Monthly Prices Movement

  • Oilseed complex behaved steady to positive overall throughout the month in major markets of India with Soybean prices moved in the range of Rs.3550-3750 so far.
  • Mustard Seed price is hovering around Rs.4850 from Rs.4550 at the starting of the month, up by 6%.

Government Updates

  • India hiked the Minimum Support Price (MSP), the rate at which the government buys the grain from farmers of Groundnut by Rs.190 per quintal to Rs 4,220, Soybean and Niger Seed by Rs 175 per quintal to Rs 2775 and Rs 3825 each.
  • MSP of Sunflower seed has been hiked by Rs 150 per quintal to Rs 3950 and Sesame support price has been increased by Rs 300 per quintal to Rs 5000 for this year.
  • Agriculture ministry data stated that Oilseed acreage sharply down by 74.97% at 0.70 million hectares with Soybean sowing as on June 24 reported lower by 86% at 0.281 lakh hectares.
  • Groundnut sowing is reported lower by 52.57% as on June 24.

Ground Report

  • Soybean Processors Association of India is estimating Soybean production to be lower by 6.36 per cent at 6.93 million tons than earlier estimate of 7.4 million tonnes in Kharif season, resulting to higher Edible Oil imports and lower Soy Meal exports.
  • Maharashtra and Madhya Pradesh are the major Soybean producers of India and contribute over 80% of the total production. This year, Maharashtra has registered fall in production by 17% due to drought like situation and it is expected to be 2.2 million tonne while MP's Dewas, excessive rain has destroyed crop. According to the revised numbers, there is no change in production of Madhya Pradesh at 3.41 million tonne. It accounts for 53% of India's total Soybean production.
  • This Kharif season, Soybean farmers are likely to face a shortage of certified seeds as production of breeder seeds has been affected over the last three years owing to drought conditions, industry group Soybean Processors Association of India (SOPA) noted.
  • Total requirement of Soybean Seeds for Kharif is usually pegged at 0.34 million tonnes, whereas the availability is estimated at 0.27 million tonnes every year. During the last Kharif season, Soybean was sown in an area of 11.07 million hectares.
  • The area under Guar Seed production in India, the biggest producer of the tiny seed used to extract shale gas in fracturing could drop 20 percent in the coming sowing season due to falling global oil prices. Guar Seed prices have fallen to the lowest level in five years after the US shale gas producers cut Guar Gum purchases due to lower oil prices.
  • India, which produces 80 percent of the world's Guar Gum, saw exports from April to February fall 48 percent to 329,070 tonnes from a year ago. US is the biggest importer of Indian Guar Gum. More than half of India's Guar Gum processing plants are now closed and nearly half of the Guar Gum from last year's crop remains unsold.
  • SEA release stated that India's Oil Meal exports during May 2016 dropped significantly by 94 per cent at only 7737 tonnes. Soy Meal exports during May 2016 dropped drastically by 93 per cent to 1015 tonnes.
  • Oil World stated that India Soybean Meal demand likely to improve in July-August as the price gap with Argentina has reduced to 29 Dollars per tonne against 159 Dollars on June 16. Soybean Meal export may recover to 20000-30000 tonnes during June-July against 2000-3000 tonnes in March-May period.
  • Oil World in its latest report estimates India's Soybean output at 8-9 million tonnes while USDA projected 11.7 million tonnes earlier this month.

