SMC Global Monthly Report on Oilseeds

Subhranil Dey

Sr. Research Analyst

[email protected]

Monthly Report (April)

Oil Seeds

April 11, 2014

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2

Price movement of Oilseeds on NCDEX & MCX (March) (% Change)

Source: SMC Research

Price movement of Oilseeds on Spot marekts (March) (% Change)

Source: SMC Research

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-6.86

-4.91

-1.98-1.59

3.02 3.21

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

Crude Palm Oil (BMD)

Crude Palm Oil (MCX) Refined Soy oil Mustard Soybean (NCDEX) Soybean (CBOT)

-6.93

-3.94

-2.40

1.45

-8.00

-7.00

-6.00

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

Mustard (Jaipur) Crude Palm Oil (Kandla) Refined Soy oil (Indore) Soybean (Indore)

3

Progress of Sowing of Rabi (2013-14) Oilseed Crop as on 3rd April, 2014

Source: SEA of India

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

3rd April, 2014

Below the Agriculture Ministry report of Rabi oilseeds sowing data for

week ending 3rd April, 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 3.89 lakh ha compared to corresponding period of Rabi

2012-13.

� Groundnut: Area coverage during Rabi 2013-14 is lower by 0.22

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 0.88


� Sesamum: Area coverage during Rabi 2013-14 is higher by 1.60


�Linseed: Area coverage during Rabi 2013-14 is higher by 0.23


Snap shot of World Agricultural Supply and Demand

Estimates (April 2014)

·U.S. soybean supplies for 2013/14 are projected at 3.49 billion

bushels, up 30 million on increased imports.

·Imports are projected at a record 65 million bushels based on trade

reported through February and prospective large shipments from

South America during the second half of the marketing year.

·Soybean exports for 2013/14 are increased 50 million bushels to

1.58 billion reflecting record year-to-date shipments and large

outstanding sales.

·Despite relatively high prices and record harvests in South America,

U.S. exports have remained strong, especially to China, where

imports from the United States have already exceeded the previous

marketing-year record.

·Soybean crush is reduced 5 million bushels to 1.685 billion with

lower domestic soybean meal consumption more than offsetting a

small increase in projected soybean meal exports.

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·Soy seed use is raised in line with the record plantings reported

in the March 31 Prospective Plantings report, while residual

use is reduced based on indications from the March 31 Grain

Stocks report.

·U.S. soybean ending stocks are projected at 135 million bushels,

down 10 million from last month.

·Projected prices for soybeans and soybean products are all

raised this month. The projected range for the season-average

soybean price is raised 5 cents at the midpoint to 12.50 to

$13.50 per bushel.

·Soybean oil prices are projected at 38 to 40 cents per pound, up

1.5 cents at the midpoint. Soybean meal prices are projected at

$460 to $490 per short ton, up 5 dollars at the midpoint.

·Global oilseed production for 2013/14 is projected at 504.5

million tons, up 0.2 million from last month with lower

soybean production mostly offsetting increases for other

crops.

·Global soybean production is projected at 284.0 million tons,

down 1.4 million from last month but still a record.

·Brazil soybean production is forecast at 87.5 million tons, down

1.0 million from last month with higher harvested area more

than offset by lower yields.

·Lower yields primarily reflect the effect of warm temperatures

and limited rainfall through mid-February in the south. India

soybean production is reduced 0.8 million tons to 11.0 million

reflecting lower-than-average yields resulting from excessive

rainfall during much of the growing season.

·Changes for other crops include higher rapeseed production

for India and the European Union, increased sunflower seed

production for Russia, and increased peanut production for

Argentina, Brazil, and India.

·Global oilseed supplies, exports, and crush for 2013/14 are

projected higher this month while ending stocks are projected

lower.

·Higher rapeseed crush in China and higher sunflowerseed

crush in Argentina and Russia more than offset reduced

soybean crush in the United States, Brazil, and India.

·Global oilseed stocks are projected at 82.6 million tons, down

1.4 million.

