SMC Global Monthly Report on Oilseeds

Subhranil Dey

Sr. Research Analyst

[email protected]

Monthly Report (March)

Oil Seeds

March 12, 2014

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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

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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)

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COOIT’s Trade Estimate for Rabi Oilseed Production and Availability of Vegetable Oils during 2013-14 Season

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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 Oilseeds crop and availability of vegetable oils from Rabi Crop during 2013-14 season as under:

General Observations

�The area under Rabi Oilseeds Crop 2013-14 increased to 99.10 lakh hectares from 93.44 lakh hectares last year i.e. up by 5.66 lakh hectares.

�Rabi Groundnut Crop has marginally increased by 0.53 lakh tones to 17.67 lakh tones from 17.14 lakh tones of last year.

�Rapeseed-mustard including Toria crop increased to 73.75 lakh tones from 68.51 lakh tones of last year, up by 5.24 lakh tones.

�The overall Rabi Oilseeds Crop 2013-14 increased to 99.10 lakh tones from 93.44 lakh tones last year, up by 5.66 lakh tones.

�The 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 last year, up by 19.99 lakh tones.

�The total vegetable oil availability from Kharif and Rabi Oilseeds crops for the year 2013-14(Nov-Oct) is estimated upward at 85.25 lakh

tones compared to 80.32 lakh tones last year.

�The 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

estimated in the range of 110.00 to 112.00 lakh tons from 106.79 lakh tons in previous year (2012-13).

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Progress of Sowing of Rabi (2013-14) Oilseed Cropas on 20th February, 2014


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Progress of Sowing of Rabi (2013-14) Oilseed Crop as on

20th February, 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) as under :

Crop-wise Brief:

�Rapeseed & Mustard: Area coverage during Rabi 2013-14 is

higher by 4.06 lakh ha compared to corresponding period of Rabi

2012-13.

�Groundnut: Area coverage during Rabi 2013-14 is lower by 0.82

lakh ha compared to corresponding period of Rabi 2012-13.

�Safflower: Area coverage during Rabi 2013-14 is higher by 0.30


�Sunflower: Area coverage during Rabi 2013-14 is lower by 0.83


�Sesamum: Area coverage during Rabi 2013-14 is higher by 0.27


�Linseed: Area coverage during Rabi 2013-14 is higher by 0.21


Snap shot of World Agricultural Supply and Demand

Estimates (March 2014)

·U.S. soybean supply and use projections for 2013/14 include higher

imports and exports, reduced crush, and reduced ending stocks

compared with last month'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

through the first quarter of the marketing year.

·Soybean stocks are projected at 145 million bushels, down 5 million

from last month.

·Soybean oil stocks are reduced on lower production and increased

exports.

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·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

higher this month.

·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

1.5 cents at the midpoint.

·Soybean meal prices are projected at $450 to $490 per short

ton, up 25 dollars at the midpoint.

·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

increases for rapeseed, 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

flowering and filling stages.

·Soybean production is also reduced for Paraguay due to the

extended period of hot, dry weather.

·China rapeseed production is estimated at 14.4 million tons, up

0.2 million based on increased area and yield indicated in

recently released government statistics.

·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

projected higher.

·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

stocks in China.

·Global oilseed stocks are projected at 84.0 million tons, down

1.9 million.

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Market Movements AheadSoybean (Domestic market fundamentals)

�Soybean futures (Apr) is likely to consolidate in the range of 4050-4370 levels.

�Soy meal, exports price at Kandla (Mar-Apr delivery) quotes remained flat to Rs 38500/MT on steady demand.

�There 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 soy meal.

�During the current Oil year Iran, Japan, Europe, Thailand, Vietnam, Indonesia and South Korea are the major destinations for Indian soy meal exports.

�Forward 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.

�At 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), while soya solvent was quoted at Rs.660-665 (up Rs.5).

�For the past few days, soya oil has been rallying on strong global cues and reports of damage to mustard crops in the country on account of unseasonal rains and hailstorm.

�Soyabean 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.37,500 a quintal in the domestic market.

Soybean: (International market fundamentals)�Argentina's 2013/14 soybean crop is seen at 54.7 million

tonnes, as cited by the Buenos Aires Grains Exchange.

�Large speculators cut their net long position in soybeans in Chicago Board of Trade.

�U.S. raises soybean oil (IBO) initial margins by 40 percent to $1,050 per contract from $750.

�U.S. lowers soybean meal (ISM) initial margins by 7 percent to $2,000 per contract from $2,150.

�Sales of freshly harvested soybeans in Brazil have slowed in the past days, while farmers to try to gauge how much inclement weather since the start of the year has damaged output.

�Betting 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)�Soybean production in MY14/15 is forecast at 12 million tons,

down 200,000 tons from the MY13/14, on average yield of 1.7 to 1.8 tons/Ha and expected decline in planting area.

�Expectations for growth in soybean production remain pessimistic given obstacles to expansion, such as low profits, yield limitations, lucrative alternatives and recently, subsidy reductions.