Global

  • Brazil's Soybean industry group Abiove has projected this year's harvest at a record 98.6 million tonnes and exports in 2016 at a record 55.3 million tonnes. Brazil had exported 10.1 million tonnes of Soybean in April which is 20% more from March and more than 50% from one year ago. Between February and April, the first three months of Brazil's local marketing year (Feb-Jan), the country has shipped more than 20 million tonnes of Soybeans, well above last year's 13 million tonnes making it the leading Soybean exporter.
  • The Brazilian Association of Vegetable Oil Industries (ABIOVE) reduced Brazil's 2016 Soybean production estimate to 97.3 million tonnes from 97.9 million tonnes.
  • Argentine farmers harvested 86.7% of land planted with Soybeans this season, adding 8 percentage points during the week whereas USDA lowered 2016-17 world Soybean ending stocks to 66.3 million tonnes. USDA raised its forecast of 2015-16 US Soybean export by 544,000 tonnes to 51.3 million.
  • Argentina lost around 3.7 to 4 million tonnes of Soybeans due to floods and another 1 million tonnes suffered quality damage. Argentina Soybean production is expected to fall by 6.18% to 57.6 million tonnes.
  • Soybean production in China forecast to rise to 12.5 million tonnes in 2016-17. China's Soybean imports forecast to hit another record at 85 million tonnes in 2016-17.
  • Ukraine completed the 2016 Sunflower sowing, seeding a total of 5.3 million hectares, 15 percent more than a year earlier.
  • Ukraine produced 3,48,000 metric tons of Sunflower Oil in April this year, against 3,46,000 metric tons in March and 2,98,000 metric tons April last year, an increase of 0.5 % and 16.8% respectively, a release from State Statistics Service of Ukraine revealed.
  • The International Grains Council (IGC) forecast world Rapeseed inventories to a 13-year low of 3.7 million tonnes whereas USDA stated global Rapeseed production forecast to decline in 2016/17 to 66.15 million tonnes compared to last year. Lower sown area for Mustard Seed reported in Canada, Ukraine, the EU, and China.
  • The Australian Oilseed Federation expects Australia's Canola harvest at 3.39 million tonnes.
  • Canadian ministry estimated a 4% drop in Canola sowing this year with the expectation of a 1.8 million ton drop in output to 15.4 million tons. Canada's Canola prices to hit four-year high on tight supplies and bad weather may cause concern over production in coming season.

Outlook

  • Soybean prices further are likely to remain strong on concerns about weather conditions in the US impacting yield as well as lower production in Argentina and some parts of Brazil. Higher Chinese demand from its animal feed industry will also provide support.
  • There is a little apprehension that Soybean and other Kharif Oilseed production may be less this year as two successive droughts may force farmers to shift to Pulses. Last year, farmers faced a dry spell during the Soybean sowing season, which was followed by heavy rains during the harvesting period between September and October.
  • Farmers are still worried about the late rains. That is why some may shift from Soybean to some other Kharif crop this year. This year, farmers are aiming to increase the Soybean yield by at least 20% for a better crop size. Generally, per hectare production is 980-1,000 tonne.
  • A drop in Soybean acreage almost certain for the 2016-17 season, although it is not clear to what extent the crop may be affected at this point.
  • Experts, believe that MSP rise will not even cover the cost of inflation farmers have been facing since the last year and termed it as cosmetic. It does not even compensate increase in labour cost of farmers, which has increased by around 15% to 20% because of deficient rainfall in the last two years. But it is likely to act as a booster for Pulses and Oil Seed sector for farmers to increase acreage and invest for increase in productivity. Hike in MSP is a welcome step.
  • Mustard Seed arrivals are low compared to peak season and may dry up in the next 15 days. Production was on the lower side last year due to shortage of water hence arrivals have been affected.
  • Mills forecast Mustard crop likely around 5.2-5.3 million tonnes from earlier estimates of 5.8 million tonnes (SEA). Whereas, traders in spot markets are expecting production anywhere between 4.2-4.8 million tonnes.
  • Only farmers and rural traders have stocks of Mustard Seed at present and they are waiting for price hike to liquidate their stocks. However, Mustard Seed prices may come under pressure between July and August amid better Monsoon rains when farmers will increase their selling.
  • Currently Mustard Seed prices are moving in the range of Rs.4600-4800 per quintal which is likely to go as high as Rs.5100-5200 in the days to come. The market will see a positive trend around August onwards. Demand will shift from steady to high with minimal arrival which will push up the prices.
  • Mustard Seed stocks on the National Commodity & Derivatives Exchange Ltd (NCDEX) warehouses as on June 20, 2016 was totaled at 52125 tonnes, up from 51772 tonnes in the previous session, but sharply down from 63301 tonnes same period a year ago. Mustard stocks were around 82655 tonnes as on June 19, 2014. The lower stock of Mustard seed stocks at the exchange warehouses also reflecting that crop may be lower this year compared to last year and that pay push up prices in near future.

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