Soya oil cools

The most active March’17 refined soya oil futures contract on the NCDEX fell to a four-month low of ₹663.3 per 10 kg on Friday. The contract tumbled over 4 per cent on the back of weak global cues to close at ₹664.75

Expectations of an increase in soyabean yield following the recent rains in Argentina and recovery in palm oil production from Malaysia added pressure on soya oil prices.

On the domestic front, the availability of more domestic soya oil on the back of ample soyabean supplies is dragging down the prices of soya oil derivatives. As per USDA, in 2016-17, soya oil production in India is expected to be around 1.62 million tonnes (mt), up 55 per cent from the previous year.

Moreover the overall supplies are seen rising by 2 per cent compared to last year. However, the imports of soya oil are likely to decline by 11 per cent to 3.8 mt. The carryover stock from 2015-16 is estimated to be around 0.531 mt, which is the highest till date.

Meanwhile, the landed cost of imported soya oil is also seen declining on the back of the ongoing harvest in South America. The harvesting of rabi mustard crops has also started in major growing regions on the expectation of a bigger crop compared to the last two years. This may further boost availability of oil seeds in the country which is anticipated to be bearish for the edible oil complex, including refined soya oil.

The writer is Head-Commodity Research, Karvy Comtrade

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