NCDEX Soybean Weakens on Lower Export Demand

Soybean futures traded lower on account of lower export demand of oil meal and lackluster demand of soybean from solvent extractors. Arrivals of soybean in Madhya Pradesh were 1.20 lakh bags on Thursday as compared to 1 lakh bags Wednesday , Maharashtra 65,000 bags and Rajasthan 40,000 bags (1 bag=100 kg).

In Indore Mandi (auctioned), soybean quoted Rs 2,340-2,380 per 100 kg on Thursday, down around Rs 20 /100 kg from Wednesday.

For plant delivery, soybean prices were quoted at Rs 2,430-2,470 per 100 Kg, down around Rs 15-20/100 Kg as compared to Wednesday. Strength in INR against Us dollar also added bearish market sentiments as soy-meal export would be less attractive.

However, for longer term perspectives, lower production estimates of soybean in South America (Brazil and Argentina) are in favour of the bulls. Brazil is second largest exporters of Soybean and Argentina is the third largest producer and exporters of soybean after USA. The Brazil crushing industry association (Abiove) pegged the Brazil soybean crop at 71.9 million tonnes which is down from 74.6 million last year. Soybean exports seen at 33 million tonnes in January 2012 as compared to 34 million tonnes in January 2011. Dry weather in Brazil was the major cause for lower production of soybean, crop will pick up pace for harvest in the coming months.

Hamburg-based Oil World said it has cut its forecast of Argentina's 2012 soybean crop to 46.5 million tonnes from 48.5 million tonnes forecast on Jan. 24 and 52.0 million tonnes forecast in December.

NCDEX April RM Seed traded lower on account of weak demand of rape/mustard seed and meal coupled with fresh arrivals of RM seed in some parts of Uttar Pradesh, Haryana and Rajasthan. Arrivals will be peak from Mid of February in major producing areas.

China restricted their imports of soy meal from India also added bearish market sentiments. However, for long term perspectives, RM seed are expected to trade higher on account of lower sowing acreage of RM Seed this year as compared to last year.

According to PIB, as on January 27, 2012, total area under oilseeds cultivation is reported to be 84.35 lakh hectares against 93.15 lakh ha last year. Higher area has been reported under oilseed crops in Tamil Nadu (1.04 lakh ha), Jharkhand (0.63 lakh ha), Uttar Pradesh (0.51 lakh hectare), Gujarat (0.37 lakh hectare), and Assam (0.21 lakh hectare).

NCDEX February refined soy oil futures traded lower on account of weak overseas market as losses in CPO Futures at Bursa Malaysia Exchange, Malaysia. Lower export figures of Malaysian Palm Oil in the month of January as compared to previous month (December).

As per SGS (cargo surveyor), Malaysian Palm Oil exports in the month of January 2012 fell to 1.29 million tonnes, down by 13% as compared to last month (December 2011). Strength in INR against Us dollar also added bearish market sentiments as edible oil imports would be cheaper as India imports about 50% edible oil of its total requirement. As per SEA of India, India imported 654,714 tons edible oil in Dec, down 21% from the month of Nov 2011.