Agricultural Commodities Market in India

Coronavirus: Way forward for Agricultural Commodities Market in India

2020-04-07T18:18:00.003+05:30

Year 2020 has so far been a painful year for entire world in terms of loss to human life and economic loss to the countries due to Pandemic COVID-19. Every human is scared of the Coronavirus these days.

On the one hand, science is struggling to find a solution to contain the Pandemic Covid-19, on the other a large number of Economies are incurring huge losses due to lockdown as movement is restricted and only essential services are allowed to operate.

Financial Markets across the globe have seen a sharp correction due to increased risk under prevailing uncertain environment.

There are a lot of pessimism with regard to the Economic growth at the global level as there is fear of recession. We believe that the recovery in global markets would vary from country to country depending upon the severity effect of the COVID-19. The policy measure taken by the various government will decide the growth trajectory of their countries.

India: Way Forward for Agricultural Commodities Sector

Fortunately, Indian is largely a consumer economy. How demand will improve and what steps Indian government takes to create and sustain demand in near future will guide the market sentiments and country’s growth story.

As on March 07, 2020, so far the loss to human life and number of case of Corona virus patients is not too much alarming India is successfully managing the situation.

India fortunately is having abundant food grains in its stock. Thus, it is not worried about the food inflation as of now. New Rabi season crop is ready to be harvested however due to lock down, the harvesting process is delayed.

Government is making every effort that Agri Markets (Mandis) are to be allowed to operate smoothly so that farmers produce starts available for sale to the bulk buyers keeping all the precautionary steps of maintain social distancing. Currently harvesting of big crops like Wheat, Chickpea (Gram/Chana) and Mustard seed is underway apart from other crops.

Unavailability of Agricultural Labour for harvesting and market operations due to its migration to their native places during Lockdown period remains a big challenge for the government.

Logistics and Transport related problems are also there as the Machineries required for the harvesting are stuck at places and it will take them time to reach at the required places.

Each day crores of rupees are required to purchase bulk agri commodities which arrives in the agri markets i.e. Mandis. It is to be seen how bulk buyers manage to arrange this huge amount of money to purchase the crop produce under uncertain economic environment. At the same time, how lending institutions are willing to provide them credit facility.

Thus, maintaining flow of money would remain a challenge under current situation. If adequate credit facility is not provided, the impact may be seen on the farm prices as Government procurement quantity remains limited.

Demand Prospects:

Early trend in the export of the Indian agricultural commodities like Pulses, Spices, dairy products, oil meals, poultry products and Rice have shown declining trend (Jan 20 over Dec 19). Under current scenario, it seems that Feb and March data might also be discouraging on export front. The short term domestic demand has also curtailed.

However, we believe that while expenditure on non-essential items might remain restricted in short to medium term by the consumers, the food demand would continue to remain there. Rather, it will increase in time to come.

Thus, increased food item demand will continue to support the agricultural and allied sector even in the pessimistic scenario of the other sector in India.

Internet based services and sectors are the sectors which are comparatively less affected due to Lockdown. Paralysis in the economic activities due to Lockdown clearly reflect that this is high time to make sea changes in the Indian Agricultural sector and make most of the services available through e-based platform be it procurement/warehousing/selling/buying etc.

However, India started e-NAM (electronic- National Agricultural Market) few years for making procurement based activities through online platform. Although, it is yet to become more popular among the farmers and traders. Similarly warehouse based sales and other operations are yet to gather attention by the market participants.

It is suggested that whole agricultural value chain operations should be made ON-LINE to make it more effective to address the unprecedented and unpredictable challenges like Pandemic Covid-19.

Update 1: Rapeseed-Mustard Crop Production and Price Outlook in India for 2016

2016-02-02T14:04:00.001+05:30

On 24 Jan 2016, we expressed our views on likely scenario of Indian Rapeseed Mustard production and prices in the light of weather disturbance and sown area progress under the article with the name “Recent Weather Fluctuations can trim India’s Rapeseed-Mustard Production and spark the prices during 2016”. The link of the article was given below http://prasoonmathur.blogspot.in/2016/01/recent-weather-fluctuations-can-trim.html)

Since then, there is marked increment in the reports of sown area under this crop. Thus we provide below the updated information on the same and consequently we also revise our production estimates. The likely price scenario is also modified little bit accordingly.

Latest Sowing Progress of Oilseeds in India

The sown area under Rapeseed-Mustard has increased to 64.51 lakh ha as on 27^th Jan 2016 as against the 65.17 lakh ha area which was sown during year 2014-15.

Thus the sown area is now just 1% below from the last year’s figure on All India basis. However, the sown area is lagging behind by 3.64% in Rajasthan which is the leading state in terms of Area and Production of Rapeseed-Mustard in India.

The Table given below has been extracted from SEA of India website.

Pest & Diseases Scenario:

Due to changes in Temperature and other weather related conditions, the advisories have been issued to state Governments and CIPMCs for continuous monitoring of Yellow Rust diseases on Wheat crop in wheat growing areas of Haryana, Punjab, Jammu & Kashmir, Himachal Pradesh, Rajasthan and Uttar Pradesh along with the monitoring of Aphids and White rust on Mustard growing areas on mustard crop.

· Incidence of white rust in mustard crop has been reported in trace to low intensity in few villages of Sriganganagar district of Rajasthan; Anand, Kheda, Baroda, Ahemadabad, Mehsana districts of Gujarat and south district of Sikkim.

Source: Crop Weather Watch Group, MoA, India, dated 25 Jan 2016.

Production Assessment:

Thus based upon the above mentioned facts and figures, we provide below the revised production estimates for the Rapeseed-Mustard crop in India for the year 2016.

These estimates can further be revised depending upon the coming weather and crop progress reports.

Thus, due to increment in the sown area as compared to the previous report dated 24 Jan 2016, we revise upward the Rapeseed-Mustard production estimate to 54 lakh tons for year 2016. However, this production figure is down by around 6% from the previous year figure of 57.4 lakh tons of the Oilseeds Industry estimates (Please note that the Government estimates may differ).

Long Term Price Outlook of Rapeseed-Mustard for the Year 2016

Currently Prices of Rapeseed-Mustard (RMseed) in the Indian Commodities Market are hovering around Rs. 3900/quintals.

We have a BULLISH OUTLOOK for RMSEED for the Year 2016.

However, since some upward revision in the production estimates is made, the downside risk in the price levels may be seen in the range of 3550-3650 during Feb/March period which is the main arrival period.

The ideal strategy would be to ENTER the market at RIGHT TIME.

Judging the right price of entry seems difficult.

Ideal Buying Period/Time in the Market:

We would prefer to start buying from February First week. Then gradually make averages on weekly basis till March first week or whenever price decline in the range of 3, 6 and 8 % is seen from the first buying level of Feb first week.

The long term upward Target seems near Rs. 5300/qtl during Oct 16 to December 16 period.

