NCDEX Soybean August futures jumped 1% on Thursday on account of short covering by the market participants amid good rains in the soybean producing areas. Open Interest dropped by 1400 tonnes yesterday while price increases. Prices have been trading sideways this week on lower acreage and steady demand. As per government data, area under soybean crop across the country for the 2017-18 kharif was 73.44 lakh hectares till last week, down about 11.7% on year. Last year, the acreage was 83.14 lakh hectares. According to SOPA press release, India’s exports of soymeal rose 56.1% on year to 64,000 tonnes in June. As of June-end, soybean inventories with farmers were at 36 lakh tonnes, over three times the amount a year ago.
CBOT November soybean continues to gain this week on forecast of hot U.S. weather and deteriorating U.S. crop ratings. The USDA on Monday rated 61% of the U.S. soybean crop in good to excellent condition, down from 62% a week earlier and in line with trade expectations.
Mustard Aug futures see some fresh buying on Thursday to close 0.44% higher on expectation of good physical demand in coming weeks. There are reports of sufficient stocks in the country. However, improvement in exports of meal during the first quarter of 2017/18 helped gain 23% in last one month. Meal exports from the country during the first quarter increase to 1.36 lakh tonnes from 60,889 tonnes last year same period. Mustard meal exports in June this year is pegged at 44,074 tonnes, down 21.4% compared to previous month in May. Last year, India exports 43,636 tonnes of meals in June.
According to data compiled by Mustard Oil Producers Association of India, Oil mills in the country crushed 550,000 tn mustard seed in June, 23% lower from the previous month.
As per Agmarknet data, the mustard arrivals during current week (Mon-Thu) are 17,698 tonnes compared to last week’s arrivals of 12,552. Higher stocks level in country is still pressurizing prices.
Mustard prices have been under pressure this season due to record production in 2016/17 and higher imports of Mustard oil during the current oil year started Nov 2016. As per SEA recent data, mustard oil imports for period Nov-May increase 5% to 1.18 lt in 2016/17 from 1.72 lt in the previous year. Moreover, imports increase by 55.7% in May compared to last year imports.
Soybean futures are expected to trade sideways to higher due to lower acreage and expectation of good crushing demand on reports of hike in import duty. However, expectation of revival of monsoon in central India may pressurize prices. Mustard seed futures expected to trade sideways due to steady demand from the industrial buyers as supplies sufficient in the physical market.
MCX CPO closed higher tracking firm palm oil prices in Malaysia. However, higher stock level in the country capped further gains. According to data by the Solvent Extractors’ Association of India, India’s monthly requirement of the commodity is about 17.5 lt, sufficient for about 30 days. Currently, the stocks are at over 22.8 lt, about 39 days requirement.
Moreover, imports of palm oil increase by 35% on Year to 8.2 lakh tonnes compared to 6.1 lt last year. During the first 8 months of current oil year, the imports are higher by 5.7% to 59.21 lt compared to 56 lt last year same period.
Malaysian palm oil surged 2 percent on Thursday, rising to a oneweek high and recovering from a two-week low hit in the previous session, on the back of strength in related edible oils. Cargo surveyor data showing rising export demand and forecasts of stronger demand from China also supported the market.
China is expected to import 450,000 tonnes of palm oil per month in August and September, compared with a forecast of 250,000 tonnes for July, according to a report by the China National Grain and Oils Information Center (CNGOIC). Palm oil shipments from Malaysia, the world’s second largest producer after Indonesia, rose 10.5 percent during July 1-20 compared with a month earlier.
We expect Ref Soy oil to trade sideways to higher due to firm international market. Moreover, expectation of higher import duty and good demand for the edible oil during monsoon season may support prices.
CPO futures may trade sideways due to firm Malaysian prices and reports of increase the import duty of edible oil. However, higher stocks in the physical market may pressurize prices.
MCX Cotton closed higher as market participants initiated fresh buying on concern about excess rains in cotton growing areas in Gujarat. However, good progress in cotton sowing in the country capped further gain. As per latest data from Agricultural Ministry, cotton is planted in 90.1 lakh hectares (l ha) till last week, higher 23% compared to last year acreage of 74 lakh ha for same period. USDA in its latest monthly report increase the production forecast by 1.28 million bales (1 bale = 170 kg).
However, there is fear of decline in yield due to deficient rainfall in major growing areas but higher acreage may keep the production at higher levels.
ICE cotton futures hit one-month highs on Thursday after a positive weekly exports sales report from the U.S. government suggested higher demand for the natural fiber, with prices further supported by a weakening dollar.
The U.S. Department of Agriculture early on Thursday reported net upland sales of 27,200 running bales for 2016/2017 crop year, up noticeably from the previous week. For 2017/2018 net sales of 166,200 were also significantly higher from the previous week.
Cotton futures are expected trade sideways to higher on reports of heavy rains in cotton growing areas of Gujarat coupled with good physical demand in the country. However, sufficient stocks good acreage in the country may keep the prices in a range.
NCDEX Jeera for Aug delivery close lower on Thursday as market participants initiated fresh selling amid weak physical demand at higher prices. However, jeera is still trading at 11 month high.
As per Agmarknet, jeera arrival during first fifteen days of July recorded only 524.5 tonnes compared to 3922 tonnes and 4148 tonnes in previous two fortnights in June. As per the data release by government, jeera exports in April 2017 was 14,599 tonnes, were down 9% from March. n 2016/17, country exports increase by 26% to 1.24 lt in as per the data release by Dept. of commerce, GOI.
NCDEX August Turmeric has seen some fresh buying on Thursday for the first time this week supported by good physical demand from upcountry buyers and stockists. In Telangana, turmeric acreage as on 19-Jul-17, up 90% to 33,000 hectares as compared to last year acreage of 28,000 hectares. The normal acreage is close to 47,000 hectares. Market arrivals dropped about 60% in June compared to May. As per Agmarknet data, about 8,627 tonnes arrived in first 15 days in July compared to 10,703 tonnes in previous fortnight. As per the data release by government, turmeric exports during first four months in 2017 is 42,855 tonnes, up 40.7% compared to last year same period.
We expect Jeera futures expected to trade sideways on expectation of further correction from higher levels. However, tight supplies and good physical as well as export demand may keep the prices higher.
Turmeric futures expected to trade sideways on expectation of improving demand from upcountry buyers at current levels. Moreover, expectations of lower carryover stock this season and yield loss for new crops due to irregular rains in turmeric sowing areas.