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Market Movements Ahead

Soybean (Domestic market fundamentals)

�Soybean futures (May) is likely to consolidate in the

range of 4200-4620 levels.

�Higher international (CBOT) soybean remained supportive

for the domestic market.

�The domestic crush margin has slightly improved in Mar. as

compared to Feb. but the disparity in crushing is still

discouraging.

�The soybean crushing units in Madhya Pradesh are just able to

operate 8-10 days a month due to inadequate supplies in beans

and are running much below their crushing capacity.

�The domestic meal demand is good and intact. India's demand

for poultry products are likely to rise by at least 6% this year,

according to NECC which will keep the meal demand intact at

3 MMT.

�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.

�Soy meal, exports price at Kandla (Apr-May delivery) was

quoted higher at Rs. 39,500/MT.

�Kandla is expected to feature range bound movement with

firm bias and the quotes will range between 39,500-40,500

levels in the upcoming days.

Soybean: (International market fundamentals)

�U.S. soybean futures rose to a more than eight-month high

after USDA projected tighter-than-expected domestic

supplies of the oilseeds.

�Farmers in Brazil and Paraguay are planting a second crop of

soybeans this year after prices rose relative to corn, signaling

oilseed supplies will remain ample and the market may soon

turn bearish.

�The soybean harvest is currently under way in South America,

and some farmers who usually replant fields with corn are now

sowing a second round of soybeans.

�Slowing Chinese demand and some canceled shipments mean

Brazil's soybean exports may fall in April.

�Chinese importers have defaulted on at least 500,000 tonnes

of U.S. and Brazilian soybean cargoes worth around $300

million, as they struggle to get credit due to losses in processing

beans.

�Defaults by buyers in China, which imports 60 percent of the

soybeans traded in the world, would likely cap a rally in global

prices as it coincides with bumper supplies from Brazil and

Argentina hitting the market.

�Chinese soybean imports will drop as processors cannot cover

their costs with a bird flu outbreak sapping demand for the

animal feed ingredient they make.

�Imports to the country, which typically buys 60 percent of the

oilseed traded in the world, could fall below 15 million tonnes

in the third quarter from 18.25 million in the same period last

year. That would likely cap a rally in global prices as it would

coincide with bumper supplies from Brazil and Argentina

hitting the market.

�China's stocks of soybeans, crushed to make cooking oil and

animal feed ingredient soymeal, have swelled due to soaring

imports in the last few months.

�China imported 15.35 million tonnes of the oilseed in the first

quarter, up 33.5 percent on a year earlier, according to official

Customs data. Imports in March were 4.62 million tonnes,

marginally lower than 4.808 million tonnes shipped in

February.

�Demand for soymeal has been hit by outbreaks of bird flu, as

well as falling pork prices, cutting appetite by as much as 20 to

30 percent in the February-March period.

�Soybean importers have cancelled up to 600,000 tonnes of

South American soybean cargoes for shipment between

March and May.

�Crushers are losing 500-600 yuan ($81-$97) for processing a

tonne of soybeans, compared with a 600 yuan profit in the

fourth quarter of last year during peak consumption and when

some shipments were delayed.

Mustard:

�Mustard futures (May) will possibly maintain the

downside bias to test 3300 levels.

�The upside may remain capped near 3530 levels.

�The rapeseed harvesting in the major producing states of

Rajasthan, Uttar Pradesh and Madhya Pradesh is in full swing

(more than 80% done) and the seasonal supply pressure of the

seed is mounting. In fact, they are currently at the peak.

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Indian Oil meal Exports Scenario (March)

�In March '14 India exported 397,786 tons of oilmeals compared to 430,407 tons in March, 2013 i.e. down by 8%.

�The overall export of oilmeals during April 2013 to March 2014 in term of quantity is reported at 4,331,450 tons compared to 4,846,013 tons during the same period of last year, down by 11%.

�In term of value the total earning is Rs.11,450 crores compared to 11,800 crores in 2012-13, marginally down by 3%.