�Soybean imports will rise six percent to 72 million tons.

�Soybean 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) from an estimated 68 million tons in MY13/14.

�Relatively low ending stocks in MY12/13 supports an additional import of 8 million tons over last year to bring MY13/14 imports to 68 million tons.

�Soybean meal consumption will rise 5.3 percent to 55.8 million tons as feed demand recovers from animal disease incidents.

�Soybean oil consumption will rise six percent to 13.8 million tons due to steady increase of income.

�CNGOIC'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 raised daily crush capacity to 40,000 tons per day.

�An estimated 78 percent of crush plants are located along the coastal region to facilitate the receipt of imported soybeans.

�China 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 40.1 percent year on year.

Mustard: �Mustard futures (Apr) will possibly maintain the

downside bias facing resistance near 3650 levels.

�The bearish trend may get extended towards 3435 levels.

�The harvesting is underway and it is gaining momentum with clear weather favorable for harvesting.

�The 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.

�SEA Survey team in last week of February had estimated Rape-Mustard at 74.40 lakh tons. However, due to hail storm

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in last week of February 2014, damaged the standing crop and hence crop was reduced by COOIT to 72.25 lakh tons.

Indian Oil meal Exports Scenario (February) �The 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 659,101 tons in February, 2013 i.e. down by 53%.

�The export of oilmeals during April 2013 to February 2014 is reported at3,933,664 tons compared to 4,415,606 tons during the same period of last year i.e. down by 11%.

�Export of oilmeals is down in February 2014, due to disparity in soybean crushing lead to lower processing of soybean and availability of soybean meal for export.

South Korea and Iran Big Markets for India�Oilmeal import by South Korea from India during April.'13 to

Feb.'14 is reported at 1,029,203 tons compared to 855,015 tons last year consisting of 457,558 tons of rapeseed meal, 419,048 tons of castormeal and 152,597 tons of soybean meal.

�Iran imported 1,149,441 tons compared to 744,733 tons, consisting 1,140,779 tons of soybean meal, and 8,662 tons of rapeseed meal.

�Thailand imported of 311,297 tons compared to 407,082 tons, consisting 152,203 tons of soybean meal, and 159,094 tons of rapeseed meal.

�Vietnam 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 meal and 90,110 tons of rice bran extraction.

�India is losing Vietnam market due to stiff competition from other origins and increased availability from domestic crushing.

�Japan imported 240,879 tons compared to 597,170 tons of last year consisting of 7,035 tons of rapeseed meal, 833 tons of castor meal and 233,011 tons of soybean meal.

�Indonesia imported 103,643 tons compared to 197,670 tons of last year consisting 41,729 tons of rapeseed meal and 61,914 tons of soybean meal.

�Indonesian end users prefer high pro with low fiber 4% against 6% supplied by India.

�Europe has turned out to be bigger market for Indian Non GMO Soybean Meal.

�Europe has imported 257,911 tons compared to 221,883 tons of last year.

Port-wise Export: Apr.'13-Feb.'14The 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 194,818 tons (5%).

Period-wise comparison of Soymeal & Rapemeal Exports (Qty. in M.T)


Month-wise Soymeal Export V/s Average International Prices of Oilmeals & Exchange


Month-wise Rapemeal Export V/s Average International Prices of Oilmeals & Exchange


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 PortQty. in M.T

Month-wise Soymeal Export Average International Prices of Oilmeals & Exchange

45,656

83,492

54,077

88,28484,198

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 PortQty. 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

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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






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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

43.8643.98

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

4290.504286.00

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


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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



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

�Refined soy oil futures (Apr) is likely to trade in the range of 705-750 levels, with a bearish bias.

�CPO futures (Mar) is expected to remain steady maintaining support above 580 levels. The uptrend restricted to 620 levels.

�Malaysian 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 losses and kept prices propped up.

�Benchmark 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 steeply to an eight-month low of 1.66 million tonnes.

Malaysia Palm Oil Industry Performance

�Malaysia'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 cited by the Malaysian Palm Oil Board.

�The 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.

�Malaysia's February palm oil output down 15.3 percent as compared to the month of January.

�Malaysia's February palm oil exports down 1.3 percent as compared to the month of January.

Calendar spread of Mustard futures


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


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)


March April May June

March - - - -

April 1.00 - - -

May 4.70 3.70 - -

June 7.00 6.00 2.30 -


Calendar spread of CPO futures (NCDEX)


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 -

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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

144,989274,523 311,899

1,659,482

109,931251,610 229,680

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)

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Export ( in Tonnes)

Explanatory Notes:

(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

Customs No. 1 and 2 (Rev. 8/89) after 10 February 2014.

1,366,846

90,885

274,059 246,833

4,356

1,349,820

85,789

267,980209,114

2,8600

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)

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 [email protected]

Ph.: 011-30111000

Extn.: 674

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SMC Global Monthly Report on Oilseeds

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Transcript of SMC Global Monthly Report on Oilseeds