07 August, Monthly Report On. Oilseeds. August 2017

Transcription

1 Monthly Report On Oilseeds August August, 2017

2 Domestic : Soybean (NCDEX) Forward Curve of Soybean Futures (NCDEX) Historic return of Soybean futures (NCDEX) in the month of August % % % -5% -1.67% -1.43% -0.46% % -7.72% -8.43% Aug Oct Nov Dec Jan Feb -15% Source: NCDEX Closing as on 4th August, Soybean futures (October) may consolidate in the range of levels, with upside getting capped. Soybean prices in the spot markets during the week ending 5th August aded steady and closed flat at Rs 2,950/100kg compared to week ago. With the start of the month soybean prices slowly started moving up on buying interest by crushers, however selloff on CBOT in soybean futures changed the Indian market sentiment. Soybean buying in the Indian markets has been slow, due to the lower offtake of Meal in the domestic & International markets, keeping crushers on the sidelines from big purchases. Soybean crop has entered the flowering stage in the key soybean growing areas of Madhya Pradesh and Maharashtra. Reports from the fields suggest that soybean crop condition in Madhya Pradesh is average and soil moisture is also good. However, in Maharashtra in Parbhani, Akola, and Amravati districts the rainfall from June to till date is deficit by around 2-31% leading to less moisture in the soil. Rains are needed in 2-3 days for proper growth of the soybean crop and weather forecasts suggest no substantial rain in these areas in next week which may increase the stress. Farmer s foresee that if rains do not occur in next 2-3 days then around 25% of the crop will damage, mainly in late sown soybean crop as they are very weak. Also, soy bean crop acreage in has declined compared to season due to shift in farmer s interest amid sharp slump in prices. The drop in acreage was sharp in Madhya Pradesh, Rajasthan, Maharashtra and Telengana as poor realization prompted farmers to shift to other better alternative. Soybean planting reached lakh ha as of August 3 compared to same period last year at lakh ha according to Ministry of Agriculture. Soybean planting has declined by percent over last year. Demand for soy meal from poultry farmers is gradually increasing as they have increased the placement of chicks but the international demand for Indian soymeal is weak which is weighing on soymeal prices. Most active CBOT soymeal December futures have declined by 3.84 percent to trade at $ Indian Soymeal is priced at $412 per tonne FAS Kandla Vs $353 Argentina CIF Rotterdam (August) as of August 5, The difference between the two origin is $59 per tonne increased by $18 compared to a week ago. Indian soymeal is trading at a premium of $59 compared to Argentine soymeal keeping the buyers on the sideline. Indian soymeal premium has also increased due to appreciation of rupee by 0.70 percent to close at during the week which makes the commodity expensive for overseas buyer. 2

3 Soybean (CBOT) Forward Curve of U.S Soybean futures (COBT) Historic return of U.S Soybean futures (CBOT) in the month of August 1, % % 4% 2% -2% -4% -6% -4.23% 2.53% 3.64% % % -7.02% Aug Sept Nov Jan Mar May -12% % Source: COBOT Closing as on 4th August, U.S soybean futures (Nov) may trade sideways in the range of $ a bushel. After 4 weeks of adding to their net longs, specs reversed in the week ending August 1. They trimmed their position 11,090 contracts to a net long position of 39,795 contracts in soybean futures and options. A Bloomberg survey shows the trade expecting USDA to cut new crop ending stocks to 433 mbu from 460 million. Analysts are projecting US soybean production will drop 56.9 mbu to bbu, on a yield of 47.4 bpa. Brazil s soy oil group Abiove raised their 16/17 soybean production estimate 600,000 MT to MMT for the country. They also increased Brazil s export projection 1 MMT to 64 MMT. Soybean prices have been pressured by forecasts of showers in Iowa and Minnesota, the No.2 and No.3 soy-producing states in the United States. Soybeans this month are setting pods, the key age for determining yields. The full impact of a hot and dry summer in the U.S. Midwest is unlikely to show up in the government's next estimate of the U.S. corn crop as it typically makes just small adjustments to harvest outlook during August. The USDA will update its yield projection in its monthly supply and demand report on Aug. 10. The forecast will be closely watched as it will be the first harvest outlook for the 2017/18 marketing year that includes data from field surveys. 3

4 Mustard: Forward Curve of Mustard futures (NCDEX) Historic return of RM Seed in the month of August 3, % % 3, , , , % 6% 4% 4.05% 3, , , , , % -2% -4% 1.52% -0.24% 0.75% 3, % 3, Aug Sep Oct Nov Dec -8% % Source: NCDEX Closing as on 4th August, Mustard futures (September) may trade with an upside bias in the range of levels. Mustard seed prices during last week made a 3 month high of Rs 3885/100kg, giving a lower close for the week at Rs 3865/100 Kg. Arrivals increased as farmers liquidated mustard seed in higher quantities ahead of the Raksha Bandhan festival. Crushers too, were active buyers amid good sales of oil. However, weakness in soybean and oil complex dragged the Mustard seed prices. According to market sources, in coming days mustard seed prices are unlikley to fall sharply on farmers reluctance to sell mustard seed at lower price level and onset of festival season along with winters will support the demand for Mustard Oil. Arrival of mustard seed decreased by percent in July month to 4.10 lakh tonnes compared to June month due to restricted farmer selling. stard seed crushing in the country during the July month decreased by 2.6 at 5.60 lakh tonnes against 5.75 lakh tonnes in June month. Mustard oil is majorly consumed in northern and eastern parts of India as it helps to keep the body warm during winter season. The only factor worrying for the traders is the premium of mustard oil to soy oil which is ruling at Rs 13/kg, which if widens to Rs 15-18/kg then consumers may shift to soy oil. Mustard oil cake price declined by Rs 30 during the week to trade at Rs 1,575/100kg amid low demand from cattle feed Industry. Premium of cotton oil cake to mustard oil cake has dropped to Rs 10/100kg which was Rs 150 on 1st July inducing the Cattle feed Industry to shift to Cotton oil cake. 4