(Substantial reserve capital must be kept to meet out the MTM in the volatile market and avoid over leveraging)

Recent Weather Fluctuations can trim India’s Rapeseed-Mustard Production and spark the prices during 2016

2016-01-24T00:41:00.001+05:30

Recent fluctuation in the temperature in many parts of North and Central India has worried the farmers as well as traders as it has lasted some unfavorable impact on some of the standing Rabi crops.

Here we analyze the likely impact on Rapeseed-Mustard as this crop is vulnerable to these fluctuations.

A. Impact of High Temperature:

Possibility of Yield Reduction:

Above normal temperature seen during first fortnight of the January proved harmful in those areas where early/timely sowing of the crop was done and the pods were in the filling stage. Due to sudden rise in temperature, the maturing process started early which may result into lesser yield and lesser oil content.

Major Rapeseed producing state “Rajasthan” falls under this category. Above normal by 4 to 6^oC over many parts of Rajasthan, Madhya Pradesh, Gujarat, Marathwada, Vidarbha, isolated pockets of Punjab, Haryana, Bihar, Jharkhand, Chhattisgarh, Telangana and North Interior Karnataka during the week 31st December, 2015 to 06th January, 2016.

B. Impact of Sudden Drop in Temperature:

Possibility of Aphid Attach:

Now for the last couple of days the average temperature has come down considerably and severe cold wave is prevailing in many parts of the country.

Sudden drop in temperature along with fog invite the aphid attack on the Mustard crop. Thus the plains of Uttar Pradesh, Punjab and Haryana are more prone to the aphid attack. The possibility of aphid attack can’t be ruled out in these areas. The aphid suck the grain inside the pod. If timely chemical treatment is not done, then the yield may reduce substantially.

Possibility of damage to the crop due to frost also remains there during this period.

C. Impact of Lesser Rains in North-Western India

Although Rapeseed - Mustard is a less water intensive crop but still slight rainfall or at least two light irrigations are required during the whole crop cycle.

In Majority of its growing states there is no rainfall till date. However in some parts of the MP some rains were seen during last week.

Map Source: IMD, India

D. Impact of Hailstorm and heavy rains:

Any spell of excessive rains if seen during Feb/March localized or on vast part of a certain region may prove again dangerous to the standing crop as it may cause root rooting. Further, pod shattering may also result in to yield loss.

Further, hailstorm if seen in some patches may reduce the yield drastically of that particular area.

Now if light rains are seen during Feb/March, then it will be beneficial for the late sown varieties of the crop particularly in the Uttar Pradesh region.

However it is observed that during Feb/March almost every year Hailstorm and rain with high wind velocity is seen at isolated places in many parts of the country.

However, till date no such incidence is reported.

Production Assessment in the light of Recent Weather Fluctuations and Less Sown area:

It seems from the above analysis that there are chances of some yield reduction due to above mentioned reasons. The extent may vary from region to region. In certain areas the impact may be more visible while in other areas it may be negligible.

Rajasthan which is a major Rapeseed growing areas, the impact of sudden rise in temperature may be substantial on the yield. Further rains are also not seen in vast part of its growing regions. MP, Haryana, Western UP and Punjab may also witness some downfall in the yield.

As can be seen from the Table 1 that as on 12 Jan 2016, the sown area under Rapeseed and mustard is reported to be 62.76 lakh hectare which is also 3 lakh hectare less as compared to the last year.

Thus, the cumulative impact of less sown area and weather disturbance may reflect into lesser production this year. We expect that this year India may witness Mustard crop production somewhere near 52 lakh tons as compared to the last year’s figure i.e. 57.4 lakh tons which translates into 9% reduction in the production from the previous year.

Thus this year the production may remain lowest in the last six years.

Price Outlook of Rapeseed-Mustard in Indian Market for 2016

This year the Rapeseed-Mustard (RMSeed) market is likely to remain bullish due to expectation of low crop production.

All the RMseed is consumed in domestic market and we are least affected of the international market sentiments in case of RMseed. In the light of falling crude oil prices and high edible oil imports in the country, some short term decline may be seen in the prices but the overall long term outlook seems bullish.

The impact would be visible in the upcoming season. Usually the fresh crop arrival starts from late February in some parts of the country.

We expect that prices will start moving upward from February first week. On NCDEX the level of 3900-4000 can be a good buying level from long term point of view.

In Soybean: Don’t follow World Market when You Trade in India

2016-01-01T16:53:00.000+05:30

During last few years, Indian oilseeds trading community has seen high volatility in prices while the world market trend remained more or less steady in one direction. Those who believe that it is the CBOT that dictate the market sentiments in many commodities went wrong in case of soybean when it comes to trade in India.

On the one hand where since last four years, the soybean Prices at Chicago Board of trade (CBOT) have seen continuous fall to the extent of 40% till this December, Indian soybean market has gained around 14%.

Figure 1 shows the change in production and prices in the Indian and world market. Since 2011-12 to 2014-15, the soybean production fell by around 14% in India resulting into continuous prices rise to the extent of around 14% during same period.

On the other hand the soybean production at world level has seen significant jump of around 33% during last 4 years resulting in to 40% fall in its price.

Thus we have seen a complete divergence in the production and price behaviour of soybean in India from the world market.

We try to identify and explain why Indian soybean prices remained immune to the world market sentiments. Let us have a look at Table 1.

Some Observations from Table 1:

The soybean production keeps on falling for the straight 4th year. A production fall of 14% is seen in the last 4 years.This year (2015-16) too the production is likely to go down significantly.
Due to fall in the production, domestic soybean oil production has also come down by around 19%.
Soybean meal exports to the various countries have fallen dramatically by around 83% in the previous 4 years. Year 2014-15 has proved to be a nightmare for the oilmeal export industry.
Soybean oil imports to the India have increased by 173% during same period.
World soybean production continued uptrend resulting into steady and consistent price fall in the world market. During last four years, the world soybean production rose by 33% while soybean prices fell by around 40%.

Thus, it is clear from the above facts, that despite bearish world market sentiments, Indian soybean market remained firm and in future too, overall sentiments are likely to remain positive with some intermittent fall owing to various other reasons excluding demand and supply.

In the Year 2015-16, the Indian soybean Industry experts feel that production may further decline and may remain near 87 lakh tons as against 91.7 lakh tons seen during 2014-15. Thus continuous shortfall in the production amidst increased domestic demand of soyoil and soymeal with continue to provide support to the soybean prices in India in medium term.

India impose very high import duty on oilseeds and oilcake (oilmeal) import into India to safeguard its own domestic industry. Currently the effective import duty on oilseeds and oilcake is 36.55 and 20.80% respectively in India.

Soybean is a rainfed crop grown in the Kharif season in India. Thus production fluctuates widely due to change in monsoon rainfall quantum and it's spatio-temporal distribution. Further the growing domestic demand by various industries like animal feed and FMCG companies keeps on supporting the prices of soybean in India.

Due to high domestic prices, the soybean processing Industry in India is passing through very tough time due to high disparity owing to high raw material cost. The Indian Industry has started loosing its export markets resulting into drastic decline in to soymeal export figures. The capacity utilization is at the lowest and many plants are close down or operating at very low capacity due to disparity in crushing and export.

