Soybean April futures closed higher on Monday as supplies have been lower due to lower prevailing prices and good domestic as well as export 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. Arrivals during February fell to 650,000 tons as compared to 900,000 tons in January.
U.S. soybeans closed loser due to huge expectations for the South American harvest and concerns that export demand for U.S. supplies will wane in the coming weeks. Brazil's Abiove soy industry association pegged the country's soybean crop, which is being harvested, 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 higher on Monday and continue uptrend on good domestic demand and firm rival palm oil. The prices are firming up despite higher imports of edible oil in Feb and cut in base import prices for edible oil. According to data released 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 on Monday on expectation of good demand. Recently, 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 decline on weaker export data and expectation of improved march output. Market participants are looking at lower demand, while supply is to see a marginal increase Palm oil shipments from Malaysia showed a 3-8% decline in shipments for the first 20 days of March from the same period the month before. Palm oil output is expected to recover from the second quarter onwards, as the effects of a cropdamaging El Nino fades away.
We expect Soybean prices to trade sideways to higher as the supplies have been lower in the physical market. The prices of Ref Soy oil and CPO may trade sideways on expectation of technical correction. 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 Futures closed flat on Monday due to lower spot demand and good supplies from mills. 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 lt sugar so far compared to 83.75 lt of sugar as on 30th April 2016.
Raw sugar futures on ICE closed lower on technical selling and coming under additional pressure after prices breached the key 18-cent support level and triggered stop-loss orders. Moreover, fundamentals remained bearish, with expectations for a surplus in the upcoming 2017/2018 season. As on 14-Mar, Speculators 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.
We expect sugar prices to trade sideways to lower on sufficient supplies in the near term as sugar mills continue to sell sugar to control domestic prices. 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 edge higher on Monday as physical demand continue to increase in the current season. Cotton Association of India unchanged its production estimates of cotton in 2016-17 (Oct-Sep) at 341 lakh bales (1 bale = 170 kg), projected in January. The cotton arrivals are in full swing and gap of arrivals compared to last year has narrowed down.
ICE cotton futures lost over 1.3% in thin-volume trade on Monday pressured by lack of speculative buying amid a firm dollar. The US exports is still good as 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. The data from the CFTC showed that managed money cut their net long position in the week to Mar 14 in cotton futures and options by 426 contracts to 105,608 contracts.
We expect cotton futures to trade sideways 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. However, higher stock positions with the farmers and stockists may pressurize prices.
Jeera March future closed higher due to good demand seen in spot markets. However, market participants are expecting good exports demand in coming weeks. 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.
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 Monday due higher arrivals and lower demand physical demand. The demand for the new season turmeric in recent weeks is lower. 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.
We expect Jeera futures may trade sideways on improving supplies. 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 higher on anticipation of lower level buying. The supplies of turmeric from new season increase many fold in current month compared to last month. The upcountry and spot demand is also steady and not picking up as expected.
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