India: Soybean can overcome the selling pressure

The soybean futures on Indian exchanges traded on a weaker note for third consecutive day on Wednesday on extended selling pressure. Indian traders and investors sold futures raising concern over revival in soy meal export demand especially from Japan.
Weakness in the spot market also exerted pressure on the futures market. Indian market moved in sync with global market. Declining global demand for soy products and increasing competition from Latin America had a bearish impact on the overseas market.
Moreover, fall in crude oil prices led to decline in CBOT soy market.
Outlook
The soybean futures are forecast to extend its bearish trend on Friday on continued selling pressure. Shrinking demand for soybean and its processed products from local traders and exporters is likely to exert pressure on the market.
Indian traders are raising concern over revival in soy meal export demand to South East Asian countries. Unending natural devastation in Japan is likely to dampen the soy meal export demand. Indian traders and investors are likely to sell futures anticipating edible oil import in April month is likely to be higher.
Due to poor meal export enquiries and on falling crush margin, local crushers are staying away from active soybean buying. Spot markets are likely to witness subdued activity on poor trade participation amid thin supplies.
The crush margin is below `800 a ton. Indian market is likely to move in line with weak overseas market. CBOT soybean futures fell sharply in last two trading sessions due to strong selling pressure.
Shrinking global demand for soy products and increasing competition from South America is putting pressure on the market. Improvement in weather condition in Brazil and Argentina is leading to full-fledged harvesting of the crop. According to Safras, 77% of the Brazilian soy crop has been harvested as on 8th April 2011.
Argentina farmers harvested 14% of the soy crop as on 7th April 2011. As a result of active harvesting, the soybean and its derivative prices are declining. South American countries are offering soy meal at much lower price compared to India, which is a bearish factor for Indian market.
Courtesy: Karvy Commtrade Ltd.