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Mahamad Rodzi Abdul Ghani




Mahamad Rodzi Abdul Ghani





Overseas trend may lift palm, soy oil prices
4/4/05 Oilmandi - Domestic edible oil prices are likely to remain mixedthis week with rise in local supplies along with costlier imports, traderssaid on Friday.

Daily mustard seed arrivals of over a million 85 kilograms bags will put adownward pressure on the market but firm overseas sentiments may pushprices soy and palm oils prices upwards.

Traders feel conflicting pressures will result in volatile price movementin both directions during the week.

India prices are guided not only by domestic oilseeds harvest but alsoglobal prices, as the country is world’s largest importer of thecommodity.

"Massive mustard seed arrivals, of over 1 million bags per day, willincrease supply and pull prices down," said Govindlal G Patel, a traderwith Rajkot-based Dipak Enterprise.

Confusion over the implementation and impact of value-added tax regimewill add to the weak sentiments, traders said. However, the recent hike inimport tariff values of crude soyoil and all grades of palm oil will pushthe prices of these oils upwards, Patel said.

This may have a contagion effect and even reflect in prices of somelocally produced oils as well, traders said.

Price movement is expected in a range of 10 rupees per 10 kg, Patel added.

The tariff value hike is likely to make import of all grades of palm oilexpensive by Rs 5-10 per 10 kilograms and those of soyoil by Rs 3-5 per 10kg, said Sandeep Bajoria, the president of the Central Organisation of OilIndustry and Trade.

This may even result in a slight fall in imports in the short-term, reducesupplies and add to an upward price movement. The government Thursdayincreased the tariff value or the base price on which import duty islevied on palm and soy oils in line with the international

On Friday, the Indore spot price of soyoil was Rs 389-390 per 10 kg, downRs 3 from Thursday. The National Board of Trade April contract (of soyoil)ended Rs 394.20 per 10 kg, down Rs 3.40 from the previous close. Thisweek, traders expect the NBOT April soyoil contract to range between Rs390 and Rs 400 per 10 kg.

Castoroil may see a rally amid fresh bouts of speculative buying and shortcovering. The commodity’s March exports were at 41,000 tonnes, an all-timehigh for a month.

Mustard oil prices however, are expected to see a decline on the back ofample supplies of seeds for processing and extraction. Rajkot physicalmarket saw mustard oil prices unchanged at Rs 410 per 10 kg.

NCDEX April contract saw a decline of Rs 2 to Rs 383 per 10 kg. Overseassoy futures on the Chicago Board of Trade are expected to see an upwardmovement on positive fundamentals, traders said.

Fundamentals are strong due to the likely cut in South American soybeancrop estimate on account of dry weather. Similarly, there is threat ofAsian Rust fungus and dry weather in South Asian palm oil productionareas.

The US acreage report released recently has reported area coverage at 98per cent of 2004 and is likely to give a fillip to buying by funds, saidan analyst with Refco Commodities.

"USDA March intentions report indicates that the Asian rust scare may notresult in large shift in acreage as initially feared," he added.

Brazil’s agriculture agency IBGE revised downwards the 2004-05 soybeanoutput forecast to 54.79 million tonnes, down by a sharp 12.2% fromprevious projection of 63.15 million.

Crude palm oil futures on the Bursa Malaysia Derivatives in Kuala Lumpurmay move in line with the trends in Chicago.

On Friday, the Malaysian palm oil futures declined, taking cue fromovernight fall in soyoil quotes in CBOT. The benchmark CPO June futuresended 1,429 Malaysian ringgits a tonne, down 32 ringgits from the previousclose.

Traders feel rise in Malaysian palm oil exports will have only a limitedimpact on prices.

SGS cargo surveyors pegged the exports at 1.22 million tonnes (up 31 percent on month) and Intertek estimated them at 1.18 million (up 29 per centon month). However, traders said that exports seem to be on the higherside as large quantum of Indonesian palm oil was shipped from Malaysianports.