The Solvent Extractors’ Association of India, in its press releases cites following main reasons of drastic fall in the soybean meal by India.

1. High price of soybean in domestic market v/s lower realization for meal and oil resulted into drastic fall in crushing and export of soybean meal.

2. The export to Japan, Iran, Thailand, Indonesia, Taiwan and Vietnam drastically reduced due to disparity in export in these regions against severe competition from other origins including China and Argentina.

3. India lost Vietnam market for soybean meal due to stiff competition from other origins and increased availability from domestic crushing of imported soybean.

4. On wake of lifting sanctions, Iran shifted soybean meal buying from India to another origins. Currently India is out priced by US$ 100 against other origins in Iranian market.

5. Japan was big importer of Indian soybean meal being non GMO, however now started using GM soybean meal and buying from other origins.

On the edible oil import front, India’s import is increasing day by day as globally the prices of edible oil are historically low since 2008, and had affected the domestic players. The domestic oilseeds prices are high and the imports are quite cheap due to less import duty on the edible oils.

Lessons:

Very low domestic production leads to excessively higher prices in soybean; no matter world market is falling.
Domestic demand will grow day by day. Thus, till we don’t increase production or start importing soybean, the domestic prices are hard to come down significantly in long to medium term.
Soybean meal export and domestic edible oil manufacturing industry may come into severe crisis if steps are not taken to improve domestic supply of soybean in a planned way.
Soon, India may become net importer of soybean as well as soymeal and other meals if oilseeds production problems are not addressed adequately.
Soybean prices are still rising in India, despite the fact that world markets are having ample supplies. Just imagine what will happen if some point of time world’s soybean production decline in any year. Prices will shoot like anything.

Thus, while trading in Indian soybean market, just have a look at it's own fundamental factors rather than blindly following world market sentiments otherwise possibility of going wrong is very high because INDIA DOES NOT FOLLOW WORLD WHEN IT COMES TO TRADE SOYBEAN.

Fear and Greed Push Soybean Prices in India

2015-10-08T15:45:00.000+05:30

It is amazing to see the soybean market movement in the Indian physical and futures market during last 15 days. The futures and physical market prices during last fortnight have increased by around 22 and 14 % respectively in India.

As per the Indian government estimates, the soybean production during 2014-15 is estimated to remain at 10.53 million tons as compared to 11.86 million tons during 2013-14, down by around 11.21%. However, the trade sources say that the production is far less than the government estimates due to deficit monsoon this year.

Usually, soybean fresh crop arrival starts in the first week of October in the India’s biggest soybean producing state i.e. Madhya Pradesh and prices usually remain low during first fortnight of the October month. Thereafter they start increasing due to reduced arrivals and increased demand.

This year, many parts of the country including parts of Madhya Pradesh and Maharashtra witnessed early monsoon rains thus sowing was also done a little bit early consequently the market was expecting considerable increase in the fresh crop arrivals during last fortnight of September and early October.

Sharp Decline in Market Arrival leads to Spark in Prices

Let us examine why prices have seen such a significant jump in prices in a very short span of time.

The market arrivals and prices in the three major soybean producing regions of the Madhya Pradesh namely Indore, Ujjain and Dewas are examined and the answer is quite clear. [the data were taken from http://agmarknet.nic.in/]

In Indore region the soybean arrivals during 1-8 October have declined by around 10% as compared to the period of 24-30 September. This extent of arrival decline varies between 35 to 47% in few mandis.

The soybean market arrivals in the Ujjain region have declined drastically by 48.68 % during 1-8 October as compared to the 24-30 September. The extent of this decline was as high as 85% in Mahidpur mandi.

However, in Dewas region, the soybean arrivals have seen considerable increment in many mandis. However Dewas mandi has seen slight decline in market arrivals.

Impact of Less Arrivals

Due to sudden and significant decline in the fresh crop arrivals, a panic buying by the traders and stockiest is seen in the market. This has led to a jump in the soybean prices in the physical market.

The immediate impact is seen in the futures market too where the hedgers and speculators both are believed to have built good quantity of buying positions in anticipation of further rise in prices due to less arrivals.

Thus GREED of the suppliers of the soybean by reducing supply in anticipation of further price rise and FEAR of the price rise by the actual consumers have suddenly spurt the prices of soybean in such a short span of time. The speculators have further aggravated the situation.

However, the current market situation is quite unsustainable, and market forces of demand and supply with sooner or later adjust the prices which will be sustainable in long run.

Currently market is trading in overbought region and possibility of sudden price fall can’t be overruled.

A cautious trade is advised.

A study on seasonality in Imports of Soyoil. Will prices further fall in India till October 2015?

2015-08-03T14:06:00.000+05:30

How soybean oil market is likely to behave in India in near future? What is the current soybean sowing progress? What is the current supply situation of soy oil? What has been remained the pattern of imports in India during a marketing season? What has been the import price behavior during various months of a marketing season? What is the current supply and demand scenario of the world soy oil market? The current study tries to find out the answers of the above questions on the basis of some empirical analysis.

New edible oil marketing season starts every year from November and end in October. There are still 3 months to start of new season.

We would examine how prices are likely to behave till then.

A. Latest Sowing Progress of Kharif oilseeds crops in India.

As per the latest Indian government estimates, the total sown area under kharif oilseeds as on 31^st July is 148.52 lakh ha. Area coverage is higher by 15.7 lakh ha. under Soybean from the normal sown area as on 31^st July. Soybean is sown at 104.81 lakh ha as compared to 89.10 lakh ha normal sown area.

In the monsoon season, cumulative Rainfall for the country as a whole during the period 1st June to 22nd July, 2015 was 7% lower than Long Period Average (LPA). Rainfall (% departure from LPA) in the four broad geographical divisions of the country during the above period was higher by 6% in North West India and lower by 6% in East & North East India, 13% in Central India and 12% in South Peninsula.

The monsoon deficiency is more in the east MP and Maharashtra regions of India which may create problem to the soybean crop if rains do not cover up during August month.

As of now situation seems under control so far as soybean crop is concerned.

B. Stock Position at Port and in Pipelines :

As per the statistics released by SEA of India-

Current stock of edible oils as on 1st July, 2015 at various ports is estimated at 610,000 tons (CPO 300,000 tons, RBD Palmolein 90,000 tons, Degummed Soybean Oil 80,000 tons, Crude Sunflower Oil 125,000 tons and 15,000 tons of Rapeseed (Canola) Oil and about 1,570,000 tons in pipelines.
India’s monthly requirement is about 16.0 lakh tons against which currently holding stock over 21.80 lakh tons equal to 41 days requirements.

Thus the current stocks are ample to meet the near future demand of the country. The import is likely to improve in this quarter as well as importers would like to take advantage of lower prices.

C. Seasonal behavior in Soybean Oil import in India

Table 1 presents the trend in the soydegum (crude soybean oil) import by India during an edible oil marketing season [November to October] for a period of last 5 years.

For the sake of more simplicity and clarity we have divided the 12 months of the whole marketing season in to 4 quarters. The first quarter (Nov-Jan), second (Feb-April), third (May-July) and forth (Aug-Oct).

