Edible oil prices declined sharply during last week owing to weakness in international markets. Steep drop in the crude oil prices kept edible oil prices under pressure. Spot prices were around `690/10kg while it declined `685/10kg which kept the prices under pressure.
Weakness in soybean prices also kept soy oil under pressure which was a result of higher soybean stocks projected as per USDA report. Soy oil ending stocks as per report was also higher with lower export estimations which kept prices under pressure. Soy oil exports sales data of U.S also declined during last year which might keep prices under pressure.
Exports demand for palm oil was very limited which kept the prices under pressure. Palm oil exports have also declined by around 2-3% during last month in comparison to previous month. Weak export demand for palm oil kept prices under pressure across major markets.
Outlook:
Edible oil prices might decline during next week owing to weakness in oilseed complex. Higher stock piles of soybean in U.S and the weak exports of soybean projected might keep prices under pressure initially.
Edible oil imports as a whole increased by 7% during December which might keep prices under pressure. Port wise stocks of edible oils increased by 3% compared to previous month. Soy oil imports as such are lower by 8% compared to November which might limit the down fall and help the prices to rebound.
NOPA crush report is due on 7th which might show higher crushing figures and keep prices under pressure. As such weak demand for Malaysian palm oil might still persist in the market as Chinese lunar holidays are fast approaching which might keep buying sluggish.
Technical Analysis:
Soy oil futures have been trading towards downside from last two weeks in CBOT platform and also In NCDEX platform. Below mentioned technical study is supporting prices to continue downside momentum in coming session.
Closing of the black candle stick is showing strength weakness in prices and also indicating continuation of down side momentum incoming session. Principle of Fibonacci retracement states that prices are witnessing support at $49.70 which is 50% of the range $38.18-$61.37 levels.
On beach and sustained trade below is likely to test $48.61 levels which are recent low. Higher side immediate resistance is seen at $51.25 level which is weekly short term moving average level. Incase on breach and sustained trade below is likely to test $52.50 level which is Fibonacci 38.2% of the above mentioned range.
Momentum indicator RSI-14 is supporting prices to trade downside by treading at 0.410 levels. Overall expecting downside momentum in soy oil futures, recommended selling at resistance levels.
Courtesy: Karvy Commtrade Ltd.
