After two-day slide, soyabean futures bounce back

After a sharp correction of 7.4% witnessed over past two days on reports of swine flu outbreak in Mexico and US, soyabean May futures on the National Commodity & Derivatives Exchange (NCDEX) once again bounced back on Tuesday. The market has discounted the news of swine flu and prices regained mainly on concerns over Argentina’s harvest and strong demand from China.
Soyabean May contracts rose to Rs 2,600 level on Tuesday after touching a low of Rs 2,594 per quintal. Earlier, the contract rose to Rs 2,800 per quintal, up by almost 20% in April month. Spot prices in Indore market also gained Rs 2 at Rs 2607 per quintal on Tuesday.
On Monday, NCDEX May soyabean futures hit lower limit of 4% in tandem with overseas market on fear of lower demand of soy meal, feed demand in near future due to outbreak of swine flu in Mexico.
A 10% special margin, which was levied on long side on all soyabean contracts, also weighed on the markets. Swine flu outbreak will impact on meat and livestock feed demand, a local trader said.
The World Health Organization has raised its six-stage pandemic alert level to 4 from 3 because of evidence of increased human-to-human contact, as swine flu is spreading across North America. Hog and pork-belly futures plunged 3 cents a pound.
“Soyabean prices are expected to rise in near term on due to concerns over Argentina’s harvest and strong demand from China,” an analyst with Angel Commodities said.
For medium term and long term, it is bullish on account of lower global soybean production estimates to 218.8 million tonnes. And higher export demand of Indian soyameal is expected from Asian and Middle East countries in coming year owing tight supply in global market, he said.
“We feel the fall in prices could be limited. Market sentiments could take it down further but now the shorts if any needs to be covered. The undertone for the commodity looks fairly bullish and this fall has opened an opportunity to go long,” analyst with Kotak Commodities said.
China is likely to import 3.83 million tonnes of soybean in April and 3.18 million tonnes in May according to Chinese government estimates issued last week. (source: fianancial express)