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Published on 18/06/2019 9:19:30 AM | Source: Angel Broking Pvt Ltd

CPO futures expected to trade sideways to higher in coming days - Angel Commodities

Posted in Commodities Reports| #Commodity Tips #Angel Broking Pvt Ltd

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Soybean

NCDEX Jul Soybean fell 1.5% on Monday on profit booking as there are chances of higher planting this season but monsoon rains will be very crucial. As per farm ministry, acreage under soybean was 37,000 ha so far, lower than 75,000 ha from a year ago. As per latest SOPA press release, soybean arrivals for the Oct-May period pegged at 84.75 lt, up by 19.4% on year. Until April, country crushed about 67.8 lt of soybean compared to 60.5 lt last year. In the 3rd advance estimates, government increased production forecast of soybean to 137.43 lt (Vs 109.33 last year). As per SEA, country export only export 40,000 tonnes of soy meal in May down 41.4% y/y. Moreover, for Apr-May period, India shipped out about 58,470 tonnes of soybean meal down 59% compared to last year.

USDA in its monthly report forecast output at 109 lt in 2019/20, down 5% compared to last year. Lower crude soybean oil stocks at port may support soybean but lowering of tariff on edible oils and lower soyoil in international market pressurize soybean.

CBOT Soybean surged to two-month high on forecasts for wet conditions in the U.S. Midwest which will further slow planting progress.

Outlook

Soybean futures expected to trade sideways due to reports of higher acreage this season. Moreover, increase edible oil imports will put extra pressure on Oilseeds as the sowing season approaching.

 

RMseed (Mustard seed)

NCDEX July Mustard closed lower due to profit booking by market participants week on slowing demand from the mills and higher stocks. The demand for rapemeal is slowed down at higher prices. As per SEA, export of rapemeal in May is provisionally kept at 19,500 tonnes, down 89% on year.

Currently, prices are consolidating near 3,920 levels on hopes of meal demand coming from China as it refuse shipment from Canada. In its 3rd adv estimates, mustard seed & rapeseed production is revise higher to 87.82 lt from 83.97 lt in 2nd estimate. Moreover, reports of nil imports of rapeoil for third consecutive month in May keep domestic crush demand intact. Nafed expected to procure about 20 lt at MSP from various states. USDA maintain export forecast of rapemeal to 9 lt this month after raise it last month from 6.5 lt. USDA expects rapeseed output in 2019/20 at 77 lt (Vs 80 lt last year) in its monthly report.

Outlook

Mustard futures expected to trade sideways to lower due to technical selling and pressure on other oilseed crops due to increase in imports of refine palm oil. Steady demand and diminishing supplies in physical market may support prices from lower levels.

 

Refine Soy Oil

Refined Soy Oil futures closed higher last week on reports of declining imports of edible oil for the second consecutive month compared to last year. In a fortnightly notification, government kept tariff rate unchanged for soyoil at 709 dollar for 2nd half of June but increase CPO tariffs. As per latest SEA press release, edible oil stocks are down to 22 lt as on 1st June compared to 26.62 lt last year same time.

According to monthly report released by SEA, Soyoil imports down 41.6% to 2.32 lt in May compared to 3.97 lt last year same month. Overall, imports are lower by 1.31% for the first 7 months of OY 2018/19 (Nov-May) at 14.69 lt compared to last year same period. USDA in its monthly report revised higher the consumption to 50 lt in 2018/19 compared to 49 lt in previous month estimates. Consumption will increase to 52 lt in 2019/20.

Outlook

We expect Ref Soy oil to trade sideways to lower due to weakness in domestic soybean prices and improving imports of edible may also put pressure on prices in coming weeks.

 

Crude Palm oil

MCX CPO closed higher for the third consecutive session after touched its lowest levels (492) last week. The prices increase sharply due to increase in tariff value for CPO. For 2 nd half of May, tariff value for CPO and RBD Palmolein increased by 11 and 7 dollar to 525 and 562 dollar per ton. Currently, CPO prices are about 18-20% down on year due to weak international prices and higher imports. Palm oil stocks at port increased to 6.2 lt as on 1st June compared to 5.55 lt last month.

According to USDA, India's palm oil imports in 2018/19 is expected to jump by 20% on year to 105 lt due to sharp fall in the prices and lower tariff values. According to SEA monthly press release, Import of Crude palm oil down 19.2% on year in April at 4.50 lt while import of RBD palmolein up by about 13.7% to 2.38 lt due to lower prices in the international markets. Malaysian palm futures rose on Monday despite lower exports due to weaker ringgit.

