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The Oilseed Market Summary

MARKET SUMMARY:
The oilseed market moved inverse to the crude oil movement. Crude dropped largely as a result making the edible oil market such as CBOT and KLC weak, however the Indian domestic oilseed market kept firm and strong on account of limited stocks and slow production. Edible oil in the Indian market also dropped to a marginal extent, however the groundnuts and sesame seeds prices did not drop much, or we could say it refrained from climbing further higher. INRUSD pair moved very adverse to export pricing. It moved from 43/US$ to 42.25/US$ in one trading session which has given a large volume of losses to the exporters with forex proceeds in USD. The Indian oilseeds market did not drop also on the account of  lack of rainfall in the major growing regions. The Indian WPI indicator moved from 11.91% to 11.89% as a result of cooling down crude prices.
 
Overall, the market upward momentum was limited by the crude slipping, and with a combined efforts of the Indian currency fluctuation.
 
 
HEADLINES FOR PASTWEEK:
News from The U.S. (Source:APC):
- The Texas peanut crop had to deal with hot, dry weather at the start of the season. This appears to have affected nodulation progress in some fields. "We are not seeing the nodulation we would like to see in
  some of our peanut fields," says Todd Baughman, Texas AgriLife Extension state peanut specialist, based at Vernon. Baughman says a peanut plant can be carefully dug up and examined for nodulation.  "While
  we prefer to see a larger number of active nodules on the taproot, active nodules (those pink to red inside) on the lateral roots can also contribute to the plant's overall nitrogen needs," he says.  
- Could Georgia be breaking out of its record breaking drought? State Climatologists say thunderstorms several days a week seem to be showing the drought recovery process is in motion. Mark Daniel's peanuts
  look promising, and he credits the recent rain, which after years of drought he calls a blessing. Daniel said "Friday in one hour we received four inches of rain. That's more than I ever recall in my whole life."     
  Assistant State Climatologist Pam Knox said that recent afternoon thundershowers will break Georgia's drought cycle. Moisture in the soil will evaporate, and provide the moisture needed to develop new storms.
  Knox said just as the drought kept the dry air in place, now these rains will keep the afternoon showers in place. Daniel said "I hope they are right. Because it sure is nice to get a good rain. It makes you feel
  better, and it helps your bottom line." The rain showers gave most South Georgia irrigation systems the last couple of days off, and farmers did not have to burn four dollar a gallon diesel fuel to pump them.   
  Water Resource leaders say the summer showers have recharged the aquifers, streams, and ponds, during a crop cycle when water is most critical. 
 
