Lower rabi output to firm up edible oil prices

MARKET OUTLOOK

Edible oil prices are likely to move up on strong global fundamentals. Healthy crush margins on kharif oilseeds, lower production estimates in rabi season and crop damages in the US and China are set to bring in firmness in oil prices.

Consequently, prices are expected to recover by Rs 2-3 a kg by the end of this fortnight. The crush margin for soya meal and beans are currently in the range of Rs 1200-1500 per tonne. Therefore, mill demand for soya meal and beans is growing.

"The rabi crop mustardseed and rapeseed output is likely to decline because of low sowing area this season. Hence, we consider the current rate a good buying level," said Amol Tilak, an analyst with Kotak Commodities Services (KSCL).

However, Navin Mathur, head-commodities, Angel Broking, differed saying the edible oils and seeds prices may remain rangebound to sluggish next week.

Overseas buyers are booking fresh to secure supplies from India, which is reflected in the recent data released by the Soybean Processors Association of India (SOPA). The data indicates that the export of soybean meal in November jumped 47.18 per cent to 531,268 tonnes as against 360,971 tonnes during the same period last year.

Exports in the last two months grew 15.92 per cent to 701,720 tonnes compared with 605,368 tonnes in the year-ago period. India produced 168 lakh tonnes of kharif oilseeds in 2007 as against 134 lakh tonnes in the last year's season where groundnut production was recorded at 52 lakh tonnes compared to 35 lakh tonnes in the last kharif season.

Daily arrivals of soyabean, however, are increasing gradually to 6.5 lakh bags (1 bag = 20 kg) today from 4 lakh bags a week ago. Still, supply is short in the market as all goods are lifted, said an analyst.

Although bullish in the new year, Mathur hopes mustardseed to remain sideways on the National Commodity and Derivatives Exchange (Ncdex) with the price to range between the support levels of Rs 459-467 per 10 kg and resistance levels at Rs 486-492 per 10 kg. Presently, mustardseed for the delivery in January is quoted at Rs 474.50 per 10 kg.

Similarly, the support levels of soy oil is set between Rs 525 and Rs 530 per 10 kg and resistance levels at Rs 538-543 per 10 kg from the present price level of Rs 434.20 per 10 kg.

Soybean's support and resistance levels are set at Rs 1810 -1833 per quintal and Rs 1867-1890 per quintal respectively.

Last week, edible oil prices in the spot Mumbai market declined up to 1.50 per kg on the abundance of arrivals from crushing mills, while groundnut oil slumped to Rs 655 per 10 kg from Rs 670 per 10 kg.

Refined sunflower oil fell to Rs 680 from Rs 700 per 10 kg and refined cottonseed oil prices slumped to Rs 510 from Rs 525 per 10 kg last week. Refined soy oil and palmolein, however, closed with a mere decline of Rs 2 and Rs 6 to close the week at Rs 528 per 10 kg and Rs 490 per 10 kg.