Observations:

The soydegum import has remained LOWEST during FIRST QUARTER i.e between November to January during the period under study (last 5 years)
There is gradual increment in its imports in the subsequent quarters.
There is no uniformity in the quarter of Highest Import as the pattern has remained different in all the 5 quarters.
There is general increment in the imports figures on “year on year basis”.
During 2013-14, a sudden and significant jump in the soybean oil import is seen (79%).

Inference:

This is clear from the above analysis that India imports lowest usually during first quarter of an edible oil marketing season because its own new soybean crops starts coming in the physical market during October month and the arrival pressure is highest during October, November and December. Thus crushing plants get better parity prices from its own soybean rather than imported crude soybean oil.

Thereafter a lot depends up on the local availability of the soybean, oil availability from other substitutes like groundnut oil, cottonseed oil and rice bran oil etc. The scarcity of the substitute oils spark the import of edible oil in the form of other edible oils mostly soybean oil or crude palm oil. This situation varies from year to year. Thus the pattern in the highest import quarter is not uniform in the years under study.

D. Import Price Behavior of Soybean Oil in India

Table 2 depicts the trend in the average import prices of the soy degum in various quarters of a marketing season during past 5 years.

Observations:

The lowest import prices have been seen either in the last quarter or first quarter of the marketing year.
There is no clear trend in the period of highest prices.
During year 2010-11 and 2011-12, the import prices showed the increasing import price trend in the subsequent months.
However from 2012-13 onwards the trend reversal is seen. i.e highest prices are seen the first quarter i.e between Nov to Jan period, later on prices have seen a declining trend in the far months.
The last quarter of the marketing season i.e. Aug-Oct period has always seen higher prices as compared to the first quarter of the marketing season i.e. Nov-Jan during last 5 years.

Inference:

The soybean oil availability usually remain high during last quarter (Aug-Oct) due to ease in supply from US which is one of the biggest producers and supplier of the soybean oil in the world market. Also during first quarter the soybean oil supply from the domestic production remain high in India and China.

Thus due to better supply in the world market during last quarter and high domestic availability in the world’s top most importers i.e. China and India during first quarter keeps international soybean oil prices under check. This is the major reason why the prices have made their lows during either last quarter or first quarter of the edible oil marketing season.

Again in the subsequent months, the supply pressure eases in the world market and many other factors come in to play which keep on changing thus no uniform pattern is found in the period of highest months.

E. Current Demand & Supply Scenario in the World Soybean Oil Market

Table 3 highlights the current soybean oil market dynamics and gives the clear idea about the current and prospective demand and supply condition of the world market. (Data Source: USDA)

Observations:

For the edible oil marketing year 2015-16, the world production and supply of the soybean oil is likely to increase by 4 and 5 percent respectively as compared to 2014-15.

India’s soyoil production and supply is estimated to improve by 24 and 12 percent respectively for 2015-16.

Its consumption is also estimated to increase by around 12% during coming marketing season.

Major soyoil suppliers like Argentina, Brazil and United State are entering the new International edible oil marketing season beginning from October 2015 with significantly high beginning stocks falling in the range of 25, 25 and 19% respectively.

Inference:

On the basis of the above statistics, the supply situation seems quite comfortable in the world market.

Soy Oil Price Outlook for the current Quarter (Aug 15-Oct15) for Indian Market.

On the basis of the above fundamental analysis we will try to reach out at some conclusion regarding further price movement in the Indian soy oil market.

Let us again quickly SUMMARIZE the major points.

The sowing progress of kharif oilseeds including soybean in India is quite satisfactory --------- A bearish market sign

The current stock position at the Indian ports is also indicating that stocks are enough to meet the current demand. There is no major festive or marriage season demand during August/September months --------- A bearish market sign

Imports have remained generally on higher side during last quarters and least during first quarter of the marketing season --------- A bearish market sign

Import prices have remained lowest during last quarter or first quarter during a marketing season --------- A bearish market sign

World market supply seems quite comfortable to meet the current and near future demand --------- A bearish market sign

Thus the above analysis indicate that market is likely to correct further during August to October period. The biofuel demand is also low due to weak international crude oil prices which will further put pressure on the soy oil market. The continued strength in the US dollar Index is also likely to pressurize the US commodities prices including soybean and soy oil in the near future resulting in to weak market sentiments.

Technical Levels of NCDEX Soy oil Market

Soy Oil : NCDEX
Trend	Support 1	Support 2	Resistance 1	Resistance 2
Down	528	496	577	591

----------------------------------------------------

Sharp fall likely in Indian Soybean Market in July-August 2015

2015-07-06T13:19:00.001+05:30

Indian soybean market is likely to witness sharp correction in near future in the light of following facts.

Increment in the sowing area
Good Monsoon Rains till date
Significant fall in the Indian soymeal export during recent past

Let us evaluate each of these factors one by one.

INCREMENT IN THE SOWING AREA

As per the data released by Ministry of Agriculture, sowing of soybean is running far ahead from the last year. The total sowing area under kharif oilseeds has also shown increment. Table given below shows the khaif oilseeds sowing progress till 25 June 2015. Sowing is likely to gather momentum in near future in July.

The net result of early sowing would be early harvesting somewhere during early September. That would start pressurizing prices in the market.

Thus market would start witnessing new crop arrival a little bit early as compared to last year that would result in to weakness in the market during near future.

Table Source: www.seaofindia.com

GOOD MONSOON RAINS TILL DATE

The overall progress of monsoon has remained satisfactory till date at country level. However it is feared that during July and August some weakness might be seen in the monsoon progress.

The major sowing areas of soybean are whole Madhya Pradesh and Vidarbha and Marathwada regions of Maharashtra.

As per the Picture shown below of Rainfall distribution in the India, it is clear that during last one month, the Madhya Pradesh has seen Normal monsoon rains, Vidarbha region has seen excess rainfall while the Marathwada region has seen deficient rainfall.

So first step i.e. sowing of the crop is likely to complete successfully in these areas. The crop would need fresh spell of rains on periodic interval till maturity.

Picture Source: IMD, India

SIGNIFICANT FALL IN THE INDIAN SOYMEAL EXPORT DURING RECENT PAST

As per the press release dated 5 June 2015 of the SEA of India (www.seaofindia.com) :-

(a) The export of oilmeals during May 2015 is reported at 83,221 tons compared to 169,607 tons in May 2014 i.e. down by 51%.

(b) The overall export of oilmeals during April-May 2015 is reduced and reported at 265,859 tons compared to 418,052 tons during the same period of last year i.e. down by 36%.

(c) Soybean crushing is very much reduced due to continuous disparity and high price of domestic market, thanks to heavy speculation in future market vis-à-vis lower realization for meal and oil affecting overall domestic availability of both oils and meals.

(d) In spite of 5% Reward Rate under new Exim Policy and rupee depreciation, the export of soybean meal is at a historical low and reduced and reported just 18,017 tons in April and 14,046 tons in May 2015.

(e) Also the domestic demand for oilmeals has reduced adding to the woes of the industry. Capacity utilization is at the lowest and many plants are close down due to disparity in crushing.

