Kotak Commodities has come out with its report on Indian edible oils and oil seeds. According to the research firm Indian edible oil and oil seed futures are expected to trade mixed during initial hours and stabilize towards the close after a series of weak close since couple of weeks.
Indian edible oil and oil seed futures are expected to trade mixed during initial hours and stabilize towards the close after a series of weak close since couple of weeks. The undertone for the complex is expected to remain weak on supply glut for Malaysian Palm oil and improving weather conditions in Mid West soy producing areas.
Soy beans across the NCDEX counter witnessed a sharp decline as domestic traders reduced their risk exposure in the markets. In addition to this lack of buying interest also failed to support the price movement. The benchmark July contract slumped to a multi week low and closed loosing more than 2% to close at Rs.2276.5/qtl a price not seen since 6th May 2011. Significant surge in volume of trade also supports the weak undertone in prices.
Soy beans at the physical counter continued to trade with a downward bias as demand at the cash market continued to lack luster. Plant prices in Maharashtra quoted mixed with the fluctuation of Rs 10-15 per 100 kg while it quoted up and down Rs 20- 30 per 100 kg in Madhya Pradesh. Mandi prices in both the states moved down Rs 20- 30 per 100 kg. Soybean offered at Rs 2,050- 2,300 per 100 kg in Madhya Pradesh and at Rs 2,150-2,340 per 100 kg in Maharashtra. Arrival in MP stood at 35,000 bags while in Maharashtra at 15,000 bags. India's oil meal exports in May jumped 84.5% to 320,266 metric tons from 173,604 tons a year earlier because of strong demand and higher crushing due to better oilseed output. The country's soybean area is estimated to be about 9.33 million hectares in the marketing year ending Sept. 30, according to the Central Organization for Oil Industry & Trade COOIT. Acreage is expected to decline as farmers may plant more cotton due to higher returns despite the higher soy meal exports. As on 9th of June all India soy plantings is marginally up by 0.01 lakh ha at 0.03 lakh ha. Sowing has been started at Karnataka and Maharashtra.
Forward Curve and Spreads:
We see a positional shift in forward curve towards the right on weak demand. We expect the demand to gain pace during the week ahead and shift the curve towards the left. The June and July spread is currently at 16 we expect the spread to remain steady at these levels. The backwardation in the far month contracts indicates new crop. The spread between August and September is also expected to turn positive to currently the spread is at -4.
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