Mumbai (Commoditiescontrol) - A down trend was witnessed in edible oil market this week on concern about slowing demand and rising production. CRUDE PALM OIL: Crude palm oil witnessed heavy selling pressure this week on various sluggish fundamentals for the commodity. Malaysian palm oil futures dropped, on expectations of rising production and slow export demand. Malaysia crude palm oil futures closed 4.38 percent lower this week, while RBD palmolein FOB, Malaysia, dropped 1.70 percent for March shipment.
According to market participant "Fundamentally production is inching up but exports are declining,". Malaysia's palm oil exports in February were down 14% on month at 1.1 million metric tons in February, the Malaysian Palm Oil Board says. Palm oil exports are estimated down 25.46% on month at 254,141 metric tons during the March 1-10 period, cargo surveyor Intertek Agri Services says. Another surveyor SGS (Malaysia) Bhd. estimates exports to be down 25.7% on month at 250,481 metric tons. The slipping demand will continue to exert pressure on prices. THE POC 2017 in Malaysia got concluded on 8th March 2017. Leading Analyst Dorab Mistry said Malaysian palm oil futures are expected to rise to 3,000 ringgit a tonne because of tight inventories after last year's drought, though a decline by June is still likely as production recovers. The market is expected to be down in June-July to 2,500 ringgit. Mistry estimated Malaysia's crude palm oil production in 2017 will rise to 19.5 million tonnes, and Indonesian output to be 33.5-34.0 million tonnes. In 2016, Malaysian output declined to 17.32 million tonnes, 2.6 million tonnes below 2015's level, and Indonesian production was 30 million tonnes, down 2 million tonnes from 2015. Production recovery in Malaysia has started already, production turned the corner in December 2016, when December 2016 production exceeded December 2015 production. He said palm oil stocks will begin to recover from July 2017, and the product will face strong competition in India from South American soyoil exports. India edible oil imports are expected to decline to 14.3 million tonnes in the year to October 2017, down from 14.738 shipped a year ago. India large 70 LT Mustard crop would vanish Soy Oil blend into Mustard Oil/China would stop auctioning Rape Oil nearby June. Indonesia Estate Fund can subsidized more CPO in BioDiesel if CPO fell by $100 Ton. In other cues U.S soy oil futures dropped 5.45 percent this week on rising stock with crushers due to high crushing during February month. Market was also pressured by improving condition in South America raising prospects of much better crop resulting in higher supply of edible oil. Crude palm oil may extend its weakness in coming days on concern about demand at high export tax coupled with outlook of rising supply of edible oil globally. According to market participants, outlook for regional oil is fragile on account of slow demand coupled with low price gap with other oil.
In domestic market, traders opted to stay away from market on anticipation of further price fall on anticipation of supply to rise in coming weeks, whereas local supply is sufficient to meet demand. Market will also feel pressure as new crop arrivals of mustard seed has started and likely to rise in coming days and improve supply of mustard oil. RBD Palmolein prices was down 1.70 percent at Kandla port in dollar terms (CNF) this week tracking weakness in Malaysian market. On the other hand, palm oil demand in local market was weak as traders and stockist opted to stay away from big commitments due to low price gap in import cost. In futures market, Crude palm oil most active March contract on Multi Commodity Exchange (MCX) close down 2.23 percent during the week, while forward April contract was lower 2.54 percent. NEXT WEEK: Palm oil market likely to trade with negative sentiment on tepid demand coupled with futures market trading on subdued tone. REFINED SOY OIL:
Refined soy oil witnessed down-trend in benchmark Indore market of Madhya Pradesh due to weak sentiment in oil complex.
CBOT soy oil futures closed down 5.45 percent this week largely pressured by rising stock with U.S plants due to better crushing in February.
In addition to it, supply of edible oil seen easing as improving weather condition in South America may speed up harvesting.
Tracking weak global sentiment, Argentina soy oil (CNF) lost 3.50 percent this week at Kandla port and prices at domestic market followed the suit and dropped 1.50 percent in benchmark Indore market of Madhya Pradesh.
Demand for refined soy oil was weak as market participants opted to stay away from any big commitments as availability of edible oil supply seen easing globally. Further to it, local supply of edible oil is sufficient to meet any immediate demand, due to which buyers are expecting supply of edible oil is easily available. In futures market, soy oil most active March contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) was lower 3.23 percent this week, while forward April contract was down 3.80 percent. NEXT WEEK: Outlook for soy oil seen weak amid rising supply of edible oil globally. (By Commoditiescontrol Bureau; +91-22-40015516)
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