Port-wise Export: Apr.’13-Mar.’14

The export from Kandla is reported at 3,328,652 tons (77%), followed by Mumbai including JNPT handled 414,455 tons (10%), Hazira handled 219,318 tons (5%), Mundra handled 184,778 tons (4%), Bedi handled 84,600 tons (2%) and Kolkata handled 97,580 tons (2%).

South Korea and Iran Big Markets for India

�Oilmeal import by South Korea from India during April.'13 to Mar.'14 is reported at 1,165,107 tons compared to 907,082 tons last year consisting of 516,230 tons of rapeseed meal, 496,138 tons of castor meal and 152,739 tons of soybean meal.

�Iran imported 1,243,114 tons compared to 886,776 tons, consisting 1,234,452 tons of soybean meal, and 8,662 tons of rapeseed meal.

�Thailand imported of 313,271 tons compared to 450,360 tons, consisting 152,951 tons of soybean meal, and 160,320 tons of rapeseed meal.

�Vietnam imported 205,724 tons compared to 699,791 tons last year consisting of 29,796 tons of rapeseed meal, 797 tons of castor meal, 1,344 tons of groundnut meal, 82,777 tons of soybean meal and 91,010 tons of rice bran extraction.

�Japan imported 245,991 tons compared to 638,201 tons of last year consisting of 7,525 tons of rapeseed meal, 1,062 tons of castor meal and 237,404 tons of soybean meal.

�Indonesia imported 136,573 tons compared to 201,999 tons of last year consisting 46,855 tons of rapeseed meal , 89,608 tons of soybean meal and 110 tons of castor 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 have imported 632,601 tons compared to 493,966 tons of last year.

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


99,451 96,492

213,564

107,038

183,555 173,381 182,724

503,269

451,314

364,443

183,550

223,204

$606

450

470

490

510

530

550

570

590

610

630

650

0

100,000

200,000

300,000

400,000

500,000

600,000

Apr'13 May '13 June '13 July '13 Aug '13 Sept '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '14

Price in US$ FAS/FOB/Tons/Indian PortQty. in M.T

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

54,077

88,28484,198

40,902

90,735

59,472

143,848

27,993

93,144

55,938

82,294

95,165

$251

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

Apr'13 May '13 June '13 July '13 Aug '13 Sept '13 Oct '13 Nov '13 Dec '13 Jan '14 Feb '14 Mar '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

2,781,985

1,248,681

786,690916,050

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-Mar '14 Apr '11- Mar '12 Apr '12- Mar '13 Apr '13-Mar '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 April 2014






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1495.201478.00

1394.60

1276.00

1227.40

1100.00

1150.00

1200.00

1250.00

1300.00

1350.00

1400.00

1450.00

1500.00

1550.00

May July August September November

42.91

43.12

42.91

42.65

42.2442.31

41.60

41.80

42.00

42.20

42.40

42.60

42.80

43.00

43.20

May July August September October December

4419.00

4405.00

4398.50

4415.00

4385.00

4390.00

4395.00

4400.00

4405.00

4410.00

4415.00

4420.00

4425.00

April May June July

714.05

702.85

693.45

683.25

679.65

675.40

650.00

660.00

670.00

680.00

690.00

700.00

710.00

720.00

April May June July August September

3,403.00

3,456.00

3,505.00

3,557.00

3,604.00

3,300.00

3,350.00

3,400.00

3,450.00

3,500.00

3,550.00

3,600.00

3,650.00

April May June July August

560.30

558.00

571.20

575.70

579.90

545.00

550.00

555.00

560.00

565.00

570.00

575.00

580.00

585.00


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Source: NCDEX

Source: NCDEX

Source: NCDEX

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Calendar spread of Ref. Soy oil futures

Source: SMC ResearchAs per closing on 10th April 2014

April May June July August September

April - - - - - -

May 11.20 - - - - -

June 20.60 9.40 - - - -

July 30.80 19.60 10.20 - - -

August 34.40 23.20 13.80 3.60 - -

September 38.65 27.45 18.05 7.85 4.25 -

Calendar spread of Soyameal futures


April May June July

April - - - -

May -330.00 - - -

June -640.00 -310.00 - -

July -920.00 -590.00 -280.00 -


Calendar spread of CPO futures (NCDEX)


