NCDEX Soybean Nov futures closed higher on Tuesday mainly on short covering as market participants are expecting recovery in oilseeds prices after announcement of MSPs. Moreover, higher stocks from last year and new arrivals still weigh of prices. Weakness in spot prices weighs on futures too.During the first 20 days of Oct. soybean arrivals have been recorded at 5.79 lakh tonnes compared to close to 6 lakh tones last year. Market In a press release SOPA, has estimated 2017-18 (Oct-Sep) soybean output at 9.15 mt, down from 11.49 mt a year ago.
Moreover, on reports of lower meal exports in September is also worrying farmers. India's soymeal exports during September were at 9,650 tn, down 21% from a year ago. U.S. soybean futures closed lower on Tuesday after a U.S. government report showed that the pace of harvest was faster than expected. Moreover, higher imports of soybean by China too supported prices.
The USDA said on Monday afternoon that soybean harvest was 70% complete, ahead of analysts' forecast of 64%. Chinese imports of soybeans during September hit nearly 8.113mt, a jump of 12.74% over last year. Of that total, 937,262 MT came from the US, with the majority from Brazil. Total imports YTD since January are up 15.49% over last year at 71.451 mt.
RMseed (Mustard seed)
Mustard Nov futures touched its eight month high prices on reports on increase in minimum support price by the government. Support price for mustard in 2017-18 rose by 8.1% on year to 4,000 rupees per 100 kg. The prices also supported on expectation of winter demand coupled with higher meal exports during the first 6 months of new financial year and increasing demand for winter crushing. As per SEA data, during Nov-Sep, import of mustard oil sharply down to 2.55 lt from 3.33 lt a year ago.
There are improved mustard meal exports in first 6 month of FY 2017/18. Country exported 242,661 tonnes mustard meal during this period which is 76.4% higher on year. As per data compiled by Mustard Oil Producers Association of India, Oil mills across the country crushed 425,000 tn of mustard seed in September, down around 6% from previous month.
Soybean futures are expected to trade sideways to higher as new season arrivals may slow down on lower prices. There are reports that government is expected to step in for procurement of soybean in Maharashtra and Rajasthan to help farmers. Lower acreage in the country and improved prices of edible oil may support prices.
Mustard seed futures expected to trade sideways to higher on increased MSP and expectation of good demand for crushing in the winter. However, higher stocks with the oil mills can keep the prices steady.
Refine Soy Oil
Refined Soy Oil Nov futures closed little lower tracking drop in international soy oil prices. Moreover, steady demand for edible oil after conclusion of festival season in the country and higher stock levels in the country also pressurized prices.
According to data release by SEA, crude soy oil imports down about 24% on year in September compared to last year. Moreover, in the Oil year 2016/17 (Nov-Sep) the imports have drop by 22% to 31 lakh tonnes compared to 39.6 lt last year.
The government cut the base import price of soyoil by $27 to $824 per tonnes for the second half of October. The government revises the base import prices every fortnight, based on global prices and changes in foreign exchange rate.
Crude Palm oil
MCX CPO closed flat on Tuesday due to long liquidation by the market participants tracking weak trend in Malaysia Palm oil. Moreover, reduction on tariff values by government and higher stocks in the country weigh on prices. For the second half, the government reduced the base import price of all palm oils, with the steepest cut of $31 per tn for refined, bleached and deodorised palmolein, and crude palmolein.
As of Oct 1, India had 979,000 tn of edible oil in stock at ports, with an additional 16.1 lakh tonnes in the pipeline. 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 reversed gains on Tuesday after hitting a five-week high, with sentiment dented by weakness in the Chicago Board of Trade (CBOT) soyoil and expectations of slower export growth.
Traders are expecting a slowdown in exports. Moreover, production in October is seen rising on-month due to the higher number of working days. Data from the Southern Palm Oil Millers Association (SPPOMA) on Monday showed that production for the Oct. 1-20 period rose 20.6 percent from the same period last year
Malaysia's palm oil stocks at end-September climbed 4% to 2.02 mt from the previous month, while production in September fell 1.7% from August to 1.78 mt, according to MPOB.
