Soy oil market also witnessed price movement more or less similar to that of soybean. In July alone prices rose nearly 8­10 % in futures market as compared to the June month.

Typically, during summer edible oil demand remains very less so not much activity is seen in physical market. But with the start of rainy season, there is significant increase in the physical market demand as a string of festival starts from August which last up to winter.

Thus stockiest demand increases manifold apart from the regular consumption demand. During June prices were hovering near contract low and selling pressure was very weak. Market participants preferred to make fresh buy positions on lower levels in soy oil.

On the other hand, weakness in the monsoon progress added to the bullish undertone of the domestic market. In International market, good import demand of the china also kept market sentiments firm.

As per latest release by China General Administration of Customs, its June Soy oil Imports were nearly 63350 tons. The spill over impact of higher international prices was seen in India as well because it too is a big edible oil importer and imports nearly 50% of its consumption requirement.

CPO sentiments in the Malaysia and Indonesia, which are the major crude palm oil producers are also firm as investors are focusing on possible production weakness due to La Nina­related heavy rainfall.

Fear of lower yields has prompted trade participants and growers to cut forecasts for supply growth this month to 5% from a previous projection of 10%. The inventory levels have also dropped from its peak levels in December.

All these factors together served as a catalyst to the soy oil market. It is expected that during August month, the positive trend would more or less continue. Taking long positions may prove beneficial for the investors.

Courtesy: Religare Commodities

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