Monthly Prices Movement

  • Mustard Seed prices remained on a lower side throughout the month and slipped to fresh 13-month low recently on poor demand from crushers and poor off take in Mustard Oil and Mustard Cake.

  • Soybean sector remained mixed so far this month at the major Indian markets as rising arrivals creating bearish tone whereas crop damage due to recent rains helping prices to improve.

Ground Report

  • Oil Meal exports from India fell by 35% to 90,907 tonnes in September as compared to 1,39,649 tonnes in the same month last year according to the Solvent Extractors Association (SEA) of India. For the first half of the current financial year, cumulative shipments were down 44% at 4,21,741 tonnes over the year-ago period on account of lower availability of seeds for crushing and continued disparity in prices in international markets.

  • Export of Soy Meal and its other value added products during oil year 2015-16 (October 2015 - September 2016) has declined by 65% as compared to previous oil year. For India, where the harvest has already commenced, the Soy Meal export window is open till March when the new Brazilian crop arrives.

  • Crushing of beans in the new season has begun and is expected to gain pace in November, when more processing units are expected to be operational. New export contracts for Soy Meal were likely to happen later this month and that shipments would commence from November mid.

  • SEA stated that India exported 23.86% higher Mustard Meal at 40095 tonnes in September. Increase in Mustard Meal exports will boost Mustard Seed prices in the days to come when the demand generally improves for animal feed due to cold weather.

  • Mustard Seed sowing is in progress in Rajasthan and sowing will be completed in next 15-20 days. According to Rajasthan agriculture department, Mustard Seed sowing in the state so far stood higher by 191.49% at 1.37 million hectares from 0.47 million hectare same period a year ago.

  • Soybean Processors Association of India (SOPA), the largest industry body of Soybean extractors and traders, has pegged the 2016-17 Soybean crop at 10.87 million tonnes, around 57% more than last year's output due to better yield amid favorable weather in key growing regions. Yet, it is 31% less than the Center’s estimate of 14.22 million tonnes.

  • Soybean production in Indian state of Madhya Pradesh is expected to be over 60% than previous year. Estimated growth in the output is expected due to improvement in yields from 608 kg per hectare a year ago to 1,034 kg per hectare this season.

  • Industry body Solvent Extractors Association (SEA) has raised its estimate for India's 2016-17 kharif Groundnut crop production to 5.48 million tonnes, an increase of 70% as compared to 3.23 million tonnes in 2015-16.

  • Groundnut production in Gujarat, the largest Groundnut producing state in India, is estimated to jump by 97% to 2.94 million tonnes in 2016-17 from 1.495 million tonnes last year, according to latest survey by SEA.

  • Gujarat Government has reported that 1.64 million hectares under Groundnut crop sown during Kharif season compared to 1.295 million hectares in 2015-16.

  • Groundnut exports of India rose during the period April-August of current fiscal year (FY) 2016-17 to 208,476 tonnes compared with 181,507 tonnes in 2015-16.

  • India's annual Oil Seeds output has increased at about 2.2 per cent but is not enough to meet the domestic demand. To meet the annual consumption of vegetable oil in the country by 2020 and 2025, it has to reach 86.84 MT and 93.32 MT respectively.

Policies

  • The government's first advanced estimate of the 2016-17 Kharif season, which has projected a record output of 23.3 million tonnes of Oilseed crop, prima facie, seems unrealistic and over-optimistic according to stakeholders. Government pegged expected output for Soybean at 14.22 million tonnes, while Groundnut production at 6.49 million tonnes.

  • Soybean farmers of Maharashtra, who lost 70% of their crops to the heavy rains that lashed Marathwada earlier this month, are now struggling to get even the MSP for the remaining produce in the open market. Taking advantage of the farmers' distressed situation, traders are offering very low rates by saying that the moisture content in the remaining produce is very high.

  • Indian government has allowed Soybean procurement at Minimum Support Price (MSP) in Maharashtra as prices has dipped below minimum support price.

  • The National Agriculture and Cooperative Marketing Federation will shortly commence procurement of Soybean in 17 districts of Maharashtra as the Center had allowed market intervention for the Oilseed.

  • Gujarat state will be buying Groundnut from November first week. The forecast of a bumper crop following a good monsoon brought prices down from the very beginning of the trading season. Prices for inferior quality Groundnut went as low as Rs 500 per 20 kg in major trading hubs, while the prices for the best quality groundnut didn't move northward of Rs 825 per 20 kg - much below the MSP of Rs 844 per 20 kg (Rs 4,220 per quintal).

Global

  • Argentina will not reduce Soybean export tax until 2018 as previously announced and will reduce tax by 0.5 percent per month from January 2018 to December 2019. Argentina is also the world's top exporter of Soybean meal and Soybean Oil. The new government lowered export taxes on those products by 5 points to 27 percent last year.

