July 17, 2012

India's soy prices to remain high on lower supply, lack of rain

Fears of lower soy supply in US and lack of rains in major soy growing states in India may continue to boost an upward movement in Indian soy prices as gains were noticed again in the last trading session at INR4394.5 (US$79) for August contract up by 1.12%.

Total weekly US soy export sales were reported at 759,200 tonnes which was higher above expectations. Total meal sales were about 169,700 and net oil sales were at 33,900 tonnes. Rising prices volumes and open interest in soy indicate a bullish trend to continue in soy prices. Active buying in soy in Indian markets coupled with supply concerns in soy both in Indian and international markets is likely to push soy prices in Indian futures markets. Basis Lowered basis is being observed on increased arrivals as farmers have finished sowing in most of the soy growing regions in Madhya Pradesh.

The spot prices are lower than futures prices on expectations of reduced supply in soy in coming days in physical markets. Soy prices at CBOT platform currently are trading higher at US$1,579 up by 0.41%. Increased weekly US export sales in soy and lack of rains which are critical for soy crop development may push up soy prices in international markets. In Indian scenario though there have been reports of increased arrivals substantially demand for soy meal is also being noticed in major physical markets which may further strengthen a firm trend in soy prices in Indian markets.