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 to their lowest in three months on Friday, on expectations of rising production and slow export demand. Malaysia crude palm oil futures closed 7 percent lower this week, while RBD palmolein FOB, Malaysia, dropped 5 percent for March shipment.
"Fundamentally production is inching up but exports are uncertain," said a Kuala Lumpur-based futures trader.
Demand for palm oil in the first-half of February declined from the corresponding period last month, cargo surveyor data showed.
Societe Generale de Surveillance shipment data showed a 3.6 percent fall in exports, while Intertek Testing Services saw a 1.4 percent rise.
South Peninsula Palm oil Millers Association (SPPOMA) have estimated palm oil output for February 1-15 period 14 percent higher against same period last month.
In addition to it, Malaysian govt raised crude palm oil export tax to 8 percent for month of March from current 7.5 percent which may continue to dampened market sentiment in coming sessions.
In other cues U.S soy oil futures dropped 5 percent this week on rising stock with crushers due to high crushing during January month.
Market was also pressured by improving condition in South America raising prospects of much better crop resulting in higher supply of edible oil.
According to CC-Analyst, 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.
RBD palmolein has turned discount to rival Argentina soy oil after trading at premium for last few weeks.
By weekend, Malaysian palm oil was quoted $727.5 per tonnes in FoB terms, while Argentina soy oil was $754 and Ukrainian sunflower oil was last quoted $755.
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 further price fall on anticipation of supply to rise in coming weeks, whereas local supply is sufficient to meet demand.
CC-Analyst are expecting palm oil prices in local market seen under pressure in near-term after port stock continues to remain at same level as last week.
Currently, palm oil (RBD+CPO) stock at various ports of the country totaled to 2.48 lakh tonnes as on Feb 13 against 2.58 lakh tonnes on Feb 06.
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 3.8 percent at Kandla port in dollar terms (CNF) this week tracking weakness in Malaysian market, while prices were down 4.8 percent 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 down 3.7 percent, while forward March contract was lower 3.72 percent.
NEXT WEEK: Palm oil market likely to trade with negative sentiment on tepid demand coupled with high stock at ports and futures market trading on slippery road.
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 percent this week largely pressured by rising stock with U.S plants due to better crushing in January.
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 (FoB) lost 4.84 percent this week and prices at domestic market followed the suit and dropped 4 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.
Ministry of Agriculture in its second advance estimate raised 2016-17 oilseed production figures, due to which supply of edible oil will also rise in coming months.
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.
Soy oil stock at various ports of the country totalled 1.60 lakh tonnes as on February 13, against 1.70 lakh tonnes on February 06.
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 was lost 5.2 percent in dollar terms (CNF) at Kandla port and was down 3.5 percent in Rupees terms.
In futures market, soy oil most active March contract on the National Commodity & Derivatives Exchange Ltd (NCDEX) was lower 4.15 percent this week, while forward April contract was down 3.5 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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