<p>Agricultural commodities rocketed in markets abroad this month on bullish fundamentals, triggered by a weakening dollar. But in India, they remained range-bound due to measures taken by the government, including timely release of foodgrain, and beginning of harvesting of kharif soybean and corn.
Corn and soybean rose sharply at the Chicago Board of Trade (CBOT). Corn for delivery in December rose 13 per cent to the highest level since September 2008. Rabobank continued its positive view on prices, with risks remaining skewed to the upside. Corn (maize) was at $5.68 per bushel at CBOT on Wednesday.
Corn fundamentals remained precariously balanced, with continuing production uncertainty in both the US and China, despite significant harvest progress. The odds of another downward revision of yield by the US Department of Agriculture are high. While Chinese import demand is uncertain, the impact of Chinese imports will be significant for both global and US corn balance sheets this season, in what is already shaping up as one of the tightest carry-out stocks on record, the latest Rabobank report says. In the domestic market, however, maize saw a marginal rise of 0.4 per cent (between September 15 and October 15) on NCDEX. Since the October delivery contract expired on the 20th of the month, the near-month contract saw high volatility.
For soybean, prices rallied in overseas markets despite a record US harvest. Even at these elevated levels, there is no sign of demand rationing, while prices have lost ground relative to corn. As a result, there is no sign of relief from the demand-driven rally currently in play. Analysts say further upside potential exists even from these historically high levels. The commodity was trading at $12.06 a bushel on CBOT on Wednesday, after climbing to a high of $12.29 a bushel in early trade, the highest for the spot month since August 2009. On NCDEX, it rose 9.45 per cent for October delivery. Rabobank believes global soybean demand conditions remain exceptionally robust and even with prices at current levels, there is no real evidence of demand rationing.
Analysts maintain a neutral view on wheat, with further range-bound trade expected in the coming months. They continue to see relative value in high-quality and high-protein wheat, given an acute tightness globally. Further currency recalibration will be influential in determining export price relativities. However, fundamentals suggest the bulk of exports should shift to the US until the end of the year, when southern hemisphere supplies begin to make their way into the chain.
Wheat was little changed on CBOT, holding on to strong advances in the previous session, as adverse weather in the US and Australia increased purchase interest. But wheat was steady, shrugging off the dollar’s fall, amid continued concerns about the state of US wheat plantings. The commodity for delivery in December was traded at $6.91 a bushel on Wednesday, little changed after rising 2.6 per cent on Tuesday.
In Delhi, however, wheat dara was trading at Rs 1,265-1,270 per 90 kg. The prices remain range-bound or, rather, have seen a decline in the past few months due to the extra release for both below poverty and above poverty line people at subsidised rates.