January 23, 2012

 

 

Due to weak demand, Indian edible oil prices dropped in the week to Friday (Jan 20), but will likely restrict the losses in coming weeks with expectation of a smaller global soy crop and a decline in the country's rapeseed production.

 

The price of crude palm oil slipped to INR52,700 (US$1,049) a tonne from INR54,000 (US$1,075) last week, while that of refined, bleached and deodorized palm olein declined to INR57,000 (US$1,135) a tonne from INR59,200 (US$1,178). The price of refined soyoil fell to INR66,500 (US$1,324) a tonne from INR69,500 (US$1,383).

 

The International Grains Council Friday reduced its global soy production forecast for 2011-12, citing the dry spell in South America which will likely reduce output. The IGC estimated soy output at 256.4 million tonnes in 2011-12, down 0.8% from its previous forecast and 4% from a record global harvest in 2010-11.

 

Traders are now watching the likely impact of recent rainfall on production in Brazil and Argentina, two of the world's largest soy exporters, said Vimala Reddy, analyst with Karvy Comtrade Ltd.

 

Rainfall in recent days over the drought-stricken grains belt in southern Brazil has fuelled hopes that the 2011-12 soy crop may prove better than the latest forecasts.

 

"I don't see much downside in soy prices," she said.

 

Sharp price movements aren't expected next week due to holidays in China and some other Southeast Asian countries, traders said.

 

In India, local prices are likely to get support from expectation of lower production of rapeseed, the main winter-sown oilseed.

 

Rapeseed arrivals will start in the next few weeks but will reach their peak levels only in March, said Vijay Data, vice president of the Solvent Extractors Association of India.

 

Rapeseed production in 2011-12 is likely to be between 5.5 million and six million tonnes, he added.

 

India's winter-sown oilseeds acreage fell to 8.38 million hectares until Friday, from 9.03 million hectares a year earlier, government data showed.