Oil and Oilseeds Weekly

Transcription

1 5/15/21 5/21/21 5/27/21 6/2/21 6/8/21 6/19/21 6/25/21 7/1/21 7/7/21 7/13/21 5/17/21 5/24/21 5/31/21 6/7/21 6/21/21 6/28/21 7/5/21 7/12/21 Soybean Strategy - SELL Soybean August NCDEX: Buy at TP 25/28 SL July 21 Market Recap The soybean futures rallied to their contract high last week on strong buying interest supported by bullish fundamental factors. Traders bought soybean futures anticipating revival in export demand for soy meal in the months ahead. End of harvesting season in Brazil and Argentina supported the price rise. Moreover, drop in edible oil import in the month of June added bullish strength to the market. Prices rose despite rise in acreage under soybean cultivation in India. Lull in monsoon activity led the rally during the week. Nevertheless, the sharp rise in CBOT soybean futures market lent support to the Indian market. Concerns of yield loss due to hot and dry weather condition in Central US, tight old crop inventories and strong export demand outlook led the CBOT soybean futures to surge to 6 month high. There was a stockist buying in the spot market supported the rise during the week. The active August contract NCDEX soybean futures made a weekly high of Rs.219 per quintal from a low of Rs.1931 per quintal and settled at Rs per quintal. Futures NCDEX (Rs/Quintal) Jul Aug Sep Oct Derivatives PVO Analysis - Soybean Soybean Basis -6 Open Interest Volume Price -7 The soybean futures are expected to advance its positive trend in the week ahead on follow through buying. Traders and investors are buying futures anticipating revival in export demand for oil meal from South East Asian countries. With the end of harvesting season in Brazil and Argentina, the oil meal importing countries are likely to turn to India. Recent fall on soy meal price might also attract the importing nations. The landed cost of imported oil is increasing due to rise in international price. Edible oil imports fell in the month of July and expected to remain low in July. Importers are likely to slow down their imports for assessing the new crop size. The soybean sowing is progressing well and it is expected to be completed by July-end. According to Union Agriculture Ministry, soybean sowing till 16 th July is lakh hectares against 6.31 lakh hectares sown in the same period last year. Acreage under total oilseeds so far is lakh hectares against lakh hectares last year. Looking into recent fall in the price of soybean and its byproducts because of heavy import of edible oil and poor oil meal export demand, the Solvent Extractors Association of

2 India appealed the central government to revise import duty and base import tariff values of edible oil. SEA is also seeking lift on ban on export of edible oil in bulk. Oil meal exports in May month were lower at 173,64 tonnes against 178,35 tonnes as major importing nations bought from Latin America following harvesting in those countries. The CBOT soybean futures are expected to trade on a positive note on strong fundamental factors. Hot and dry weather condition in Central US is threatening yield loss. The export demand for US soybean encouraging, which is likely to support the price. According to USDA, soybean exports during July 2-8 were 666,5 tonnes. Jul-1 Aug-1 Sep-1 Oct-1 Jul-1 Aug Sep Oct Pivot table NCDEX Soybean Jul Aug Sep Oct Nov Technical analysis Soybean August future prices witnessed an upside rally last week by extending the previous trend. After making a high of 219 it settled at 214 levels. Closing of the previous week s candle renders sideways to higher movements. Market is trading well above the weekly short term EMA suggesting potential to trade higher. However, on the lower side crucial support is at 195 levels sustain above the likely to trade higher. In daily chart market made a Double bottom pattern (neckline support is at 1967 levels) suggests prices to move higher in short term. The momentum indicator RSI (14) weekly is treading at.57 levels and still has the potential to move higher. We expect prices to trade higher and recommend buying near support levels.

3 Refined Review The refined soy oil futures staged a strong rally and made a contract high on strong buying interest. Indian market reacted very positively to strong overseas market. Rising import parity price of soy oil prompted domestic traders to buy futures during the week. Traders bought futures anticipating revival in festive demand in the months ahead. Indian market moved in line with firm CBOT soy oil and MDEX CPO market. The drop in edible oil import in June month due to rising price led the rally during the week. The active August contract NCDEX RSO futures made a weekly high of Rs per 1 kg from a low of Rs per 1 kg and settled at Rs per 1 kg. NCDEX (Rs/1 Kg) Jul Aug The soy refined oil futures are expected to trade on a positive note during the week ahead. Strong buying interest ahead of festival season in India and likely drop in import of edible is expected to support the prices. Indian market is expected to move in line with firm overseas market. According to the Solvent Extractors Association of India, edible oil imports in June fell 6.67% Y/Y to 6.92 lakh tonnes against 7.42 lakh tonnes. Soy oil imports fell 25% to 1.92 lakh tonnes against 2.58 lakh tonnes in the same period a year ago. Looking into recent fall in the price of soybean and its byproducts, the Solvent Extractors Association of India appealed the central government to revise import duty and base import tariff values of edible oil. SEA is also seeking lift on ban on export of edible oil in bulk. Pivot table Jul NCDEX Aug Sep Spot price Date Ex Factory Indore Spot Indore Refined Degum Spot Ex-Mumbai Crude Ready Mumbai Solvent Crude Indore CIF Mumbai Degum ($/Tonne) 7/9/ /12/ /13/ /14/ /15/ /16/

4 5/15/21 5/21/21 5/27/21 6/2/21 6/8/21 6/19/21 6/25/21 7/1/21 7/7/21 7/13/21 RM seed The mustard seed futures traded on a positive note last week tracking firm soy market and based on strong fundamental. Traders and investors bought futures anticipating revival in demand for mustard oil in coming day. Declining stock and strong crushing demand supported the price rise. Spot price showed a positive note on lower supply and strong demand. Market reacted very positively to drop in edible oil import data released for the month of June. There was rolling over of positions from July to next available contract. The rise in open interest in far month contracts as compared to July contract is an indication of rolling over of positions. NCDEX futures NCDEX (Rs/2 Kg) Jul Aug Sep Derivatives 12, 1, 8, 6, 4, 2, PVO Analysis - RM Seed RM Seed Basis -14 Open Interest Volume Price -16 The mustard seed futures are expected to trade on a positive note during the week ahead. Strong buying interest and declining stock level is likely to support the prices. Last year s lower production is one of the factors. It is expected that edible oil import in July would remain lower due to higher international price. Rising import parity will also support the price. The stock is estimated at 5 lakh tonnes against 6 lakh tonnes estimated at the beginning of June month. The NCDEX designated warehouses are having a stock of 96,74 tonnes as on 17 th July 21. Spot markets are witnessing average daily arrivals of 9, bags against the demand for 1.4 lakh bags. Traders and investors are likely to buy futures anticipating revival in demand for the produce. Declining stock levels and strong demand from crushers is likely to push up the prices. Pivot Table RM Seed Jul-1 Aug-1 Sep-1 Jul-1 Aug Sep Jul Aug Sep

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