dec futures jumped higher on short covering pressured by good start to rabi sowing and higher stock levels in the country. Moreover, government which is sitting on a buffer stock of 18 lakh tonnes is set to dispose of 5 lt pulses by March next year will put pressure on prices. Hike on import duty on chana is unlikely as prices have already started moving up, however, government is considering allowing export of desi chana with limits on quantity and "the decision is likely to come in a week.
As per government sowing data chana is planted in 47.2 lakh ha as on 10 Nov, up by 43% compared to 33 lakh ha last year. Moreover to encourage farmers to plant more chana, Government increase MSP by 10% to Rs. 4,400 per quintal. According to the target estimate released by government, India’s chana production target estimate for 2017-18 is 97.5 mt.
Chana futures may trade sideways on sufficient stocks and good start to rabi sowing in the country. Hike in import duty in all peas may and higher MSP may support prices this season.
Cotton / Kapas
MCX Cotton Nov futures closed lower on Tuesday pressured by higher arrivals but prices are still supported above Rs. 18, 300 levels on reports of damage to cotton crops in Vidarbha and start of procurement by CCI in Gujarat at higher prices. In November, cotton traded sideways in a range on higher than expected cotton production in the country. CCI has stared its procurement from Telangana and some parts of Gujarat and estimated to have procured about 62,000 bales at MSP this season. The arrivals in the current season during Oct are about 20.27 lakh bales compared to 18.72 lakh bales last year as per ICC.
ICE cotton futures dipped on Tuesday weighed down by growing harvest pressure, with federal data showing steady progress in the U.S. cotton harvest. The USDA in its monthly crop supply and demand report, raised U.S. production estimates to 21.38 million bales from 21.12 million bales in the previous month.
All upland cotton 17/18 export sales for the week of November 2 came in at 205,297 RB, which was slightly lower than last week but 21.61% larger than a year ago.
Cotton futures are expected trade sideways to higher as CCI has already start its procurement in main cotton growing states. Procurement by government will support prices as it increase the demand from the stockists, mills and physical traders. They have a target to procure 100 lakh bales this season. Good demand for kapas may also support cotton prices.
Spices (Jeera & Turmeric)
NCDEX Jeera closed higher on Tuesday on anticipation of improved export demand from the country despite good sowing progress in Gujarat. In Gujarat, jeera sowing reached about 60,000 ha this year compared to 36,600 ha last year as on 13th Nov. As per government data, Jeera exports during first five month of FY 2017/18 (Apr-Sep) is 63,085 tonnes, down 2.6% compared to last year exports volume for the same period. India's jeera exports in Aug increase 46% on year to 13,879 tn. On the import front, country imported about 1,044 tonnes of jeera during the month of August about 209 percent higher than last year imports.
Turmeric Dec futures falls on Tuesday due to profit booking . The prices have been pressurized on reports good supplies from the government auctions. The export of turmeric is down by 17.4% to 49,186 tonnes for the first 5 month of FY 2017/18 compared to last years’ exports. The arrivals have been lower during October at 7,222 tonnes compared to 10,037 tonnes last year same period according to Agmarknet data.
We expect Jeera futures to trade higher today on reports of improved demand but good supplies in the physical market may pressurize prices. Moreover, diminishing stocks and improvement in export demand for Indian cumin may support prices.
Turmeric futures expected to trade sideways on technical trading as demand may increase at lower levels. Supplies from the government auctions and arrivals of medium quality supplies may pressurize prices. Steady physical demand and weak exports is also weighing on prices.
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