Friday, June 12, 2015

Bearishness in soyabean prices on better production estimates
[Editor: This report says that the International trends aren’t supportive of Soya prices in Indian market. This is music to the companies like Rasoya Proteins Ltd (Rs.0.34), who were suffering due to steep increase in the price of the Soyabean, due to destruction of a large part of the crop in Maharashtra. However, the Soya Oil, imports continue to create problems for the domestioc players, as the Narendra Modi government is yet to take measures, to stem the tide. 
The shares of Rasoya Proteins Ltd, which is now hovering around Re.0.34, should soon cross Rs.5 in the near future; as the company's production is likely to gather steam, post September, 2015. Moreover, the company has come out with a comprehensive plan, regarding insider trading--all these augurs well for the company. The stock has hit the UC, today, and is likely to continue till Re.0.60. So, accumulate the scrip in every dip, so that your acquisition price comes down.
Meanwhile, there are reports that the market for soybean derivatives is estimated to be worth $176,921.05 million in 2015, and is projected to reach $254,913.10 million by 2020, at a CAGR of 7.6%. In 2015, the Asia-Pacific region is estimated to be the largest market and is projected to grow to $125,854.43 million by 2020, at a CAGR of 7.8%, as studied from 2015. North America is the second-largest market and is projected to grow at a CAGR of 9.2% during the period under review. The soybean crop is processed into soy meal and vegetable oil, and almost all of that meal is used in animal feed. Steady demand for soybean derivatives also confirms sustained need for food-grade soybeans, including specialty varieties, organic, non-GMO, and IP beans. Also, Washington recently unveiled a proposal that mandates less ethanol and greater biodiesel use than was originally outlined by law. Vegetable oil prices have since rallied, with CBOT soyabean oil futures gaining 4.5 per cent in the past two weeks and breaking daily volume records on May 29]
May 31 2015: Improved arrivals in the domestic market and forecasts of better global production are expected to keep a check on soyabean prices, which have been bullish since April. Spot prices, which have been hovering around Rs 3,300-3,470 per quintal between January and April, had gained 22 per cent to a high of Rs 4,217 per quintal (100 kg) in May. In the futures market too, prices that were at Rs 3,406 per quintal in January-end, moved up to Rs 4,380 in the first week of May.

Prices were under check between January and April as supplies were sufficient in the domestic market; soy oil imports had gone to record levels and the international price trends too were weak due to bumper crop in South America. In 2013-14, the country had achieved a record production of 119.89 lakh tonne.

The import of soyabean oil between November 2014 and April 2015 went up to 1,059,901 tonne compared with 641,286 tonne in the year ago period, up by about 65 per cent.

In the international market, soya- bean prices had dipped 8.6 per cent to $9.24 a bushel from over $10.11 a bushel since March as global inventories were expected to rise by over 12 per cent.

Due to disparity between international and domestic prices, soya meal exports from India declined. “The demand for Indian soya meal was weak due to the disparity in prices largely on unattractive quotes compared with other exporting countries such as the US, Brazil and Argentina. Vietnam lowered imports from India, while Iran, sought cheaper soy meal from other countries after the sanctions against it were lifted,” said Ritesh Kumar Sahu, analyst, agri-commodities, Angel Commodities.

Prices of Indian soya meal were quoted $80-90 per tonne higher than other countries. However, by May, predictions of a deficient monsoon increased concerns about a lower crop in India. Soyabean Processors Association of India (SOPA) predicted the production in 2014-15 would be about 99 lakh tonne. This saw prices moving up to Rs 4,200 in the spot market.

Meanwhile, Solvent Extractors’ Association came up with reports that the production could be normal in 2014-15 and that farmers had held up their crop due to lower prices. The market is also not expecting monsoon to be normal. This once again brought in bearishness in soyabean prices.

According to recent United States department of agriculture reports, global soyabean production for 2015-16 is expected to be similar to last year’s 317.3 million tonne. The larger crops from Brazil, India, Canada and Ukraine are expected to offset decline in production in the US, Argentina and China. There is also a 35 per cent increase in global carry over stocks.

“We expect soyabean prices to continue to remain sideways with negative bias for near to medium term on sufficient stock levels in the domestic market and expectations of better sowing in this kharif season. Soyabean prices may be trading in the range of Rs 3,650-4,150 per quintal in the next two months depending on the progress of monsoon and international price movement,” said Sahu.


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