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In the early part of last week, refined soya oil (RSO) futures on the NCDEX traded on a positive note, moving in sync with the rival crude palm oil (CPO) futures contract. An anticipation of rise in palm oil demand amid cuts in export taxes in Indonesia supported palm oil futures.
Meanwhile, the narrowing spread between RSO and CPO spurred fears of a demand shift towards the former, helping it to move even higher during the week. The increase in demand in the domestic market for imported soya oil also buttressed prices.
However, the gains could not sustain for long as continuous weakness in overseas soyabean futures weighed on refined soya oil futures in the domestic market.
According to the USDA report released on March 31, US farmers are expected to increase soyabean acreage by 7.25 million acres year-on-year. With bumper production of RM seed in the ongoing rabi season, the demand for soya oil for blending purpose has declined substantially.
Outlook For the upcoming week, the refined soya oil futures contract is expected to trade negatively tracking the weak trend in overseas market, for vegetable oils. Moreover, rise in soyabean production and the crushing estimates of Argentina in the upcoming USDA’s World Agricultural Supply and Demand Estimates (WASDE) report may further drag down prices, although, initially, prices may move higher on short covering.
The writer is Head-Commodity Research, Karvy Comtrade
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