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Global cues fuelling soy bean, mustard prices

Author: Subhranil Dey/Thursday, April 29, 2021/Categories: Exclusive

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Global cues fuelling soy bean, mustard prices

Additional margin of three per cent on both long side and short side of all running contracts and yet to be launched contracts in Soy Bean (SYBEANIDR) have been imposed with effect from April 22, 2021. On NCDEX, the May futures contract of soybean hit a record high of Rs7,300 per 100 kgs. On a year-on-year basis, soybean prices have jumped 126 per cent from low of Rs3,228 in 2020.
It is reported that due to this surge in prices, the arrivals have reduced as traders and farmers don't want to sell in hope of better prices.
According to market participants, soymeal exports will be difficult because the Indian oilmeal is heavily out-priced in international markets. Prices of soymeal, ex-factory, are around Rs60,000 per ton against Rs40,500 rupees a month ago.
at this price, crushers find disparity of Rs4,000 to Rs5,000 per ton of processing and in the process, the availability of soybean meal has reduced dramatically. Price of soymeal, Ex-factory has touched Rs60,000 per ton from Rs40,500 per ton a month ago.
According to the Soybean Processors Association of India (SPAI), the latest estimates of supply and demand of soybean for the oil year 2020-2021 (October 2020 to September 2021) till March 2021 show that estimated demand of soybean seed for sowing has been increased by 1 Lakh Ton because the farmer this year is retaining more seed.
Poultry demand estimates have been lowered by 1 Lakh Ton due to very high soybean prices and also reduction in inclusion by feed makers.
Estimates for crushing for the entire year has been reduced to 93.5 Lakh Tons from the earlier estimate of 95 Lakh Tons, on reduced meal demand.
Estimates of soybean imports have been reduced to 2 Lakh Tons from the earlier 3 Lakh Tons.
Assuming a normal 2021 monsoon season (June-September) and favorable weather conditions, India’s total oilseed production in market year (MY) 2021/22 (October-September) is forecast to rise four percent to 39.9 million metric tons (MMT), based on expectations of near normal oilseed crop yields. According to IMD, the monsoon seasonal rainfall is likely to be 98% of the Long Period Average (LPA) with a model error of ± 5%

Outlook
Soy oil and CPO futures in the international market are continuously maintaining their respective uptrend. Factors such as higher demand of soybean oil for meeting the bio-fuel mandates along with shortage of US soybean will continue to fuel the demand. The higher crude oil prices are also acting as a catalyst to the upside in commodities. Regarding palm oil, the impressive figures of exports will continue to lend positive sentiments.
The mega rally in soybean oil continues as burgeoning industrial demand for biodiesel (with many new facilities coming on line and competing for feed stocks) is now being joined by higher usage in the food sector. Increased indoor dining and greater patronage at various away from home eating establishments is resulting in greater demand for cooking oils.
Mustard futures (Belief that mustard oil is an immunity booster has led millers to intensify crushing of the oilseed. From the current level as millers and stockists are on a buying spree.
In March, crushing of mustard seeds across India rose 60 per cent on year to 1.2 million tons. As at February end, mustard carryover stocks were down to 100,000 tn from 500,000 tn a year ago, traders said.
Mustard arrivals in major markets across the country fell sharply to 465,000 bags (1 bag= 85 kg). In Jaipur, the benchmark market, the oilseed was sold at Rs7,250-7,275 per 100 kg. India mustard output this year is projected at 104.27 lakh tonnes. However, the Central Organisation for Oil Industry and Trade (COOIT) and the Mustard Oil Producers' Association (MOPA) have estimated the production at 89.50 lakh tonnes.
Imports of mustard oil from Canada are negligible. Consumers are shifting to oil produced from home-grown mustard seeds. This will also buoy prices in the near future.
High global prices have made edible oil imports dearer, benefiting domestic mustard growers just when their crop is being harvested and brought to the mandis.
One major reason behind the increased consumption of mustard oil is its purity, adding that higher prices of imported oils have left no scope for adulteration in mustard oil, due to which the consumer is enjoying the commodity in a pure form.
In Apr-Feb, India's mustard meal exports rose 18 per cent on year to 1.03 mln tn, Solvent Extractors' Association data shows.
Overseas shipments of mustard meal are seen growing in coming days due to upbeat demand from South Korea, the largest importer.
National Agricultural Cooperative Marketing Federation of India has so far procured just 30 kg of the oilseed, said an official with the government's
nodal agency. Procurement is lower because prices are above the minimum support price of 4,650 rupees per 100 kg.

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