NCDEX May Soybean settled lower on Monday on anticipation of normal monsoon prediction by IMD. However, due to steady demand in physical market and millers are unsure about increase demand for meal exports. The Govt. is taking up the issue with China to remove restrictions on Indian soymeal trade. However, as per SOPA, India is likely to export 90,000 tonnes soymeal in April, down around 20% from 111,800 tn a year ago, mainly due to less demand from major importers. The arrivals in the physical market have been higher during first 15 days in April at 1.27 lt compared to 1.24 lt last year for same period. According to data released by SEA, soymeal exports for Apr-Mar, rose 26.2% on year at 11.56 lt due to firm demand from EU particularly France and Germany. Meanwhile, trade body, SOPA cuts soybean production by nearly 10 lt to 83.5 lt for 2017/18 crop.
CBOT May Soybean futures fell on Monday, weighed down by a by technical selling. U.S. oilseed processors crushed crushed 171.9 million bushels of the oilseed last month, up from the 153.7 million bushels processed in February and well above the 153.1 million bushels from last year while soyoil stocks rose for a fifth straight month and hit a 21-month high, according to a National Oilseed Processors Association report. Export Inspections report indicated that 444,987 tonnes of soybeans were shipped for the week that ended on April 12, up 16.74% than the previous week but 2.11% down than a year ago for this week. As per the USDA monthly report, world soybean production was reduced by nearly 6.1 million tonnes (mt) while global soybean ending stocks are lowered by 3.6 mt from last month to stand at 90.8 mt.
RMseed (Mustard seed)
Mustard May futures edge lower on Monday on concern over sufficient stocks in the domestic market. Prices are under pressure due to higher stocks with the farmers and oil mills. As per SEA data, the export of rape oilmeals during March 2018 is provisionally reported at 23,499 tons compared to 52,071 tons in Feb 2018, i.e. down by 55%. However, exports have been 162% higher at 5.62 lakh tonnes for the FY 2017/18 compared to previous year’s export volume of 2.14 lt. The USDA’s Foreign Agriculture Services in its latest report pegs mustard output in India to fall 9% on year to 64 lt in 2017-18 (Oct-Sep) because of lower acreage. Oil mills have crushed 800,000 tn of mustard seed in March, more than double from last month, according to data compiled by the Mustard Oil Producers Association of India.
Soybean futures are expected to trade sideways to lower on mixed fundamentals of higher tariff value for soyoil and improved demand for crushing. However, normal rains in the coming monsoon season may have bearish impact on prices.
Mustard futures expected to trade down on anticipation of further technical correction. However, on good physical demand due to government procurement of new season may keep the prices steady.
Refine Soy Oil
Refined Soy Oil Futures closed lower on Monday on reports that India's vegetable oil imports rose 3% on year to 11.5 lakh tonnes (lt) in March, according to data released by the Solvent Extractors' Association of India today. However, soyoil imports during the March dropped 49.9% to 115,102 tons compared to 229,853 tons in the same period a year ago. Stocks of edible oil in ports and pipeline are estimated at 2.112 mt as on Apr 1 compared to 1.913 mt a year ago while lower than 2.197 mt in Feb, data showed.
It traded under pressure last week due to higher domestic stocks and steady physical demand. Government has increased base import prices of all edible oils, according to an official notification. For the second fortnight of April, the base import price of crude soy oil was hiked by $14 to $824 per tn. Higher import duty and increase in tariff value during the current calendar year is making imports expensive.
Crude Palm oil
MCX CPO closed lower tracking weak International prices. CPO has been trading all-time high in April due to jump in oilseed prices in the country following news on removing export restrictions on edible oils from the country. There is good physical demand despite CPO trading at nearly 6 years high. CPO has touched all time high recently due to steady demand higher import duty. The base import price of crude palm oil was increased by $5 to $684 a tn for the second fortnight of April. India's CPO imports rose 9.6% on year to 5.46 lakh tonnes in February. As per SEA latest report, India's crude Palm oil (CPO) imports in March increased by 30.33% compared to same period a year ago despite the government imposed higher duty. However, Shipment of RBD palmolein dropped 25.56% to 163,222 tons compared to 219,270 tons in the corresponding period a year ago.
