Monthly Prices Movement

  • Soybean prices traded mixed with more of positive sentiments in the Indian spot markets on delayed Monsoon and lower than expected sowing progress.
  • Mustard Seed prices witnessed a positive trend throughout the month amid falling arrivals and strong demand for Mustard Oil.

Ground Report

  • The Soybean Processors Association of India (SOPA) said nearly 95 percent sowing has been completed across the country, with deduction of 8-15 percent area dedicated to other crops due to better returns.

  • Soybean sowing has been 1.1% higher at 10.61 million hectares against 10.48 million hectares at same period last year. Monsoon progress is so far good at main farmland, which is supporting Soybean crop development.

  • Kharif sowing in Indian state of Maharashtra gathered momentum with 80% done so far with Oil Seed registered a significant rise. Oilseeds have been sown on about 3.60 million hectares land, surpassing the average sowing on 3.4 million hectares in Maharashtra.

  • Soybean production in India estimated to decline by 27% to 7.5 million tonnes in crop year 2015-16 (July-June), the lowest in 11 years as prolonged drought reduced the quality of the crop as well as the yields.

  • This year, again, farmers faced huge supply shortage of breeder seeds. This is likely to impact the next Soybean sowing year more than the current year.

  • Rising of Soy Oil imports and falling Soy Meal exports likely to impact the Soybean acreage of India this year. India's Soybean area in 2016/17 set to fall by 3.6% from a year ago as farmers have shifted to more lucrative crops like Pulses and heavy rainfall damaged the Oilseed in key producing region.

  • Lower Soybean output will force the world's biggest Edible Oil importer to increase overseas purchases of Palm and Soy Oil, supporting their prices. Lower Soybean output could also limit India's Soy Meal exports, given prices for its GMO-free produce are already ruling above international prices.

  • Farmers are expected to plant the Oilseed on 11.21 million hectares this year, down from last year's 11.63 million hectares.

  • Demand for Soybean Meal is irregular which is pressuring prices. However, in its latest report, SEA stated that Soy Meal exports in June increased by 163.25% to 2672 tonnes. Oil Meal exports during June 2016 were down 48% at 88,514 tonnes compared to 169,699 tonnes same period a year ago.

  • The Soybean Processors Association of India (SOPA) stated that export of Soybean Meal from India in June showed a marginal increase of 7.73% over the same period of last year. For the April-June quarter, Soybean Meal exports fell by 62% to 40,634 tonnes as compared to 1,06,209 tonnes.

  • SOPA stated that Soybean arrivals in India as on June of the current season reached at 5 million tonnes. SOPA forecast 2015-16 Soybean crop at 6.93 million tonnes. India Soybean balance stock with farmers and plants is nearly 1.45 million tonnes, which is likely to make supply tight till new arrivals amid monthly crushing of 0.45 million tonnes.

  • India's exports of Mustard Meal during the month June rose to multi month high by thirteen fold amid strong demand from South Korea. South Korea was the major buyers of Indian Mustard Meal during June month with 37,975 tonnes followed by 2,658 tonnes by Vietnam and 1,485 tonnes by Indonesia.

  • COOIT forecast total Mustard production of 5.5 million tons this year, while local traders are estimating 4.2-4.5 million tons. Production size is not important at current demand situation which is rising, especially from North Eastern states, where consumption rises during monsoon.

Policies

  • India has revised down the import tariff value for Crude Soy Oil to $752 per ton for second half of July against $765 a ton earlier.

  • Traders have urged the government to allow import of Oilseed duty-free, to make Edible Oilseed available for domestic crushers.

Global

  • USDA forecast that India's Soybean production in the new season may rise by 67% to 11.7 million tonnes.

  • USDA has raised its projection for global Oilseed production for 2016/17 to 536.4 million tons, up 2.6 million from last month with US Soybean production accounting for most of the change.

  • US Oilseed production for 2016/17 is projected at 115.4 million tons, up 2.5 million tons mainly on higher Soybean production.

  • Global Oilseed ending stocks for 2016/17 are projected at 76.1 million tons, up 1.0 million with higher Soybean, Rapeseed, and Sunflower seed stocks only partly offset with lower Peanut stocks.

  • The International Grains Council (IGC) has reduced its estimate for 2015-16 world Soybean output by 2 million tonnes to 312 million tonnes, a drop of 3% from a year earlier.

  • The trade in Soybean is expected to reach a new high in 2016/17 on continued growth in China’s protein meal requirements.

