Mumbai (commoditiescontrol) - Edible oil market witnessed heavy volatility with positive tone this week on various fundamental factors.
CRUDE PALM OIL:
Crude palm oil witnessed some buying interest at lower level despite deteriorating outlook due to expectations of higher supply amid robust domestic oilseed production.
Benchmark Malaysian futures market closed 2 percent higher largely on short-covering ahead of palm oil conference in Kuala Lumpur on Mar 6-8.
Outlook for palm oil seen dismal as cargo surveyors reported Malaysian exports down 13 percent in month of February, while South Peninsula Palm oil Millers Association (SPPOMA) have estimated palm oil output seen recovering by 14 percent during same period against a month ago.
In addition to it, market is also worried about demand after Malaysian govt raised crude palm oil export tax to 8 percent for month of March from current 7.5 percent, while Indonesia left export tax unchanged at $18 per tonne.
Further market is also getting nervous on favorable weather condition in South America raised prospects of record production.
According to Analyst, palm oil market may weaken in coming weeks as demand for regional oil is gradually shifting to rival Argentina soy oil due to low price gap.
By weekend, Malaysian palm oil was quoted $717.5 per tonnes in FoB terms, while Argentina soy oil was $753 and Ukrainian sunflower oil was last quoted $747.
According to market participants, outlook for crude palm oil is fragile as hike in export tax may slow down demand coupled with low price gap with other edible oils.
In domestic market, traders opted to buy the commodity as per requirement on anticipation of further price fall due to expectations of supply to rise in coming weeks. Edible oil availability at the various ports is sufficient to meet demand.
Currently palm oil (CPO+RBD) stock at various ports of the country rose to 2.84 lakh tonne as on Feb 27 against 2 lakh tonne on Feb 20.
RBD palmolein in FOB term steady for current month, while price gap with forward contract was lower by 6 percent, indicating bearish tone ahead.
Meanwhile, prices dropped 1.4 percent at Kandla port in dollar terms (CNF) this week, while rose 1.7 percent in rupee term.
In futures market, crude palm oil most active March contract on Multi Commodity Exchange (MCX) moved up 0.7 percent this week, while forward April contract rose 0.4 percent.
NEXT WEEK: Palm oil market may trade with cautious note ahead of palm oil conference in Malaysia, coupled with big industry demand-supply data from MPOB, USDA and March 1-10 palm oil export data from cargo surveyors.
REFINED SOY OIL:
A positive tone was seen in refined soy oil market and price rose 1.5 percent this week in benchmak Indore market of Madhya Pradesh, largely supported by big upmove in U.S futures market.
Prices at Chicago Board of Trade (CBOT) soared more than 5 percent this week, on rumors of U.S govt signed documents for implementation of Bio-diesel with higher target in United states for 2017.
However, the report was denied by U.S govt, but rumor circulation continued for the whole week.
In addition to it, palm oil prices in Malaysian market have also moved up ahead of 2017 palm oil conference, which also lends support to soy oil.
Moreover low price gap within oil complex have also prompted some buying interest among traders globally.
Argentina soy oil FoB was up 3.5 percent this week and quoted $753 per tonne, while the rival Malaysian palm oil was $717.5 and Ukrainian sunflower oil was $747.
Further to it, soy oil stock at various ports of the country eased to 1.20 lakh tonne as on Feb 27 against 1.49 lakh tonne on Feb 20, which also supported market sentiment.
However, big upside for the commodity is not seen in long-term view on outlook of high supply of global edible oil in 2017.
Domestic supply of edible oil likely to rise this year, after Ministry of Agriculture raised oil seed production in its second advance estimate earlier last month.
Whereas, Malaysia palm trees are entering high production period after El-Nino dry weather reduced output last year. While South America is gearing up for big supply of soy oil on expected high production of soybean seed.
Demand for soy oil in spot market was as per requirement on outlook of high edible oil supply in coming months, but a gradual shift of demand from palm to soy oil was seen and lended additional support to prices.
Soy oil prices was up 0.9 percent in dollar terms (CNF) at Kandla port while prices were steady in Rupees terms.
In futures market, soy oil most active March contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) was higher 2 percent this week.
NEXT WEEK: Refined soy oil prices will follow global cues for direction, whereas market will be waiting for big industry data USDA.
(By Commoditiescontrol Bureau; +91-22-40015516)
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