5 Edible oil complex (Domestic ) Forward Curve of Refined Soy oil futures (NCDEX) Historic return of Soybean Oil futures (NCDEX) in the month of August % 7.86% Aug Sep Oct Nov Dec Jan Feb Mar 6% 4% 2% -2% -4% -6% -8% -1-12% 2.01% 0.81% -0.17% -0.99% -0.79% -9.75% Source: NCDEX Closing as on 4th August, CPO futures (August) may consolidate for the fifth consecutive week & trade with a downside bias in the range of levels. In domestic market, traders opted to do the need based buying, on anticipation of price declining in coming weeks. Edible oil availability at the various ports in India is sufficient to meet the demand. Meanwhile, RBD palmolein prices dropped USD 20 to trade at 665/tonne percent at Kandla port in dollar terms (CIF) last week, while declined by Rs 10 to trade at Rs 525/10kg in rupee term. RBD palmolein traded weak during last week tracking bearish cues of Malaysian Palm Oil Futures which closed 2.90 percent lower amid improving production of palm oil in Malaysia and Indonesia. Outlook for RBD palmolein is seen dismal as South Peninsula Palm oil Millers Association (SPPOMA) have estimated palm oil output recovering by 41 percent for July month during same period of the last year. Indonesia palm oil production is estimated to reach million tons in the marketing year , which runs from October 2017 to November 2018, from 34 million tons in underpinned by benign weather conditions, according to USDA Jakarta bureau. Bureau also increased Indonesia palm export Ae to million tons in , just 1.0 million tons higher than the USDA's official estimate. On biodiesel the report notes industrial consumption is estimated to be up to 3.70 million tons, following Ministry of Energy and Mineral Resources (MEMR) data which showed biodiesel production increasing. U industrial biodiesel consumption was estimated at 3.80 million tons, up from 3.70 million tons in Further, market is waiting the Malaysia palm oil export data of Aug 1-10 period and MPOB palm oil supply and demand report which will be released on August 10. Refined soy oil futures (September) may trade sideways to down in the range of levels. A bearish trend followed in refined soy oil too, in benchmark Indore market of Madhya Pradesh on account of poor demand coupled with weak cues of CBOT soy oil futures and declined by Rs 10 to trade at Rs 634/10kg during last week. CBOT Soyoil December futures declined by 3.66 percent to trade at cents per pound during last week. The weakness in CBOT soyoil futures and Palm oil markets drove the bearish trend in the Indian markets, keeping the buyers away from any bulk trades. Further, the appreciation of rupee will also impact the prices of imported soyoil in the near term. Soy oil prices were lower by USD 10 to trade at 804 per tonne in dollar terms (CNF) at Kandla port and gained by Rs 7 to trade at Rs 583/10kg due to rupee impact. 5

6 Edible oil complex (International market fundamentals) Forward curve of U.S Soybean Oil Futures Historic return of Soybean Oil futures (CBOT) in the month of August % 5.18% 7.33% 4.02% 6.96% % -0.75% -6.88% % Aug Sept Oct Dec Jan Mar -15% Source: CBOT Closing as on 4th August, CPO futures (October) may trade sideways in the range of levels with upside getting capped. Ref. soy oil (December) may trade in the range of cents/lb levels. Malaysian palm oil futures dropped last week after hitting a four-month high, as weighed down by expectations of rising production in coming months and tracking weaker performances in related edible oils. Inventories and output for July are expected to rise in line with the seasonal trend. Production gains in the east Malaysian state of Sabah, the country's largest producing region, is seen rebounding the most on a post-el Nino recovery compared with other states. According to a Reuters poll, reports from industry regulator Malaysia Palm Oil Board (MPOB) will be released on coming 10th August. Malaysian palm oil stockpiles are expected to grow in July for the first time in three months as production gains outpaced export demand. Palm stocks at the end of July stood at 1.63 million tonnes, a 6.5-percent rise from the previous month, according to Reuters. That would be the highest volume so far this year, but the lowest July level since Inventory levels in the third quarter of the year typically hover around the 2 million tonne mark. Meanwhile, July production was forecast to have reached 1.68 million tonnes, up 11 percent from the previous month and the strongest monthly gain since March. The survey also showed July's palm exports rose 4 percent to 1.43 million tonnes in July, led by growing shipments to China and Europe. Analysts and planters say trees are still seeing lingering effects from a strong El Nino weather pattern in 2015 that brought dry weather to the region. Demand for the tropical oil is seen remaining steady in the coming months before picking up ahead of major festivities in October, Diwali in India and China's Mid-Autumn festival. 6

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