Ref. Soy oil prices to trade weak on huge stock

Fundamental Analysis

NCDEX Aug Soybean oil futures ended sharply lower on account of weak overseas market and huge stock of edible oil and lower demand at retail ends.

Edible oil industries were expecting for imposition of import duty on crude edible oil about 20% from nil in the current budget 2009-10. However, there was not witnessed such move in federal budget, which has provided support to bears in the market.

As per Executive director of Solvent Extractors Association of India (SEA, India’s edible oil sector will be hurt by a decision to continue duty free import of crude edible oils in this budget.

The benchmark July contract on NBOT Exchange (Indore), Ref Soy oil futures ended lower Rs 9.80 at Rs 457.10/10 Kg on Monday, from its high of the day (469.00) and touched a low of MYR 455.50/10 kg.

Technical Analysis

Ref Soy Oil Prices (NCDEX Aug Contract) closed lower at 461.50 per 10 Kg on Monday; its high of the day was 475.90 and touched a low 458.95 level.

Prices closed below its 10 days and its 20 days EMA. 14-Days RSI is at 27.60.

Outlook

Refined soy oil futures are expected to trade lower on account of huge stock of edible oil due to record high import of edible oil in first 7 months of current marketing year as compared to last year during the period and decision of continue to import of crude edible oil at 0% also in favor of bears in the market for short term. For medium term, prices may improve slightly on festival demands.

Courtesy: Angel Commodities