NCDEX Mar Soybean closed higher by more than 1% on Monday supported by firm International and improved domestic crushing. Last week, trade body, SOPA cuts soybean production by nearly 10 lakh tonnes to 83.5 lakh tonnes (lt) for 2017/18 crop. It now estimates, soy bean carryover stock is 13 lt, which is added to the crop size of 83.5 lt, thereby making the overall availability of the oilseed at 96.5 lt. Soybean stock with farmers, traders and mills is estimated at 45.32 lt as of January. According to data released by Solvent Extractors' Association of India (SEA), India exported 76,089 tn of oilmeal in January, down 51% on year. But the export volume is higher by 69% for the period Apr-Jan at 10.14 lt.
CBOT Mar Soybean futures rose on Tuesday supported by strength in soymeal market on concerns that dry conditions in Argentina will limit the size of the harvest and eat into the country's export program for both soymeal and soyoil. Analysts are expecting Thursday’s NOPA report to show 165.511 mbu of soybeans were crushed during January, up 3.04% than the same time last year, and the second largest behind December 2017.
Monthly USDA report was bearish for the soybean as USDA raised its forecast of U.S. soybean stocks by 12.8% to 14.4mt (Vs 12.8 mt in Jan 18). Brazil production was increased 2 to 112 mt, while Argentina production to drop to 54 mt from 56 mt forecasted in the earlier month.
RMseed (Mustard seed)
Mustard Apr futures closed lower in Monday after it hit two weeks highs on profit booking by market participants tracking steady demand by the oil mills. There estimation of lower production in coming rabi season as Mustard acreage is down 5% on year at 66.7 lakh ha due to poor returns in the last one year. Mustard acreage in Rajasthan, the largest grower, was at 21 lakh ha in 2017-18, down 25.4% from a year ago. Rajasthan accounts for over 70% of the country's total mustard production. The state farm department has also estimated smaller mustard crop at 32 lakh tn in 2017-18 against, down 16% from a year ago.
Soybean futures are expected to trade higher on expectation of improved demand from the oil mills and lower supplies. The prices to trade firm in long term on reports of lower production in MP and slowing arrivals. Higher incentives for oil meal export, improved estimates for meal exports also supporting soybean prices.
Mustard futures expected to trade sideways on reports of lower than expected exports demand for meals. However, improved physical demand and unseasonal rains in the north and central India may keep prices supported above MSP.
Refine Soy Oil
Refined Soy Oil Feb closed lower higher on Monday tracking good demand in the spot market. The futures prices have been trading range bound due to reduction of tariff value by government for first half of Feb.
Government has slashed the base import price of crude soy oil by $5 per tonnes to $822. The government revises base import prices every fortnight based on the global prices and changes in foreign exchange rates. The prices were last revised on Jan 15.
According to data released by the Solvent Extractors' Association (SEA), India's edible oil imports fell 10% on year to 10.6 lakh tonnes in December due to a sharp hike in import duty. Soyoil imports were down by 66% in December to 79,250 tonnes compared to 2.32 lt last year. As per SEA, stock position at ports & pipeline is at 21.76 lt as on Jan 1, higher by 17% on year.
Crude Palm oil
MCX CPO closed lower on Tuesday tracking weak Malaysia futures and weaker rupees. Recently, Government cuts tariff value for CPO by $1 per tn to $675 while increase tariffs for RBD Palmolein by $5 to $695 for the first half of Feb. On anticipation that country will import more as Malaysia lifted export taxes may pressurize prices in the coming weeks.
As per SEA latest report, During Nov-Dec, import of refined palm oil fell to 254,286 tn from 486,502 tn in corresponding period last year. However, import of crude palm oil increased to 11.7 lakh tn from 10.3 lakh tn a year ago.
Malaysian palm oil on Tuesday snapped four days of gains, as the market corrected lower after a rally ahead of the Lunar New Year holidays. As per MPOB data, Malaysia’s production in January, down 13.5% month on month at 1.59 mt, fell a little less sharply than forecast in what is a seasonally weak time of year for output, exports of 1.51 mt far exceeded expectations. Exports in the first 10 days of February, meanwhile, were up 14.7% month on month, data on Monday from ITS showed.
Malaysian palm oil inventories of 2.55m tonnes last month, a decline of 6.7% month on month in stocks, the largest drop in a year, rather than the small increase of 0.6% to 2.75m tonnes that investors had expected.
