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Soy Oil Rallies as Argentina's SoyDollar Scheme Nears End

8 Dec 2023 10:26 am
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Mumbai, 8 Dec (Commoditiescontrol):The soy oil market witnessed a sharp upturn on Thursday, propelled by the impending conclusion of Argentina's soydollar scheme set for December 10 and a wave of technical buying, as the market was previously oversold.

In the Chicago Board of Trade (CBOT), January soy oil contracts experienced a significant rise, gaining 1.79 cents to close at 51.13 cents per pound. Concurrently, January soybeans saw an increase, settling up 16-1/4 cents at $13.11-3/4 per bushel. However, January soymeal diverged, finishing down by $1.70 at $406.80 per short ton.

ICE Canola Futures Break Decline, Euronext Rapeseed Futures Close Higher

ICE Canola futures broke their six-day losing streak with a robust 2.6% increase on Thursday. The rebound was attributed to speculative short-covering and bolstered by strong soyoil prices linked to policy shifts under Argentina's new president. The active buying by crushers and increased Canadian farmer sales, following recent price dips, further fueled the market. January canola contracts closed at $666.60 per metric ton, marking a $16.70 rise.

Similarly, Euronext rapeseed futures concluded the trading day with gains. The most active February futures climbed by €3.50/Mt, closing at €439/Mt.

Malaysian Crude Palm Oil Futures Extend Losses

In contrast, Malaysian crude palm oil (CPO) futures extended their losing streak to a fifth day on Thursday, marking the longest slump since mid-September. The decline was influenced by the downturn in similar edible oils and crude oil prices. The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell 0.54% to 3,699 ringgit ($791.74) per metric ton. It briefly dipped to a six-week low of 3,641 ringgit before a modest recovery, with a weaker ringgit providing some cushion against steeper losses.

Outlook: Potential Impact of Argentine Currency Devaluation

The soy oil market's recovery aligns with the anticipated end of Argentina's soydollar scheme and short-term overselling, spurring a technical rally. However, market analysts are closely monitoring developments in Brazil's large soy crop and potential impacts of the expected devaluation of Argentina's currency under President-elect Javier Milei. The anticipated weaker Argentine peso could enhance the country's export competitiveness, potentially leading to increased market supply, renewed selling pressure on soyoil, and a subsequent drop in prices.

(By Commoditiescontrol Bureau: 09820130172)

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