1. Commodity News

Near Term Fundamental Outlook of Soybean / Soybean Oil & RM seed

Abhijeet Banerjee
Abhijeet Banerjee
Oils
Oils

Soy oil: Global cues were somewhat positive yet edible oils finished on a subdued note. Buyers were still under influence of the recently announced duty cut in edible oils. The government on Saturday had reduced the custom duties in order to ease the retail prices. The effective duty on crude palm oil, crude soy oil, and crude sunflower oil will come down to 24.75 percent whereas effective duty on refined palm oil, soy oil, and sunflower oil will be 35.75 percent.

As the markets have discounted this to a great extent, the overall impact may be short-lived. Lower availability of vegetable oils in the country shall continue preventing any major fall in soya oil and palm oil prices this month. The USDA report was released on Sep 10 and the 2021/22 foreign oilseed supply and demand forecasts include higher beginning stocks and lower production, exports, and crush. Foreign oilseed production is lowered 1.5 million tons to 499.8 million mainly on lower canola production for Canada and the EU. 

Soybean: Soybean gave back the morning gains as edible oils failed to hold higher. The recent withdrawal of additional margins by NCDEX soybean has been supporting the price rise these days. But unless spot demand improves or soya oil registers consistent gains, we shall not observe any major price appreciation for next few weeks. The arrivals are a bit early this time therefore we expect the peak arrival period to begin by the first or the second week of October. The new season supplies are observed in mandis of Maharashtra since the last few weeks.

The USDA report was released on Sep 10 and the 2021/22 foreign oilseed supply and demand forecasts include higher beginning stocks and lower production, exports, and crush. Foreign oilseed production is lowered 1.5 million tons to 499.8 million mainly on lower canola production for Canada and the EU.

RM seed: RM seed on Tuesday traded firm during the first few hours but failed to carry with the momentum and lost nearly one percent because of weakening edible oil and soybean markets. New highs were established last week and as compared with the entire oil complex basket, RM seed appears stronger for upcoming weeks. Viewing technically, the October RM seed shall continue with the bullish next week unless closes below 8200. 

In coming days, RM seed futures will be supported from factors like stocking activity and thin arrivals, but the increasing crushing disparity may cap the upside to some extent. The hike in MSP of RM seed will be an additional supportive factor for RM seed apart from the existing bullish factors.

The increase in MSP for Rabi Crops for RMS 2022-23 is in line with the Union Budget 2018-19 announcement of fixing the MSPs at a level of at least 1.5 times of the all-India weighted average cost of production, aiming a reasonably fair remuneration for the fanners. The Cabinet had increased Minimum Support Prices (MSP) for Rabi crops for marketing season 2022-23 on September 8.  From Rs.4650/qtl the MSP for 2022-23 season will be Rs.5050/qtl now.  

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