Published on 24/05/2017 10:25:56 AM | Source: Angel Commodities Pvt Ltd

Sugar futures may trade sideways - Angel Commodities

Posted in Commodities Reports | #NCDEX #Commodity Tips #Angel Broking Pvt Ltd


Agri-Fundamentals

Soybean

Soybean Jun futures closed lower on Tuesday on reports of higher stocks of soybean with farmers and traders. Soybean prices is trending down because farmers, reluctant to sell at "low prices" so far this season, will soon begin liquidating stocks trying to raise money for sowing operations beginning June.

In the benchmark market of Indore, soybean sold for 2,900-2,980 rupees per 100 kg yesterday, marginally above the MSP of 2,775 rupees.

As per Agmarknet data, arrivals of soybean during the first 20 days of May is lower compared to last month same period. In May the arrivals have been 1.64 lt while in April it was 1.88 lt. India's oilseeds industry body has cut its soymeal export forecast by 25% from its previous outlook on appreciating rupee and a correction in global prices make Indian supplies uncompetitive.

India may export 1.5 mt of soymeal during the 2016/17 marketing year (Oct-Sep) lower from 2 mt expected in the beginning of the season.

CBOT soybean futures settled lower on Tuesday on technical selling and slightly better-than-expected U.S. planting progress.

The USDA weekly sowing report says this year’s U.S. soybean planting stayed close to average last week. As of Sunday, 53% of soybeans are planted, compared to 52% typically this time of year, with 19% emerged, compared to 21% normally. 

 

RMseed (Mustard seed)

Mustard Jun futures fell more than 1% on Tuesday as market participants are expecting higher supplies of crop in the physical market amid bumper crop forecast this season. Stockiest and millers are buying in the market at lower price levels. As per third advance estimates, the production of most important rabi oilseed, rapeseed & mustard, is expected to increased by 12 lt to 79.8 lt compared to last year.

Due to lower prices in the current season, the arrivals of mustard in the physical has been lower compared to last year at 5.57 lakh tonnes in the month of April 2017. The average price of mustard futures have dropped to two years low in the month of May 2017 to about 3,700 per quintal compared to Rs. 4,440 in May 2016 and Rs. 4,000 in May 2015.

Mustard meal exports have been lower by about 51.7% in April 2017 at 6,842 tonnes compared to last year in April. Last year, India exports about 14,160 tonnes of meals in April.

 

Outlook

Soybean futures are expected to trade lower of good supplies and lower demand but the prices may recover in current week on lower level buying but prices. Mustard futures may trade lower on supply pressure and steady crushing demand from the oil mills

 

Refine Soy Oil

Refined soy oil futures closed lower on Tuesday on profit booking from higher levels. However, good physical demand from the stockists on anticipation of higher intake of edible oil in the country during the next one month capped further loss. The increase in the tariff value by the government and weakening rupees too supported prices in recent weeks.

Government increases the tariff value for crude soyoil for the second half of May by $13 to $793 per tonnes. Imports of soyoil are lower this oil year starting last November. According to SEA, during Nov.’16 – Apr.’17, import of soy oil has been lower to 13.50 lt from 22.44 lt in the same period of last year.

Moreover, Import of soy oils during April 2017 is reported at 3.04 lt compared to 3.50 lt in April 2016 - down by 12.4% however, the imports increase 32% m-o-m.

 

Crude Palm oil

MCX CPO closed lower tracking drop of prices in international prices. Increase in tariff value too support prices in the country.

The government increases the base import prices of Crude palm oil by $9/tonne and RBD by $6/tonne for 2nd half of May.

As per SEA, During Nov.’16 – Apr.’17, Import of palm oil decreased to 43 lt from 43.4 lt during the same period of last year. The overall stock of edible oil as on 1st May, 2017 has increased by 207,000 tonnes to 212 lakh tonnes compared to stocks on 1st Apr., 2017.

Malaysian palm oil futures declined on Tuesday evening, their first drop in three sessions, weighed down by a stronger ringgit and forecasts of rising production.

Exports of Malaysian palm oil products for May 1 - 20 rose 20 % to 846,705 tonnes from 705,372 tonnes shipped during April 1 - 20, cargo surveyor Intertek Testing Services said on Friday.

Palm oil output is seen rising in line with the seasonal trend and as trees recover from damage caused by the El Nino weather pattern, production growth is not as strong as forecast.

