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SMC Global Monthly Report on Oilseeds

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This report is published every month and contains detailed factors, which generally impacts the oilseeds. Also it contains the expected price scenario and possible price range in futures markets …

This report is published every month and contains detailed factors, which generally impacts the oilseeds. Also it contains the expected price scenario and possible price range in futures markets within a month. Future prices scenario is arrived at by taking various factors such demand and supply of the commodities, considering price movement in spot & international markets.

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  • 1. Subhranil Dey Sr. Research Analyst subhranildey@smcindiaonline.com MonthlyReport(March) Oil Seeds March 12, 2014 ®
  • 2. 2 Price movement of Oilseeds on NCDEX & MCX (Feburary) (% Change) Source: SMC Research Price movement of Oilseeds on Spot marekts (Feburary) (% Change) Source: SMC Research ® 5.48 10.84 11.57 11.54 4.54 6.28 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 Mustard Crude Palm Oil (MCX) Crude Palm Oil (BMD) Soybean (CBOT) Refined Soy oil Soybean (NCDEX) 5.51 11.50 3.18 4.87 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 Mustard (Jaipur) Crude Palm Oil (Kandla) Refined Soy oil (Indore) Soybean (Indore)
  • 3. 3 COOIT’s Trade Estimate for Rabi Oilseed Production and Availability of Vegetable Oils during 2013-14 Season ® Source: SEA of India 35th All India Rabi Seminar of Oilseeds, Oil Trade & Industry was held on 9th March, 2014 at New Delhi and arrived at trade estimate of Rabi Oilseedscropand availability of vegetableoils fromRabi Crop during2013-14seasonasunder: General Observations ŸTheareaunderRabi OilseedsCrop 2013-14increasedto99.10lakh hectaresfrom93.44lakh hectareslastyeari.e.upby5.66lakh hectares. ŸRabi GroundnutCrop has marginallyincreasedby0.53lakh tonesto17.67lakh tonesfrom17.14lakh tonesof lastyear. ŸRapeseed-mustardincludingToria cropincreasedto73.75lakh tonesfrom68.51lakh tonesof lastyear,up by5.24lakh tones. ŸTheoverallRabi OilseedsCrop 2013-14increasedto99.10lakh tonesfrom93.44lakh toneslastyear,up by5.66lakh tones. ŸThe overall 9 oilseed crops ( Kharif & Rabi) for the current year (2013-14) is estimated at 267.30 lakh tones compared to 247.31 lakh tones of lastyear,up by19.99lakh tones. ŸThe total vegetable oil availability from Kharif and Rabi Oilseeds crops for the year 2013-14(Nov-Oct) is estimated upward at 85.25 lakh tonescomparedto80.32lakh toneslastyear. ŸThe import of vegetable oil during 2013-14 (Nov-Oct) in spite of higher crop, likely to increase by about 5.00 to 6.00 lakh tons and estimatedin therangeof 110.00to112.00lakh tonsfrom106.79lakh tonsin previousyear(2012-13).
  • 4. 4 Progress of Sowing of Rabi (2013-14) Oilseed Cropas on 20th February, 2014 Source: SEA of India ® Source: SEA of India
  • 5. Progress of Sowing of Rabi (2013-14) Oilseed Crop as on 20thFebruary, 2014 Below is the Agriculture Ministry report of Rabi oilseeds sowing data for week ending 20th February, 2014 vis a vis same period of the last year(2012-13)asunder: Crop-wiseBrief: ŸRapeseed & Mustard: Area coverage during Rabi 2013-14 is higher by 4.06 lakh ha compared to corresponding period of Rabi 2012-13. ŸGroundnut: Area coverage during Rabi 2013-14 is lower by 0.82 lakh ha comparedtocorrespondingperiodof Rabi 2012-13. ŸSafflower: Area coverage during Rabi 2013-14 is higher by 0.30 lakh ha comparedtocorrespondingperiodof Rabi 2012-13. ŸSunflower: Area coverage during Rabi 2013-14 is lower by 0.83 lakh ha comparedtocorrespondingperiodof Rabi 2012-13. ŸSesamum: Area coverage during Rabi 2013-14 is higher by 0.27 lakh ha comparedtocorrespondingperiodof Rabi 2012-13. ŸLinseed: Area coverage during Rabi 2013-14 is higher by 0.21 lakh ha comparedtocorrespondingperiodof Rabi 2012-13. Snap shot of World Agricultural Supply and Demand Estimates(March2014) ·U.S. soybean supply and use projections for 2013/14 include higher imports and exports, reduced crush, and reduced ending stocks comparedwithlastmonth's report. ·Soybean exports are raised 20 million bushels to a record 1.53 billion reflecting continued strong sales and shipments through February. ·Soybean crush is reduced 10 million bushels to 1.69 billion reflecting weaker-than-expected domestic soybean meal use throughthefirstquarterof themarketingyear. ·Soybean stocks are projected at 145 million bushels, down 5 million fromlastmonth. ·Soybean oil stocks are reduced on lower production and increased exports. 