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Oilseed Meal- August Wrap up

posted Aug 31, 2010, 5:28 AM by Unknown user   [ updated Oct 3, 2010, 1:17 AM ]
Soybean prices were tight in August. As per Solvent Extractors Association of India data, soy meal exports from India stood at 1.66 lakh tonnes during July 2010 against 0.98 lakh tonnes in previous month and 0.58 lakh tonnes in July 2009. Total edible oil meal exports estimated at 2.41 lakh tonnes in July 2010, increased by 38.7 percent from same month of last year and 50 percent from previous month. This robust increase in exports supported rally in prices in the first two weeks of August. An increasing export demand for Indian soy meal is prompting crushers to buying soybeans from the spot market The crush margin is improving due to strong export demand for meal. Lower acreage under kharif soy bean is also supporting bullish sentiment sin edible oil seed complex. Domestic Kharif oilseeds area covered 129.49 lakh hectares tillAugust 05, 2010 against 123.88 lakh hectare during corresponding period a year ago. But the area under Soybean is reported at 89.72 lakh hectares against 93.68 lakh hectare. An increasing demand for edible oil ahead of festive season is also likely to support further rise in the prices. At global markets, firmness in wheat prices due to temporary suspension of exports from Russia is also positive impact on other commodities including soy bean. The CBOT soybean futures rebounded from some weakness on emergence of fresh buying and on strong export demand from China. .Reports of Sudden Death Syndrome disease in Iowa region of US acted as booster for the market. But, sharp gains may not be seen as the underlying fundamental factors are still bearish for the market. Forecast to bumper soybean production in India due to improved yield level is likely to weigh on the market. Beneficial rainfall across soybean growing areas of India is likely to improve the yield of the crop. Thus, in the short term, soybean prices are expected to trade slightly higher on firm overseas market. However, for the long term, prices are expected to trade lower due to fresh arrivals in Maharashtra and favorable weather for crop in Madhya Pradesh, which is a major producing state of soybean (it contributes more than 50% of total production).

Recovery in soy market is likely to support the rapeseed meal. Strong oil meal export demand and depleting stock level in spot market is another supporting factor. The exchange warehouse stocks declined marginally compared to last week indicating good demand in the physical market. Also as indicated in last months post, the production levels are also low this year as compared to last. Globally also the markets are bit tight due to the same reason as that of soy meal. However, in the long term perspective, it is expected to trade lower on account of higher global oilseeds output and huge import of edible oils may provide support to bears. Favorable local weather in the major producing areas of Rajasthan & Madhya Pradesh are also in support of long term bears. 

Maize sustained its higher levels on the back of good local demand and export demand particularly from Bangladesh. Also the arrivals are reducing in the monsoon season and stock levels dwindling until fresh arrivals comes from Orissa & Karnataka in October. However, higher acreage of maize is likely to cap the gains. According to latest sowing data, maize acreage rose 4.5% to 67.97 lakh hectares as on 5th August against 65.05 lakh hectares in the same period last year. Hence in the near term, maize may still see some upside, but in the long term (Mid-October onwards) prices should undergo correction on the back of good crop prospects.