Indian Agri Market Snapshot:
Financial year and month end March saw the markets were steady and stable on the front of pricing and news outflows. Few physical markets were closed. Volatility was observed during the month, with an expectation of crop failing, unseasonal rain and stockiest demands. However, slight pickup in export demand, summer season and festive demand has push the prices of the few commodities higher while in some of the commodities profit bookings from the higher levels has also been seen.
Meanwhile, we believe the upcoming monsoon updates, crop outcomes and export demand will drive the market trends for specific commodities.
- According to Senior Official from Meteorological Department – Onset of monsoon rains over India will likely to impact owing to El-Nino. However, according to present forecast by various international weather agencies – El Nino is declining and is expected to be neutral by May end. While we believe if El-Nino diminishes by may end it may impact onset of monsoon in India which starts in early phase of June.
- IMD (Indian Meteorological Department) is likely to issue its first 2016 monsoon forecast in 3rd week of April, which may be normal as per various parameters available as of now.
- According to Weather Department – Indian will have another hot period of summer this year, above the normal temperature historically. IMD says there is high probability of 76% maximum temperatures in the core heat wave zone during the year.
Soybean prices has seen volatility during the week but ended on the higher levels of 4119. Prices remain firm in the second half of the March on back of lower planting data outcome from USDA, firm global markets, and strong demand from stockiest in domestic market. Prices rose from the levels of 3800 to the levels of 4100 in the time span of just 15 – 20 working days.
USDA has projected US 2016 soybean planting lower at 82.2 million acres slightly below from the previous 82.7 million acres estimated planting in 2015. While on contrary, soybean stocks stored on farms are estimated at 728 million bushels, up 19% on yearly basis and off farm stocks at 803 million bushels up 12% from last year same month march.
Market during the week remained firm, as strong demand from local traders and restricted arrivals. According to domestic trader- Rajasthan arrival of Chana may increase in coming days due to start of new financial year and prevailing higher prices. On physical market front – Mandis – Chana is hovering in the range of Rs 4200 – 4400 per quintal with the arrival of 15,000 – 20,000 bags per day. In coming weeks, prices on the higher levels could see some pressure on back of arrival pressure in major mandis.
According to USDA outcome report – US farmers are planning to plant in large area of Chickpeas due to strong prices and demand, as compared to last year. As per expectations, planting area for small chickpeas to increase by 15% to 83,000 acres and for large chickpeas is expected to grow by 20%.
- On Buffer Stock of pulses – HAFED will procure Chana on behalf of NAFED in Haryana. Haryana gram production estimate is around 1.05 lk tonnes and arrivals are expected from Mid April. If prices in physical market decreases or comes around MSP, government intervention to cernment would pay Rs 75 per quintal over and above MSP.
- On Carry out stocks – Canadian Chickpeas are expected to fall from 125,000 MT in 2014-15 to 50,000 MT in 2015-16, mainly due to strong exports demand and lower production.
Cotton prices are moving high, rose to over one- month high in late morning trades in Friday, on back of falling output estimates for 2015-16. Fundamentals are bit supportive for uptrend as intensifying concerns over lower production of cotton amid tightening arrivals at major trading centers. Recent outcome of CIA (Cotton Association of India) has further revised its production estimates downwardly to 34.5 million bales as estimated before to 35.3 million bales. Cotton arrivals in current season have declined by more than 11% on year.
All India arrivals reported so far in current season stood at 24.84 million bales as on March 22, according to CCI (Cotton Corporation of India). Meanwhile, US plantation for cotton may stand at 9.562 million acres, up 11.4% as compared to last year. Upland area is estimated at 9.347 million acres, up11% and prima plantings forecast at 215,000 acres up 35.6% from 159,000 acre last year.
Sugar prices across the globe have skyrocketed, prices are trading firmly higher globally on back of lower stocks, summer demand and higher exports. Sugar price on exchange has gains nearly Rs 400 during March and further rise is imminent with pick up in demand for the hot summer season and export demand. Local traders say prices to remain firm in coming months. On retails pricing front prices have risen to Rs 40/kg from the levels of Rs 35/kg in the time span of just one month.
Sugar Consumption during summers remain pretty strong because of increased demand from confectioners, ice cream and aerated water manufacturers. Year of 2015 remains strong for sugar manufacturers on back of strong export demand, strong local demand, and lower stocks. On capital markets front sugar stocks surged in range of 50 – 80% in the time span of just 6 – 9 months.
Sugar market sentiment has changed drastically in last one year on back of lower stocks wherein, estimated export of nearly 1.7 million ton will bring down the carry forward stocks to below 8 million ton from 9 million tons a year before – according to ISMA official said.
According to domestic traders – Since price rise in global markets are showing bullish sentiment, boosting local stockiest confidence to stock the commodity on expectation of further increase in prices. If prices sees some pressure from higher levels stockiest or traders would support the prices from further fall on robust demand domestically and internationally.
Prices have seen sharp upward movement from the levels of Rs 3250 to the levels of Rs 3680 in the time span of just one month March.