Monthly Prices Movement

  • A mixed trend was witnessed in the Edible Oil complex through out the month in the major markets across the country. Festival demand has given a boost to the Edible Oil complex by the end of the month.

  • Edible Oil prices are at last year's levels and likely to follow a usual patterns, with a marginal increase likely towards the upcoming festival season. Edible Oils price trend is expected to be bullish due to higher consumption and lower stock positions in the global markets.

Ground Report

  • FAO Vegetable Oil Price Index of India dropped 2.8 percent for the third consecutive month from its level in June.

  • India's domestic demand for Vegetable Oil is expected to rise to 20-21 million tonnes in 2015-16, as per Solvent Extractors Association. Last year the country had imported 14.4 million tonnes of Edible Oil.

  • Sunflower Oil exports of India in 2016-17 likely to reach 9 million tonne, including 4.9 million from Ukraine and 1.8 million tonne from Russia.

  • India Vegetable Oil imports fell by 24% to 1.14 million tons during July this year compared to 15.01 million tons a year early due to high stock.

  • SEA estimates import of about 1.2-1.3 million tonnes of Vegetable Oil in the remaining three months of the current Oil year.

  • India's Vegetable Oil imports during the first nine months of the current Oil marketing year gained by 5% to 10.9 million tons, according to Solvent Extractors' Association of India.

  • India likely to import a record 15 million tonnes of vegetable Oil in the current 2015-16 marketing year (November-October) to meet its rising domestic demand, the Solvent Extractors' Association of India (SEA) stated.

  • India's Sunflower Oil purchases climbed 33% to 140,000 tons and Canola Oil purchases were seen at 30,504 tons in July., according to a Bloomberg survey.

  • SEA demanded Indian government to make the difference between the Crude and Refined Edible Oils should be doubled to 15% from current 7.5% as the imports of Refined Edible Oils is increasing in the country. Increasing duty difference will reduce import dependency.

  • Imports account for two-thirds of the India’s Edible Oil demand and the demand will remain stable even though prices and availability will impact the preferences.

Policies

  • Indian government revised Tariff value for imported Edible Oil for Crude Soybean Oil to $848 per ton from $775 and for CPO and RBD Palmolien to $770 and $791 from $688 and $736 on August 31, 2016 respectively.

  • India released a draft amendment to allow Vegetable Oil in chocolate. The draft says that chocolate can contain Vegetable fats that are not cocoa butter as long as it does not exceed 5% of the finished product.

  • Andhra Pradesh removed incentives for Edible Oil refiners at ports for new units as excess capacity stifled the existing units. A reimbursement of VAT at 2.5 percent for big units, 3.75 percent for medium size units and 5 percent for smaller units under the Industrial Policy 2015-2020 were allowed for Edible Oil refining units in Andhra Pradesh.

Global

  • Soybean Oil imports of China during July fell sharply by 55.1% year-on-year to 98,000 metric tons, as per latest Chinese Customs data.

  • Chinese Customs data showed that Rapeseed Oil imports plunged by 32.% year-on-year to 32,000 metric tons during July.

  • China’s Palm Oil imports set to recover from a 25% slump in the first half as cheaper supplies and a major autumn festival boost Edible Oil demand.

  • Argentina’s Soy Oil and Soy meal shipments are hit due to storm and flooding in the key farm regions, which consequently lead to the boast in US Soy exports.

  • Argentina shipped 31.2 million tonnes of Soybean from March through July 2016 compared to 36.5 million during the corresponding period in 2015.

  • World Sunflower Oil production in 2015-16 marketing year (Oct-Sept) is likely to increase by 0.15 million tonnes to 15.71 million tonnes. Sunflower Oil production in Ukraine projected to rise by 0.013 million tonnes to 4.93 million tonnes.

  • Sunflower Oil exports in 2016-17 likely to reach 9 million tonne, including 4.9 million from Ukraine and 1.8 million tonne from Russia.

  • European Union gained its position as Ukraine’s biggest Sunflower Oil buyer from India during the September to June of this marketing year.

  • EU purchased 1.23 million tons of Sunflower Oil during the first ten months of this marketing year, while India purchased 1.19 million tons, according to ministry data.

Outlook

  • Weakness in Palm Oil prices in Oil complex is giving direction to other Vegetable Oil in the markets. Palm Oil investors focusing more on supply factor as world Vegetable Oil supply likely to rise in coming months, as apart from Refined Soy Oil, supply for Sunflower Oil is also likely to hit markets by next quarter.

  • A price war likely to start in Edible Oil market, as price gap within all Vegetable Oil is narrowing, giving buyers a lot of varieties to choose. Market will focus movement in Crude Oil, as the prices for the same has dropped 14% in July and further weakness in Crude Oil prices may dent Bio-diesel mandate.

  • In coming months, Palm Oil prices have to fall to remain competitive against Soy Oil. Otherwise Palm Oil exports will fall gradually and inventory will build up in peak producing months.

  • Soy Oil stock at various ports of the country totaled 0.24 million tonne on 15-Aug, against 0.21 million tonne on 18-July, which will keep price upside in check, as the stock is sufficient to meet demand, whereas the rival Palm Oil stock is very low in comparison.

  • In long term view, Soy Oil likely to get support only due to festival demand, whereas procurement and arrivals for the same will take nearly 35-45 days time to reach Indian ports, which is far enough for restocking ahead of near-term demand.

  • Edible Oil demand likely to fall after Diwali as no near-term festival or marriage season follows. Supply for Vegetable Oil will rise in coming months on expectation of big Soy crop from US and Sunflower in Ukraine.

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