5 ® ·Other soybean oil changes include reduced use for biodiesel and an offsetting increase for food, feed, and other industrial use. Soybean and soybean product prices are all projected higherthismonth. ·The season-average price range forecast for soybeans is raised 25 cents on both ends of the range to $12.20 to $13.70 per bushel. ·Soybean oil prices are forecast at 36 to 39 cents per pound, up 1.5centsatthemidpoint. ·Soybean meal prices are projected at $450 to $490 per short ton, up25dollarsatthemidpoint. ·Global oilseed production for 2013/14 is projected at 504.3 million tons, down 1.7 million from last month as reduced soybean and copra production are only partly offset by increasesforrapeseed,sunflowerseed,and peanuts. ·Foreign production, projected at 407.0 million tons, accounts for all of the change. Brazil soybean production is projected at 88.5 million tons, down 1.5 million mainly reflecting hot, dry weather in the south when much of the crop was in the floweringand filling stages. ·Soybean production is also reduced for Paraguay due to the extendedperiodof hot, dryweather. ·China rapeseed production is estimated at 14.4 million tons, up 0.2 million based on increased area and yield indicated in recentlyreleasedgovernmentstatistics. ·Other changes include higher rapeseed production for Australia and increased peanut production for China, Uganda, and Tanzania. ·Global oilseed supplies, exports, and ending stocks for 2013/14 are projected lower this month while crush is projectedhigher. ·Soybean crush is projected higher for the European Union, Paraguay, and Zambia; rapeseed and peanut crush are each raised for China. Lower soybean stocks in the United States, Brazil, and Paraguay are only partly offset by higher rapeseed stocksin China. ·Global oilseed stocks are projected at 84.0 million tons, down 1.9million.
  • 6. 6 ® MarketMovementsAhead Soybean(Domesticmarketfundamentals) ŸSoybean futures (Apr) is likely to consolidate in the range of 4050-4370levels. ŸSoy meal, exports price at Kandla (Mar-Apr delivery) quotes remainedflattoRs38500/MTon steadydemand. ŸThere is preference of the meal of Indian origin mainly by the South-East countries due to logistic and freight advance and demand for non-GMO meal will lend support to the domestic soymeal. ŸDuring the current Oil year Iran, Japan, Europe, Thailand, Vietnam, Indonesia and South Korea are the major destinationsforIndian soymealexports. ŸForward bookings and export commitments for India are quite weak as the major buyers have been placing their soy meal orders to Brazil and Argentina due to their price competiveness. ŸAt the spot market, both soya oil and soyabean ruled firm despite strong global cues and scattered buying support. Soya refined ruled at Rs.700-705 for 10 kg (up Rs.10 from last week), whilesoyasolventwas quotedatRs.660-665(upRs.5). ŸFor the past few days, soya oil has been rallying on strong global cues and reports of damage to mustard crops in the countryon accountof unseasonal rainsand hailstorm. ŸSoyabean prices in mandis across Madhya Pradesh ruled at Rs.4,000-4,150 a quintal amid an arrival of 55,000 bags (75,000 bags last week). In Indore mandis, soyabean ruled at Rs.3,800- 4,200 amid arrival of 4,000 bags. Given damage to mustard crops in the country, bearish sentiment in soyabean appears unlikely in the coming days. Soyameal ruled steady on slack demand with prices on Kandla port at Rs.38,700, while it was Rs.37,500a quintalin thedomesticmarket. Soybean: (International marketfundamentals) ŸArgentina's 2013/14 soybean crop is seen at 54.7 million tonnes,as citedbytheBuenosAiresGrainsExchange. ŸLarge speculators cut their net long position in soybeans in Chicago Boardof Trade. ŸU.S. raises soybean oil (IBO) initial margins by 40 percent to $1,050percontractfrom$750. ŸU.S. lowers soybean meal (ISM) initial margins by 7 percent to $2,000percontractfrom$2,150. ŸSales of freshly harvested soybeans in Brazil have slowed in the past