April - - - - -

May 2.30 - - - -

June -10.90 -13.20 - - -

July -15.40 -17.70 -4.50 - -

August -19.60 -21.90 -8.70 -4.20 -

Calendar spread of Soybean futures


April May June July

April - - - -

May 14.00 - - -

June 20.50 6.50 - -

July 4.00 -10.00 -16.50 -

Calendar spread of Mustard futures



April - - - - -

May -53.00 - - - -

June -102.00 -49.00 - - -

July -154.00 -101.00 -52.00 - -

August -201.00 -148.00 -99.00 -47.00 -

Calendar spread of CPO futures (MCX)


April May June July

April - - - -

May 5.00 - - -

June 8.40 3.40 - -

July 14.00 9.00 5.60 -

Edible oil complex

�Refined soy oil futures (May) is likely to trade in the range of 680-720 levels.

�CPO futures (May) is expected to fall towards 530 levels, with upside getting capped near 570 levels.

�On the domestic market, stockists came forward with fresh orders at a lower price.

�Local refineries reduced their rates for imported palmolein and soya oil over Rs.10 each, following slack physical demand.

�Resellers offloaded 200-250 tonnes of palmolein at Rs.600-601.

�The Malaysian ringgit has gained 1.5 percent so far this year, making the ringgit-denominated feedstock more expensive for overseas buyers and investors.

�Malaysia's palm end-stocks rose in March, industry data showed, missing market estimates for a drop to a three-year low as the effect of crop-damaging weather wore off and output surged.

�Stocks in the second-largest grower after Indonesia rose nearly 2 percent to 1.69 million tonnes, industry regulator the Malaysian Palm Oil Board (MPOB) said in a monthly report on Thursday, against forecasts for a drop to 1.58 million tonnes.

�Lagging demand from major buyers also added to the higher stockpiles.

�Market players are optimistic that a recovery in demand will bolster benchmark prices this quarter.

�Appetite for the tropical oil is anticipated to rise from April as buyers begin to restock ahead of the Muslim holy month of Ramadan at end-June, followed by the Eid al-Fitr festival.

�Festivals typically drive up consumption of palm oil, which is used as cooking oil and as an ingredient in foodstuff ranging from biscuits to chocolates and ice creams.

�Cargo surveyor data released earlier Thursday showed exports in April 1-10 rose more than 4 percent to 306,765 tonnes from a month ago on bigger demand for refined palmolein.

Malaysia Palm Oil Industry Performance

�Malaysia's March palm oil output is up by 17.4% from February.

�Malaysia's March end-stocks are up by 1.9% from February.

�Malaysia's March palm oil exports are down by 8% pct from February

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Malaysia Palm Oil Industry Performance for March 2014

Production ( in Tonnes)

Closing Stock ( in Tonnes)

Source: MPOB

Source: MPOB

1,275,812

322,104

164,034 180,782

1,497,145

386,648

170,828 188,887

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

Feb (r) Mar (p)

1,656,908

109,829

251,610 229,680

1,687,709

130,532

259,755 236,291

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Palm Oil Palm Kernel Palm Kernel Oil Palm Kernel Cake

Feb (r) Mar (p)

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Export ( in Tonnes)

Explanatory Notes:

(p) Preliminary

(r) The figures for the month of Mar 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 March 2014.

PRICE (1% OER) (Local Ex -Mill)

1,351,441

85,853

267,980209,561

2,860

1,243,590

89,081

187,916234,389

8,7520

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

Feb (r) Mar (p)

28.6

31.62

27.00

27.50

28.00

28.50

29.00

29.50

30.00

30.50

31.00

31.50

32.00

Feb (r) Mar (p)Feb (r) Mar (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

Economy & Finance

Transcript of SMC Global Monthly Report on Oilseeds