Posts Tagged ‘Soybeans’

SOYA CRUSH MARGIN……. “Fenced with negative wire”

The variable margin that processors derive from crushing soybeans to create byproducts is one of the most intriguing and challenging aspects of the entire soybean and product-value chain.

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A soybean crusher makes his profit from the difference between the cost of buying the beans and the price of selling the products. This is called the “crush margin”. Or in other words the price realization to the crushers from selling soy oil and soy meal after deducting soybean price)

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.Crushing blues………. “The implications”

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Very frequently, it is one of either the meal or the oil that drives crushing. For example if meal export prices are ruling firm, then the margin widens. During such times, plants crush in order to sell the meal.

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With the increase in crush margin, there will be a greater demand for soybeans for crushing resulting in gradually firming prices of soybean. Conversely, when the margin starts falling, one can expect weaker demand for soybean and softening in its prices.

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Under utilization of crushing capacity will always put pressure on margin. The miller crushes the seed and gets oil and meal which he sells in the market and receives income.

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If the money he gets greater than the cost of oilseed and crushing costs/overheads, he has a profit margin. The greater the margin, the greater is his incentive to crush the soybean at full capacity and sell the meal and oil & vice versa.

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Rule of Thumb: One metric tonne of soybean yields around 180 kg or 0.18 tonnes of soy oil (18% yield) and 820 kg or 0.82 tonnes (82% yield) of soymeal.

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Crush Margin (1 tonne of soybean): [(price of soy oil x 0.17) + (price of soy meal x 0.81)] – [price of soybean + processing cost]

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For example, as on July 6, 2010 the spot prices (NCDEX) of soybean, oil and meal in Indore were Rs 1,875.00 per quintal, Rs 437.50 per 10 kg and Rs 15,300 per tonne respectively. Converted into constant units of Rs/tonne, the prices are Rs 18,750, Rs 43,750 and Rs 15,300 per tonne respectively.

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Additional costs involved:

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·Processing charges roughly work out to Rs 750 per tonne to crush the seed and a further

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·Rs 500 per 180 kg as refining cost of oil. (The refining cost per tonne of crude soy oil is roughly Rs 2,500 and approximately 20% is factored for refining the 180 kg of oil derived from crushing 1 tonne of soybean.)

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It should be borne in mind that these numbers may vary marginally from year to year, depending on  growing conditions. As the prices of bean, oil and meal change on a daily basis, so too does the crush margin and this is watched closely by the industry.Thus, the crush margin would be [(43750*0.17 + 15300*0.81) – (18750+1250)] or Rs.-37.65 per tonne (NEGATIVE CRUSH MARGIN).

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In recent day’s i.e from the mid of June, the disparity of soy crushing, which is below crushing cost has consequently discouraged the soy crushers by calling off the operations of most of the crushing units in the key growing areas..

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The negative crushing margins faced by the industry have been due to a combination of high oilseed prices & drop in soybean meal supplies from India. According to the Solvent Extractors’ Association of India (SEA) the estimated 125 lakh tonnes of surplus oilseeds as on June 1 can potentially produce 40 lakh tonnes of edible oil, but cannot be crushed by the industry because of the disparity between crop and oil prices. The export of oilmeals for the month of June stood at 158,750 tons compared to 197,593 tons in June 2009 i.e. down by 20%. The overall export of oilmeals for April-June 2010 stood at 536,700 tons compared to 614,528 tons i.e. down by 13%. To sum up, the relationship between the soybean and its products, meal and oil, is operational, physiological and economic in nature. The value of the three components is tightly interlinked and often dynamic.

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Farmers in Upbeat Mood over Prospects of Commercial Crops

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Farmers in Upbeat Mood over Prospects of Commercial Crops

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Farmers in upbeat mood over prospects of commercial crops

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Vagaries of nature may have dampened the mood of farmers in the district of Guntur in Andhra Pradesh with fears lingering over decrease in the yield, but the first signs in the yield of commercial crops are already indicating towards a record production.

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The prolonged drought which delayed the sowing operations in kharif last year meant that the acreage has decreased by about 20,000 acres.

The year 2008-2009, the paddy yield has shot up to 12.96 MT in 2009-2010.

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The drought, however, seems to have hit the prospects of cotton farmers as the yield had been reduced by 1.25 lakh MT.

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As against the total yield of 6.61 lakh MT in the year 2008-2009, the yield has fallen to 5.36 lakh MT in the year 2009-2010.

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In comparison, chilli farmers are smiling as both the acreage and production have shot up considerably.

The yield has shot up by 40,000 MT and the acreage too has increased by about 40,000 hectares.

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In the year 2008-2009, statistics available with the Agriculture Department showed that, chilli was sown in 63, 628 hectares and the cultivable area went up by 67, 867 hectares.

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In Other major Commodities Update, there is a news of soyabeans and corn rice rising the most last week and on the other news, sugar prices surging up by Rs 14/kg in Kerala after the subsidy rollback by state govt.