  • The US National Oilseed Processors Association's (NOPA) latest crush report showed that 145.05 million bushels of Soybeans were crushed by its members in June, below the average pre-report estimate of 145.418 million bushels and down from 152.82 million bushels in May.

  • USDA pegged the US Soybean crop as 71% good/excellent, far ahead from a 62% year-ago average and higher than the market forecasts of 70 percent.

  • Soybean exports from Brazil totaled 39.7 million tons during the first six months of 2016, which was 17% more than during the first six months of 2015, according to National Association of Grain Exporters.

  • National Association of Grain Exporters is estimating that Brazil will export a total of 57 million tons of soybeans in all of 2016, which if achieved, would be a new record.

  • Soybean processors in Argentina have crushed a totaled of 4.02 million tons of Soybeans in June, declined 7.55% from 4.34 million tons last month and 11.3% below the 4.53 million tons processed a year ago, according to government data.

  • Argentina's Soybean crushing during the first half of 2016 totaled 22.4 million tons, advanced 21% from 18.55 million tons processed in January- July of 2015.

  • China’s Administration of Customs reported June Soybean imports at 7.56 million tonnes vs. 7.66 million tonnes in May and compares to 8.09 million tonnes a year ago.

  • China's year to date imports in June stands at 38.5 million tonnes up 9.9% from the same period a year ago.

  • China National Grain and Oils Information Center is estimating July imports will rise to 8.5 million tonnes. They forecast August Soybean imports will decline and September will fall to 2.5 million tonnes.

  • China's inbound shipments of Soybean may drop as much as 4 percent to a fifteen year low of 80 million metric tons in the 12 months starting August as the government sells from stockpiles and domestic production climbs, according to Oil World.

  • The China government offered to sell about 300,000 tons of Soybeans from stockpiles on July 15 and most of that may be used to crush into oil and meal products, according to Oil World reported.

  • Agriculture Canada has pegged this year’s Canola crop at 15.9 million tonnes, up 500,000 tonnes from the June forecast although still well down from 17.23 million tonnes a year earlier.

  • Canada's Canola ending stocks remained static from last month at 700,000 tonnes, as all of the additional production is forecast to be absorbed by exports, which are now estimated at 8.5 million tonnes, according to Ag Canada said.

  • EU cut its Mustard harvest estimate by 5.5% to 20.8 million tons compared to 22 million tons, putting the crop at a four-year low.

Outlook

  • Though there is no direct relation between US and local markets, prices will follow global cues, as any weakness in global prices, makes local prices of by-products competitive in international market. Price gap between Indian Soybean Meal with Argentina origin was $150 per tonne in international market, which has reduced to $26 in recent weeks as global prices have improved, whereas local prices have been steady for last 2 years.

  • Soybean demand likely to remain laggard and as per requirement following weak demand for Soybean Meal from poultry farms. However, low arrivals of raw material will support as major balance stock available is of inferior quality.

  • Low arrivals of superior quality of Soybean resulted more demand for good quality of raw material from millers for crushing, which may support prices till new crop arrival. Soybean yields may rise and production will be better than expected if monsoon arrives at regular interval and distribution of rainfall is proper in sowing areas.

  • Market participants in US and India will wait and watch for next direction as Soybean crop enters critical developing stage in August. Despite dim fundamentals, Soybean prices likely to rise in near-term on low arrivals in spot market, due to which millers are not getting enough stock for crushing to meet local demand.

  • There are some possibilities that Soy Meal exports may rise in July-August, however, price competitiveness is very important at this juncture. Domestic Soy Meal may also find support after sharp rally in Maize prices, which is also a key ingredients used in preparation of poultry feed.

  • Market will majorly focus on demand for Soybean Meal, as the other by-products Refined Soy Oil is imported, so demand for raw material is totally depended on Soybean Meal. Soybean prices likely to be volatile in near-term as there is no clarity yet how much sowing area is likely to shift to other crops this season.

  • Mustard Seed prices are likely to trade positive for the near term on expectation of lower output and falling arrivals. Farmers are getting busy for Kharif crop sowing which is one of the reasons for low Mustard Seed arrivals, whereas millers are facing supply shortage of raw material for crushing.

  • The latest Mustard Meal export data will give a big boost to market as strong exports demand for Mustard Meal followed by good demand in Mustard Oil will encourage millers to increase crushing. Mustard Seed prices likely to witnessed volatility in near-term as prices have reached to 2016 highs recently.

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