Mumbai (commoditiescontrol) - A positive tone was seen in edible oil market this week with heavy volatility.
CRUDE PALM OIL:
Crude palm oil was positive this week largely supported on market talks of lower than expected production in month of January.
However, upside was capped by weekend as Malaysian Palm Oil Board (MPOB) January supply-demand was not surprising and not inline with market expectations.
Palm oil production in January month pegged at 12.76 lakh tonnes in January, down 13.4 percent against 14.73 lakh tonnes in December, whereas market participants were expecting it drop by 22 percent.
January ending stock was 15.40 lakh tonnes against market expectation of below 15 lakh tonnes.
In addition to it, cargo surveyors reported palm oil exports were down 3 percent during 1-10 February against same period last month.
Benchmark Malaysian crude palm oil futures closed 0.5 percent higher this week, while rbd palmolein prices closed up 1.3 percent in FoB terms.
According to CC-Analyst, crude palm oil prices may come under pressure on concern about demand at higher level coupled with high export tax in producing region.
Malaysia have hiked crude palm oil 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.
In addition to it, crude palm oil prices were trading at par with rival soy oil and was quoted at premium against other edible oil in the complex which raised concern about demand.
By weekend, Malaysian palm oil was quoted $780 per tonnes in FOB terms, while Argentina soy oil was $785 and Ukrainian sunflower oil was last quoted $760.
With low price gap within oil complex, importing countries have full range of buying opportunity for selection of edible oil.
According to market participants, outlook for regional oil is fragile as hike in export tax coupled with low price gap with other oil may slow down demand.
In domestic market, traders opted to stay away from market on anticipation of price fall as Indian rupee appreciated by 0.6 percent this week.
CC-Analyst are expecting palm oil prices in local market likely to remain under pressure after cargo surveyors reported higher edible oil availability at various ports of the country.
Palm oil (RBD+CPO) stock at various ports of the country have risen to 2.58 lakh tonnes on Feb 06 against 1.98 lakh tonnes on January 30.
Market will also feel pressure as new crop arrivals of mustard seed likely to rise in coming days, which will led to increase in mustard oil availability.
RBD Palmolein prices was higher 0.32 percent at Kandla port in dollar terms (CNF) this week due to high prices at Malaysian market and weak ringgit, while prices were steady in rupee terms.
On the other hand, palm oil demand in local market was as per requirement 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 February contract on Multi Commodity Exchange (MCX) close up 0.9 percent, while forward March contract was higher 1.4 percent.
NEXT WEEK: Palm oil market likely to trade with negative sentiment on tepid demand coupled with rising stock at ports and futures market trading on slippery road.
Market will focus on February 1-15 Export data from cargo surveyors and production estimate from South Peninsula Palm Oil Millers Assoc. (SPPOMA) for same period.
REFINED SOY OIL:
A steady tone was witnessed in refined soy oil in benchmark Indore market of Madhya Pradesh largely due to sluggish demand in spot market.
Demand for refined soy oil in spot market was dull as retailers and road-side shops were buying as per requirement.
In addition to it, Rupee has appreciated this week 0.6 percent which reduces import cost, while prices in global markets were improving and making market participants to wait and watch till prices stabilizes.
Further 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.
According to CC-Analyst, outlook for refined soy oil is not clear on rising supply globally with demand currently seen as hand to mouth.
Soy oil futures on CBot rose 2.2 percent this week, largely due to slow supply from South America and reports of low palm oil stock in Malaysia.
Argentina soy oil FoB soared 3 percent this week on squeezed local supply coupled with tight palm oil supply and rising U.S futures market.
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 steady this week, while prices have risend 3 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 up 0.8 percent this week, while forward March contract was higher 0.9 percent.
NEXT WEEK: Outlook for soy oil is not clear as global markets are rising while strong rupee is keeping lid on prices.
(By Commoditiescontrol Bureau; +91-22-40015516)
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