Conclusion:

It is clear from the above three points that till demand does not improves and Indian industry does not get good export orders of soymeal in near future, it would not be possible for the buyer to buy soybean at higher prices in Indian market.
Soybean sowing area is likely to increase this year as a result of good monsoon during June and till first week of July. This factor is also likely to put pressure on the market prices.
This year, the fresh crop arrival would be a little bit early in the Indian physical market.

Technical View on Prices for short term [ for July- Mid September 2015 Period]

Currently in Indian futures market, the soybean October contract is trading at Rs. 3300/quintal.

Soybean prices in Indian futures market are likely to fall by around 10 -12 % from current levels.

The bottom price for the season 2015-16 seems somewhere near Rs. 2900/quintal. This level might be seen by Mid-September to Early October 2015.

Good beginning is half done: Indian Kharif crop sowing progress analysis

2015-06-29T12:36:00.001+05:30

Kharif crop sowing in India gradually picks up due to good monsoon rainfall till date in country as a whole.

However monsoon is yet to gather momentum in many parts of north and north –western India.

The latest data released by the Ministry of Agriculture, the kharif crop sown area has crossed 165 lakh hectares so far as compared to 134.18 lakh ha at this time last year. Remarkable progress is seen in case of Pulses and Oilseeds where area increment is far ahead as compared to the last year’s figures. In Pulses this increment is around 80% while in case of oilseeds around 427% increment is seen.

Rice and sugarcane area has seen marginal decline.

The sowing of different crops is underway and will continue till July end. If monsoon remains fairly active and its spatial distribution also remain good then country can expect better production.

This is a matter of great relief that in the commodities like pulses and oilseeds the sowing progress is good because India is import dependent in many pulses and edible oils.

Monsoon Progress:

Till date the Indian monsoon rains have remained good enough. It is clear that majority of the regions have received normal /excess rainfall during 1-28 June 29, 2015 barring a few regions of Uttar Pradesh.

The actual cumulative rainfall is also fairly above the normal rainfall for the country as a whole.

Now a lot will depend upon the further progress of the monsoon during crop growth stage.

Figures Source: IMD, New Delhi

Impact Assessment: Deficit Monsoon likely to hit hard on Crop Production and Commodity Prices in India

2015-06-03T04:47:00.000+05:30

The latest forecast of Monsoon rains in India by the Indian Meteorological department has worried the Indian farmers as well as the consumers. The goodwill of the government is also on stake as it will have an uphill task to contain inflation if the forecast come true this year.

This article analyses the previous trend in the monsoon rainfall, changes in production of commodities and wholesale price index to gauge the likely impact on the common man.

First of all let us highlight the main features of the Latest Monsoon Forecast for India for 2015 which was released by IMD on 2^nd June 2015.

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Ø Rainfall over the country as a whole for the 2015 southwest monsoon season (June to September) is likely to be deficient (<90 lpa="" of="" span="">

Ø Quantitatively, monsoon season rainfall for the country as a whole is likely to be 88% of the long period average with a model error of ±4%. [THAT MEANS AROUND 12% DEFICIENT RAINFALL]

Ø Region wise, the season rainfall is likely to be 85% of LPA over North-West India, 90% of LPA over Central India, 92% of LPA over South Peninsula and 90% of LPA over North-East India all with a model error of ± 8 %.

Ø The monthly rainfall over the country as whole is likely to be 92% of its LPA during July and 90% of LPA during August both with a model error of ± 9 %.

Ø The rainfall over the country as a whole is likely to be 92% of its LPA during July and 90% of LPA during August both with a model error of ± 9 %.

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· Thus, as of now, there is clear indication that this year’s monsoon is likely to remain deficient by around 12% on country level.

· States like West UP, Punjab, Haryana, Rajasthan, Madhya Pradesh and Maharashtra are likely to be affected more than the other parts of the country. The deficiency may remain in the range of 15 to 10 percent in these states.

· Last year too, country witnessed a 12% deficient rainfall. Thus this will be the second consecutive year which will witness less rains in the country.

· This indeed is a matter of worry despite the fact that the country has ample foodgrain buffer stocks with the government and Sugar supply is ample.

Market react more on the future event rather than the current facts. Thus in spite of comfortable food grain availability, the possibility of commodities price rise has increased sharply.

Here we will see empirically what has happened during past years when such type of situation emerged. Based on that we will try to draw some conclusions about the likely production scenario and expected price rise for this year for some important commodities.

A : IMPACT OF RAINFALL ON PRICES OF COMMODITIES

In India a vast part of the cultivable land is totally dependent upon monsoon rains. The monsoon rains are one of the most important factors that determine the production of crops. Thus supply and demand factors determine the prices.

Table1 and Fig. 1 present the trend in the rainfall departure and percentage change in the Wholesale Price Index in India for the last 9 years.

Observations:

From 2005 to 2008, not much deviation in rainfall from the normal range was seen. Thus prices in general (with some exception) have remained more or less stable or even declined in Cereals, Pulses, eggs, meats & fish, condiments and spices and sugar. However in Oilseeds the prices remained very high.
In Year 2009, where rainfall deficiency was very high (-21.8%), the immediate impact on prices of the commodities was seen. Prices of Cereals witness a moderate rise, while a significant jump in prices of Pulses, Vegetables, Eggs, Meat & Fish, Condiments & Spices was seen.
SUGAR PRICES ROSE EXCEPTIONALLY HIGH BY 48 %.
In year 2010 and 2011 monsoon rains recovered and were in surplus, the prices came down in cereals, pulses, and sugar.
In Year 2012, again prices rose substantially in Cereals, Pulses, oilseeds and sugar.

Inference:

Thus prices of Cereals, Pulses, Oilseeds and Sugar have seen more and direct impact of deviation in the monsoon rainfall.

The vegetables are perishable and nature and spices are mostly perennial, thus the impact of rainfall deficiency/surplus cannot be generalized.

B: IMPACT OF RAINFALL ON PRODUCTION OF COMMODITIES

Table 2 presents the trend in the rainfall as well as the production of important commodities for the last 10 years. The %age change in the production with respect to the previous year is also given.

Observations:

The production years 2009-10, 2012-13 and 2014-15 have seen deficient monsoon rainfall in India. The extent of deficiency has remained in the range of -21.8%, -7.1% and -12% respectively in these years.
The production of Cereals, particularly Rice and Wheat, Pulses, Oilseeds and Sugar has seen significant decline in the deficient rainfall years. The extent of production decline has roughly remained in the range of 5-16% in these commodities.
In year 2014-15 which witnessed around 12% rainfall deficiency, the significant production decline in Cereals, rice, wheat, Pulses and Oilseeds was seen.. Herver sugarcane area witnessed marginal increase.

Inference:

Even a rainfall departure of around 10% from normal rains results in to production fall in the range of 5 to 15 Percent in many commodities.

Given the fact that this year’s rainfall deficiency in the range of 12% (equal to last year’s range), we assume that production of cereals, rice, wheat, pulses and Oilseeds may reduce by -5. -4, -5, -10, -16 % respectively as compared to last year’s figure. [ i.e fall in production of these commodities may be at least in the same proportion as was seen during 2014-15].

