Soyabean prices come alive, set sights on Rs 4,000 level

By Manoj Kumar Jain

This year, soyabean, a major oilseed kharif crop, fell drastically below Rs 3,000 levels at the time of harvesting. In the last two months, the crop made a strong comeback in domestic markets, with prices jumping more than 20 per cent.

There are a few factors at work. Domestic production estimates have been revised by SOPA to the 83.5 lakh tonnes, from the previous 109 lakh tonnes, down by almost 24 per cent.


Second, CBOT soyabean is able to close above 1,000 per bushel and crossed the key resistance level.

Third, in the recent USDA report released in February, the global output estimate has been scaled down due to bad weather conditions in Argentina and Brazil. Global crude oil prices are also supporting oilseeds as prices are beyond the $60 per barrel mark.

Last but not the least, soyameal prices at CBOT are sustained above $370 per metric tonne, signaling strong demand of soybean globally.

In domestic space, lower output estimates and strong demand of millers are also backing up prices. The central government has convened a meeting this week to discuss issues relating to farm distress and better remunerative price for farmers for their crop. The government could further hike import duty on edible oil and pulses to protect domestic interest.

Looking at the change in fundamentals, strong global cues, robust domestic demand and lower output estimates, we expect soybean prices at Rs 4,000 per quintal levels soon in domestic markets.

Technical Chart of Soyabean (Source: Tele-quote)

Technical View
Soyabean in international market is able to cross 1,000 cent per bushel, an important resistance level. Our line is it could further rise till 1,036 and 1,076 levels in international markets with strong support at 1,000 and 992 levels.

At NCDEX, soybean is able to cross important resistance level of Rs 3,780 on weekly closing basis. We believe that it could test its next resistance level of Rs 3,880-3,940-4,000 in days to come. Soyabean is having strong support around Rs 3,740-3,700 in domestic markets. Traders are having a long-term horizon of 2-3 months. One could buy and accumulate soybean on dip around Rs 3,740-3,720 with the stop loss below Rs 3,600 for the upside target of Rs 3,920-4,000.

Recommendations
Buy Soybean Rs 3,740-3,720. Stop loss Rs 3,590. Target Rs 3,920-4,000.

(Manoj Kumar Jain is Director of Commodity and Currency at IndiaNivesh Commodities. He has 20 years of experience in financial service sector. Views expressed in this article are author's own and do not represent those of ETMarkets.com. Readers are advised to consult their financial advisers before taking any position based on these observations)