We expect Ref Soy oil to trade sideways to higher tracking improved prices of soybean and reports of improved demand in physical market may support prices in domestic market. Moreover, lower base import prices may pressurize prices.
CPO futures may trade sideways to down tracking weak International prices and steady physical demand in the domestic market. However, higher stocks and cut in base import prices by the govt. for first half of Feb may keep prices in a range.
Chana Mar futures traded higher on Monday tracking firm trend in spot market after reports of damage to chana crop in Maharashtra due to hail storm. Recently, to discourage imports, government raised import duty on chana to 40% from 30%. Still, futures have been trade below MSP. It is trading at 33 months low on concern over higher domestic stocks amid expectation of higher production estimate due to record acreage. As per government sowing data, area under the chana crop across the country was up 8.3% on year at 107.2 lakh ha as on last week. Moreover, higher imports during the current financial year too pressurize prices. As per government data, India imported about 7.46 lt of chana during Apr-Nov, up by 200% compared the last year imports. The imports were mostly done from Australia.
Chana futures may trade sideways to higher on anticipation of improvement in physical demand at lower levels. Moreover, increase in import tax and damage of crops due to recent rains in north and central India may support prices.
Cotton / Kapas
MCX Feb Cotton traded under pressure for the third consecutive session on Tuesday due to improved physical arrivals. Cotton prices have been correcting this month despite reports of lower than expected production estimates. USDA in its monthly report trimmed cotton production for the 4th consecutive month for India by 2.73% to 28.5 million bales in its February report. Moreover, Cotton production in India in 2017-18 (Oct-Sep) is likely to miss the government's estimate of 322 lakh bales by 7- 8% due to pest attack in large areas across Maha and Telangana.
ICE cotton futures closed little lower on Tuesday after slipping to their lowest level in nearly eight weeks on bearish USDA monthly report coupled with higher planting intentions from the US cotton planters from next season. U.S. cotton producers intend to plant 13.1 million cotton acres this spring, up 3.7% from 2017, according to the National Cotton Council's 37th Annual Early Season Planting Intentions Survey. USDA's weekly export sales data on Thursday showed exports totaled 432,500 running bales for the week ended Feb. 1, a marketing-year high, up 42% from the previous week and 56% from the prior four-week average. But the exports volume is still lower by 8.62% compared to last year exports volume.
Cotton futures are expected trade sideways to down tracking improved arrivals and higher prices may dent domestic consumption. However, the price may improve from current levels as Cotton production is expected to be lower than initially projected by the various agencies.
Spices (Jeera & Turmeric)
NCDEX Mar Jeera futures fall close to 2% on Monday due to fresh selling initiated by the market participants on expectation of higher production and start of new season arrivals. Jeera futures are trading at more than 14 months lows. The new season arrivals are expected to pick up in next 15-20 days. Jeera production may be higher in coming season on reports of higher acreage of cumin in Gujarat during current season.
In Gujarat, Jeera acreage is up by 38% to 3.83 lakh hectares as on 15-Jan-18. Last year, it was 2.88 lakh ha at that same time. As per government data, Jeera exports during first8 month of FY 2017/18 (Apr-Nov) is 98,681 tonnes, up 15% compared to last year exports volume for the same period. India's jeera exports in November increase by 60% on year to 10,451 tn.
Turmeric Apr contract close little lower on Monday due ot technical selling by the market participants. However, it is expected that as the new season arrivals picked up, there will be improvement in exports demand. Currently supplies from the new season turmeric have been lower during 1-13 Feb at 10,700 tonnes compared to 13,200 tonnes last year, as per Agmarknet data. The export of turmeric is down by 17% to 70,558 tonnes for the first 8 month of FY 2017/18 compared to last years’ exports.
We expect Jeera Mar futures may trade higher on anticipation of technical rebound in prices on anticipation of improvement in physical demand. However, higher production from new season may pressurize prices.
Turmeric Apr futures expected to trade sideways due to steady physical demand and expectation of good production of turmeric. However, expectation of improvement in up country and export demands for new season crop may support prices in coming weeks.
To Read Complete Report & Disclaimer Click Here
Click here to open demat account
For More Angel Broking Pvt Ltd Disclaimer http://www.angelsecurities.in/disclaimer.aspx
Views express by all participants are for information & acadamic purpose only. Kindly read disclaimer before refering below views. Click Here For Disclaimer