days, while farmers to try to gauge how much inclement weathersincethestartof theyearhas damagedoutput. ŸBetting that already lofty prices will rise further, local soy farmers are holding onto more of their crop, now in the midst of harvest. Fundamentals of China's oilseeds market (Source: USDA) ŸSoybean production in MY14/15 is forecast at 12 million tons, down 200,000 tons from the MY13/14, on average yield of 1.7 to1.8tons/Ha and expecteddeclinein planting area. ŸExpectations for growth in soybean production remain pessimistic given obstacles to expansion, such as low profits, yield limitations, lucrative alternatives and recently, subsidy reductions. ŸSoybean importswillrisesixpercentto72million tons. ŸSoybean imports are expected to continue an upward trend. The crush industry will continue to exert strong demand to secure resources needed to supplement declining domestic production and meet rising consumption. MY14/15 soybean imports are forecast at 72 million tons, up 4 million tons (four percent)froman estimated68million tonsin MY13/14. ŸRelatively low ending stocks in MY12/13 supports an additional import of 8 million tons over last year to bring MY13/14importsto68million tons. ŸSoybean meal consumption will rise 5.3 percent to 55.8 million tonsas feeddemand recoversfromanimal diseaseincidents. ŸSoybean oil consumption will rise six percent to 13.8 million tonsduetosteadyincreaseof income. ŸCNGOIC's estimates show total annual soybean crush capacity reached 140 million tons per year at the end of 2013. Despite crush plants low utilization rate, both new construction and expanded renovations to existing facilities raiseddailycrushcapacityto40,000tonsperday. ŸAn estimated 78 percent of crush plants are located along the coastalregiontofacilitatethereceiptof importedsoybeans. ŸChina imported 4.81 million metric tons (tonnes) of soybeans in February, a slump of 18.61 percent from the previous month, according to the latest data provided by the General Administration of Customs (GAC). In the first two months of this year, the country's soybean imports reached 10.72 million tonnes,soaring 40.1percentyearon year. Mustard: ŸMustard futures (Apr) will possibly maintain the downsidebiasfacingresistancenear3650levels. ŸThe bearishtrend maygetextendedtowards3435levels. ŸThe harvesting is underway and it is gaining momentum with clearweatherfavorable forharvesting. ŸThe overall area under rape-mustard has increased by 4.04 lakh hectares to 71.30 lakh hectares while the production is expected to jump by 7.39 lakh tonnes to 75.90 lakh tonnes, due to good subsoil moisture at the time of sowing, useful showers during January & February, hardly damage due to severe cold and continuous favourable weather has helped to increase the production. ŸSEA Survey team in last week of February had estimated Rape-Mustard at 74.40 lakh tons. However, due to hail storm
  • 7. 7 ® in last week of February 2014, damaged the standing crop and hencecropwas reducedbyCOOIT to72.25lakh tons. Indian Oil mealExportsScenario (February) ŸThe Solvent Extractors' Association of India has just compiled the export data for export of oilmeals for the month of February, 2014 and reported at 307,260 tons compared to 659,101tonsin February,2013i.e.downby53%. ŸThe export of oilmeals during April 2013 to February 2014 is reported at3,933,664 tons compared to 4,415,606 tons during thesameperiodof lastyeari.e.downby11%. ŸExport of oilmeals is down in February 2014, due to disparity in soybean crushing lead to lower processing of soybean and availability of soybean mealforexport. South Koreaand IranBigMarketsforIndia ŸOilmeal import by South Korea from India during April.'13 to Feb.'14 is reportedat 1,029,203tons comparedto 855,015tons last year consisting of 457,558 tons of rapeseed meal, 419,048 tonsof castormealand 152,597tonsof soybean meal. ŸIran imported 1,149,441 tons compared to 744,733 tons, consisting 1,140,779 tons of soybean meal, and 8,662 tons of rapeseedmeal. ŸThailand imported of 311,297 tons compared to 407,082 tons, consisting 152,203 tons of soybean meal, and 159,094 tons of rapeseedmeal. ŸVietnam imported 202,072 tons compared to 658,621 tons last year consisting of 28,950 tons of rapeseed meal, 797 tons of castor meal, 1,344 tons of groundnut meal, 80,871 tons of soybean