Soyoil to stabilise on festivals

Good demand due to the festive season amid bumper crop prospects are likely to keep domestic soyoil prices in a tight band of Rs 10-15 per 10 kg during the next one month, industry players said.

Also, the sideways movement in Malaysian crude palm oil futures is likely to stabilise domestic soyoil prices, traders said.

"I expect refined soyoil prices to move within a spread of Rs 10 per 10 kg for the next month as festival demand will be offset by good domestic crop prospects," said Sandeep Bajoria, chief executive officer, Sunvin Group, a major edible oil importing firm.

Good and early rains have resulted in an increase in the area under oilseed cultivation during the June 1-August 9 period to 15.9 million hectares, compared with 14.9 million hectares a year ago.

Soybean sowing in India has been completed on 8.5 million hectares, against 7.9 million hectares in the year-ago period. Hence, traders are expecting an early and also a bumper crop this year.

Arrival of new soybean crop is just 45-60 days away and hence, prices may not rise much rise despite the festival demand, Bajoria said.

"Also, the landed cost of imported edible oils is very high, thereby widening the disparity between these oils and domestic prices. This will keep imports in check," he said.

India's soyoil imports during August-September are pegged at 400,000 tonnes.

Rajesh Agarwal, spokesperson, Soybean Processors' Association of India, expects soyoil futures prices to move in the range of Rs 490-500 rupees per 10 kg in the coming month, tracking the movement in international markets.

In Indore, a major spot market in India for soyoil, prices were quoted at Rs 492.65 per 10 kg today.

Crude palm oil futures on the Bursa Malaysia Derivatives, the largest exchange for the commodity in the world, are expected to move in a thin range in the coming month ahead of the peak production and demand period starting August-end, industry experts said.

"I do not expect much swings in crude palm oil prices for the coming month as production in Malaysia is expected to be more than normal this year," said Davish Jain, chairman, Central Organisation for Oil Industry and Trade.

Last week, the Malaysia Palm Oil Board said the country's palm oil production in July rose 16.3 per cent in the month to 1.36 million tonnes, compared with 1.17 million tonnes in June.

Closing stock also rose 9 per cent on month to 1.31 million tonnes in July, the Board said.

At the same time, demand is likely to be strong, especially from India, China, and Europe, Jain said.

Off-take from India is seen rising in the coming months as the demand is expected to be strong during the festival season, while some loss of crop in China will boost the demand from that country, the experts said.

"However, demand from India could tone down a little as we have already contracted deals for August and September, while new soybean crop from Madhya Pradesh will start arriving in the markets by September-end," said Agarwal.

He expects India's crude palm oil imports for the next two months to be around 800,000-900,000 tonnes.

"Unless something goes critically wrong with the soybean crop in the US due to adverse weather in the country, crude palm oil prices will trade in the spread of 100 ringgits a tonne," said Jain.

Malaysia is the world's second-largest palm oil producer after Indonesia, while the US is one of the leading producers of soybean along with Brazil and Argentina.