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Soybean Update

posted Feb 24, 2011, 7:14 PM by NAVYUG Info
Soybean has been on an bearish trend in the last couple of weeks on extended selling pressure. Domestic traders and investors advanced their selling on expectation of further shrink in demand for soybean and its derivatives. The soy meal demand from local trades as well as exporters declined owing to shift in demand from India to Brazil. Declining crush margin also prompted crushers to stay away from active buying. Further the news from the government corridor on likely extension of stock limit on edible oil and oilseeds led to a sharp decline in first part of last week. Indian market moved in line with weak overseas market. 

Moving forward the bearish trend in the soybean market is likely to continue in the week ahead on extended selling pressure. Spot markets are likely to witness subdued trading especially from crushers due to lower crush margin and poor export enquiries. 

Internationally, following commencement of harvesting, the Brazilian traders are offering soybean and its derivatives at lower price compared to other countries. This is resulting into shift in demand to Brazil. The Brazilian soy meal FOB price is quoting below $400 a ton while Indian price as ex-Kandla is $405-410 FAS. According to Safras and Mercado, Brazilian farmers harvested 9% of their 2010 soy crop as on 18th February. The demand from China is likely to slow down following hike in Banks’ Reserve Requirement to control higher inflation. Favourable weather forecast for Argentina might also exert pressure on the market. 

Back home, full-fledged harvesting of Rabi oilseeds is likely to have a bearish impact on the market. Report of Bird Flu outbreak in North Eastern states is likely to dampen the demand for soy meal in India. Also market participants are likely to take cautious approach ahead of General Budget. The Finance Ministry is likely to giver more importance to control food inflation and is likely to announce some measures. In recent years, central government has taken sufficient steps to control the prices. There are possibilities that centre may slash import duty on palm olein, which might have a bearish impact on the market.