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Soybeans, Corn Rise Ahead of U.S. Forecasts for Crop Reserves:

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Soybeans rose the most in almost a week on speculation that U.S. crop reserves may be lower than earlier estimates.

Corn and wheat also advanced.

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Soybeans for March delivery rose as much as 13.25 cents, or 1.5 percent, on the Chicago Board of Trade, the biggest intraday gain since Feb. 2.

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The U.S. Department of Agriculture is expected to cut its projection for soybeans reserves before the 2010 harvests to 221 million bushels in a report on Feb. 9, from the 245 million estimated last month, a Bloomberg News survey showed.

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Subsidy rollback pushes sugar prices by Rs 14/kg in Kerala:

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Kerala government’s recent decision to stop Rs 28-crore subsidy to its grocery retailing arm Supplyco has pushed sugar prices by around Rs 14 per kg in Supplyco’s outfits.

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Though, sugar prices in state-run shops is still lower than the open market price of around Rs 45 per kg or even Nafed-fixed price of Rs 41 per kg, but low stocks have minimized the benefit of low prices.

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Wheat Falls as Rally, Dollar Gain May Curb Demand for U.S. Crop

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Wheat Falls

Wheat Falls as Rally, Dollar Gain May Curb Demand for U.S. Crop:

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Wheat dropped on speculation that a price rally to a three-week high and the dollar’s rebound may reduce demand for the U.S. crop.

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Corn and soybeans also declined.

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The grain yesterday jumped 5 percent, the most since Nov. 11, leading gains in corn and soybeans on speculation that fund managers will purchase agricultural commodities at the start of 2010, anticipating improved demand as the global economy strengthens.

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Wheat for March delivery declined as much as 1 percent to $5.45 a bushel on the Chicago Board of Trade and traded at $5.4575 as of 10:49 a.m. in Tokyo.

The contract yesterday touched $5.51, the highest level since Dec. 8.

The grain has lost 11 percent this year.

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In Other major Commodities Updates, we have news of edible oil industry, urging a tightening of futures trading in oils and oilseeds.

Industry wants tighter oil, oilseeds futures norms:

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With oilseed crushers feeling the pinch on their margin due to rise in oilseed prices, which, they feel, have been fuelled by speculations in futures trading, the edible oil industry is urging a tightening of futures trading in oils and oilseeds.

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Raising the issue, the Solvent Extractors’ Association of India (SEA) has suggested the Union consumer affairs ministry that new futures contracts for oilseeds should be restricted to current plus one month only.

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As for existing futures contracts for the next six months, the traders should be asked to square them off on the date of settlement next month.

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Moreover, all contracts have to be backed by a minimum quantity of delivery, suggested SEA.

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It has further requested the ministry to enhance the margin on trading to such a level, which would discourage speculators entering into this arena.

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Industry expects 44% rise in sugar output next season

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Industry expects 44% rise in sugar output next season

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Industry expects 44% rise in sugar output next season:

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India’s sugar output is expected to rise by 44% to 23 million tonne in the crop year that starts from October 2010, an industry official said, as higher prices are likely to support cane cultivation.

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The output in 2010-11 would be substantially higher than an expected 16 million tonne during 2009-10, Vinay Kumar, managing director of the National Cooperative Federation of Sugar Factories Ltd, told.

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Bumper planting is going on in Uttar Pradesh because of higher prices.

Producers are raising price of cane every week, Kumar said.

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In Other major Commodities Updates we can read that Corn, Soybeans are expected to rise with the rise in crudeoil prices and decline in dollar value.

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Corn, Soybeans May Advance as Crude Oil Rises, Dollar Declines

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Corn, soybeans and wheat were little changed and may climb on speculation that the dollar’s decline and rising crude oil may increase demand for the crops used for food, animal feed and alternative fuel.

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Corn for March delivery fell 0.1 percent to $4.0425 a bushel in electronic trading on the Chicago Board of Trade at 10:51 a.m. in Tokyo after gaining 1.5 percent yesterday, the biggest gain since Dec. 11.

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Before today, the contract fell 3.1 percent this month, the first drop in four months. March-delivery soybeans climbed 0.3 percent to $10.12 a bushel.

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The contract rose 1.1 percent yesterday after the Department of Agriculture said U.S. exporters sold a total of 367,000 metric tons in transactions with Italy, China and buyers that weren’t identified.

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Cumulative U.S. sales from Sept. 1 to Dec. 10 are up 53 percent to 29.554 million tons.

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Uncertainty over stocks leads to price volatility in turmeric futures

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Uncertainty over stocks leads to price volatility in turmeric futures:

In an unusual situation this week, far-term turmeric contracts were trading much below near-term ones, offering a big arbitrage opportunity for hedgers and speculators, on the National Commodity & Derivatives Exchange (NCDEX).

The price difference was 39 per cent.

Last year’s carryover stock is estimated to have declined steeply, at around 150,000 bags (a bag is 70 kg) as of today, as compared to around 700,000 bags around the same time last year.

