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Refined Soy Oil Drops Amid Weak Meal Demand, Global Cues

Capital Market/ 16:51 , Apr 09, 2014

Refined soya oil continued to see a moderating activity following poor demand for oilmeal though the gains in global markets capped the losses. The commodity had dropped near Rs 700 in Indore in last week of March- its two-month low as dull demand in oil and meal market hurt sentiments. The demand for soyameal from overseas markets is weakening. Heavy rains and snowfall have lashed out interior Maharashtra few days back while Madhya Pradesh has also been subjected to some erratic rainfall. This had boosted the soybean and soya oil prices in mid March trades. The spot prices in Indore jumped to one-year highs in the middle of March but are witnessing some resistance now. The commodity trades at Rs 709, down Rs 2 per 10kgs on the day. CPO futures in Malaysia smashed gains of 1.5%, liming the losses for local markets.

Renowned edible oils consultancy Oil World has stated that it is expecting a bullish undercurrent for global soybean prices on a downgrade in US stocks. The group cut by 130,000 tonnes to 3.4m tonnes (125m bushels) its forecast for US soybean stocks at the close of 2013-14. That figure is well below the 3.95m tonnes (145m bushels) that the US Department of Agriculture downgraded its forecast to on Monday. These tight inventories leave Chicago soybean futures vulnerable to upward pressure, Oil World has said.

According to the latest data from the Solvent Extractors' Association of India (SEA), the import of vegetable oils during February 2014 is down by 40% and reported at 578,975 tons compared to 969,175 tons in February, 2013, consisting of 569,544 tons of edible oils and 9,431 tons on non-edible oils. The overall import of vegetable oils during November 2013 to February 2014 is reported at 3,496,807 tons compared to 3,735,263 tons i.e. down by 6%. Import during February 2014 is the lowest in last 3 years, mainly due to heavy disparity in import of palm products resulting in to drastic reduction of import of CPO to 2.69 lakh tons compared to 6.70 lakh tons in February, 2013.

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