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Agri-Fundamentals

Soybean

NCDEX Feb Soybean futures slipped to 3-week low and fell about 1.6% on Wednesday. Prices have corrected from higher levels due to profit booking and lower demand from the oil mills. However, Soymeal exports from India are expected to rise 25% on year to around 15 lakh tn in 2018-19 (Apr-Mar). Demand for Indian soymeal is growing from Europe and West Asia while Iran is emerging as one of the largest buyers. In January, soybean futures surged about 12.5% on improving physical demand tracking higher exports of soybean meal. Soymeal exports up by 42% on year in December to 240,530 tonne, as per SEA press release. Soymeal exports are higher by 6% at 994,303 tonnes for the Apr- Dec period compared to last year. In second advance estimates by state government, production forecast for soybean in Madhya Pradesh by about 35% higher to 72 lakh tonnes compared to last year.

CBOT Soybean futures edged higher on Wednesday on renewed Chinese demand for U.S. shipments and worries about a smaller Brazilian soy crop, but gains were limited by abundant global supplies and an uncertain outcome. The USDA reported nearly 3 million tonnes of U.S. soybean export sales on Tuesday, mostly to China, after high-level talks last week between the United States and China.

Outlook

Soybean futures expected to trade sideways to lower on expectation of technical selling. However, improving physical demand for new season crop from oil mills due to higher meal exports may keep prices supportive in coming weeks.

RMseed (Mustard seed)

Soybean futures expected to trade sideways to lower on expectation of technical selling. However, improving physical demand for new season crop from oil mills due to higher meal exports may keep prices supportive in coming weeks.

Mustard Feb futures closed slipped to 2-week low and closed 1.4% down on Wednesday due to technical selling. Prices may recover on expectation of higher meal exports and forecast of rains and hailstorm in North Indian states of Haryana, Rajasthan and Uttar. Acreage under mustard is higher by 214 lakh ha this year at 69.1 lakh ha. Mustard production is forecasted at 75 lt tn in 2018-19 (Jul-Jun), up 7.1% from the previous year's due to higher yields this year. As per SEA press release rapeseed exports are down by 34% on year in December to 45,616 tonnes. However, for Apr-Nov, India's rapemeal exports up by 78% on year at 8.2 lt. January and February months are lean season for rapemeal exports. The export of rapeseed meal to China is unlikely to resume during current financial year due to lengthy formalities. According to MOPA, Mustard oil mills across the country crushed 400,000 tn of the oilseed in January, taking this financial year crushing volumes to 69 lakh tonnes. Last year, only 60 lakh tonnes of mustard were crushed.

Outlook

Mustard futures expected to trade sideways in coming week on expectation of improving mustard demand from the industrial users. Moreover, due to steady demand for crushing, higher acreage is keeping prices in a range.

Refine Soy Oil

Refined Soy Oil Feb Futures closed lower yesterday on reports of higher imports of edible oil in January due to lower import duty on palm oil . The prices have touched 8-month high last week amid good domestic demand and higher soybean prices. In a fortnightly notification, Government hike tariff value of crude soy oil by 48 dollar to $734 per tn for the first half of February. In January, prices have climb more than 6.3% or 46 rupees per 10 kg supported by firm International prices. 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% on year. Consumption pegged at 49.5 lakh tonnes, up 7% compared to last year.

Outlook

We expect Ref Soy oil to trade sideways to lower on expectation of some technical corrections and higher imports of edible oil in January. However, improving domestic demand and higher international prices may keep prices supported. Lower stocks at port and pipeline supported prices in January recently.

Crude Palm oil

MCX CPO closed lower for the third consecutive session on Wednesday in the absence of any clue from Malaysia but higher palm oil imports to India may be bearish for price. Prices jumped close to 12% in January supported by increased tariff price by Government for of crude palm. Palm oil imports are expected to increase in January as well due to lowering import duty from Malaysia. 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 dropped compared to last year. According to USDA monthly report in December, 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. India has cut import taxes on crude and refined palm oil from Southeast Asian (ASEAN) countries after a request from suppliers.

Malaysian market will remain close Tuesday and Wednesday. Malaysian palm oil futures rose on Monday, supported by expectations of declining inventory levels due to lower production potential in coming months. Exports of Malaysian palm oil products for January rose 14.7% to 1,466,932 tonnes from 1,278,661 tonnes shipped during December, cargo surveyor Intertek Testing Services said on Thursday. Palm oil production tapers off at the year-end after peaking between August and October. Moreover, India is the world's largest edible oil importer, had cut import duties on CPO from Malaysia. Ministry of finance has issued two notifications on 31-Dec-18, reducing import duty on palm oil and reducing the duty difference between crude and palm oil from 10% to 5% on palmolein to be imported from Malaysia.

Outlook

CPO futures may trade sideways to down tracking weak international prices. Moreover, higher tariff value, weaker rupees and improving physical demand from the stockists may support edible oil prices.

Chana

Chana Mar futures edged lower for the second consecutive session on Wednesday concern over higher stocks with government. Prices are in a range on reports of lower acreage and diminishing stocks with the traders. Area under chana is lower compared to last year, as Feb-1, chana acreage is at 96.35 lakh ha, down 10% compared to last year acreage on over 107 lakh ha. However, chana ended January on negative note and slipped more than 10% in last two months on expectation of better production for third successive year. Higher carryover stocks in the country are keeping prices under pressure. Chana stocks are diminishing with physical market players due to steady domestic consumption and lower imports of chana. Chana attract 60% import duty since March 2018. Moreover, chana exports from the country increased by 218% to 1.77 lt. The govt have extend import curbs on all varieties of peas by 3 months until the end of March.

Outlook

Cotton futures expected to trade sideways mixed fundamentals of higher International prices and lower demand from the bulk industrial buyers in the country. Prices have already factor for the lower production and slower exports in New Year. Higher cotton stocks with farmers and fear of imports may keep prices under pressure in coming weeks.

Spices (Jeera)

NCDEX Jeera Mar futures slipped to 9-month low on Wednesday to close at 15,475 rupees per 100 kg. The trend looks down on reports of higher production prospects and slowing exports. According to 1st Adv est. by Agriculture Ministry, cumin output may be higher by 10% on year to 7.56 lakh tonnes. Moreover, subdued exports demand is keeping prices range bound. New season jeera expected to hit the market in one-month time. In the 2nd advance estimate, cumin production in Gujarat is forecasted doen by 25% on year at 2.23 lakh tonnes for 2018/19 crop. Area under cumin in the state is pegged at 3.48 lakh ha as on 4-Feb, down 9.1% on year but higher by 8.75% than normal area as per govt data. 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, acc. to Commerce Ministry.

Outlook

We expect Jeera futures to trade sideways to lower due to higher availability in the physical market amid slowing export demand. Moreover, forecast of better crop in coming harvesting season is pressurizing prices.

Turmeric

NCDEX Apr Turmeric down to 7-week low on Wednesday due to steady demand and higher supplies from new season crop. Production is forecasted at 11.5 lakh tonnes in the 1st advance estimates by the government little higher then to last year production. Prices are down more than 6.5% in 2019 on subdued export demand and good production prospects. 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 (AprNov) is up 13.25% at 85,756 tonnes compared to 75,723 last year for the same period.

Outlook

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, expectation of demand may support prices.

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