The soybean futures on the Indian bourses traded on a positive note during initial hours of yesterday’s trading session on account of short covering and taking cues from firm overseas market.

Investors and traders liquidated their positions expecting some change in USDA’s monthly crop report. However, in latter part of the day prices resumed its downtrend on fresh selling backed by weak demand in the local market.

Most of the South East Asian countries are shifting to South America to meet their soy meal requirement resulting into poor export demand for India. Spot market remained subdued with limited participation especially from the crushers.

The most active April contract soybean futures on NCDEX traded in a broad range of 2005-2041 levels and settled at 2010.50 levels, declining by 0.59%.

Outlook

The soybean futures are projected to trade on a positive note during the day on account of short covering and taking cues from firm overseas market

Investors and traders are likely to cover their short positions anticipating recovery in the price Since the prices are in oversold zone, we may see smart recovery in the prices

However, fundamental factors are still weak for the market, hence, it may limit the sharp gains Indian oil meal exporters are not getting enough export orders for soy meal because of shift in demand to South American countries as the harvesting of the crop has been started

Crushers are not actively buying soybeans from the spot market because of disparity between soybean and its end products

According to trade sources, around 40-45% of the crop has been crushed so far

Availability of imported oil at lower rate is also weighing on the soybean and its derivatives market

The spot price is quoting at Rs.2000-2010 per quintal for mandi delivery and Rs.2060-2070 per quintal for plant delivery with arrivals reported at 20,000 bags across Madhya Pradesh

Ex-Kandla soy meal price is quoting at Rs.17600-17700 per tonne while FAS-Kandla price is quoting at $385-386 per tonne

The open interest in most active April contract increased by 6.87% to 139730 tonnes and volume surged by 67.79% to 76380 tonnes

The CBOT soybean futures staged a strong rally yesterday taking cues from the sharp gains in the crude oil market

Talks of new import enquiries by China from the US also supported the bullish trend

In its March month World Agriculture Supply and Demand Estimates Report, the USDA lowered the US soybean production estimates by 20 million bushels to 3.359 billion bushels

Ending stocks of US for 2009-10 lowered by 20 million bushels to 190 million bushels

Global soybean production forecast raised to 255.9 million tonnes, up 0.9 million tonne

Output for Brazil raised by 1 million tonne to 67 million tonnes based on higher acreage and good yield level

The May contract CBOT soybean futures made an intraday high of $9.64 ¼ per bushel from a low of $9.41 ¾ per bushel and settled at $9.58 per bushel, up by 1.10%

Courtesy: Karvy Commtrade Ltd.

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