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NCDEX Aug Soybean closed higher on Wednesday due to short covering, The prices is still under pressure due to monsoon revival and lower demand for soymeal exports. As per farm ministry, acreage under soybean is 97.1 lakh ha so far, down about 4 lakh ha from last year acreage of 101.5 lakh ha. Area in MP improved up to last year areas however in Maharashtra the area lower than last year. Edible oil imports expected to be on higher side in coming months due to lower tariffs. Government hike minimum support price by 9% or 311 rupees to 3,710 per 100 kg for 2019/20 which also helps to increase acreage this year.
As per SOPA, the arrivals of soybean improved during June to 4.5 lt compared to Apr and May. Overall, arrivals this season is 89.25 lt compared to 75 lt last year. Soy meal exports provisionally down by 82.5% in June to 18,185 tonnes compared to last year. Similarly, exports for 1st quarter (Apr-Jun) are down by about 55% to 1.12 lt compared to 2.5 lt last year. In the 3 rd advance estimates, government increased production forecast of soybean to 137.43 lt (Vs 109.33). USDA kept soybean output forecast unchanged at 109 lt in 2019/20 but down 5.2% y/y.
CBOT soybean down to seven-week low on Wednesday on worries over the U.S.-China trade war that may slow exports of US soybean. President Trump criticized China for lack of promised purchases of US ag goods and warned them from waiting on a trade deal until after the 2020 election.
Soybean futures expected to trade sideways to lower due to revival of rains in central part of India. Moreover, declining meal exports may put extra pressure on Oilseeds as the sowing season progressing.
RMseed (Mustard seed)
NCDEX Mustard closed on positive note on Wednesday due to short covering to end the day at 3,937 rupees per 100 kg. The prices have been consolidated above 3900 levels due to good crushing demand on reports of nil imports of rape oil for third consecutive month in May. As per data released by MOPA, with the new season arrivals is just above 50 lt. In its 3rd adv estimates, mustard production revises higher to 87.82 lt from 83.97 lt in 2nd estimate. USDA maintain export forecast of rapemeal to 9 lt and output in 2019/20 at 77 lt (Vs 80 lt ) in its monthly report. As per SEA, rape meal exports also down 23% to 2.5 lt during the first quarter of 2019/20 compared to 3.2 lt last year. For June, rape meal exports are provisionally kept at 54,250 tonnes, down by more than 40% on year.
Mustard futures expected to trade sideways due to sufficient supplies and steady physical demand. Exports of rape meal is also not picking up as expected. However, good demand for mustard oil and increase demand for mustard crush may keep prices above 3900 levels.
Refine Soy Oil
Refined Soy Oil futures fell slightly on Wednesday to close at 736.95 rupees per 10 kg. Earlier in the week it touched 4-week high tracking improving physical demand against lower stocks at the ports coupled with increasing international prices. Lower tariff value and expectation of higher imports in coming months may pressurize price. In a fortnightly notification, government increased tariff rate for soyoil to $705 for 1st half of Aug from 686 dollar earlier. According to monthly report released by SEA, Soyoil imports down 22.8% to 2.23 lt in Jun compared to 2.90 lt last year same month. Overall, imports are down 4.80% for the first eight months of OY 2018/19 (Nov-Jun) at 16.92 lt compared to last year same period.
Soy oil imports were down for the third consecutive month in June compared to last year while the import of refine palm oil increase more than 50% on year since November. As per latest SEA, edible oil stocks are at 21.5 lt as on 1st Jul, down compared to 25.18 lt last year same time. USDA revised higher domestic consumption to 50 lt for 2018/19 compared to 49 lt in its monthly report. Consumption forecast to increase to 52 lt in 2019/20.
We expect Ref Soy oil may trade higher due to increase in tariff rates above 700 dollars and improving physical demand for the coming festival season. However, expectation of increasing imports in coming months to keep prices steady.
Crude Palm oil
MCX CPO edged lower on Wednesday to close at 513.60 rupees per 10 kg tracking weakness in Malaysian palm oil. Moreover, improving physical demand coupled with and sufficient stocks at ports is keeping prices in a range (490-515). According to SEA monthly press release, import of crude palm oil higher by 38.2% on year at 4.21 lt in June while import of RBD Palmolein up by about 44% to 2.56 lt due to lower prices in the international markets. Palm oil imports up by 40.5% on year at 6.77 lakh tonnes. For 1st half of Aug, tariff value for CPO and RBD Palmolein increases by 5 and 7 dollar to 502 and 540 dollar per ton. Imports of refined palm oil imports are likely to jump to a record 3 mt in the 2018/19 marketing year ending on Oct. 31, up 43% from a year ago.