However, we expect that sugarcane production may decline by more that 5% as compared to last year’s figure because this crop requires more water and is largely grown in the North-west UP and Maharashtra where the expected monsoon deficiency is around 15%.

Conclusion:

The agricultural commodities production is expected to decline straight in the second successive year due to weak monsoon rains. The extent of production fall may vary in the range of 5 to 15% among various commodities including cereals, rice, wheat, pulses, oilseeds and sugar. This figure may further rise if the monsoon deficiency range further increases in the June – september period.

The prices of agricultural commodities are likely to increase substantially during 2015-16 period due to less production and increased demand.

Oilseeds and Pulses seems more vulnerable in terms of price rise. If sugarcane area substantially reduce this year then Sugar prices will start witnessing improvement and sugar will emerge a major commodity which will witness significant price rise in 2015-16.

RICE GROWING SEASONS AND REGIONS IN INDIA

2015-05-28T23:02:00.001+05:30

Knowledge Series :

Rice is the main food item of Indian Diet.

Rice (Paddy) sowing/transplanting and harvesting periods have a great variation in different parts of India due to variation in temperature, rainfall, soil type and other Agroclimatic conditions.

Three Main Seasons for Rice/Paddy which are classified according to season of harvesting of the crop.

Rice Seasons	Sowing Time	Harvesting Time	Interesting Facts
Autumn Rice	May to August	September to October	· Known as Pre-Kharif rice. · The time of sowing differs among states due to variation in weather condition and rainfall pattern. · Autumn rice crop is known as 'Aus' in West Bengal, 'Ahu' in Assam, 'Beali' in Orissa, 'Bhadai' in Bihar, 'Virippu' in Kerala and 'Kuruvai/kar/ Sornavari' in Tamil Nadu.
Winter Rice [This is the main rice growing season in India]	June to July	November to December	· Known as Kharif rice. · Winter rice is known as 'Aman' in West Bengal, 'Sali' in Assam, 'Sarrad' in Orissa, 'Agahani' in Bihar and Uttar Pradesh, 'Sarava' in Andhra Pradesh, 'Mundakan' in Kerala and 'Samba/Thaladi' in Tamil Nadu. About 84% of the country's rice crop is grown in this season.
Summer Rice	November to February	March to June	· Known as Rabi rice. · It is known as 'Boro' in Assam and West Bengal, 'Dalua'in Orissa, 'Dalwa' in Andhra Pradesh, 'Punja' in Kerala and 'Navarai' in Tamil Nadu and 'Garma' in Bihar.

Due to favorable temperature conditions in the eastern and southern regions of the country, two or three crops of rice are grown in a year.

In northern and western parts of the country, due to sufficient rainfall and fairly low winter temperature, only one crop of rice is grown during the month from May to November.

RICE GROWING REGIONS

Sl.No.	Rice Growing Regions	Facts
1	North-Eastern Region	· Major States are Assam and North eastern states. · In Assam rice is grown in the basin of Brahmnaputra river. · North-eastern region receives very heavy rainfall and thus rice is grown under rain fed condition.
2	Eastern Region	· Major States: Bihar, Chhattisgarh, Madhya Pradesh, Orissa, Eastern Uttar Pradesh and West Bengal. · Rice is grown in the basins of Ganga and Mahanadi rivers. · This region has the highest intensity of rice cultivation in the country as it receives heavy rainfall thus rice is grown under rain fed conditions.
3	Northern Region	· Major States: Haryana, Punjab, Western Uttar Pradesh, Uttrakhand, Himachal Pradesh and Jammu & Kashmir. · Low winter temperature. · Single crop of rice from May-July to September-December is grown.
4	Western Region	· Major States: Gujarat, Maharashtra and Rajasthan. · Rice is grown under rain fed condition during June-August to October - December.
5	Southern Region	· Major States: Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. · Rice is mainly grown in deltaic tracts of Godavari, Krishna and Cauvery rivers and the non-deltaic rain fed area of Tamil Nadu and Andhra Pradesh. · Rice is grown under irrigated condition in deltaic tracts.

Source of Data/ information: http://drd.dacnet.nic.in/ (Directorate of Rice Development, Patna)

Congratulation Mr. Modi for Launching “DD KISAN CHANNEL”: Adopt 16 Points to Success

2015-05-27T15:13:00.000+05:30

On 26 May Indian Government launched a dedicated television channel exclusively for the Farmers which is expected to fulfil various needs of the farming community.

We all know that “Time is money”. Technology is “means” to achieve it. Anything can wait but not agriculture. So without any time lag, how to reach to the millions of farmers remained a big constraint for the concerned departments of Agriculture in India.

Technology is changing faster than anything in most sphere of life and has become a part and parcel of our daily life. Farmers of India have also been benefited from these technological innovations in one way or other. The green revolution took place due to technological breakthrough in seed technology of wheat and rice. This became a foundation stone of India’s self-sufficiency in food grain production. Since then India has seen remarkable growth in several arenas of agriculture.

Now with the Launch of the “DD KISAN CHANNEL” it has become easier to go from "Lab to Land". The government of India deserve the appreciation for it.

Now following are the 16 suggestions for making this Channel a grand success:

Extensive Advertisement of the “Kisan Channel” : Because India is a big country and We all know that it is advertisement which makes a big role in the success or failure of a particular product/institution/policy.
Regional importance: Agriculture is highly diversified into regions and climates. Thus to make it more relevant it is important to include more and more focus on regional crops and issues.
Language issues: Programmes in the regional languages are must because in several parts of the country Hindi or English is yet not spoken and understood. In the later years, the same programmes may be translated in to regional languages and may be broadcast.
Participation of Research Institutions: Extensive participation of scientists is must for the success of this channel.
Programmes like “World of Agriculture”: In it, the best practices adopted by various countries should be broadcasted.
PRIME TIME: The communication should be TWO way. This means that burning issues/problems should be taken up and discussed and farmers’ representatives should be made an integral part of this debate programmes.
Extension of the government programmes and schemes: Best way to spread government programmes and policies to the end beneficiaries i.e. farmers.
Private sector participation: Due time-slot must be provided to the private sector industry relating to agriculture so that they can also show their products through this channel. This can become a good revenue model to the Government itself for sustaining the financial viability of the channel.
Agribusiness and Market information: Real time commodities market information must be spread through Kisan Channel to the farmers. Live Mandi Prices and Arrival information is must to get the real benefits of their produce sale. Information on other agribusiness and small scale industry in agriculture can be spread.
Futures Market Information and Knowledge: Through this channel, farmers can have direct and live access to the futures market information. The basic objective of the futures market are (a) price discovery (b) price dissemination and (c) risk management. These three objectives can be easily attained through broadcasting the futures market information on the DD Kisan Channel. The decision making of the farmers regarding various aspects of the commodities viz. sowing area increase/decrease, current and future prices of a particular commodity, appropriate time of sale of commodity, supply and demand scenario across the country and factors affecting the market trend can be enhanced many fold through programmes specially formed for this purpose.
Weather Watch: Regular Updates on Weather is must to include.
Information about the International Market Trade/Export/Import: The kisan channel on daily basis can provide the international market demand, supply, production and other various aspects of international trade.
Lessons from Leading Business Channels: The leading business channels like CNBC Awaz and Zee Business are a great source of information and knowledge regarding the financial sector of the country. Likewise, the live updates/ programmes on crops/commodities markets can give a direct financial benefits and literacy to the farmers.
Programmes for Financial Inclusion: Programmes on banking system and current facilities available to the farmers can be broadcasted so that the objective of the financial inclusion can be met.
Success Stories: Stories of the Farmers/entrepreneurs successful in the field of agriculture/trade should be highlighted.
Man Ki Baat: Let farmer also do “Talk of the Heart” through this channel. Give 5 minutes time and take interview of one farmer and let him say what he wants from the Indian Government.

