June 27, 2012

 

 

Bolstered by dry weather in key soy growing areas in India, soy futures extended gains on Tuesday (June 26) to hit a record peak and the US that raised concerns over oilseed supplies in the world after output fell in Latin America.

 

Soyoil was treading water as a fall in the Malaysian palm oil outweighed weak rupee, while rapeseed rose on good demand for meal.

 

The July soy contract on India's National Commodity and Derivatives Exchange was up 0.48% at INR3,847.5 (US$67) per 100 kilogrammes by 0826 GMT, after rising to INR3,879 (US$68) earlier, the highest level for the front month contract.

 

US soy was up 0.07% at US$14.83-1/2 per bushel, after gaining 2.8% in the previous session, while Malaysian palm oil futures were down 0.1% at MYR3,027 (US$948) per tonne.

 

"The delay in monsoon progress is boosting sentiments. It will ultimately delay sowing and then arrival of new crop," said Sudha Acharya, an analyst at Kotak Commodity Services Ltd.

 

"Soy supplies are very tight in the local market. Sowing delay will keep tight supply situation for a longer period."

 

Madhya Pradesh and Maharashtra are the top two soy producers in the country accounting for more than 85% of the total production and both states have so far received below average rains.

 

"The rally in overseas market is also supporting local prices. It is lifting export prices of Indian oilmeal," Acharya said.

 

USDA's weekly crop ratings survey on Monday (June 25) said that US soys were 53% good to excellent compared with 56% a week earlier as dry weather hurts the planted crop. In South America, this year's poor crop coupled with strong export demand has cut soy inventories sharply, Oil World estimates.

 

The July soyoil contract edged up 0.13% to INR765.25 (US$13) per 10 kilogrammes, while rapeseed rose 1.18% to INR3,948 (US$69) per 100 kilogrammes. The Indian rupee eased to 57.14 against dollar on Tuesday (June 26). A weak rupee makes edible oil imports cheaper and at the same time raises returns for oilmeal exporters.

 

In the Indore spot market in Madhya Pradesh, soyoil edged up by INR1.1 (US$0.02) to INR753.8 (US$13) per 10 kilogrammes, while soy rose INR14 (US$0.24) at INR3,818 (US$67) per 100 kilogrammes. At Sri Ganganagar in Rajasthan, rapeseed rose by INR89 (US$1.56) to INR3,954 (US$69) per 100 kilogrammes.