Fundamental Analysis

Soy oil prices ended in red on account of lower demand at retail ends on Monday.

Huge domestic Vegoil stock continued to pressure the oil market. The overall import of vegetable oils during Nov.’09 to Jan.’10 is reported at 2,413,784 tons compared to 2,189,007 tons i.e. up by 10%. This may pressurize the prices in the short term.

The USDA’s net oil sales came in at minus 9,400 tonnes. Cumulative oil sales stand at 74.3% of the USDA forecast for 2009/2010 versus a 5 year average of 48.9%. Sales need to average 13,000 tonnes each week to reach the USDA forecast. The US Senate has inserted the $1 per gallon bio-diesel subsidy into another jobs bill and this bill has now passed the Senate.

Technical Analysis

Prices closed below its 10 day & its 20 day EMA, which indicates bearish market sentiments.

14-Day RSI is at 31.9, which is in neutral zone.

Daily MACD just turned in negative territory.

Outlook

Refined soy oil futures are expected to trade lower on weak overseas market owing to bio-diesel subsidy is not passed in the US senate (for short term). In the long term perspective, higher import of edible oils during the first 3 month of oil marketing year as compared to last year during the same period. Huge stock of imported edible oil and decision of continue to import of crude edible oil at 0% also in favor of bears in the market.

Courtesy: Angel Commodities

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