Malaysian palm oil exports for June 1-15 dropped 19-22.5% from a month earlier. A weaker ringgit makes palm oil more attractive to buyers holding foreign currencies. The Malaysian currency fell 0.29% against the U.S. dollar. Malaysia's palm oil stockpiles at the end of May dropped 10.3% from the previous month to 2.45 million tonnes.

Outlook

CPO futures expected to trade sideways to higher in coming days due to increase in tariff values. Drop in edible oil stocks in ports will also support edible oil prices.

 

Chana

NCDEX Jul Chana plunge more than 3% on Monday mainly of profit booking by the market participants on higher physical stocks and steady demand. Majority of stock is with the government agencies. In 2018/19, chana output forecast revised slightly lower at 100.90 lt in 3rd advance estimate compared to 103.2 lt in 2nd advance estimated by Government. Currently, chana attract 60% import duty since Mar 2018 which restricted imports. Chana, imports are down 84% to 1.86 lt in 2018/19 (AprMar) compared to 9.81 lt last year, while exported are about 2.28 lt compared to 1.28 tonnes last year.

Outlook

Chana futures will trade sideways to lower in coming days as government agencies holding major portion of Chana may auction to stabilize prices near MSP. However, stocks with physical traders diminishing amid lower imports and high consumption may support prices if it drops below MSP.

 

Cotton / Kapas

MCX Jun cotton edged higher on Monday to close at 21,690 rupees per bale due to slow start to sowing progress this season and steady demand. As per farm ministry report, acreage under cotton was 15.32 lakh ha so far, lower than 17 lakh ha from a year ago. Recently, CAI has projected cotton exports at 46 lakh bales compared to 69 lakh bales last year due to higher prices and smaller crop size. With the lower exports and higher imports the closing stock as on September 30, 2019 may increase from 13 lakh bales as estimated by the CCI’s Cotton Crop Committee.

In its latest monthly report in June, USDA kept the production, export and import unchanged. India will be back to number one position in 2019/20 season with projected production of 28.5 million bales. In the current season, we see higher imports of about 31 lakh bales due to higher domestic prices. As per DGCIS, exports of cotton from India is down by 27% in first 3-months of 2019 compared to last year while imports up by 12%.

ICE cotton was mixed on Monday, with nearby July down 0.47%, and other front months closed 0.6% higher. The U.S. Department of Agriculture (USDA) reported on Thursday that net cotton sales were down 59%, while exports were up 17% for the 2018/19 marketing year. NASS reported that US cotton acres were 89% planted by Sunday, 5% behind the normal pace.

Outlook

Cotton futures may trade sideways to higher due to slow start to planting season. However, expectation of steady to higher supplies in domestic market on higher imports and decreased exports may keep supplies at optimum levels. Moreover, forecast of normal monsoon and pick up in sowing in Maharashtra and Gujarat my keep prices under pressure during the sowing season.

 

Spices

Jeera

NCDEX Jul Jeera closed higher on Monday due to short covering after it fell last week. There is sufficient supplies in physical market against slowdown in exports. Exports in March were lower at 23,300 tn compated to 33,450 tn last year, according to DGCIS latest data update. As per Commerce Ministry data release, Jeera exports is up 12% on year in 2018/19 (Apr-Mar) at 179,874 tn compared to 160,500 tn last year. The arrivals have are higher during first 12 days in June at 8000 tn against only 6,600 tn last year. According to third advance estimates by Government, India’s cumin seed (jeera) output in 2018/19 is 5 lakh tonnes, down 36.3% than the previous year’s production of 7.85 lakh tonnes.

Outlook

We expect Jeera futures to trade positive and consolidate at current levels of in coming weeks to gauge demand at these levels. Overall exports demand will play a major role in prices movement as availability is good this season.

 

Turmeric

NCDEX Turmeric continue to trade under pressure due to profit booking by market participants to close at 6,580 rupees per 100 kg on Monday. Since April, the prices have corrected about 10.6% due to reports of new season sowing and higher carry-over stocks with the stockists. The improving export demand and forecast of below normal rains in the turmeric growing areas of the country may support prices as season progresses. As per Commerce Ministry, turmeric exports during the month of March, up 25.5% y/y to 13,140 tonnes (Vs 10,473 t). While, turmeric exports in 2018/19 is up by 19.2% compared to last year. Country exported about 1.33 lakh tonnes of turmeric in FY 18-19 compared to 1.11 lt last year. In 2018/19, production is forecast at 10.77 lt in the 3rd advance estimates by the government.

Outlook

Turmeric futures expected to trade sideways in coming sessions but higher stocks with traders and farmers may pressurize prices. Government procurement in some states coupled with improving demand for exports will support price rise.

 

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