Lack of demand on the export front due to the pandemic has adversely affected trading aspects for jeera and prevented any strong recovery for the prices.
Ajitesh Mullick
IMD's report of monsoon arrival delayed by five days supported market sentiments for the week. The recent announcements by the Centre to provide funds for agri infrastructure, warehousing and provide more e-markets for farmers and making changes to the Essential Commodities Act, were all factors that could have a long term implications for the agriculture sector.
However, record foodgrain production reports proved to be a dampener for rising prices as exports too failed to pick up due to the novel coronavirus pandemic's impact.
Government's announcements to supply free dal to about 20 crore households for the next three months to overcome the COVID-19 crisis, kept sentiments down for Chana.
While the prices are below MSP, traders are apprehensive that these lower levels may not be sustainable in the medium to long term. Again, government's initiatives for farmers such as amending the Essential Commodities Act to scrap imposing stock limits (until there is an emergency) could act as a booster for chana prices in the medium to long term. Rs 4,000 per quintal remains an immediate strong psychological support for Chana June contract. However, there can be a firm rend only if prices hold and close above Rs 4,120.
Lack of demand on the export front due to the pandemic has adversely affected trading aspects for jeera and prevented any strong recovery for the prices. June contract could however find strong psychological support at the Rs 13,000 per quintal mark, but any upside movement would be limited till exports pick up.
The upside movement in guar was limited by falling crude oil prices late during the last week as lack of strong export demand kept uptrend limited. Short term trend looks volatile till exports pick up as mandis gradually open.
However, guarseed prices are likely to find immediate support at the Rs 3,200 per quintal mark with strong psychological resistance at the Rs 4,000 mark.
Guargum June finds support at Rs 4,950-5,000 mark, while resistance is seen at Rs 6,000 mark. Any close above the Rs 6,120 mark could see some moderate firmness prevailing for the counter.
Soybean ended the week on soft note. June soybean at NCDEX was down Rs 56 per quintal over previous week. Due to the lockdown, activities were limited hence prices failed to sustain higher. However buyers stepped in at every decline since arrivals are quite less while edible oils are quite strong these days. Positive cues from the recently released United States Department of Agriculture (USDA) report shall be supportive for the market in coming days. The May month's USDA demand and supply report has projected global Soybean production to jump by 26.6 million tons to a record 362.8 million tons, but still lower than 3 million tons above the previous record set in 2018/19.
However, for the current year global soybean consumption is projected by the USDA to increase and China is projected to account for more than 50 percent of global consumption growth in 2020/21 and roughly 85 percent of import growth.
Argentina and India are projected to meet most of the growth in trade in 2020/21 as rising feed demand in the United States and Brazil will account for nearly all of the increase in their meal production. Prices are quite lower hence retail-end demand is expected to remain stable next week. We expect Soybean June at NCDEX to show moderate recovery towards Rs 3,820-3,840 per quintal levels in case stays above Rs 3,700 for first few days of the week.
RM seeds posted decent gains this week and June RM seed was up 3.7 percent week-on-week. As procurement continues and arrivals are limited. Market is constantly getting supported these days. Same factors are expected to support prices next week as well.
Yet, overbought situations have emerged in the derivative market therefore a sharp correction is quite likely. June RM seed may trade between Rs 4,250-4,450 per quintal next week.
Edible oils i.e. CPO and Soya oil were supported from Ramazan demand and strength in international edible oil markets. Although Ramazan season shall end on May 25 yet the imported arrivals won't be seen till May-end. Since this would create temporary supply bottlenecks, prices shall remain supported for next week as well.
Soya Oil June at NCDEX is expected to trade with positive bias as long as stays above Rs 755-760 per 10 kg levels. Likewise May CPO at MCX will trade with positive tone as long as stays above Rs 610-615 per 10 kg levels.
(The author is VP Retail Research at Religare Broking.)
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