Soybean: India-global market divergence seen, weather a key factor now

 

Support levels for Soybean March contract at National Commodity and Derivatives Exchange (NCDEX) is seen at Rs 3700,3850 while resistance is seen at Rs 4120, 4250.

 

MUMBAI (Commodity Online): 

Soybean price trends in India and global markets have been divergent since the beginning of the season in October 2013 with gains witnessed in Indian markets, while global markets have been under pressure.

Angel Commodities in a monthly update on soybean said that Indian market will now follow global trends while weather in Argentina and Brazil will have a major impact on prices.

Support levels for Soybean March contract at National Commodity and Derivatives Exchange (NCDEX) is seen at Rs 3700,3850 while resistance is seen at Rs 4120, 4250.

Global production of soybeans is estimated at 287 mn tons for 2013-14 season, a gain of 7.2% over 2012-13.

US harvest is already over and estimated at 89.5 mn tons. Brazil and Argentina's harvest may be impacted by adverse weather conditions.

From the consumption side, China continues to be a major factor having imported 59.9 mn tons in 2012-13 (October to September) while 2013-14 figures may have only increased. Robust increase in world production may offset the China demand thus keeping prices under check. Upside support is being provided by concerns on Souther American crop.

Supplies in the domestic markets have dwindled significantly while exports have remained subdued. However, recovery in the international markets and rising concerns over South American soy crop may encourage soy meal exports from the India in the months to come. Upward trend shall continue during the rest of February and early march.

Thereafter, prices will take cues from prevailing weather conditions in Argentina and Brazil. If weather turns conducive in the coming weeks, harvest shall commence in full pace in these nations and will then exert downside pressure on the prices. On contrary, if erratic weather conditions persist, then prices will continue to trade higher and a spillover effect of the same could be seen on the domestic soybean prices.