mealand 90,110tonsof ricebran extraction. ŸIndia is losing Vietnam market due to stiff competition from other origins and increased availability from domestic crushing. ŸJapan imported 240,879 tons compared to 597,170 tons of last year consisting of 7,035 tons of rapeseed meal, 833 tons of castormealand 233,011tonsof soybean meal. ŸIndonesia imported 103,643 tons compared to 197,670 tons of last year consisting 41,729 tons of rapeseed meal and 61,914tonsof soybean meal. ŸIndonesian end users prefer high pro with low fiber 4% against 6%suppliedbyIndia. ŸEurope has turned out to be bigger market for Indian Non GMOSoybean Meal. ŸEurope has imported 257,911 tons compared to 221,883 tons of lastyear. Port-wiseExport:Apr.'13-Feb.'14 The export from Kandla is reported at 3,030,080 tons (77%), followed by Mumbai including JNPT handled 356,089 tons (9%), Mundra handled 169,330 tons (4%), Bedi handled 84,600 tons (2%), Kolkata handled 96,680 tons (2%) and Hazira handled 194,818tons(5%). Period-wise comparison of Soymeal & Rapemeal Exports (Qty. in M.T) Source: SEA of India Month-wise Soymeal Export V/s Average International Prices of Oilmeals & Exchange Source: SEA of India Month-wise Rapemeal Export V/s Average International Prices of Oilmeals & Exchange Source: SEA of India 581,606 302,131 99,451 96,492 213,564 107,038 183,555 173,381 182,724 503,269 451,314 364,443 183,550 $548 $520 $510 300 350 400 450 500 550 600 650 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Feb '13 Mar '13 Apr'13 May '13 June '13 July '13 Aug '13 Sept '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Price in US$ FAS/FOB/Tons/Indian Port Qty. in M.T Month-wise Soymeal Export Average International Prices of Oilmeals & Exchange 45,656 83,492 54,077 88,284 84,198 40,902 90,735 59,472 143,848 27,993 93,144 55,938 82,294 $232 $227 200 210 220 230 240 250 260 270 280 10,000 30,000 50,000 70,000 90,000 110,000 130,000 150,000 170,000 Feb '13 Mar '13 Apr'13 May '13 June '13 July '13 Aug '13 Sept '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Price in US$ FAS/FOB/Tons/Indian Port Qty. in M.T. Month-wise Rapemeal Export Average International Prices of Oilmeals & Exchange 3,829,521 3,439,848 2,558,781 1,171,895 755,564 820,885 100,000 600,000 1,100,000 1,600,000 2,100,000 2,600,000 3,100,000 3,600,000 4,100,000 Apr '11-Mar '12 Apr '12-Mar '13 Apr '13-Feb '14 Apr '11-Mar '12 Apr '12-Mar '13 Apr '13-Feb '14 Soymeal Rape meal
  • 8. 8 Forward Curves Forward Curve of U.S Soybean futures (Cents per bushel) Forward Curve of Soybean Futures (NCDEX) (Rs./Qtl.) Forward Curve of Refined Soy oil futures (NCDEX) (Rs. 10/Kgs) Forward Curve of Mustard futures (NCDEX) Rs./Qtl Forward curve of U.S Soybean Oil Futures (Cents per pound) Forward curve of CPO futures (MCX) Source: barchart.com Source: barchart.com Source: NCDEX Source: NCDEX Source: MCXSource: NCDEX As per closing on 10th March 2014 As per closing on 10th March 2014 As per closing on 10th March 2014 As per closing on 10th March 2014 As per closing on 10th March 2014 As per closing on 10th March 2014 ® 1419.20 1418.60 1394.20 1345.60 1235.40 1176.40 1100.00 1150.00 1200.00 1250.00 1300.00 1350.00 1400.00 1450.00 March May July August September November 43.64 43.86 43.98 43.78 43.38 42.81 42.75 42.00 42.20 42.40 42.60 42.80 43.00 43.20 43.40 43.60 43.80 44.00 44.20 March May July August September October December 4259.00 4302.50 4290.50 4286.00 4278.50 4230.00 4240.00 4250.00 4260.00 4270.00 4280.00 4290.00 4300.00 4310.00 March April May June July 738.15 742.35 736.35 731.40 728.30 730.60 720.00 725.00 730.00 735.00 740.00 745.00 March April May June July August 3,606.00 3,641.00 3,683.00 3,739.00 3,500.00 3,550.00 3,600.00 3,650.00 3,700.00 3,750.00 April May June July 612.70 609.80 624.70 629.90 635.20 595.00 600.00 605.00 610.00 615.00 620.00 625.00 630.00 635.00 640.00 March April May June July
