Refined Soy Oil fails to sustain lower levels

Fundamental Analysis

Refined Soybean Oil (December contract) futures opened lower on account of weak overseas market and profit taking after a rally during the last week. However, prices could not sustain lower levels and an hour before closing the market prices surged sharply and managed to close higher at 458.60 levels in tandem with overseas market and short covering on Thursday.

Firm spot market and local exchanges also added bullish market sentiments on Thursday.

The USDA’s weekly export sales released on Thursday, it was below trade expectations in oil. Net oil sales came in at 9,200 tonnes. Cumulative oil sales stand at 43.6% of the USDA forecast for 2009/2010 versus a 5 year average of 17.2%. Sales of need to average 17,000 tonnes each week to reach the USDA forecast.

Technical Analysis

Ref Soy Oil Prices (NCDEX December Contract) closed higher at 458.60 per 10 Kg on Thursday; its high of the day was 459.00 levels and touched a low 448.50 level.

Prices closed above its 10 days and below its 20 days EMA. 14-Days RSI is at 58.95.

Outlook

Refined soy oil futures are expected to trade higher on account of gains in overseas market for short term. However, (for medium to long term) prices are expected to move southwards on account of huge stock of imported edible oil in first 10 months of current oil marketing year as compared to last year during the same period 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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