Soybean to decline on weak export demand

Fundamental Analysis

NCDEX Soybean futures fell sharply due to poor export demand of soy meal from global livestock industry. However, prices settled slightly higher towards the end due to profit booking.

As per Agriculture Ministry’s Crop Weather Watch Report, domestic area under soybean is reported higher at 1.14 lakh hectare compared to 1.03 lakh hectare in the corresponding period a year ago.

USDA’s weekly export sales figures considered favorable for soybean, Meal and Oil. Net Sales for soybeans were 250,700 metric tonnes. Sales need to average 17,000 tonnes each week to reach the USDA’s forecast for the current marketing year. Net soy meal sales were 202,100 metric tonnes. Sales need to average 88,000 tonnes each week to reach the USDA’s forecast. Net soy oil sales were 21,600 metric tonnes. Sales need to average 15000 tonnes each week to reach the USDA’s forecast.

Technical Analysis

Prices (NCDEX July Contract) closed lower at Rs.2424.00 per quintal on Tuesday; its high of the day was 2439.00 and touched a low of 2377.00 levels.

Prices closed below its 10 Days & its 20 Days EMA. 14-Days RSI is at 25.22, which is in oversold territory.

Outlook

Soybean prices are expected to trade lower on account of lower export demand of soy-meal from global livestock industry and weakness in overseas market (for short term). For medium term, prices are expected to move northwards on lower stock of soybean and monsoon rains is weak at the start of soybean planting season, which is delaying planting in major producing states.

However, for long term, prices are expected to move southwards owing to higher sowing acreage estimates for this year as compared to last year on account of better realization to farmers as compared to other crops. Globally soybean production is estimated higher as compared to last year may provide support to bears.

Courtesy: Angel Commodities

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