The programmes must be of high quality. For that the reporters and programmes team must have a minimum Level of agriculture knowledge.

I hope that these points can help to improve the quality of the DD Kisan Channel and will serve the purpose for which it is launched.

Agri commodity prices may rise due to sudden Fuel Price rise.

2015-04-30T22:10:00.001+05:30

In Mid night today, the fossil fuel price will rise by significant amount.

Agri commodities prices in general will witness a upward movement because of rise in the transportation cost due to hike in Diesel price and Petrol prices.

Diesel price hike = Rs. 2.37/litre
Petrol Price hike = Rs. 3.96/litre

Soy oil close down in Indian Futures Market

2015-04-21T23:34:00.000+05:30

Soy oil close down in Indian market due to profit booking and fresh selling pressure.

As discussed in earlier post this afternoon that short term correction might be seen in soy oil.

The NCDEX Soy oil June contract closes at 584.

Tomorrow some more correction might be seen.

For 22 April 2014 the following short term Technical Levels seems valid.

Support = 580 Resistance = 587

Short Term correction likely in Soy oil in Indian Market

2015-04-21T15:04:00.003+05:30

After witnessing a positive movement since start of the April month, it seems that short term correction is due in Indian soy oil market.

Prices are getting resistance on current levels.

NCDEX Soy oil June contract :
Resistance = 591 Support = 582

Selling near current levels i.e 587 may result in to some gains in short term.

Rain Effect on Indian Agricultural Commodities Market

2015-04-15T22:57:00.003+05:30

Recent unseasonal rains during March and early April month have caused significant damage to the standing crops which were ready for harvesting in states of central and north India.

As expected, agricultural commodities market has reacted sharply to this event.

In the first fortnight of April month, the prices rose significantly in some commodities.

Table 1 and figure 1 given below show the extent of price rise in few important commodities in the Indian futures market.

Jeera(cumin), Chana (Chickpea) and Mustard seed have seen highest price rise among the Rabi season crops.

The cascading effect is also seen in the commodities like soybean and soy oil.

However, in Wheat not much change is seen because the government of India has ample buffer stocks with it. Further government has also started wheat procurement at MSP.

Once the government procurement programmes end by June, the wheat market is also expected to witness significant price rise during this marketing season.

Sharp Positive Reaction in Indian Commodities Market on further crop damage due to recent rains

2015-04-06T13:04:00.001+05:30

Recent rains and hail storm in many parts of north India during past week till yesterday has put farmers in further trouble as harvesting process of Rabi season crops like wheat is further delayed and to some extent there has been loss to the crops also.

Please note that during March and till this Sunday rains in many states particularly north Indian states have caused a considerable loss to the rabi crop production. There are also issues of quality deterioration. The extent of loss varies from farmer to farmer and state to state.

The states and central government have made an assessment of crop damage and appropriate relief measures are being taken by the concerned agencies.

This recent spell of rains/hail storm/squall has become a turning point for some of the commodities which were in search of a fresh direction in market.

And now this positive momentum seems more vigour than expected particularly in commodities like Chana (Gram), Jeera (Cumin), Mustard seed, Barley and wheat and may last for medium term.

The cascading positive effect will also be seen in other oilseeds like soybean, edible oils like refined soy oil, crude palm oil and cotton etc.

Right now most of the above mentioned commodities are up in the range of 1 to 4% from their previous close.

Farmers again on the mercy of Rain God in India

2015-03-29T19:14:00.000+05:30

Farmers of many states like Rajasthan, Madhya Pradesh and Maharashtra have yet not come out from the trauma of crop loss due to unseasonal rains during first fortnight of March. However, the states/central government have announced different relief (financial assistance) packages for the farmers.

And again Rain God seems to have annoyed from the farmers. As per the IMD, the rains/hail storm/squall are likely to occur at many places in the next one to two days.

The Rabi crop harvesting is underway in most parts of the north India. Major contribution to the food crops comes from the states like Punjab, Haryana, Uttar Pradesh, Rajasthan and Madhya Pradesh.

Have a close eye on the RABI SEASON CROPS like WHEAT, GRAM (Chana), BARLEY, MUSTARD SEED (RMSEED), CUMIN (JEERA), Coriander (Dhaniya) in India market.

It is to be seen that impact of this rain on the crops and accordingly the market direction would be decided.

It seems that Next week movement would be volatile with a positive bias in the above mentioned commodities.

Source: IMD, 29 March 2015

Source: IMD, 29 March 2015

Soy oil trades down in Indian Market

2015-03-27T23:08:00.000+05:30

11.00 PM IST
Soy oil Update

Soy oil trades down by more than 1% in Indian futures market due to subdued demand in the physical market. Weakness is also seen in the international market as soy oil prices at CBOT also trades down by 2%.

Yesterday when NCDEX Soy oil April Contract was trading at 588.50 level, we posted that market may fall from current levels.

Today till now market has made a low of 579.45. Thus we have seen a fall of Rs. 9. Currently market trades at 580 level.

Again if market close below 584-585 level, then next week also we may witness further fall... may be near 560 level.

NCDEX Soy Oil April Contract

Soy oil likely to correct from current levels in Indian Futures Market

2015-03-26T20:44:00.000+05:30

After trading in a range bound to positive territory for the last 4-5 days, it appears that market is getting enough resistance on current levels in soy oil futures market in India.

we may go wrong in our view, but as we mentioned in our earlier posts that 591 is the major resistance for short term. And till now market was not able to close above this level in NCDEX Soy oil April Contract.

And today if market close near 584-585 level, then there are quite fair chances that market may start coming down again towards the levels below 560.

At the same time if market is able to close above 591 level then movement towards 600 may be seen in short term.

However likelihood of correction is very high.

Sugar Market Plunges due to Excess Supply in India

2015-03-18T20:32:00.000+05:30

There has been a sharp correction of around 17 % in the sugar futures prices in India since the start of the sugar marketing season (sugar marketing season starts from October and ends in September).

The Futures prices of NCDEX Sugar May Contract have dropped from Rs. 2860/quintal during October 2014 to Rs. 2370/quintal till date.

In fact, Traders were having fair idea about the production rise and situation of ample supply world over. They utilized every rise in making selling opportunities.

