December 4, 2008

India Oilseed Weekly: Soy farmers brace for lower prices on new arrivals (week ended Nov 29, 2008)
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Price Summary

Soy Indore prices were up in this week by Rs. 910 per tonne on Saturday (November 29) and settled at Rs. 15,660 as compared to last week's closing rate of Rs. 14, 750 as on November 22, 2008.  
Price of sunflower remained stable in the week as compared to the last week's figure.
Peanut kernal, peanut meal, soymeal 48%, rapeseed and soymeal Indore dipped by Rs. 1,000; Rs. 500; Rs. 500, Rs. 250 and Rs. 55 per tonne respectively.
Groundnut Extraction (GNE) 40% and GNE 45% were traded at Rs. 12,500 and Rs. 13,500 per tonne respectively.
Market Analysis
Farmers in India are yet to reconcile themselves to lower commodity prices in the aftermath of the global financial meltdown. This is more apparent now in the case of soy.
The country has this year, produced record soy. The Soybean Processors' Association of India (SOPA) has estimated the size of 2008-09 harvest at 10.818 million tonnes against the previous 9.473 million tonnes (which was again an all-time-high) then.
The trend is visible for soy in Madhya Pradesh, which accounts for about 55 percent of the country's output.
According to the Madhya Pradesh Mandi Board, total arrivals in major mandis (markets) of the State since October, at almost 0.7 million tonnes as on Friday, is down 21 percent from the 0.88 million tonnes last year.
After clocking five million tonnes of exports valued at over Rs. 73,000 million during 2007-08, soymeal shipments have, for the first time since 2003, shrunk by 15 percent in October. Export prices have also dropped to US$262 to US$265 a tonne (FOB), Kandla/ Bedi, from the average US$480 - US$490 for July- August.
As a result, soy is currently selling at Rs. 14,500 - 15,500 a tonne in Madhya Pradesh, which is just above the MSP of Rs. 13,900. Last year, prices at this time quoting roughly Rs. 2,000 a tonne higher and going up to Rs. 26,000 to Rs. 27,000 towards the season-end.    
"After last year highs, farmers are finding it difficult to accept the new rates and and are therefore trying to hold back their crop. Had arrivals been as before, prices would have collapsed even more," said Rajesh Agarwal, spokesperson of SOPA.
According to him, bigger farmers are not experiencing any immediate liquidity pressures because of the profits from the last year's crop. Also, many of them are generating cash by liquidating whatever little stocks they have of wheat that was harvested in March-April.   
"They are staggering their soy sales in the hope of cashing on in every little increase in prices from these levels," Agarwal added.
No hike in edible oil import duties seen
India's Union Food and Agriculture minister, Sharad Pawar, has ruled out any immediate hikes in edible oil import duties.
Speaking at the Economic Editors' Conference, the minister said the government will take any action on raising import duty on edible oils only if oilseed prices in the domestic market fell below the minimum support price (MSP) levels.
"As of today, oilseed prices are not below the MSP," Pawar said. The government, on November 18, imposed a 20-percent import duty on crude soy oil, while leaving the duty on other oils unchanged.
Currently, crude palm, sunflower and rapeseed oil attract zero basic customs duty, while all refined oils including soy are chargeable to 7.5 percent duty. The government has been under pressure from domestic solvent exporters to raise import duties, especially on the palm complex that accounted for over 85 percent of the total 5.608 million tons (mt) of edible oil imports undertaken in the just ended 2007-08 oil year (November - October).
Pawar said in the event of oilseed prices going below the MSP, the government of India would consider either hiking import duties or alternately undertake market intervention through state agencies.
"There is a gap between domestic production and consumption requirement and therefore, we cannot do away with imports," he added.      
Acreage under most rabi crops on the rise
Rabi sowing is fairly robust in the current year, with farmers bringing in more area under most crops than last year.
There has been a significant jump in acreages - be it corn, barley and oilseeds (rapeseed-mustard, sunflower and groundnut).
All in all, these point to a bumper rabi harvest, subject to favourable weather conditions such as expected rains in December-January and no early onset of summer.
Market forecast
Guar Seed
Supply pressure from arrivals is keeping prices low despite good demand.
Soy may trade weak on sluggish demand and increased arrivals but support from exports will keep prices positive.
Prices are stable at major markets and may improve on emerging export opportunities.

The comparison rates of nine commodities like Soy/ Peanut/ Rapeseed/ Sunflower and their meals


Prices as on Nov 22

Prices as on Nov 29


Soy (Indore)

14, 750

15, 660 

+ 910

Soy Meal 48%

14, 000 

13, 500 

- 500

Soymeal Indore

13, 200

13, 145 

- 55

Peanut Kernal

30, 000

29, 000

- 1, 000

Peanut Meal

13, 000

12, 500

- 500


29, 250

29, 000

- 250

Rapeseed Meal

10, 400 

11, 555

+ 1, 155


28, 000

28, 000


Sunflower Meal

8, 700

9, 100

+ 400

US$ 1 = INR 49.930 (Dec 4, 2008) 


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