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Soybean

NCDEX Soybean future traded bearish during the month of August due to recoveries in sowing all over India According to the latest soybean sowing estimate released by the Soybean Processors Association of India, as on 28 August, the area under soybean sowing in the country has touched 123.53 lakh hectares compared to 118.38 last year. However, Madhya Pradesh, the largest soybean producing state of the country, is lagging behind in soybean sowing at 55.84 lakh hectares as on August 28th against last year's 58.54 lakh hectares. By 27th August, NCDEX Soybean futures has closed at Rs.7755/quintal, lower by - 29.99% compared to Rs.10081/quintal by 30th July.

Fundamentally for the coming month, we are expecting NCDEX Soybean Futures to trade bearish with reports of higher sowing acreage in the other major states of Gujarat, Telangana, Karnataka, Maharashtra and Rajasthan till 28th August. However, the yield factors may see some concerns as the monsoon has been reported to lower in the above states that could hamper the actual production figures. Based on the recent IMD report; all India monsoon on a weekly basis is reported to be below normal in the central and north western regions of India by 15% and 14% respectively till 29th August. Elsewhere, in the United States, the soybean supply and demand changes for 2021-22 include higher beginning stocks and lower production, crush, and exports. Beginning soybean stocks are raised on lower 2020-21 crush and exports. Soybean production for 2021-22 is forecasted at 4.34 billion bushels (1 bushel = 27.22 kgs), down by 66 million bushels on lower yields. Harvested area is forecasted at 86.7 million acres, unchanged from July. The first survey-based soybean yield forecast of 50.0 bushels per acre is reduced 0.8 bushels from last month. Soybean supplies for 2020-21 are projected at 4.5 billion bushels, down 3% from last year. Overall, the sentiments continue to remain bearish for soybean prices amid upcoming harvesting season in India and United States in September.

On a weekly time frame, NCDEX Soybean (Oct) future has given a breakout of Ascending Broadening Wedge pattern, which supports the downward trend. In addition, the indicator MACD also indicates the short position with negative crossover. Moreover, the RSI indicator is also reading below 50 levels, which is again a downside confirmation. However, on the daily chart, the price has faced immediate hurdle of lower Bollinger band and prior demand zone which indicate a slight recovery in the counter. Hence, based on above technical structure, we are recommending sell on rise strategy in NCDEX Soybean (Oct) future , so one can initiate a short position in NCDEX Soybean (Oct) future around 7200 or a rise in the price till 7280 levels can be used as selling opportunity for the downside target of 6100. However, the bearish view will be negated if NCDEX Soybean (Oct) future close above the resistence level of 7750.

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