We expect Ref Soy oil to trade sideways to higher on reports of firm international prices. However, good seasonal arrivals of oilseed, lower tariff value and higher imports of edible oil may keep the prices in range.
CPO futures may trade sideways on mixed fundamentals of firm International prices and higher stocks levels in the country. Lower tariff value, good festive demand and higher import duty for edible oil may keep the prices in a range.
Chana futures closed flat on Tuesday after plunged 4% on Monday despite 10% increase in Minimum Support prices to Rs. 4,400 per quintal by the government. Futures prices are well above the MSP prices and thus pressurised due to profit booking by the market participants due to higher stocks and steady demand. Moreover, sufficient stocks levels in the country and good production forecast for next season may keep the prices near MSP.
According to the market participants, chana sowing acreage in the coming rabi season may be higher than last year as prices was firm throughout the year. According to the target estimate released by government, India’s chana production target estimate for 2017-18 is 97.5 mt which is slightly higher than 2016-17 fourth advance estimates of 93.3 lakh tonnes.
Chana futures may trade lower as market participants are expecting higher production during the new season coupled with higher stocks in the country.
Cotton / Kapas
MCX Cotton Nov futures corrected on Tuesday on fresh selling initiated by the market participants at higher levels. Prices have jumped higher in the previous session as Gujarat government has announced a bonus of ₹500 per quintal over and above the minimum support price of ₹4,020. The Cotton Corporation of India is set to open its procurement centers in major cotton-growing states as it is believed that the prices may decrease below the MSP during the peak arrival season.
ICE cotton futures remained largely unchanged on Tuesday, a day after it registered its biggest one day percentage gain, as the market waited for updates on a weather scare in top producing state Texas. The USDA's weekly crop progress report showed 37% of cotton crop was harvested in the United States by the week ended Oct. 22, up from 31% in the previous week. China customs data shows the country imported 92,847 MT of cotton during September, 53.2% ahead of the same month in 2016.
Cotton futures are expected trade sideways on reports of improved arrivals but higher bonus declared by the Gujarat government, lower than expected crop size, cci procurement and improved exports demand for Indian cotton may support prices However, expectation of improved production and carryover stocks may pressurize prices.
Spices (Jeera & Turmeric)
NCDEX Jeera recover a little on short covering by the market participants. Currently there is subdued demand from the physical players due to weak exports which is keeping prices steady. As per government data, Jeera exports during first four month of FY 2017/18 (Apr-Jul) is 49,205 tonnes, down 11% compared to last year exports volume for the same period. India's jeera exports in Jul down 12% on year to 7,498 tn. The arrivals have been higher during first 20 days of October at 3,052 tonnes compared to 1,309 tonnes last year same period according to Agmarknet data.
Turmeric futures for Nov delivery closed lower on profit booking while the prices have been trading in a range on mixed fundamentals of diminishing arrivals and expectation of higher production in the new season. The arrivals have been lower during first 20 days of October at 4,707 tonnes compared to 6,552 tonnes last year same period according to Agmarknet data.
The export of turmeric is down by 16.4% to 41,517 tonnes for the first 4 month of FY 2017/18 compared to last years’ exports. For 2017/18, turmeric sowing in Telangana, this season down 1.5% to 44,956 hectares as compared to last year acreage of 45,633 hectares. Market participants are expecting good production in the coming season due to rains in turmeric sowing areas.
We expect Jeera Nov futures expected to trade sideways to lower on anticipation of technical selling as there is still weak physical demand and subdued exports. Higher stocks in the NCDEX warehouse are also pressurizing prices.
Turmeric futures expected to trade sideways to down as market is expecting good production of turmeric due to wet weather conditions in Telangana. Moreover, good demand from the institutional buyers may be positive for turmeric prices.
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