After witnessing a long bearish phase, finally soybean prices recovered during July month. NCDEX futures market prices increased nearly 8­10 % during this period.

In fact, till last month, it was the general opinion that world oilseeds market would witness further fall in prices due to comfortable supply as Brazil, Argentina and US which are the major soybean producers harvested a bumper crop this year.

Prices too followed more or less weak trend till June end. In India, June July is the period when monsoon is active and kharif crops are sown. Market participants keep close eye on monsoon progress. Till July end, country experienced deficit rain fall. Soybean which is a kharif crop is mainly grown in Madhya Pradesh and Maharashtra region.

Baring some initial few rains, the vast part of the soybean growing area of Madhya Pradesh is still waiting for rains. The delay in monsoon brought back bulls in the fight and suddenly from the second week of July, prices started rising as market added risk premium to it.

Till 16th July soybean was sown at 61.1 lakh ha as compared to 60.31 lakh ha same period last year. Hot weather and less rains directly means moisture stress in the standing crop and further delay in sowing where farmers have yet not started it. All these things may finally result in possible production loss.

Thus on domestic front, this is the main reason why prices suddenly rose despite the fact that large amount of carry over stock is there in the market. On international front also, US soybean new crop is standing in the fields and there are some concerns regarding long term weather.

Please note that August is a very crucial month for soybean growth in US. Thus international market too turned positive which in turn added to the bullish undertone of Indian market. Currently there is good domestic as well as export demand of Soy DOC which is supporting the market prices.

It appears that a lot will depend upon further progress of monsoon in India. If sufficient rains are seen during August, then prices may remains stable on current levels or even may witness some weakness otherwise more upside would be seen which may continue till early September. A vary cautious trade is advised in this period.

Courtesy: Religare Commodities

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