The market seems still in the grip of the bears in the light of the facts and figures which were released by the Indian Sugar Mills Association (ISMA) recently.

The important points of the Press Release are given below.

· The sugar mills in the country have produced 221.8 lac tons of sugar during the current season up to 15^th March, 2015. This is 28 lac tons higher than the production up to the corresponding period in the last season of 193.8 lac tons.

· As on 15^th March, 2015, 476 sugar mills were still under operation, which were 409 mills last year at the same time

· The Government has revised its sugar production estimates to 265 lac tons, as compared to the earlier estimate of 250 lac tons. They had previously estimated a surplus of 14 lac tons and, therefore, allowed incentives to export this 14 lac tons as raw sugar.

· However, the global sugar prices fell at the same time mainly due to the massive depreciation of Brazilian currency in comparison to the US dollar, making sugar exports from Brazil even cheaper. The fall in global sugar prices, therefore, have restricted raw sugar exports from India.

· With higher estimations of the sugar production by the Government by 15 lac tons and lower expected raw sugar exports, the industry has requested for creation of 20 lac tons of buffer stocks. It will help the industry with some cash flows to carry the extra sugar and will check distress sales by some sugar mills. This 20 lac tons can then be used by the Government next season for its PDS requirements.

Source: ISMA, Press Release, 17 March 2015.

NCDEX SugarM May Contract

Market Follows what We predicted in Soy oil in Indian

2015-03-18T10:57:00.000+05:30

Please recollect our earlier post on 12 March 2015.
http://prasoonmathur.blogspot.in/2015/03/short-term-marginal-recovery-then-again.html

We said that after making a marginal recovery, Soy oil market is likely to fall again.

Market did the same. From 12th to 16th March soy oil April contract rose from the level of 574 to the level of 588.30 then again it started falling from 17th March.

Today right now market trades at 571.80 at 10.37 AM IST.

We still stand with our earlier forecast that correction will continue in medium term.

The Technical levels are given below as was described in the post of 12 March.

NCDEX Soy Oil April Contract as on 18 March 2015

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12 March 2015

Short term marginal Recovery then again Fall expected in Indian Soy oil Market

http://prasoonmathur.blogspot.in/2015/03/short-term-marginal-recovery-then-again.html

12 March 2015:
Short Term Recovery then
During last 10 days Indian soy oil market has fallen by nearly 4%. (from 600 to 575 level) till date.

Let us review the market movement for next couple of days.
Two things seem still clear --------
1. MEDIUM term Outlook is still BEARISH.
2. SHORT term MARGINAL RECOVERY might be seen

Right Now Soy oil April Contract trades at 576.50 at 12.33 IST.

Technical levels are given below for MEDIUM and SHORT term.

India: NCDEX Soy oil April Contract

Medium Term Technical Levels

S1: 548 S2: 530 R1: 600 R2: 619

Short Term Technical Levels

S1: 555 S2: 550 R1: 590 R2: 600

Fundamentals have yet not changed. Physical market demand is still not picking up and traders are in wait and watch mode.

Some technical bounce back may be seen in the market. Higher levels may result in to fresh selling by the hedgers and speculators.

---------------------------------------------------------------------------------------------------------------------------

Rains and hailstorm Damage Crops in Many parts of the India

2015-03-16T10:07:00.000+05:30

Recent rains in various parts of the country for the past couple of days have badly affected the crop production.

Various print and electronic Media reports of India have shown pictures and visuals of crop damage due to hailstorm and waterlogging in fields.

Farmers of the states like Rajasthan, Madhya Pradesh and Maharashtra are among the worst sufferers.

In Rajasthan some people died while many injured due to this unseasonal rains and weather disturbance.

Rabi crops like Mustard seed, wheat, Barley, Gram, Masoor, Jeera (Cumin), Potato and Onion have seen maximum loss.

Please note that Madhya Pradesh is one of the major producers of Wheat and Gram (chickpea) while Rajasthan stands first in Mustard production. Other crops like Onion and Cumin are also among major crops of Rajasthan.

In Maharashtra crops like Onion and horticulture crops like pomegranate and grape have seen losses.

In many cases the quality issues will be raised in time to come.

The final assessment of production loss is yet to be made by the government agencies. The farmers say that more than 50% of the crops are lost either in terms of production or quality.

The market will surely adjust itself once some clear picture emerges. But one thing is sure that ample amount of damage is there to some of the crops.

In near future in March or in Early April if again weather turns unfavorable then it will be really hard to save the remaining crops because in the north Indian states like Haryana, Punjab, UP and Bihar harvesting of crop would be in full swing and any unseasonal rain during that period may put farmers in great trouble.

Strong US dollar Index and Weather Concerns Support Indian Agricultural Market

2015-03-13T23:32:00.002+05:30

Indian edible oil market witnessed some recovery on Friday mainly due to short covering by the sellers.

Strong US dollar against Indian currency also added support to the edible oils i.e soy oil and crude palm oil as Indian is the net importer of these oils.

Weather concerns also encouraged bulls as there is forecast of widespread rains in many parts of the country for the next 3-4 days which may result in to some loss to the standing crop and delay in harvesting process of the crops like Mustard seed, Chana wheat.

Yesterday we posted in our blog that some recovery might be seen in the market.

On next week too, if intensity of rains remain high then market may witness some more gains in the above mentioned commodities.

Next week may witness increased volatility in the agricultural commodities market.

Bad Weather Supports Indian Agricultural Market Sentiments

2015-03-13T16:59:00.000+05:30

Forecast for widespread rains in many parts of the country supports the agricultural commodities market sentiments.

Please note that the crops like Mustard seed, and Gram are ready for harvesting.
In Fact in many parts harvesting is underway.

Rains may delay process of harvesting. There is possibility of hailstorm in some patches, it may also damage the crop to some extent.

Below is the weather warning issued by the IMD on 13 March 2015.

Thus, it appears that some upside movement in Wheat, Gram (Chana), Mustard seed, edible oils and soybean may be seen in near future.

Short term marginal Recovery then again Fall expected in Indian Soy oil Market

2015-03-12T12:35:00.000+05:30

During last 10 days Indian soy oil market has fallen by nearly 4%. (from 600 to 575 level) till date.

Let us review the market movement for next couple of days.
Two things seem still clear --------
1. MEDIUM term Outlook is still BEARISH.
2. SHORT term MARGINAL RECOVERY might be seen

Right Now Soy oil April Contract trades at 576.50 at 12.33 IST.

Technical levels are given below for MEDIUM and SHORT term.

India: NCDEX Soy oil April Contract

Medium Term Technical Levels

S1: 548 S2: 530 R1: 600 R2: 619

Short Term Technical Levels

S1: 555 S2: 550 R1: 590 R2: 600

Fundamentals have yet not changed. Physical market demand is still not picking up and traders are in wait and watch mode.

Some technical bounce back may be seen in the market. Higher levels may result in to fresh selling by the hedgers and speculators.

NCDEX Soy oil April Contract:
Medium Term Chart View

Short Term Chart View