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NCDEX Feb Soybean futures edged higher on Thursday due to improved physical demand tracking higher exports of soybean meal. Moreover, end of Bhavantar scheme of MP and soybeans holdings by the bulk traders also support prices. As per SEA press release soymeal exports up by 42% on year in December to 240,530 tonnes. Moreover, meal exports are higher by 6% at 994,303 tonnes for the Apr- Dec period compared to last year. According to SOPA, soybean product exports falls in Oct-Dec quarter. USDA pegs soymeal production up 2.2% on month and 22% on year at 75 lakh tonnes in 2018/19 due to increase in crushing by 22% this season.
CBOT Soybean futures edged up on Thursday amid China trade optimism and adverse weather in Brazil. There is concerns about dryness in parts of Brazil with some forecasts calling for crop stress to expand after mid-month. The Wall Street Journal reported that the United States is considering lifting some or all tariffs imposed on China in a bid to hasten a trade deal between the world's two largest economies. AgRural cut their Brazil production estimate by 4.5 mt from November to 116.9 mt, due to hot and dry weather conditions in many parts of Brazil.
Soybean futures expected to trade sideways to higher due to improve demand for crushing. Government procurement at MSP and improving physical demand for new season crop from oil mills may keep prices supportive in coming weeks.
RMseed (Mustard seed)
Mustard Feb futures edged higher on Thursday but still under pressure on reports of lower meal exports in December. As per SEA press release rapeseed exports down by 34% on year in December to 45,616 tonnes. The export of rapeseed meal and soybean meal to China is unlikely to resume during current financial year as procedure for registration with MoA, China is too cumbersome, lengthy and time consuming to complete all formalities. According to MOPA, Mustard oil mills across the country crushed 550,000 tn of the oilseed in December, up 29.4% on year. Currently rabi area for mustard is high compared to last year acreage as on 11-Jan at 68.3 lakh hectares (lha) against 66.6 lha last year. Mustard oil imports down about 70% on year to 12,242 tons in November compared to over 40,600 tons last year same month according to SEA latest press release. As per SEA data, rapeseed meal exports down 18.8% on year to 56,089 tn in Nov. However, for Apr-Nov, India's rape-meal exports up by 90% on year at 7.5 lt.
Mustard futures expected to trade sideways due to steady demand for crushing, higher acreage but reports on diminishing stocks with farmers may keep prices supportive until new crop arrived in physical market. There is sufficient stocks with government and reports of delay in meal exports to China on strict norms may restrict price surge.
Refine Soy Oil
Refined Soy Oil Feb Futures closed higher on Thursday tracking weak rupees and good physical demand. As per monthly SEA import report, the import of crude soy oil down about 18% to 2.89 lt during November-December 2018 as compared to 3.53 lt in corresponding period last year. In a fortnightly notification, Government cut tariff value of crude soy oil by 22 dollar to $686 per tn for the second half of January. India's y/y imports of crude soy oil for December up by 7.8% on year and down 58% on month at 85,404 tonnes.
USDA in its latest monthly update forecast India soyoil production at 16.92 lakh tonnes, up 2.2% on month and 22.1% on year. Soyoil imports are unchanged for month at 34 lakh tonnes, but up 14% higher on year. Consumption pegged at 49.5 lakh tonnes, up 7% compared to last year.
We expect Ref Soy oil to trade sideways to higher on anticipation of improved domestic demand and higher international prices. However, stronger rupees and lowering of tariff value for coming fortnight may keep prices steady.
Crude Palm oil
MCX CPO edged higher on Thursday tracking firm Malaysian palm oil prices and soy oil prices in India. India has cut import taxes on crude and refined palm oil from Southeast Asian (ASEAN) countries after a request from suppliers. The government increased tariff price of crude palm oil by $41 to $556 per tn and $16 per ton for refined, bleached and deodorised palm oil for the Second half of January. According to SEA monthly update, CPO imports were up by 13.1% at 6.70 lakh tonnes in December. However, the Nov-Dec period the import volumes are lower than last year. USDA in its December update, forecast palm oil production to 73.3 million tonnes in 2018/19 up by 1.45% m/m due to higher production estimates for Indonesia. India imports figures are unchanged at 10.5 mt, up 22% compared to past year imports. Domestic consumption for India is forecast at 10.6 mt, up 16.7% on year.