  • The Food and Agriculture Organization (FAO) of the United Nations has pegged 2016-17 global Oilseed production at a record 556.9 million tonnes, up 4.3% from 534.1 million tonnes recorded in 2015-16.

  • World production of oil and fats in 2016-17 predicted to rise to a record 216.5 million tonnes, advanced 4.4% over the production of 207.3 million tonnes in 2015-16. Global Oil Meal and cake production also forecast higher at 143.9 million tonnes, up 4.4% from 137.9 million tonnes a year earlier.

  • Brazil likely to produce between 101.9 million and 104 million tonnes of Soybeans in 2016/2017 season, recovering from a drought-hit previous crop of 95.4 million tonnes.

  • April-September shipments to South Korea, the largest buyer of Indian meal, were reported at 329,464 tonnes, 32% lower than the 481,827 tonnes in corresponding period last year. Similarly, exports to Vietnam also registered a sharp decrease of 66% at 51,823 tonnes during the first half this year compared with 154,940 tonnes in the corresponding period last year.

  • Total Canola crushing from the start of 2016-17 Canadian oil year, which runs from August to July, recorded at 1.557 million tonnes, up 13.5% as compared with 1.37 million tonnes in the corresponding period a year ago.

  • USDA expects global Soybean output to go up by 6.39% to 333 million tonnes whereas USDA forecast India's Soybean output to rise by 38.57%. USDA stated that China’s Soybean imports are forecast to hit a record of 86 million tonnes in market year 2016-17, up from the estimated 82.5 million tonnes in market year 2015-16.

  • The US Department of Agriculture's Foreign Agriculture Service (FAS) has estimated China's 2016/17 Rapeseed imports at 4.5 million tonnes, advanced from an estimated 4.05 million tonnes in 2015/16. The forecast is higher than the USDA September official forecast of 3.8 million tonnes, but still lower than the average yearly 4.8 million tonnes imports in MY13/14 to MY14/15.

  • Based on a forecast planted area of 7 million hectares, down 4.1% from the previous year, China's Rape Seed production in 2016/17 season is forecast to fall by 5.6% to 13.5 million tonnes, the report said.China, the world’s largest buyer of Soybeans, will increase the area planted with Soybeans over the next five years and reduce Corn plantings, a government official said. China’s Soybean plantings will go up to 9.3 million hectare by 2020, up from 6.5 million in 2015. The Corn acreage is set to fall by 0.7 percent each year over the next five years, to reach 33.3 million hectares by 2020, showed the five-year plan.

  • The leading bank, Societe Generale, maintained its bearish position on Soybean price prospects, despite the recent demand-led rally, as it flagged the size of the US harvest, and downplayed any crop threat from La Nina in South America. The bank forecast prices to fall by almost $1 a bushel in the near term, under pressure from the ample US harvest.

Outlook

  • Mustard Seed availability in the country is around 1.5 million tonnes, which is likely to stress balance sheet in the coming days as new crop will be available only after February. There is at least 5 months left for the new crop and with average monthly crushing of 0.3 million tonnes, total stocks likely to get exhausted, which may support Mustard Seed prices.

  • Approaching sowing season will be crucial in assessing the price direction for Mustard because prospects have improved due to good availability of soil moisture, after a good monsoon season. This can be a limiting factor against the upward price movement.

  • Demand for Mustard may pickup in physical market as India is approaching winter. India's Mustard output expected to rise by 12.5% from last year. With commencement of winter season, consumption of Mustard Oil likely to rise and will support Mustard Seed prices.

  • Soybean prices recently dropped down by 10-12% from last year. Soybean is ruling between Rs.2500-2800 a quintal in terminal market Indore, as against Rs.3200-3400 in mid-September as market arrivals have begun to increase. Overall with production looking good, prices could further come down.

  • Soy Meal prices recently dropped nearly 4 percent in the spot markets due to lack of encouraging demand by poultry feed manufacturer at current level and bearish tone on Soybean amid higher supply.

  • As the prices of Soybean turn bearish on increasing market arrivals, prospects for India's re-entry into the overseas markets for Soy Meal exports, especially in the Far East and South East Asia are seen turning brighter.

  • Arrivals may reduce if prices remain below Rs 3,000/Kg in market as farmer selling will slow at such lower level which will limit the fall in prices.

  • Present supply of Soybean has moisture content in the range of 10-11 percent as compared to 12-14 percent a week ago. Crushers have started stocking for their long term requirements as quality of Soybean is good coupled with lower prices. Stockiest are stocking Soybean in very small quantities as most of the stockiest feel more correction now and prices will be attractive.

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