Malaysia will lower its crude palm export tax for a third consecutive month to 6% in June, down from 7 percent in May, according to a circular from the Malaysian Palm Oil Board on Friday. The MPOB data showed April production rose 5.7% to 1.55 mt. The growth was below market expectations.

 

Outlook

The prices of Ref Soy oil and CPO may trade sideways to higher on good physical demand and increase in tariff value. The depreciation of rupees in the previous week is also supporting the edible oil prices. India imports more than 70% of its edible oil requirements and mostly soy oil and palm oil are imported.

 

Sugar

Sugar Futures closed lower on Tuesday to good supplies and steady demand from the physical market. Sugarcane acreage in the country was at 41.9 lakh ha as of last week, a shade lower than 42.3 lakh ha a year ago, according to the first acreage report released by the farm ministry for 2017-18. According to USDA, India’s production is forecast to rebound by 18% to 25.8 mt due to higher area and yields. Imports are forecast lower while consumption is forecast to edge higher to 26.0 mt. Moreover, government extends curbs on holding of sugar stocks by six months for the sugar dealers and traders.

ICE Raw sugar futures fell on Tuesday on improving weather outlook in top producer Brazil reinforced expectation of ample supplies. Prices were further pressured by a weak Brazilian real. Brazil's cane industry group, Unica, forecast the country's sugar exports to China could fall by 800,000 tonnes in the next 12 months due to the extra tariff in China.

 

Outlook

Sugar futures may trade sideways as the supplies are in line with demand but firm international prices may support domestic prices. However, good sowing progress in the country will keep pressure on the sugar prices.

 

Cotton / Kapas

Cotton futures on MCX edge further lower on this week on Tuesday as kharif planting of cotton in the country begin on good note. As per latest data from Agricultural Ministry, cotton is planted in 8.93 lakh hectares as on 19th May, higher by 32% compared to last year acreage for same period. Cotton planting begins in the northern Indian states of Punjab, Haryana, and Rajasthan in early May. Moreover, there are ample supplies this season through imports and good stocks available with the farmers. USDA forecasts India cotton production for 2017/18 at 6.01 mt, up nearly 6% while area is forecast at 11.5 mhac, up 10% from last year.

ICE cotton futures fell on Tuesday on favorable growing conditions in the US and other cotton planting countries coupled with expectations of more export cancellations. Weekly sowing data in US reported that about 52% acreage is planted in the week ending May 21, against 50% for 5 years average. There is a drop in weekly export sales in the US to 120,700 running bales (RB), down 25% from the week before.

 

Outlook

Cotton futures are expected trade sideways to down on reports of good sowing progress, steady physical demand, reports of higher stock levels and normal monsoon forecast. There is an anticipation of higher sowing acreage in the country, lower exports prospects and higher imports keeping prices under pressure.

 

Spices (Jeera & Turmeric)

Jeera Jun futures close lower on Tuesday and continue its sideways movement. The arrivals have now slowed down in the physical market but the trade has been slow down. As per Agmarknet data, about 6,725 tonnes of jeera arrived in May (1- 20) compared to 26,151 in April (1-20). On the export front, country the exports increase by 29.6% to 1,08,513 tonnes in first 11 month of marketing year 2016/17 as per the data release by Dept of commerce, GOI. The stock levels in the NCDEX warehouse is about 1,593 tonnes as on May 22, dropped from 2,068 tonnes a week ago. However, on 1 st May the stock was close to 964 tonnes. Last year, stocks were higher at 4,101 tonnes.

NCDEX Turmeric closed lower on supply pressure and profit booking by the market participants. There is steady demand in the physical market against higher stock levels. There was lower demand all season from industrial buyers. Turmeric arrivals in the country are lower in first 20 days of May at 46,168 tonnes compared to 96,995 tonnes during April (1-20), as per the Agmarknet data. The lower arrivals are due to poor realization by the farmers. On the export front, country exported about 97,596 tonnes during April-Feb period, up by 26.6% compared to last year exports of 77,087 tonnes, as per government data. There are expectations of improved demand in coming weeks as prices are lower.

 

Outlook

We expect Jeera futures to trade lower and move in range on anticipation lower demand from the physical market players. The export demand is not improving either. Turmeric futures may trade sideways to down on sufficient stocks and lower demand from the industrial buyers. The arrivals in physical market have been lower due to less realization for the farmers. 

 

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