Malaysian palm oil rose to an over two-month high on Wednesday on forecast of declining production in the coming months and improving export data. In an industry conference, analysts have predicted Crude palm oil prices expected to rise to between 2,200 and 2,300 ringgit ($559) per tonne by June on a seasonal decline in stocks. Palm oil production typically tapers off at the year-end after peaking between August and October. India is the world's largest edible oil importer, had cut import duties on CPO from Malasyia. Ministry of finance has issued two notifications on 31-Dec-18, reducing import duty on palm oil and also reducing the duty difference between crude and palm oil from 10% to 5% on palmolein to be imported from Malaysia.
CPO futures may trade sideways to higher due to higher tariff value tariff value and improving physical demand from the stockists.
Chana Feb futures closed little higher for the second consecutive session on Thursday as market participants initiated short covering from the lower levels. The trend is lower due to reports of higher stocks available with the government agencies. Area under chana is lagging and supplies are dwindling in the country due to lower imports and good consumption. Chana acreage is at 91.6 lakh ha, down 10.6% compared to last year acreage. The govt have extend import curbs on all varieties of peas by 3 months until the end of December. Chana stocks are diminishing due to higher domestic consumption and lower imports of chana due to 60% import duty since March 2018. Chana exports from the country increased by 207% to 1.61 lt on year for Apr-Oct while imports down by 88% for same period.
Chana futures may trade sideways to higher on expectation of lower level buying. But higher stocks with Government agencies are keeping prices under control. However, reports of diminishing stocks and lower acreage may support prices.
Cotton / Kapas
MCX cotton closed higher on Thursday tracking firm trend in International markets coupled with lower than expected production prospects in the Country. In its latest press release, Cotton Association of India (CAI) cuts 2018-19 production estimate by 5.25 lakh bales this month to 335 lakh bales for the year 2018- 19. It is about 8% lower from 365 lakh bales reported last year. The CAI has reduced the crop estimate for Gujarat by 1.50 lakh bales and for Maharashtra and Telangana by 2 lakh bales each. The total cotton supply projected from October 2018 to December 2018 at 142.50 lakh bales, comprises arrivals of 115.97 lakh bales up to December 31, 2018, imports (3.53 lakh bales) and beginning stocks (23 lakh bales). According to data published by Commerce Ministry, country exported about 2.29 lakh bales (1 bale= 170 kg) in Oct 2018, compared to only 67,155 bales last year same month.
ICE Mar cotton futures rose more than 1% for the second straight session on Thursday to touch a near one-month high, supported by fund buying. Demand for cotton has been weak over the past few months, especially due to lack of buying from top consumer China due to a trade dispute with the United States. As per ICAC press release, world consumption projected to exceed production in 2018/19, the drawdown of stocks continues.
In 2018, cotton prices marked their first yearly decline in four years, largely because of the trade tussle between top exporter the United States, and China, the biggest consumer of the natural fiber.
Cotton futures expected to trade sideways to lower due to improving arrivals and weak international prices. However, lower production and reports of slow arrivals in physical market and good exports demand may support prices.
Spices (Jeera & Turmeric)
NCDEX Jeera Mar futures edged higher and it is trading in a narrow range due to balanced supply and demand situation. Prices have been under pressure on improving areas in Gujarat and higher in Rajasthan. Jeera futures corrected about 7% from higher levels in December as cumin acreage improves in Gujarat on reports of providing water in canal for irrigation for rabi crop by govt of Gujarat. As per data release by Agriculture Department of Gujarat, area under cumin in the state is pegged at 3.48 lakh ha as on 15-Jan, down 9% on year but higher by 8.75% normal area. Acc. to Commerce Ministry, exports of jeera is down 25.4% on year in November at 7,859 tonnes compared to 10,537 tn last year but jeera exports in 2018/19 (Apr-Dec) is 1.28 lt, up 26.7% compared to exports last year.
We expect Jeera futures to trade sideways on steady domestic and exports demand at higher prices. However, prices to remain under pressure on expectation that the area may increase on assure irrigation to Gujarat farmers.
NCDEX Apr Turmeric edged lower for the second consecutive session on Thursday due to technical selling. Prices are trending lower since last week on expectation of higher production prospects. Turmeric production is expected to be higher this season due to higher acreage in Telangana however; good exports demand may keep the prices supportive. As per data released by Commerce Ministry, turmeric exports during the month of Nov 2018, up 13% on year to 9,722 tonnes (Vs 8,594 tonnes). Turmeric exports in 2018/19 (Apr-Nov) is up 13.25% at 85,756 tonnes compared to 75,723 last year for the same period.
Turmeric futures expected to trade sideways on new season arrivals and good production prospects due to higher turmeric areas in Tamilnadu, Karnataka and Maharashtra. However, good export demand and improving domestic demand may support prices.
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