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Corn & Soybean-September Wrap Up

posted Oct 4, 2010, 9:29 AM by Unknown user   [ updated Oct 7, 2010, 10:00 AM ]
Corn did experience some upside especially Bihar crop on the back of strong demand from Bangladesh. Also there was good export demand from South East Asian countries for November-December shipments. As much as 1.5 lakh tonners of forward contracts have already been booked. There was also rains in Karnataka & Maharashtra which will cause a delay in arrival. On the international front, US harvest is 18% complete but the yields is expected to decrease to 155bushels/acre from the current 160bushels/acre. The Russian ban on wheat and drought also continue effecting the prices. All these factors led to some firmness in the prices. However arrivals have started coming in Nizamabad & would do so soon in Karimnagar. South West monsoon has receded from most states except Karnataka as mentioned above. The moisture content has also come down from 16.5% to 15%. Starch prices are also coming down following the lackluster demand from the ice cream industry with the onset of slight winters. Acreage as on 1st October stood near 7.58 million ha against 7.09 mil ha last year, which is higher by 7%. Hence with heavy crop arrival prospects in the coming 4 weeks from AP, Karnataka, Maharashtra & Orissa, corn now looks to be turning back to the downside. 

Soybean experienced some upside for most of the last month due to overseas demand and lower stocks, as predicted in our last post. However towards the end of the month some weakness was seen due to reduced offtake in the physical market at higher prices. The global market weakness due to end of month position sqauring also supported the decline. The production estimates for the new season are bumper and this is pressurizing the prices. Th
e Soybean Processors Association of India has estimated 2010-11 soybean crops at 10.13 million tons as against 8.5 million tons last year. Better than expected monsoon rainfall in India brightened the prospects of soybean output. The soybean yield is likely to rise to 1,089 kilograms per hectare in 2010 from 1,006 kg/hectare last year, the trade body said. Carry over stocks for the new season starting from 1st October is likely to be around 1 million tons. India’s soymeal exports are also expected to increase by 10.15 lakh tonne to touch 34 lakh tonne next year on the back of higher oilseeds production. However demand from China looks to be good as freezing weather hurts crops, likely dry spell in Brazil, Argentina due to La Nina phenomenon to hurt upcoming plantings. Also it is predicted that shipments to neighboring countries like Bangladesh, Paskistan & Sri Lanka are expected to jump to 4 million tons starting from Oct 1 in the new season. Traders have already signed contracts for 150,000 tons to 200,000 tons with buyers in Vietnam and South Korea for delivery in the quarter ending December. Overall, near term trend is likely to remain bearish as fresh soybean arrivals will pick up from next week. For long term, much will depend on the international demand which looks good at present.