  • 9. 9 ® Calendar spread of Ref. Soy oil futures Source: SMC ResearchAs per closing on 10th March 2014 March April May June July August March - - - - - - April -4.20 - - - - - May 1.80 6.00 - - - - June 6.75 10.95 4.95 - - - July 9.85 14.05 8.05 3.10 - - August 7.55 11.75 5.75 0.80 -2.30 - Calendar spread of Soybean futures Source: SMC ResearchAs per closing on 10th March 2014 March April May June July March -43.50 - - - - April -31.50 12.00 - - - May -27.00 16.50 4.50 - - June -19.50 24.00 12.00 7.50 - July -19.50 24.00 12.00 7.50 - Edible oil complex ŸRefined soy oil futures (Apr) is likely to trade in the range of 705-750levels,witha bearishbias. ŸCPO futures (Mar) is expected to remain steady maintaining support above 580 levels. The uptrend restrictedto620levels. ŸMalaysian palm oil futures dipped on profit-taking after the tropical oil surged to a 17-month high in the previous session, although worries of dry weather tightening supplies curbed lossesand keptpricespropped up. ŸBenchmark prices on March 10, 2014 had hit 2,910 ringgit per tonne, their highest since mid-September 2012, after industry data showed that end-stocks in the world's No.2 producer fell steeplytoan eight-monthlowof 1.66million tonnes. MalaysiaPalm Oil IndustryPerformance ŸMalaysia's palm oil stocks at the end of February edged down 14.25 percent to 1,659,482 tonnes against a revised 1,935,192 tonnes at the end of January, as citedby the Malaysian Palm Oil Board. ŸThe fall in stocks was bigger than market estimates that inventories at the world's second-largest palm oil producer dropped 7.7 percent to a five-month low of 1.79 million tonnes. ŸMalaysia's February palm oil output down 15.3 percent as comparedtothemonth of January. ŸMalaysia's February palm oil exports down 1.3 percent as comparedtothemonth of January. Calendar spread of Mustard futures Source: SMC ResearchAs per closing on 10th March 2014 April May June July April - - - - May -35.00 - - - June -77.00 -42.00 - - July -133.00 -98.00 -56.00 - Calendar spread of Soyameal futures Source: SMC ResearchAs per closing on 10th March 2014 March April May June March - - - - April -280.00 - - - May -610.00 -330.00 - - June -930.00 -650.00 -320.00 - Calendar spread of CPO futures (MCX) Source: SMC ResearchAs per closing on 10th March 2014 March April May June March - - - - April 1.00 - - - May 4.70 3.70 - - June 7.00 6.00 2.30 - Source: SMC ResearchAs per closing on 10th March 2014 Calendar spread of CPO futures (NCDEX) March April May June July March - - - - - April 2.90 - - - - May -12.00 -14.90 - - - June -17.20 -20.10 -5.20 - - July -22.50 -25.40 -10.50 -5.30 -
  • 10. 10 ® Malaysia Palm Oil Industry Performance for February 2014 Production ( in Tonnes) Closing Stock ( in Tonnes) Source: MPOB Source: MPOB 1,508,980 387,348 182,902 203,050 1,277,999 322,497 164,092 180,782 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Crude Palm Oil Palm Kernel Palm Kernel Oil Palm Kernel Cake Jan-14 (r) Feb (p) 1,935,192 144,989 274,523 311,899 1,659,482 109,931 251,610 229,680 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Palm Oil Palm Kernel Palm Kernel Oil Palm Kernel Cake Jan-14 (r) Feb (p)
  • 11. 11 ® Export ( in Tonnes) ExplanatoryNotes: (p) Preliminary (r) The figures for the month of February 2014 are revised by taking into account corrections made by the licensees and from late receipt of CustomsNo.1and 2(Rev.8/89)after10February2014. 1,366,846 90,885 274,059 246,833 4,356 1,349,820 85,789 267,980 209,114 2,860 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Palm Oil Palm Kernel Oil Palm Kernel Cake Oleochemical Biodiesel Jan-14 (r) Feb (p) 27.27 28.6 26.50 27.00 27.50 28.00 28.50 29.00 Jan-14 (r) Feb (p) PRICE (1% OER) (Local Ex -Mill) Jan-14 (r) Feb (p)
  • 12. Disclaimer: This report is for the personal information of the authorized recipient and doesn’t construe to be any investment, legal or taxation advice to you. It is only for private circulation and use .The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of the report. The report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s.All investments involve risk and past performance doesn’t guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that we and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance if this material;(a) from time to time, may have long or short positions in, and buy or sell the commodities thereof, mentioned here in or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodities discussed herein (c) may have any other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High court. For further any queries, please contact Subhranil Dey Sr. Research Analyst subhranildey@smcindiaonline.com Ph.: 011-30111000 Extn.: 674 ®