Published on 23/03/2017 10:50:46 AM | Source: Angel Commodities Pvt Ltd

We expect Soybean prices to trade sideways - Angel Commodities

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


Agri-Fundamentals

Soybean

Soybean April futures edged higher on Wednesday on expectation of good demand from Industries. The supplies have been lower due to lower prevailing prices. There is steady domestic as well as export demand. Soybean exports during OctFeb were estimated at 112,000 tonnes, compared with 80,186 tonnes in the year-ago period, as per SOPA press release. Arrivals during February fell to 650,000 tons as compared to 900,000 tons in January.

U.S. soybean futures closed lower on Wednesday, with prospects for bumper harvests in South America and record U.S. plantings weighing on the beaten-down market. Brazil's Abiove soy industry association pegged the country's soybean crop, at 107.3 mt, up from its Feb forecast of 104.6 mt. Moreover, it pegged Brazil's soy exports at 59.8 mt, 1.1 mt larger than its previous outlook.

 

Refine Soy Oil

Refined soy oil futures closed lower on Wednesday as demand and supplies seems to be steady. With expectations of bumper oilseeds output, availability of edible oil in the country is seen rising. According to data released by the Solvent Extractors' Association of India (SEA), during Nov-Feb, the country had imported 4.68 mt of edible oil, down from 5.09 mt a year ago. The government has cut the base import price of soyoil by $9 per tonnes for second half of March.

 

Crude Palm oil

CPO Futures fell on Wednesday on expectation of good supplies in domestic market. The imports of palm oil during Feb are higher compared to previous month which implies that the consumption demand is good in the country. Recently, government has cut base import prices (tariff charges) for palm products in India for the third successive fortnight making prices cheaper to import.

Malaysian palm oil futures hit a near two-week high on Wednesday amid an uncertain production outlook and forecasts for a soyoil rally, after 2017 U.S. biofuel requirements came into effect. Palm oil production typically rises in March from February. However, industry players are uncertain about how much production will pick up this month as palm oil trees still face the brunt of a crop-damaging El Nino.

 

Outlook

We expect Soybean prices to trade sideways to higher on good physical demand and lower supplies. The prices of Ref Soy oil and CPO may trade down as there is still pressure on edible oil prices in the country due to adequate supplies amid record oilseed crop this season and lower import prices as govt. cut base import prices for the edible oil for third successive fortnight on 15th March.

 

Sugar

Sugar Futures edged down by more than 1.15% on Wednesday on reports that the domestic consumption of white sugar may be down this year mainly due to demonetization and reduction of demand from the bulk buyers. India's domestic consumption of sugar is expected to fall 3.0-3.5% to around 24 mt in the current season ending September. Bulk consumers including soft drink manufacturers, bakeries, confectioners, hotels and restaurants account for 60-70% of the country's sugar demand.

Government is likely to revise down its estimate on sugar output in 2016-17 (Oct-Sep) from 22.5 mt forecast earlier due to shortage of cane in Maharashtra and Karnataka.

Raw sugar futures close slightly higher on Wednesday on late-day buying from the lower levels on chart support. Earlier, sugar prices were under pressure driven by fund selling against the backdrop of a favourable production outlook in top grower Brazil and the prospect of a rebound in Indian output next season after a poor crop this season. As on 14-Mar, managed money cut their bullish position in raw sugar contracts on ICE Futures 3rd straight week reduction cutting it by 29,046 lots to 90,506 lots. 

 

Outlook

We expect sugar prices to trade sideways to higher on expectation of technical rebound. However, there is sufficient supplies in the near term as sugar mills continue to sell sugar to control domestic prices. Moreover, lower production estimated this season and anticipation of increase sugar demand during summer may support prices. 

 

Cotton / Kapas

Cotton futures on MCX recover on Wednesday after two days of corrections on expectation of continuation of good demand this season. Currently, physical demand continues to increase so as the arrivals. The cotton arrivals are in full swing and gap of arrivals compared to last year has narrowed down.

ICE cotton futures rose on Wednesday to snap a two-day losing streak, supported by short-covering and a weaker dollar. Moreover, the prices are also supported as China sold only 17, 800 tonnes of cotton which is about 58% of cotton offered from state stockpiles on Wednesday.

 

Outlook

We expect cotton futures to trade sideways to higher on expectation of good demand. However, there are high stock positions with the farmers and stockists which may pressurize prices. However, expectation of export demand to China may support prices on poor response to state reserve auction in China.

 

Spices

Jeera

Jeera March future edged higher on Wednesday due to higher prices in the spot market due to good demand. The arrivals have been good in the physical market. As per Agmarknet data, during Mar 1-20 about 30,695 tonnes of jeera arrived compared to 9,373 tonnes during last month same period. Market participants are expecting good exports demand in coming weeks.

On the export front, India in 2016-17 is likely to cross 1.2 lt against 94,352 tonnes a year ago while the exports increase by 36.7% to 93,724 tonnes in first 10 month of marketing year 2016/17 as per the data release by Dept of commerce, GOI. As per second advance estimates for 2016/17, production of Jeera in Gujarat will be 2.21 lt, down almost 11% compared to last year production of 2.38 lt.

NCDEX Turmeric continues to trade lower on Wednesday due higher arrivals and lower demand physical demand. The demand for the new season turmeric in recent weeks is lower from the up country traders. The turmeric arrivals in the country are higher at 115,205 tonnes during Mar 1-20 compared to 30,945 tonnes during previous month, as per the Agmarknet data. On the export front, country exported about 82,115 tonnes during April-Dec period, up by 28% compared to last year exports of 64,105 tonnes, as per government data. 

 

Outlook

We expect Jeera futures to trade sideways to higher on good physical demand. Uncertain export demand for new season crop is keeping the prices little volatile. There are reports of lower production estimates in Gujarat and improved exports in 2016/17 financial year. Turmeric may trade lower on anticipation of higher supplies of turmeric from new season. The upcountry and spot demand is also steady and not picking up as expected. There is a possibility of revival of prices due to bargain buying as prices have touched lowest for the season.

 

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