News from Argentina (Source:CBOT):
- Argentina oilseed area Seen Way Up, Corn Down On Farm Fight Ongoing tension between the Argentine government and farmers and a return to a lower export taxes on grains will spur a sharp increase in
  soybean and sunflower seed planting at the expense of wheat and corn, according to analysts. With corn and soy planting set to kick off in September and October, soybeans appear poised to steal the show
  again. Rosario Grain Exchange chief analyst Rogelio Ponton, said that soy area is likely to increase sharply due to the lower risks and input costs associated with the crop. Local brokerage Panagricola Vice
  President Ricardo Baccarin estimated that soy area will rise 5% from last season, while Agripac Consultores analyst Pablo Adreani saw area increasing 6%.
- Higher input costs to grow corn and sunflowers and uncertainty regarding government farm policy will spur farmers to plant even more of the sure-bet soybeans this season, said Rodolfo Rossi, the president of the
  Argentine soy chamber, known as ACSOJA. Farmers planted a record 16.6 million hectares with soy-beans last season, using about half of all cropland to grow the legume, according to the Agriculture
  Secretariat. “Soy is less risky, cheaper to plant, and isn’t consumed domestically so there isn’t a risk that the government will shut down exports,” said a leading analyst who asked not to be named.
News from India:
- Cotton sowing this year is down 40% due to poor rains in growing states like Gujarat, Andhra Pradesh and Maharashtra. Cotton output in 2008-2009, is projected to  fall 10% to 28.5mln bales from record 31.5 mln
  bales last year.
- Adani Wilmar, the branded and packaged edible oil maker that controls one fifth of the domestic market has decided to reduce prices by 2-3 rupees per ltr on all its brands. With crude going down, the edible oil
  market is also correcting.
- Indonesia has decided to cut its crude palm oil export tax for August to 15% from 20% in July and cut its base export price for CPO to $1,106 a metric ton, from $1,144/ton in July, to bring them in line with
  international prices, the trade ministry said Wednesday. The new rates will be effective from August 1 until the end of the month. Under Indonesia’s progressive tax system, export tariffs will be cut or raised in
  tandem with international CPO price fluctuations.
- India Summer-Sown Crop May Be Hit On Weak Rains - India’s summer crop planting could take a turn for the worse if the weakness in monsoon rains continues in the next couple of weeks, industry participants
  said. Planting of India’s summer crops such as rice, corn, oilseeds, cotton and sugar cane is now underway, and good monsoon rains are critical because 60% of the country’s farm-lands are rain fed.
- According to the latest data from the India Meteorological Department, showers during the week ended July 16 were 19% below normal levels, with a major shortfall in the southern, western and central parts of
  the country.
- India 08-09 Summer-Sown Oilseed Output Seen Dn 13.2% India’s summer-sown oilseed output is likely to fall 13.2% this year, to 13.8 million metric tons from 15.9 million tons a year ago, on poor monsoon rains
  in areas that account for most of the country’s output. “Except for Rajasthan, all major oilseed-growing regions have had poor rainfall in the current monsoon season,” said Govindbhai Patel, managing partner,
  Dipak Enterprise, an Indian edible oils trading company based in the western province of Gujarat. Summer-sown groundnut output may fall to around 3.9 mil-lion tons in the current crop year, from 4.8 million tons 
  a year ago, Patel said in his latest forecast on India’s edible oils and oilseeds output. The crop year runs from July to June. Patel, whose forecasts on India’s oilseeds and edible oil supply are closely tracked by
  the industry, said soybean output is likely to fall to 9.0 million tons in 2008-09 from 10 million tons a year earlier.
- “Sowing will continue till early August, and the picture will be much clearer then. However, good rains are required in the next two weeks to ensure that sowing progresses well,” said a senior official with a leading
  cotton trade body. Another crop that has been affected by low rains, specially in Andhra Pradesh, is corn.
- Corn planting, which had been progressing well till last week, was lower between June 1 and July 18 at 4.10 million hectares, compared with 4.27 million hectares a year earlier. However, industry officials said the
  impact of the low rains on the corn crop was yet to determined because sowing will continue till the end of the month. But the arrival of the new crop in the local markets could be delayed if the rains remain
  subdued because sowing in some areas could be delayed. However, rice planting has been higher so far at 14.89 mil-lion hectares as of July 18, up from 12.12 million hectares a year earlier, with industry officials
  keeping a close eye on progress of the crop in light of the low rainfall.
- Groundnut acreage in Gujarat, the top producer of the oilseed in India, is likely to miss the target for this kharif (jun-oct) if rains play hide and seek for one more week.
- Kharif groundnut sowing in Gujarat is 90% over. Until now, the acreage stands at 1.73mln ha. But there is a likelihood that crop may get damaged due to insufficient rains.
- Oilseeds output may be lower by 2000000 MTS says expert.

 
TRADE WATCH:
GROUNDNUTS: As price moved upward, export covering started. Good amount of 140160 and 5060 were covered. Demand from China and Philippines market was flat, while Indonesia demand picked up.
- SESAME SEEDS: Demand from China was flat, Philippines & Indonesian demand was sideways.
 
 
CROP STATUS (groundnuts):
Andhra: No more export stock. Next season October 2008.
Karnataka: No more export stock. Small quantity of 90100s available are good averaging prices.
Tamil Nadu: New crop 8090 alone is available. However production speed is very slow due to erratic rainfall, and slow arrivals. Old crop is dry, medium pink and is good for averaging trading prices.
Orissa: No more export stock.
 
 
MONSOON WATCH:
- The IMD also updated its data for the monsoon rain so far this season, saying rain from June 1 to July 16 was 4% above normal levels, a reduction from levels seen between June 1 and July 9, when rain fell at
  10% above the normal level. The government is banking on a bumper summer-sown crop harvest to cool down India’s double-digit inflation. However, industry officials said that if the rains don’t increase in the next
  few days, then the sowing of the crop and the yield from what’s already been planted could be affected. That’s the case with oilseeds in the four key Indian states of Andhra Pradesh, Karnataka, Maharashtra and
  Madhya Pradesh, which have been already affected by scant rains during this year’s monsoon, said B.V. Mehta, executive director of the Solvent Extractors’ Association of India. “Even for areas where oilseeds
  crops have already been planted, if rains continue to remain scant, farmers may have to replant their crops, which will delay harvesting,” said Mehta. Planting of soybean had been carried out on 6.50 million
  hectares as of July 17, up from 5.50 million hectares a year earlier. Major declines in area under cultivation so far have been seen in cotton and sugar cane, specially in Maharashtra.
 
OUTLOOK FOR NEXT WEEK:
- Market this week will be bullish. With demand picking up from the lagging market, USDINR within the range of 42/US$ and 42.50/US$, we expect the market to turn very bullish with very minor corrections. Key
  indicators will be crude that will affect the Indian currency which will in turn affect the export competitive pricing.
 

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