Daily Indian Oil and Oilseed Complex Price Outlook and Strategy Decision enabling market analysis & price outlook For Dec 31, 2013 Fundamental Price drivers Subdued soybean arrivals in the physical market Limited buying enquiries over edible oil complex Higher Y o Y rabi season sowing pace Commencement of soybean harvest across Brazil Impact Marginally Bullish Consolidation Marginally Bearish Marginally Bearish Fundamental Review and Analysis Indian oil & oil seed prices edged lower in the wake of weak international soy and palm oil market coupled with little buying enquiries for soy oil at domestic front. However, steady to lower arrivals of bean in the physical market has limited the aggressive fall during the week under review. Soybean arrivals at the domestic market continue to remain subdued due to restrained selling by the farmers. In this context, still the arrivals are nearly 50% lower than the last year with soybean arrivals of around1.5 2.0 lakh bags nation wide. Hence, nation wide lower arrivals is continuing to keep the soybean prices intact. Meanwhile, very limited enquiries are made by the processors regarding the soy oil. However, as the crush remains lower during the month of Dec it is likely that the supplies will dried up and will support the prices in the coming days. Further, soy oil imports is likely to remain on lower side during the month of Dec 13 which will further weigh the soy oil supplies. Indian rabi sowing of various oil seed crop has reached to 81.42 lakh ha by 26 th Dec 13 vis à vis 77.72 lakh ha for the same period last year. In this context, major rise in sowing is witnessed in rapeseed and mustard which has reached to 68.86 lakh ha vis à vis 64.48 lakh ha last yaer which is higher by 4.38 lakh ha. Moving ahead, in the major rapeseed and mustard sowing stated major increment is witnessed in Rajasthan where the mustard sowinh has increased by 9.28% i.e at 30.25 lakh ha vis à vis 27.68 lakh ha for 2012/13. Thus, higher acreage of mustard and rapeseed will weigh the prices of rapeseed at immediate front and will add bearishness to the market sentiment. International soy oil remained weak in the wake of approaching harvest at the South American front. In this context, soybean harvest has commenced in the Mato Grosso region of Brazil in this week which is likely to weigh the soybean prices at international front. Further, it is likely that Jan WASDE might revise the Brazil soybean production to 89 90 million tons from current level of 88 million tons. Beans from Mato Grosso account for about one third of Brazil's crop, which is expected to be an all time record of around 90 million tons in the 2013/14 season. That could be more than the United States produces for the first time. Hence, such a huge production across the Brazil will turn the Chinese demand from US to South America at immediate front and in turn will pressurize the prices. However, weather models has forecasted some recent rainfall in the Brazil which might arrest the harvest progress to certain extent. At the Argentina front, weather is likely to ease in the recent week while it will again become dry from the 2 nd week of Jan onwards. In this context, Argentina soybean sowing stood at 83.2% vis à vis 80.1% last year. 17 million ha is already planted this year and the same would open possibilites of very larger crop towards 54 55 million ton in the wake of conducive weather supporting yields. Thus, weather is likely to guide the market sentiment at the immediate front. USDA reported export inspections of U.S. soybeans in the latest week at 43.182 million bushels, below trade estimates for 45 million to 55 million. USDA reported sales of 35,000 tonnes of U.S. soybean oil to unknown destinations for delivery in 2013/14. Hence, lower export inspection is an clear indication of lacking demand of US soybean. Cumulative soybean booking across US has reached to 39.77 million tons against the export target of 40.14 million tons. Thus, approximately 99% of the total export target has already been achieved while the shipment pace is running behind the schedule with 55% completion vis à vis 66% for the same period last year. However, shipment pace remain on higher side in term of absoulte number i.e at 22.01 million tons vis à vis 19.96 million tons for the same period last year. At the international plam front, malaysia is witnessing huge floods and the same might bring down the production for Dec 13. Though production in Dec 13 remain seasonally lower, these floods in the last few Discuss with our expert Phone: +91 40 33404040 1 E mail: services@transgraph.com Internet: www.transgraph.com
