Soy oil prices have shown recovery in the past few days. Yet the traded offers are down nearly 15 percent when compared with the average prices prevailing during May 2021. Soy oil prices have increased to an unprecedented high in the country.
There has been a significant price rise in soybean (which is processed to produce soy oil and soymeal) because of acute shortage of the commodity in the supply line. The price rise was considered to be unsustainable by most of the value chain participants of the industry including the end consumers. The government reacted timely by announcing the import duty cuts and there has been a three time reduction in the import duties of edible oils between February 2, 2021 and October 14, 2021.
India’s effective import duties for soybean oil have decreased by 33 percent during this period. As per the Solvent Extractor’s Association reports the imports of soybean oil had reached higher levels in September at 235,000 metric tons, reflecting an increase of domestic vegetable oil stocks to 2 million metric tons as of October 1 – approximately 283,000 tons higher than the same period last year.
For the remaining part of the month the domestic soy oil markets are expected to remain under the influence of the soybean supply situation, in addition to the trade atmosphere prevailing in markets of South America and the US. The Indian currency market appears stable for this month therefore the rupee fluctuations may not matter much as of now.
Trade related developments of palm oil will continue influencing the price direction of soybean oil since it has a strong positive correlation with palm oil. Viewing the NCDEX charts, the outlook for next two weeks appears slightly positive and the December contract of soya oil may trade between 1180 and 1225 levels.
As long as the new season arrivals of soybean are increasing, the December soya oil of NCDEX will find difficulty in holding above 1225.
