Weak rupee lifts soyabean, trend looks positive

Soyabean is one of the most affected agriculture commodities in the world in the wake of the trade war between the world’s two biggest economies US and China.

Record global as well as domestic output impacted prices, too.

Prices at CBOT have tested a one-decade low. On the NCDEX, they slumped to a low of Rs 3,147 in October.


Soyabean prices took support in the domestic market as arrivals in mandies did not go up in line with expectations after a record production of more than 11 million metric tonne this year.

The government has estimated domestic production at 13.5 million tonne this year while the Soyabean Oil Processors Association (SOPA) pegged it at around 11.5 million metric tonnes.

Domestic prices took support from lower arrivals and a broad weakness in the rupee.

Governments in producing states are incentivising farmers in the form of Bhavantar payment scheme. We expect soyabean prices to remain firm locally and will continue to take support at lower levels.

Technical chart of soyabean

Technical View
Soyabean prices at CBOT tested $812, the lowest in one decade. They rebounded to $892 in October though.

We expect soyabean prices at CBOT to continue at the support levels and not fall further in coming days. In the domestic market, after testing a low of Rs 3,147 in October, prices gained momentum and tested the high of Rs 3,390 on October 30.

Technically, soyabean prices made a solid base in the range of Rs 3,150-3,200 in the domestic markets and will continue to hold. If soyabean prices close and sustain above Rs 3,330 on a weekly closing basis, these could test Rs 3,420 and then Rs 3,500.

A close and continuance below Rs 3,250 will create panic. In that case, it could test Rs 3,150-3,100 again, but the chances are remote.

Looking to domestic fundamentals and the technical chart on a weekly basis, traders can buy and accumulate soyabean around Rs 3,250 with strict stop loss at Rs 3,130 for the upside target of Rs 3,420-3,500.

Recommendations
Buy Soyabean at Rs 3,250 | Stop Loss Rs 3,130 | Target Rs 3,420-3,500

(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)