weeks could keep the production decline higher than the anticipations and thus might bring the stock number down to 1.80 1.85 million ton. On the whole, short term momentum is expected to remain on a sideways to positive note in indian oil & oilseed prices due to robust fundamental of palm & emerging dryness in Argentina giving support to prices at both international & domestic front. Collating all the factors, Indian edible oils and oilseed prices to trade on a sideways to positive note in the coming sessions Technical Analysis NCDEX Soy oil Futures Jan 14 Futures INR 693.60 (+0.65) per 10 Kg as on Dec 30, 2013 Technical NCDEX Soy oil prices are trading on sideways note in the last three sessions and closed above 10 day EMA on Monday. On the technical setup Stochastic (14/3/3) is turning flat after rising from oversold territory, exhibiting mixed bias. On the downside prices has immediate support near recent swing low of INR 683 followed by INR 680. On the higher side prices has immediate resistance near INR 705 followed by INR 715.00 Strategy Review Trading Strategy Prices are likely to hold above INR 680 on any minor dips and trade on mixed note within INR 685 to INR 705 ahead of turning positive in the coming 3 5 sessions. 685 705 685 710 For fresh positions wait for a while. Filled on Position Entry Objective Stop Loss Wait Performance Audit NCDEX Soy oil Futures FY 2012 13 Sep 13 Strike Rate % 82.76 % 75.00 % Net profit / Gross profit Ratio % 87.49% 75.00 % 2
MCX CPO Futures Jan 14 Futures INR 549.60 (+2.40) per 10 Kg. on Dec 30, 2013 Technical MCX CPO prices after finding resistance near falling trend line are trading on sideways note in the last three sessions while holding below its 10 and 20 day EMA. On the daily technical setup stochastic (8/3/3) is hovering flat in oversold zone. On the higher side prices has immediate resistance near INR 558 followed by INR 560. On the downside prices has immediate support near INR 545 followed by INR 540. Strategy Review Trading Strategy Prices are likely to hold support above INR 535 and trade on mixed note within INR 540 560 ahead of turning higher in the coming sessions. 545 555 540 560 For fresh positions wait for a while. Filled on Position Entry Objective Stop Loss Wait Performance Audit MCX CPO Futures FY 2012 13 Oct 13 Range honored % 76.56 % 100.00% Net profit / Gross profit Ratio % 87.34 % 100.00% NCDEX Soybean Futures Jan 14 Futures INR 3776.00 ( 13.50) per Qtl. as on Dec 30, 2013 Technical Strategy Review Trading Strategy Soybean prices are traded on a choppy note during last session, which formed candle like Doji, reflecting indecisive characteristics of the market sentiment. Prices are holding below its 13 day EMA. On the daily technical setup Stochastic (5/3/3) turned flat in oversold territory, exhibiting underlying weakness in prices. On the up side prices shall find immediate resistance near INR 3865, followed by swing high near INR 3921. On the downside prices has immediate support near INR 3750 followed by INR 3720. Prices on any pullback are likely to find support above INR 3750 and trade on sideways to mixed note, in the coming 5 8 sessions. 3750 3850 3720 3950 Traders may consider exiting from suggested Long position at INR 3837 (avg) on 26 Dec 13 at cost price, keeping stop loss below INR 3750. For fresh position traders may wait for a while. Filled on Position Entry Objective Stop Loss Wait Performance Audit NCDEX Soybean Futures FY 2012 13 Oct 13 3
Range honored % 86.11 % 75.00 % Net profit / Gross profit Ratio % 61.80 % 97.79 % Soy Meal FOR Kandla, INR/MT Last closing INR 35300 (00) per MT as on Dec 28, 2013 Technical Soymeal prices are trading in a very tepid note from last one month. In the session under review prices dropped by INR 400 and settled at INR 35300, above its 9 pd EMA. Momentum oscillators are poised above equilibrium level and moving flat exhibiting neutral bias. On the higher side multiple resistances placed between 36200 to 37000. On the downside prices has immediate support near INR 34500 followed by INR 34000. Prices upon holding above INR 34500 are likely to stay with mixed bias in the range of INR 34500 to INR 37000, in the coming 6 8 sessions. 