Published on 17/03/2017 10:45:13 AM | Source: Angel Commodities Pvt Ltd

We expect cotton and kapas futures to trade sideways - Angel Commodities

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


Agri-Fundamentals

Soybean

Soybean April futures closed higher on Thursday as supplies have been steady due to lower prevailing prices and good demand. Soybean exports during Oct-Feb were estimated at 112,000 tonnes, compared with 80,186 tonnes in the year-ago period, as per SOPA press release. Soybean crushing has also dropped to 750,000 tons in February as compared to 900,000 tons in the same period a month ago. Arrivals during February fell to 650,000 tons as compared to 900,000 tons in January.

U.S. soybeans edged higher on Thursday, as a weaker dollar supported prices but gains were checked by ample global supplies. Higher global soybean supply outlook with a record crop expected in Brazil and reports of higher U.S. soybean acreage may keep prices under pressure. According to a survey of growers, .U.S. farmers will expand their plantings of soybeans by 6.5 % to 88.8 million hectares in 2017 while scaling back on corn and wheat.

 

Refine Soy Oil

Refined soy oil futures closed little higher on technical trading despite higher imports in edible oil in Feb, cut in base import prices and adequate domestic supplies. According to data released today by the Solvent Extractors' Association of India (SEA), India's edible oil imports rose 15.8% on year to 1.23 mt in February. The government has cut the base import price of soyoil by $9 per tonnes for second half of March. The base import price of crude soyoil is now at $805 from $879 during Feb first half.

 

Crude Palm oil

CPO Futures closed higher tracking international prices despite government has cut base import prices (tariff charges) for palm products in India for the third successive fortnight making prices cheaper to import. For 2 nd half of March, the prices of CPO and RBD palm oil cut by $31 a ton to $753 and $38 a ton to $768 respectively.

Malaysian palm oil futures closed higher on improving exports and lowered production forecasts. Palm oil exports data edged up 1.4% for Feb. 1-15 according to cargo surveyor Intertek Testing Services. The market was also supported by concerns about a potential El Nino weather pattern returning this year. Lower production (fell 1.4 % to 1.26 mt)and inventories (fell to a sixyear low of 1.46 mt, down 5.3 % on month) in Feb also bullish for the palm oil prices.

 

Outlook

We expect Soybean prices to trade sideways as fundamentals still remains weak on adequate supplies in the physical market. The prices of Ref Soy oil and CPO may trade higher firm tracking international prices. There is still pressure on edible oil prices in the country due to adequate supplies and lower import prices as govt cut base import prices for the edible oil. 

 

Sugar

Sugar Futures closed lower on Thursday tracking the spot demand. Market participants are expecting better summer demand from the industrial buyers as there is probability of lower production this season. Moreover, 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.

Recently, ISMA lowered the production estimate by about 10 lakh tonnes (lt) for 2016/17. Moreover, Maharashtra’s cane crushing season of 2016-17 has come to an end. This is among the shorter seasons in Maharashtra after two consecutive droughts and has produced only 41.6 lakh tonne sugar so far compared to 83.75 lt of sugar as on 30th April 2016.

Raw sugar futures on ICE closed little higher traded in a narrow range and hovered above last week's three-month low for the third straight session. Prices were also supported by the strong real. Societe Generale in a report increased its estimate for a global 2016-17 sugar deficit to 3.8 mt from 2.4 mt and cut its global 2017-18 surplus forecast to 5 mt from 5.9 mt.

 

Outlook

We expect sugar prices to trade lower sufficient supplies in the near term as sugar mills continue to sell sugar. However, due to lower production estimated this season and anticipation of higher sugar demand during summer the price may improve. 

 

Cotton / Kapas

Cotton prices on MCX closed higher while NCDEX Kapas fall on Thursday tracking as Cotton Association of India has maintained its estimate for production of cotton in the country in 2016-17 (Oct-Sep) at 341 lakh bales (1 bale = 170 kg), it had projected in January. The supply of cotton in the domestic market is steady so as the demand from the ginners and textile mills. The cotton arrivals are in full swing and gap of arrivals compared to last year has narrowed down.

ICE cotton futures edged higher on Thursday in thin volume trading on weak dollar and stronger US export sales data. Weekly export sales data from the U.S. government showed net upland sales totaled 316,500 running bales for the week ended March 10, up 27 % from the previous week.

 

Outlook

We expect cotton and kapas futures to trade sideways to higher on expectation of good demand from the textile industries as cotton yarn exports to China may increase due to poor response to state reserve auction in China. Expectation of higher stock positions with the farmers and stockists may pressurize prices. 

 

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