Sell NCDEX Soybean; target of Rs 3700: Fortune Financial

Fortune Financial Services has come out with its fundamental updates on agricultural commodities. According to the research firm one can sell NCDEX Soybean at Rs 3830 with a stop loss above Rs 3900 for the target price of Rs 3700.

January 03, 2014 / 18:38 IST

Fortune Financial Services' report on agri commodities

Soybean futures are likely to trade range bound as there are no new triggers. Mustard futures may trade positive on talk of crop damage. Soybean futures are likely to trade sideways to negative as there are no new fundamentals. Weak export demand for Indian soy meal and expectations of a bumper soybean crop in South America will continue to weigh on prices. Prices may rise on lower arrivals in spot markets but then there would be correction. There was a lot of talk about hike in edible oil import duty. A decision in this regard was expected soon but according to government sources it is likely to be taken up next week. Talk of hike in edible oil import duty too will impact soy futures, but traders are anxious that the government may not hike the edible oil import duty in view of the upcoming elections. The food ministry had recommended raising import duty on refined edible oils to 10 percent from 7.5 percent to protect the interests of domestic refiners. The import duty on crude edible oils is currently 2.5 percent. In case of a hike in import duty, prices of edible oils would go up.

The Solvent Extractors Association has been lobbying for a hike in import duty on refined edible oils to 12.5 percent, as imports of refined oils are increasing and affecting the domestic refining industry. Demand for soyoil is moderate in the domestic markets. Talk of hike in edible oil import duty will continue to impact soy futures. Mustard futures are likely to trade positive on concerns of crop damage due to cold wave and rains in the key growing areas such as Rajasthan and Uttar Pradesh. Extreme cold conditions in the key growing areas lead to frost formation, which damages the mustard crop. Also, rain showers accompanied by hailstorms or fungal diseases after the showers can damage the crop. Mustard had been planted across 6.88 mln ha, up 6.8 percent from a year ago, latest data from the Directorate of Oilseeds Development showed. The normal area of the crop for the entire rabi season is 6.10 mln ha. The crop had been sown across 3.02 mln ha in Rajasthan the largest mustard growing state up from 2.77 mln ha a year ago. The normal area under the crop in Rajasthan is around 2.77 mln ha.

NCDEX Soybean (Dec) looking negative on chart, soybean trade lower this week as seen in daily chart has broken trend line support at 3830 level and started trading negative sustaining below 3830 level pressurize the prices. Trading consistently below 3830 level lead toward 3670 the support 3715, 3646, 3500 near term resistance 3847,3906, and 3960.

Recommendation - Sell at 3830 stop loss above 3900 target 3700.