36500 35000 37000 34500 NCDEX Rapeseed Futures Jan 14 Futures INR 3508.00 ( 21.00) per Qtl. as on Dec 30, 2013 Rapeseed prices post finding resistance from falling trendline, consistently falling from last six trading sessions. In the session under review prices made a low of INR 3495 and lastly settled at INR 3508 with a loss of INR 21; continue to hold below its 10 day EMA. On the technical Technical setup 9 period RSI drifting lower towards deep oversold territory, exhibiting underlying weakness in prices. On the downside prices shall find immediate support near INR 3500 followed by INR 3450. On the higher prices shall find immediate resistance near INR 3560 followed by INR 3600. Strategy Review Trading Strategy Prices on holding below INR 3600 are likely to trade on mixed to weak note, finding support above INR 3500 or tad lower, ahead of witnessing technical rebound, in the coming 4 6 sessions. 3450 3600 3500 3650 For fresh position traders may wait for a while. Filled on Position Entry Objective Stop Loss Wait Performance Audit NCDEX Rapeseed Futures FY 2012 13 Oct 13 Range honored % 84.44 % 100.00 % 4
Net profit / Gross profit Ratio % 84.41 % 100.00 % Soy meal FOR Kandla Volatility RISK PARAMETER Soy meal FOR Kandla AVaR Soybean Future Continuation Volatility Soybean Future Continuation AVaR Soy oil Future Continuation Volatility Soy oil Future Continuation AVaR Rapeseed Future Continuation Volatility Rapeseed Future Continuation AVaR Soybean Indore Volatility Soybean Indore AVaR MCX CPO Future Continuation Volatility MCX CPO Future Continuation AVaR Ref. Soy oil to crude Soy oil price spreads (INR/10 kg) Refining Margin @INR 30/10 kg (Landed @Kandla) Mini Charts CPO import parity (INR/10 kg) Sunflower oil import parity (INR/10 kg) 5
Edible oil prices @ Mumbai (INR/10 kg) Edible oil prices @ Mumbai (INR/10 kg) Palm oil refining margins (FOB Malaysia basis, $/ton) Soy RBD Olein price spread (At origin, $/ton) Sun Soy price spread (FOB Argentina, $/ton) Sun Soy price spread (CNF India, $/ton) Soy Olein price spread (CNF India, $/ton) Soy oil/meal ratio (US) Soy oil/meal ratio (India) Gross soybean crush margins @ US ($/bu) Soybean crush margin @ Indore (INR/ton) Rapeseed stocks @ NCDEX Warehouse (th tons) INR vs. USD MYR vs USD Euro vs. USD 6
$ Index NYMEX Crude ($/barrel) Soy meal Price Spread FAS Kandla Vs. FOB Argentina($/t) Price updates RBD Olein Indicative prices of diff. oils (imported vs. domestic) @ Major consuming markets Delhi Mumbai Nagpur Lucknow Kota Kolkata Hyderabad Kakinada NF NF NA NF NF NF NA Kandla 606 NF 611 611 593 NF 611 JNPT 603 577 596 NF NA NF 598 Kolkata 36 NF NF NA NA 0 NF Soy refined Imported 715 655 690 672 0 Local 664 654 NA 662 NA Comparison of imported vs. local crude soy oil @ Major producing markets Degummed soy Kandla to JNPT to Kandla JNPT Morena Kota Indore Nagpur Pune Khandwa Dhule Landed cost 632 647 639 626 640 622 637 622 632 Spot 635 650 642 629 643 625 640 625 635 Solvent oil local prices NA NA 615 NA NA NA 620 Note: All prices are indicative and exclusive of taxes and might not be quoted in the markets. In the case of consumption markets, domestic soy oil is assumed to be shipped from Indore and in the case of imported oil; the nearest port quote is taken. Ref oil indicative price is arrived by adding INR 30/10 kg to crude oil and INR 15/10 kg to degummed oil. In producing markets, degummed imported oil is converted to crude oil by deducting INR 15/10 kg and nearest port prices are used for different markets. Units: INR/10kg NF Not feasible, NA Not available 30 Dec 2013 Commodity Contract Open High Low Close Change Bean Jan 14 3780 3813 3765 3772.5 17 Feb 14 3762 3768.5 3722 3732 18 Soy Oil Jan 14 692.3 697 692.3 693.45 0.5 Feb 14 683.8 689.2 683.25 684.05 0.85 7
Rapeseed Jan 14 3544 3549 3495 3508 21 Apr 14 3431 3454 3425 3432 1 MCX CPO Jan 14 549 550.5 547.3 549.4 2.2 Feb 14 551.5 554.9 551.5 554 2.6 Units Soybean : INR/Qtl; Soy oil : INR/10 kg; Rapeseed :INR/Qtl; CPO : INR/10 kg; Contract size : 10 MT Oil and oilseed spot prices Commodity & Market 30 Dec 28 Dec Soybean Indore 38880 38785 Soybean Nagpur 36812.5 36500 Cr Soy oil Indore 61500 61000 Ref. Soy oil Indore 66500 66000 Degum oil Kandla 63200 63200 Soy Meal FOR Kandla 35300 35300 Soy meal FAS Kandla ($/ton) 561 561 Rapeseed, Alwar 36615 36640.75 Rapeseed, Jaipur 36500 36500 Refined rapeseed Oil Jaipur 69500 69500 Rapeseed ext Ex Kandla 14900 14900 All units in INR/ton; 8
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