Soybean

Soybean futures lower, giving back most of last week’s gains as fieldwork conditions improved in Brazil. Wetter weather eased concerns about planting delays in the major South American producer, sparking bets that Brazilian farmers were on track for another year of large oilseed production. Slow planting progress, a result of dry soil conditions, had helped soybean prices higher last week.

Futures contracts of soybean on NCDEX rose as investors are concerned that ongoing rains in parts of Madhya Pradesh may damage the standing crop. The most active October contract traded up 0.9% from the previous close. Prices were also up in the benchmark market of Indore, Madhya Pradesh.

Futures contracts of soybean on the CBOT surged to a seven-week high of $9.7950 cents per bushel due to higher-than-expected exports by the country. The most active November contract on the bourse traded at $9.7875 cents per bushel, up 0.8% from the previous close. The US exported 2.3 million tonne of the oilseed in the week ended Sep 14, up around 45% from the previous week.

Futures contracts of edible oils on the domestic exchanges traded mixed. Soybean and mustard futures traded lower while soyoil and crude palm oil traded higher. Increased fresh arrivals of soybean in key growing regions further weighed on the sentiments. Extending weakness from the previous session, mustard futures on the NCDEX settled around 1% lower due to subdued buying from oil millers. Higher carryover stock from 2016-17 season also pulled down the prices.

Futures contracts of edible oils on the domestic exchanges traded mixed. Soybean and soyoil futures traded higher while mustard and crude palm oil were down. Soybean futures on the National Commodity and Derivatives Exchange ended around 1% higher, bolstered by a pick-up in demand for soymeal produced from the fresh crop.

Soybean prices in Indore, Madhya Pradesh fell, as arrivals of the new crop rose. Arrivals of new soybean crop were at around 1,000 bags (1 bag = 100 kg), higher than 700 bags the previous day. Poor rainfall in Madhya Pradesh during the initial months of the Jun-Sep monsoon is not likely to hit yield much, as adequate intermittent rainfall in September is seen helping. However, good demand for the oilseed ahead of festival season prevented any further fall in prices.

Output of soybean is estimated at 3.6 million tonne, down 22.7% on year. Yield in the state is estimated to decline because of erratic monsoon in pod filing stage in August. The overall output of oilseeds in the state is seen at 3.82 million tonne, against 4.89 million tonne in 2016-17.

Soybean production in Argentina is seen rising over 6% to 58 million tonne in 2017-18 (Apr-Mar) due to likely favourable weather. The country is estimated to have harvested around 55 million tonne soybean in 2016-17. Weather is seen largely conducive this year and farmers in the South American country may also increase acreage of the crop, which may boost output further. Soybean acreage is estimated at 19 million ha in 2017-18, higher than 18 million ha a year ago. Stocks of the commodity at the end of 2016-17 are estimated at 4.9 million tonne, lower than 5.6 million tonne at the end of the preceding year.

Futures contracts of edible oils, barring crude palm oil, fell on the domestic exchanges due to subdued buying in physical markets. Soybean on National Commodity and Derivatives Exchange ended around 0.6% lower because of increasing supply of fresh crop in key markets of Madhya Pradesh and Maharashtra. Arrivals are rising because farmers have started harvesting the early-sown crop as it has reached maturity. Peak arrivals of soybean begin in the first week of October.

Arrivals of new soybean crop rose in the benchmark Indore market in Madhya Pradesh by nearly 200 bags (1 bag = 100 kg) to 500 bags. New crop arrivals started last week. Total arrivals across Madhya Pradesh were pegged at 80,000 bags, up from 60,000 bags a week ago. Of the 80,000 bags, about 7,000-8,000 bags comprised new crop arrivals. The most-active October contract of soybean on NCDEX ended up 0.3% from previous close. Improved demand for soybean ahead of the festival season also contributed to rise in prices on the domestic exchange.

