Soybean Jun futures closed lower by 2% on Tuesday, highest single day drop for the contract, on reports of lower physical demand as 60% of soybean mills in Madhya Pradesh reported to have shut down because of subdued demand for soymeal and lower prices of soyoil. As per USDA latest report, soybean production in the country is kept at the same level at 115 mt as last year while the crushing volume will be improved while meal exports and soy oil imports will be higher in 2017/18 compared to last year. However, IMD forecast for higher monsoon than previous forecast in April may keep the prices sideways.
CBOT soybean futures rose 1.1% on Tuesday amid technical buying and signs of strong export demand. As per USDA report, private exporters reported the sale of 132,000 tonnes of soybeans for delivery to unknown destinations during the 2016/17 marketing year. Soybean also got support from the strong Brazilian Real which discourages farmers from selling their dollar-denominated soybeans. Moreover, USDA reported 32% planted Vs 14% week ago and 32% five years average.
Refine Soy Oil
Refined soy oil futures continue to trade positive this week driven by good physical demand and increase in the tariff value for May. Government increases the tariff value for crude soyoil for the second half of May by $13 to $793 per tonnes. There is still good domestic supplies due to cheap imports and high domestic crushing. According to SEA, 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. Moreover, 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.
Crude Palm oil
MCX CPO closed higher on Tuesday amid good physical demand and increasing tariff value. As per SEA, During Nov.’16 – Apr.’17, Import of crude oil decreased to 56.3 lt from 61.8n lt tons during the same period of last year. The government cut the base import prices of Crude palm oil by $9/tonne and RBD palmolein by $6/tonne for second half of May.
Malaysian palm oil closed lower due profit booking on Tuesday The fell is supported by firm ringgit. There are still bullish sentiments due to good exports. Exports of Malaysian palm oil products for May 1-15 rose 8.9% shipped during Apr. 1-15, as per intertek. The MPOB data showed April production rose 5.7% to 1.55 mt. The growth was below market expectations.
Soybean futures are expected sideways to down as Oil mils are active on lower levels to maintain the parity of oil and meal. There is supply pressure as stockists are selling as good monsoon forecast indicates another bumper crop. The prices of Ref Soy oil and CPO may trade higher on good demand and increase in tariff value. However, adequate supplies and cheap imports keeping the prices under control.
Sugar Futures closed lower by more than 2% on lower volume on Tuesday due to lack of activities in the physical market. In another development, Maharashtra government seeks differential pricing for sugar where industrial buyers have to pay more while retail consumer pays less. There are reports of rebound of sugarcane production in the next year due to higher acreage. As per USDA, India’s sugar production in marketing year (MY) 2017/18 (OctSept) is expected to increase by 18% to 25.8 mt. Moreover, government extends curbs on holding of sugar stocks by six months for the sugar dealers and traders.
ICE Raw sugar futures jumps higher for the second consecutive session on reports of recent rains in Center-South Brazil slowing the pace of crushing. Moreover, lower crushing data from Brazil and produced 1.12 mt of sugar during the second fortnight of April, down 38.1% from 1.81 mt produced a year ago. According to UNICA, mills in the main center-south cane belt in Brazil crushed 24.091 mt of cane in the second half of April, down 33.5% from the same period last year.
Sugar futures may trade sideways on mixed fundamentals of higher supplies and improvement in physical demand from industrial buyers. However, balanced demand and supply levels in the physical market may keep prices range bound.
Cotton / Kapas
Cotton futures on MCX closed lower on Tuesday after surging for 2 consecutive sessions tracking International prices. There are supplies this season through imports and good stocks available with the farmers. According to trade sources, India’s cotton imports have touched an all-time high of 30 lakh bales this season. 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. The domestic cotton arrivals in April are higher by 49% on year at 2.64 lakh tonnes (lt) compared to 1.77 lt last year, as per Agmarknet data.
ICE cotton futures fell about 4 cents on Tuesday, halting three straight sessions of gains, on a technical sell-off and speculator liquidation after cotton hit near three-year highs on Monday. The USDA reported US cotton planting 33% complete, lagging the average of 37% and last year’s 38%. However, favorable planting conditions across major producing areas across the world may pressurize prices.
Cotton futures are expected trade sideways on good physical demand. However, reports of higher stock levels, normal monsoon and anticipation of higher sowing acreage in the country may pressurize prices. Moreover, lower exports prospects and higher imports keeping prices under pressure.
Spices (Jeera & Turmeric)
Jeera Jun futures closed higher on Tuesday supported by fresh buying form lower levels. The arrivals have now slowed down in the physical market. As per Agmarknet data, about 4,316 tonnes of jeera arrived in May (1-14) compared to 17,494 in April (1-14). 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 increase to 2,176 tonnes, up by 125% in last 15 days. On 1st May, the stocks were only 964 tonnes.
NCDEX Turmeric closed lower on profit booking pressurized by 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 14 days of May at 28,212 tonnes compared to 69,452 tonnes during April (1-14), 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.
We expect Jeera futures to trade higher on anticipation of revival of physical and export demand. Technically the prices have been trading on strong support. Turmeric to trade sideways to higher on expectation of some good physical demand as prices has touched lowest for the contract. There is sufficient stocks and lower demand from the industry. The supplies have been lower due to lower prices and there is some increase in demand which may keep the prices supported.
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