Malaysian palm oil see its first monthly gain since January ending around a seven-week high on support from export data released by cargo surveyors. Malaysian palm oil exports in July rose between 1.6% and 5.1% from the previous month, according to data from cargo surveyors Amspec Agri Malaysia, Societe Generale de Surveillance and Intertek Testing Services on Wednesday
CPO futures expected to trade sideways to higher due to improvement in Malaysian Palm oil prices. Moreover, any import duty hike by the government may also support palm oil prices.
NCDEX Chana edged slightly lower for third consecutive session on Wednesday but traded in a range to close at 4,283 levels due to profit booking. There is expectation of improving demand in physical market due to coming festival season. Prices have been trading in a range this month due to sufficient supplies in the physical market coupled with slow procurement by government at MSP. NAFED is still holding more than 12.8 lt of chana from last season. In new season NAFED only procured about 7.75 lt compared to more than 23 lt last season. As per govt data, during first quarter of FY19-20, chana imports increase 50,000 compared to only 13,500 t last year. Currently, chana attract 60% import duty since Mar 2018 which restricted imports. Imports were down 84% to 1.86 lt in 2018/19 (Apr-Mar) compared to 9.81 lt last year, while exported are about 2.28 lt compared to 1.28 tonnes last year. 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 estimate.
Chana futures will trade sideways as government agencies holding major portion of Chana. Moreover, good stocks with physical traders due to higher production this year are pressurizing the prices. Procurement of chana at MSP by NAFED is slow and may pick up in coming weeks.
Cotton / Kapas
MCX Aug cotton closed higher on Wednesday to close at 20,750 rupees per bales. In July, cotton futures plunge more than 8.3% tracking improved cotton imports, good area and satisfactory monsoon progress in cotton growing districts in India. Moreover, improved sowing, higher imports and weak international prices also weighing on prices. As per farm ministry report, acreage under cotton in the country was 108.95 lakh ha so far, up from 102.52 lakh ha from a year ago. Area in Gujarat under cotton is higher as on 29-Jul-19 at 23.76 lakh ha compared to 25.5 lakh ha last year. USDA increase production forecast for cotton in India by 1.75% this month to 29 million bales while the stocks jump by 17.8% to 8.93 m-bales. Trade data by Ministry of Commerce indicates that provisional shipments in the month of June 2019 are 88% lower at 60,000 (Vs 5 l bales) as compared to last year.
ICE cotton closed higher on Wednesday due to bargain buying after it see two days of falls. Prices are under pressure due to good crop ratings and delay in trade deal between the US –China worries demand. The COT report on Friday showed spec funds pushing their net short position to a new record of 45,230 contracts.
Cotton futures may trade sideways to lower due to fresh spell of showers in Saurashtra may limit damage to cotton crops. Moreover, expectation of higher imports and improvement in monsoon rains in cotton producing areas in last week of July and during August will ensure good production this season in India.
The Aug Jeera closed lower for third consecutive session due to profit booking tracking improved arrivals as prices have improved in last fortnight. However, prices have closed 2.71% higher in July. As per, Agmarknet data arrivals of jeera in Gujarat is about 30,000 tn during 1-30 July compared to 7,500 tn last year same period. Jeera prices have surged in the first half of July on reports that the crop from competing countries — Syria and Turkey — are poor, and India only supplier in world market. As a result, China has increased offtake of jeera from India. As per Commerce Ministry data, India exported about 29,835 tonnes of jeera in seed and powdered form in May, up by 7.4% on year. However, exports are down by 8.6% at 95,800 tonnes in the first 5-months in 2019.
Jeera futures expected to trade sideways as due to sufficient availability in the physical market pressurized prices at higher levels despite improving export demand.
Turmeric Aug futures closed with some gain due to short covering after prices slipped to 3-week low. Currently prices are under pressure due to higher supplies and lower imports. Exports to Iran have come to a standstill since May with the expiry of the US sanctions waiver to India for six months. The trends still looks down on revival in monsoon rains in turmeric growing districts in south India. The rain deficit in south peninsula increase to currently at 18.8% from about 30% deficit last week. Turmeric exports in June, down 16.22% y/y to 11,883 tn (Vs 14,183 tn), as per govt data. However, turmeric exports in first half of 2019, up by 5.1% to 66,300 tn compared to 63,000 tn. In 2018/19, output is forecast at 10.77 lt in the 3rd advance estimates by the government.
Turmeric futures expected to trade sideways to down due to revival of monsoon rains in turmeric growing areas. However, there is expectation of improvement in upcountry and export demand which may restrict any steep fall.
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