soybean prices: Should traders avoid soybean as prices go through the roof?

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Soybean surged to a recent peak on Friday, extending a report run in the previous few classes. At the present ranges, the legume has taken its rally to 132 per cent from final yr’s low of Rs 3,228 per 100 kilograms.

NCDEX soybean futures for supply in July had been being quoted at Rs 7,550 per quintal on Friday night, up Rs 231 or 3.16 per cent from the earlier shut, after surging to a report excessive of Rs 7,606 throughout the session.

The refined soy oil contract for June supply jumped by Rs 16.8 or 1.21 per cent to Rs 1,405 per 10 kilograms.

Analysts say increase of recent positions by speculators is pushing the charges to unprecedented ranges and a few volatility may be anticipated in the close to time period.

Soybean has outperformed most agri-commodities in current instances. It is up 64 per cent to date this yr, sharply outperforming the NCDEX Agridex index’s 27 per cent rise, and 87 per cent in the final one yr. Other winners in the pack embody cottonseed oil cake, turmeric and chana gram, up 37 per cent, 36 per cent and 30 per cent to date this yr, respectively.

The rally in soybean is being fuelled primarily by sturdy demand for soymeal from exporters amid scarcity of shares in the spot market, mentioned Vinod TP, Research Analyst at

.

“The yellow bean started its northward journey after corrective selloffs witnessed in the first quarter of last year, owing to nationwide lockdown on the back of concerns over fall in global soybean outlook along with lower stocks,” he mentioned.

Fundamentally, decrease edible oil shares globally amid issues over falling output resulting from drought in Brazil additionally underpinned the prices, mentioned TP, who has a optimistic outlook on soybean. He, nonetheless, added that revenue reserving can’t be dominated out in the close to time period.

Others are extra circumspect about coming into soybean at the present ranges.

“Trends witnessed in global markets are pointing to some correction in soybean ahead with US planting seen surpassing last year’s levels. Soybean futures have reached risky levels, making it difficult to take long positions,” mentioned Ajay Kedia, Founder and Director of Mumbai-based Kedia Advisory.

At the present juncture, soybean is buying and selling at a 94.59 per cent greater value in comparison with the MSP or minimal assist value set by the authorities.

Some business gamers have suspected a speculative improve in the value of the commodity resulting from rigging and have sought regulatory intervention.

Technical view

Kedia advises traders to avoid taking lengthy positions for now. The near-month contract could droop to Rs 6,100 degree in the close to time period, the place it will probably discover some technical assist, he added.

Soybean is quoting above all main exponential shifting averages and as lengthy as it stays above the Rs 6,680 per 100 kilogram-mark, it seems poised to achieve Rs 7,200-7,260 ranges, mentioned TP. “Any direct fall below Rs 6,650 with firm volume could see profit booking with selloffs towards Rs 6,490/6,400.”

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