Review and Weekly Outlook for Domestic Oil Complex Markets

Soybean Oil: 

Soy oil was seen trading within a moderate range during the last week. Reports of Brazil harvesting a bigger crop from last year and India to allow soymeal import was the major hindrance against the upward movements. However, the market sentiments remain positive on the back of tightening inventory levels of major vegetable oils and possibility of a lower planting area in oilseeds.

The latest USDA release is slightly bearish, and as per the report the 2021/22 global oilseed supply and demand forecasts include lower production, crush, exports, and slightly higher ending stocks compared to last month. Foreign oilseed production is reduced 3.6 million tons to 501.4 million, reflecting lower canola production for Canada and sunflower seed for Russia. The September contract of NCDEX  seems marginally bullish from a weekly perspective as per the charts.  The contract may trade between 1385-1430 this week.

Soybean: 

The October contract of NCDEX was down Rs 200 week on week. Sentiments remained negative from the news of DGFT allowing import of 12 Lakh tonnes of soymeal. This news will cap the upside in the coming days. However as edible oils appear positive and stocks of soybean are limited therefore we expect a moderate pull back in coming days.  The 2021/22 global oilseed supply and demand forecasts, as reported in the latest USDA release include lower production, crush, exports, and slightly higher ending stocks compared to last month. Foreign oilseed production is reduced 3.6 million tons to 501.4 million, reflecting lower canola production for Canada and sunflower seed for Russia. 

With festivals approaching and the peak arrival period still far away we expect soybean to remain supported overall. For the next few days the October contract may trade between 5950 and 6550.

Mustard/RM seed: 

For the week ending recently, RM seed traded with a bullish tone as spot markets were more or less stable with decent trade volumes. But the futures faced resistance after moderate spikes due to weakening trend of soybean and disparity with the mills for crushing of RM seed. RM seed has offered impressive returns to the farmers in 2020-21 therefore sowing area is most likely to expand this season. Sowing will commence after a month roughly.

Regular demand from the stockists and lowering All India arrivals shall continue supporting the markets in near future.

Charts indicate that the September contract may trade between 7800-8200 this week. Latest reports indicate that more than 50 Lakh tons of RM seed has been crushed out of the estimated 80 lakh tons of the crop , and this would explain RM  seed supplies getting limited. The overall trend will be positively biased this week unless the September contract of NCDEX fails to close above 7800.