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India Edible Oil May Trade In Slippery Road Next Week

4 Feb 2017 3:13 pm
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Mumbai (commoditiescontrol) - A steady tone was witnessed in edible oil market this week with heavy volatility coupled with weak dollar.

Crude palm oil was highy volatile in benchmark Malaysia market in trucked week and prices moved range bound stucked between strong fundamental reports and rising ringgit.

According to data released by SPPOMA (South Peninsula Palm Oil Millers Association) palm oil January production is estimated down 22 percent after falling 6.4 percent in December.

Whereas, cargor surveyors reported palm oil exports were up 4-8 percent in January after falling 1-6 percent in December.

Market participants are expecting palm oil stock may touch 15 lakh tonnes in month January on basis of production loss estimate coupled with small up tick in exports.

Malaysian palm oil board (MPOB) will publish its January demand supply data on February 10.

However, upside for benckmark market was capped tracking weakness in U.S soy oil futures which dropped 1.2 percent this week.

According to CC-Analyst, crude palm oil prices are in slippery road as prices are trading at premium with other edible oil in the complex, where production of rival soy oil is estimated to be higher than expected specially with upward revision in soybean output in South America.

By weekend, Malaysian palm oil was quoted $770 per tonnes in FoB terms, while Argentina soy oil was $762 and Ukrainian sunflower oil was last quoted $760.

With low price gap within oil complex, importing countries have full range of buying appourtunity for selection of edible oil.

In coming week, market participants will also focus on demand for crude palm oil after producing regions have hike export duty effective February 01.

Malaysia raised its export duty to 7.5 percent for February month against 7 percent in January, while the rival Indonesia hiked export tax to $18 per tonnes against $3 for same period.

According to market participants, outlook for regional oil is fragile as hike in export tax may slow down demand coupled with low price gap with other oil.

In domestic market, traders opted to stay away from market on anticipation of price fall as local currency Rupee appreciated by 1.4 percent this week and likely to rise further in coming weeks.

Market was also disappointed by no announcement made for edible oil sector in Union Budget 2017.

According to CC-Analyst, palm oil prices may remain under control with negative sentiment as big shipment of soy and sunflower oil is expected in coming weeks coupled with rising supply of mustard seed new crop.

RBD Palmolein prices was dropped 1 percent at kandla port in dollar terms (CNF) this week, while prices were steady in Rupee terms.

In futures market, benchmark Malaysian palm oil closed 0.5 percent lower while prices at local bourses dropped inline with global cues.

Crude palm oil most active February contract on Multi Commodity Exchange (MCX) close up 0.2 percent, while forward March contract was down 0.44 percent.

NEXT WEEK: Volatility likely to continue in palm oil market ahead of big industry data from MPOB, Rupee movement which is in upsiwing after Union Budget and coupled with demand in spot market as the country enters month long marriage season.

Market will also focus on full February 1-10 export data from cargo surveyors and production estimate from South Peninsula Palm Oil Millers Assoc. (SPPOMA) for same period.

A weak tone was witnessed in refined soy oil in benchmark Indore market of Madhya Pradesh largely pressured by sluggish demand weak global cues.

The big trigger came from weakness in U.S soy oil futures on growing concern about soybean production in South America which has been revised upward by weekend and may result for high soy oil supply in coming weeks.

In addition to it, uncertainity about bio-diesel program in U.S under Trump's policy also pressured prices.

U.S Environment Protection Agency (EPA) in November 2016 hiked bio-fuel mandate for 2017.

Soy oil futures on CBot has dropped 1.2 percent this week and outlook seen negative in near-term.

China returned from new year holidays and its action will be watchful after U.S Trump aggressive action for his slogan "America First".

According to CC-Analyst, if U.S trade war continues, then China demand may be diverted to South American supply or other origin for agri-commodities.

In domestic market, demand for refined soy oil was as per requirement as market participants opted to stay away from volatility in futures market and on anticipation of price fall in near-term on weak sentiment in global edible oil market coupled with weak dollar.

The local currency Rupee appreciated 1.4 percent this week, making imported edible oil cheaper.

Argentina soy oil FoB was inched higher by 0.6 percent this week.

Mustard seed new crop arrival have started and may rise in coming days, which may increase supply of mustard oil in local market and keep lid on prices of other edible oil in the complex.

Soy oil prices in benchmark Indore market was down 2.2 percent this week, while prices dropped 1 percent in dollar terms (CNF) at Kandla port and but was flat in Rupees terms.

In futures market, soy oil most active February contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) was down 0.46 percent this week, while forward March contract was lower 0.54 percent.

NEXT WEEK: Soy oil likely to trade with negative sentiment with volatility tracking dollar and CBot movement.

(By Commoditiescontrol Bureau; +91-22-40015516)

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