25/02/2011 (Commodity Online) - The refined soya oil futures plunged to 4% intraday lower limit and hit 9-week low on Wednesday on strong selling pressure.

A sharp decline in international market owing to political unrest in Middle East countries and dampening demand led the Indian market to witness a sharp decline.

Domestic market reacted to the news of slash in import duty on refined oils to control food inflation also acted as bearish factor for the market.

Poor off-take of the produce in the spot market had a bearish impact on both spot and futures market.

Outlook

The refined soy oil futures are expected to recover from recent losses on short covering and taking cues from firm overseas market.

CBOT soy oil and BMD palm oil futures recovered from their previous losses on short covering and tracking rise in crude oil market.

However, trend is still remaining weak on poor demand in local market. Market participants are more concerned about likely to government steps towards controlling food inflation.

To control higher food inflation, central government may announce some measures in the Budget.

Harvesting of Rabi oilseeds is on full-swing, which might limit the gains. Physical markets are likely to witness subdued trading due to poor off-take of the produce from wholesalers and retailers.

Derivative analysis is suggesting continuation of weak during the day. However, short covering might result into positive opening on Thursday.