India soybean stocks would be at a record high of 1.75 million tonne when the current marketing season ends on Sep 30 because of a bumper output. Stocks are seen rising more than four-fold from 2015-16 (Oct-Sep). All the 13 participants polled rise estimated higher year-on-year ending stocks. Estimates for the season-ending stocks for 2016-17 ranged between 1.0 million and 3.0 million tonne, while those for 2015-16 were in the range of 0.2-1.0 million tonne. Indian farmers harvested 11.49 million tonne of soybean in 2016-17, up from 6.93 million tonne harvested in the previous year. Carryover stocks (for 2017-18) of the oilseed is estimated higher because of a record crop last year and good beginning stocks.

Futures contracts of crude palm oil on the Bursa Malaysia Derivatives rose tracking soyoil prices on CBOT. The most-active November contract traded at 2,884 ringgits (44,050rupees) per tonne, up 11 ringgits from previous close. Prices of crude palm oil and soy oil move in tandem as both are used in the production of bio-diesel. Expectations of lower production in coming weeks coupled with good export demand are also seen supporting prices.

Projection is that Brazilian soybean production decline from 113.93 million tons of soybeans in the 2016-2017 harvest to 107 million tons in the 2017-2018 harvest. Brazil’s 2016/2017 crop is expected to reach 238.7 million tons which is 28% higher than the previous year, because of better climate conditions and improved productivity. This includes 114 million tons of soybeans and 97.71 million tons of corn.

Soybean prices fell in Madhya Pradesh benchmark market of Indore because arrivals of the new crop picked up pace. Extending gains from the past few sessions, soybean contracts traded higher on the NCDEX due to reports of lower-than-expected production in 2017-18. The most active October contract of soybean on the NCDEX was up 0.6% from the previous close.

After a stellar start to monsoon this year, the prolonged dry spell in Jul-Aug has taken a sizeable toll on kharif crops, soybean. This may lead to an over 12% decline in the country’s overall output of summer-sown oilseed crops. Soybean is the largest hit oilseed crop and we expect production this kharif season to fall by 15% to 8.9 million tonne. Expect soybean production in Madhya Pradesh to fall to around 5.0 million tonne from 5.4 million tonne and in Maharashtra to 3.8 million tonne from around 4.0 million tonne a year ago. However, the carry-forward stock of the oilseed from the current year is likely to shoot up to around 1.2 million tonne from 460,000 tonne a year ago, which keep supply comfortable next year. Overall oilseeds production in the kharif season is expected to be at 14.4 million tonne, down 2 million tonne from a year ago.

Futures contracts of soybean on the CBOT rose, as investors bought the oilseed at a bargain after prices fell in the last four trading sessions. The most active November contract of soybean on the CBOT was at $9.54 per bushel, up 0.5% from the previous close. Prices had fallen earlier after the USDA raised its estimate for soybean production in the US during 2017-18 to 120.6 million tonne, up 1.2% from its projection in August. The rice in prices was also because of higher forecast of US soybean exports in 2017-18.

Soybean prices in the benchmark market of Indore, Madhya Pradesh, fell because of higher arrivals of the new crop. There are expectations of prices falling by an additional 100-150 rupees in the coming days, as supply of the new crop is likely to gather pace. Soybean futures on NCDEX, however, rose around 0.2%.

India’s soybean production during the 2017/2018 crop year may drop 22 percent from a year ago after a reduction in the planting area and because of a prolonged dry spell in key growing regions. India is likely to produce 9 million tonnes of soybeans during the 2017/18 crop year starting from Oct. 1, down from 11.5 million tonnes in the current year. Farmers have cultivated soybeans on 10.5 million hectares this year, down 8.4 percent from a year ago. This year, a prolonged dry spell in July and August curtailed the crop in the states of Madhya Pradesh and Maharashtra, which account for nearly 85 percent of the country’s total soybean production.

Weather forecasts suggest soybean planting in key regions of Brazil may be delayed due to scarce rains following the end of the fallowing period in states like Paraná, Mato Grosso and Mato Grosso do Sul. The absence of rains over the next 10 days in these three regions, where about 51 percent of Brazil’s soybeans are grown, will push back planting this year in relation to last.

Soybean prices in Indore were up because of lower supply of quality crop due to end of season. There are worries of lower output due to infestation and limited availability of quality inventories with the farmers and stockists. Gains in the soybean contract on the CBOT are also seen supporting upside in the oilseed prices. The most active October futures were up 0.7%.