Arrivals at the Erode market were 2,000 bags and sold at Rs 10,900-11,000 a quintal.

In Duggirala, prices were placed at Rs 9,800-10,500 a quintal and in Warangal at Rs 9,900-10,500 a quintal.

Turmeric exports climbed seven per cent to 4,000 tonnes in October 2009 from the same period last year.

Weak turmeric futures put downward pressure on spot markets, to send the product down by Rs 800 a quintal.

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In Other major Commodities Updates also read Soybeans and Wheat Drop as Dubai Default Risk Dents Confidence of the Investors.

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Soybeans, Corns and Wheat Drop as Dubai Default Risk Dents Confidence:

Soybeans, corn and wheat slumped after Dubai’s bid to reschedule debt sent equities tumbling and eroded investor confidence in commodities.

Soybeans for January delivery dropped as much as 2.7 percent to $10.2625 a bushel, the lowest level since Nov. 19, in electronic trading on the Chicago Board of Trade and were at $10.385 at of 10:50 a.m. Tokyo time.

The contract has lost 0.7 percent this week, the first such drop in three weeks.

Wheat for March delivery in Chicago lost as much as 2.4 percent to $5.5775 a bushel before trading at $5.595.

The grain dropped 3.7 percent this week, falling for the first time in four weeks.

Production may be around 21 million metric tons, down 2 percent from last harvest and lower than the 23 million tons forecast in October,2009.

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Bull Run in Commodities May Continue

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Bull run in commodities may continue


Bull run in commodities may continue:

Spurt in prices to be driven by dollar weakness, rise in demand and low supplies.

The global bull run in commodities is likely to continue through next year due to dollar weakness, supply restraint and, eventually, a pickup in demand.

Crude oil prices are also up 74 per cent, but the energy complex as a whole is down, as natural gas prices are weighed down by massive oversupply.

Precious metals have also risen 37 per cent.

The base metals complex has performed well this year, driven by the rebound in growth in China, although some of the increased demand has gone into inventory.

Sugar and soybeans have been the exception in 2009, rising sharply while the rest of the agricultural complex underperformed.

This was largely on supply issues; improved crops in 2009-10 are expected to flood the market, dampening prices.

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In Other major Commodities Updates we can read about Govt estimation about the Edible oil output which says that Edible oil output may dip 7.4% in 2009-10.

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Edible oil output may dip 7.4% in 2009-10:

The government today said edible oil output is likely to decline 7.4 per cent to 7.96 million tonnes in the 2009-10.

Edible oil production, last year, stood at 8.6 million tonnes.

Oil season runs from November to October.

Production/net availability of edible oil from all domestic sources is estimated to be 7.96 million tonnes in the 2009-10,” Minister of State for Agriculture K V Thomas said.

The demand of edible oil in the country is estimated to have increased to 17.79 million tones this year, he said.

The domestic edible oil production is likely to decline following a dip in oilseeds production, which is estimated to be 15.23 million tonnes in the kharif season against 17.88 million tonnes in the last season, the official data showed.

Thomas said, “There is a wide gap in the production and demand of edible oil in the country and imports are resorted to bridge the gap.”

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Centre May Raise Coffee Package to Rs 802 Crores

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Centre may raise coffee package to Rs 802 cr

Centre may raise coffee package to Rs 802 cr

Centre may raise coffee package to Rs 802 cr:

The Centre is likely to increase the debt relief package for coffee growers to Rs 802 crore, 58 per cent more than the recommendations of Coffee Board, Union minister of law and justice, M Veerappa Moily said.

There are discussions at different stages to work out the package.

The figures of the total loan owed by the coffee industry to banks are Rs 1,700 crore.

The coffee board recommended a scheme for Rs 504 crore.

The coffee growers are in need of an urgent relief package, so as to give them a one-time life line to come out of the crisis.

The coffee industry is continuously facing low productivity due to drought of 2003 and 2004, which have had a domino effect on productivity.

In Other major Commodities Updates we can see how Corn, Soybeans advanced on the Speculation of excess rains which can delay the harvesting of crops”.

Corn, Soybeans Rally on Speculation Rains to Delay U.S. Harvest:

Corn and soyabeans advanced on the concern that higher-than-normal rainfall in parts of the U.S. may raise the risk of yield losses in the world’s biggest exporter of both crops.

Above average rainfall was forecast in producing states, including Iowa, Illinois, Nebraska and Indiana between Nov. 21 and Nov. 25, according to a U.S. Climate Prediction Center report dated Nov. 15.

The four states are among the biggest corn and soybean growing areas in the U.S. Corn for March delivery added as much as 0.9 percent to $4.0925 a bushel in after-hours electronic trading on the Chicago Board of Trade, and was at $4.09 as of 9:58 a.m. Singapore time.

Soybeans for January delivery climbed as much as 1.4 percent to $10.0125 a bushel in Chicago and last traded at $9.9475.

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