18/02/2011 (CommodityOnline) - The refined soy oil futures stumbled to 5-week low on Wednesday on strong selling pressure. Sharp decline BMD palm oil market had a pressure on the Indian market. Decline in physical demand for the produce and commencement of Rabi oilseeds harvesting had a bearish impact on the market.

Market participants sold futures on fear of likely government intervention to control higher food inflation.

Government has already indicated that it may extend stock limit on edible oil and oilseeds by 6 months. Indian market moved in line with weak overseas market, which declined on extended profit booking and weakness in demand.

Outlook

The refined soy oil futures are expected to trade on a weaker note on continued selling pressure. The physical demand for the produce is declining following commencement of Rabi oilseeds harvesting.

Rabi oilseeds production is likely to be higher this year on higher acreage and favourable weather condition. In second advanced estimate, central government has projected India’s oilseeds production for current year will be 27.85 million tons against 24.88 million tons produced last year.

Looking into higher food inflation, the central government is planning to extend stock limit edible oil and oilseeds by 6 months till September 30. Weak trend in global market on improvement supply situation is likely to have bearish effect on Indian market.

CBOT soy oil futures tumbled further on projection of larger crop in Brazil and improvement in weather condition in Argentina. According to data released by the Solvent Extractors’ Association of India, soy oil import in January declined 57% Y/Y to 49,520 tons. During November to January imports fell 56% Y/Y to 130,215 tons.