Malaysian palm oil futures fell to a one-month low on Monday, recording a sixth straight day of losses on expectations of slowing demand growth and tracking losses in related edible oils. Moreover, expectation of output rise in the second quarter is in line with the seasonal trend also pressuring palm oil prices current levels Exports of Malaysian palm oil products for April 1-15 rose 5 to 6% from the corresponding period in March. Malaysia, the world's second largest palm producer and exporter, said it would resume export duties on crude palm oil after four months of tax exemptions and set its crude palm oil export tax at 5% for May, according to the Malaysian Palm Oil Board.
We expect Ref Soy oil to trade sideways to lower due to sufficient stocks in the domestic market however; balanced supply and demand situation may keep prices in a range.
CPO futures may trade sideways to higher tracking firm international prices. Moreover, higher tariff may also support prices.
Chana May futures closed little higher on Monday on bargain buying but trading under pressure due to higher supplies of Chana in domestic market. Government is trying to support prices by removing export restrictions and procuring at MSP. MP govt announces to procure about 21 lakh tonnes of Chana at MSP of 4,400 per quintal and exclude it from Bhavantar scheme. Earlier, govt has announced of a 7% duty credit incentive on export of Bengal gram, or desi chana. Centre approved the procurement of chana from Rajasthan, Karnataka, Andhra Pradesh and Telangana. During Apr-Jan period, India imported about 9.57 lt of chana up by 38.6% compared the last year imports. However, the imports have slowed down since December due to duty hike.
Chana futures may trade sideways to down on heavy arrivals in physical market. However, lower level buying and reports that MP govt. going to procure chana at MSP may support prices in coming weeks.
Cotton / Kapas
MCX Cotton closed higher on Monday to touch six weeks supported by reports of improved export demand to China despite normal monsoon predicted by IMD. India signed contracts to export 200,000 bales of cotton to China in the past one week after it slap tariff on US Cotton. Cotton exports from the country are likely to touch 70 lakh bales in 2017/18, up about 27% from the earlier estimate, due to a surge in demand, particularly from China, as Indian cotton is selling at discount. Moreover, expectation of shrinkage of cotton acreage by at least 10-15 lakh ha in coming kharif season in the country due to pest attack also supports prices.
ICE May cotton corrected a little after hitting a five-week high as monsoon in India is expected to be normal this year while more clarity on weather forecasts is still awaited for China and the United States. USDA Crop Progress report indicated 8% of US cotton acreage was planted on April 15 moved 1% from the previous week and 1% above average. As per CFTC data, speculators raised their net long position in cotton by 1,144 contracts to 77,382 contracts, in the week to April 10. The USDA in its monthly report raised its U.S. cotton exports forecast by 200,000 bales, to 15 million bales and cur its U.S. ending stocks to 5.3 million bales from 5.50 million bales. The World ending stock total was cut by 560,000 bales to 88.29 million bales.
Cotton futures are expected trade sideways on expectation of improved cotton exports to China and gain in international price. However, improved arrivals in physical market and normal monsoon estimates may keep prices in a range.
Spices (Jeera & Turmeric)
NCDEX Jeera futures settled higher on Monday supported by fresh buying initiated by market participants on lower arrivals and anticipation of improve in physical demand in coming weeks. As per Agmarknet data, arrivals of jeera in the country were lower at 15,367 tonnes during 1-15 April compared to 19,265 tonnes last year for the same period. As per government data, Jeera exports during first 10 month of FY 2017/18 (AprJan) is 114,882 tonnes, up 12.5% compared to last year exports volume for the same period. India's jeera exports in January were down by 9.3% on year to 7,705 tonnes.
NCDEX Turmeric futures closed higher on Monday supported by expectation of pickup in export demand. Turmeric prices were down 10 month low in April due to arrival pressure of new season crop and lower export demand. Supplies from the new season turmeric have been higher during March at 83,242 tonnes compared to 76,292 tonnes last year, as per Agmarknet data. The export of turmeric is down by 14.6% to 88,144 tonnes for the first 10 month of FY 2017/18 compared to last years’ exports.
We expect Jeera Mar futures may trade sideways to higher on anticipation of improved physical demand at lower prices. However, mixed signals from spot market may keep the prices in a range. Removal of 5% additional margin may see more participation in the jeera contract.
Turmeric Apr futures expected to trade sideways to higher on technical buying from the lower levels. There is expectation of improved up country and export demands for new season crop may keep prices supportive.
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