'Overbought' edible oils set for a correction

Edible oil complex is likely to witness correction next week, despite bullish medium-term outlook, analysts said.

"Correction is expected as the market reflects an overbought condition," said Veeresh Hiremath, an analyst with Karvy Comtrade.

Refined soyoil futures on the National Commodity and Derivatives Exchange are seen down early next week on profit booking, tracking the weak trend in global crude oil prices

Soybean futures are also seen weak amid low demand from processors and millers, while mustard futures are seen down, reflecting sentiments in soyoil.

Soyoil futures are expected to trade weak in line with softening trend in crude oil prices.

However, medium-term trend in global crude prices will be clear after December 5, when the Organisation of Petroleum Exporting Countries decides whether to hike production by member nations or not.

"If OPEC raises output quota, then soyoil would come down even further," Hiremath said. Global crude oil prices is now under $90 a barrel.

Usually, higher crude oil prices push prices of alternative futures like soyoil and palm oil. Both the vegetable oils closely follow each other's price movement.

Soybean futures are expected to display weakness amid demand slowdown in cash markets. "Millers and processors have enough stocks to meet exporters' demand for soymeal," said an Indore-based trader.

Soy complex on the Chicago Board of Trade (CBOT) is also expected to be weak as demand from China is likely to slow down in December.

Reports from Brazil and Argentina about healthy output prospects would also put downward pressure on CBOT.

NCDEX mustard futures are expected to trade weak on high inventory level.

"Technically, mustard contracts are seen bearish, despite slow progress in sowing," said Badruddin, an analyst with Angel Commodities.