Soybean futures remained on loosing spree during last week owing to better crop conditions over South
America. Around 80 mm of rain fall was recorded in these regions which supported crop to recover from dry weather conditions of 10 weeks.
But towards closing CBOT soybean prices erased losses and ended slightly positive by 0.5% as weekly export sales data increased which came on Friday evening. Soybean exports increased to 991.1 tons compared to 433.9 tons compared to previous week.
In domestic markets, demand remained very subdued across major markets which kept the spot prices under pressure. Spot prices decreased to Rs. 2380/quintal from Rs. 2430/quintal during last week. However arrivals remained at 2.5lakh bags all over India.
Meal demand remained subdued across major markets due to absence of fresh export demand. Fast approaching Chinese lunar holidays resulted weak export enquiries. This kept the prices under pressure which resulted in lower crushing margin also towards closing of the week.
Outlook:
Soybean prices are projected to extend the losses initially in the next week owing to the good rains projected over Brazil and Argentina regions.
Around 75-80% of cloud cover is reported by many meteorological agencies over South American which resulted in rains might help recovery in crops in Argentina. While crop is in harvesting stages in Rio Grande do Sul which might be affected if rains are more than expected.
These regions produce 14% of soybean of Brazil and harvests first. Any such heavy rains might help prices to reverse from lower levels. Chinese demand for beans might be lower during next week due to holidays on account of New Year.
IGC has released grains production estimate where global soybean production is still lower at 257 million tons down by 2.2 million tons with major drop attributed from South American regions.
Domestic market buyers might wait watching development of the weather conditions which might keep prices under pressure. Drop in crushing margins and Chinese demand for meal might keep the buyers inactive adding to the drop in prices.
Courtesy: Karvy Commtrade Ltd.
