Edible oil prices may dip on higher output

KOLKATA: Riding on higher arrival of soyabean in mandis of Indore and Kota, spot soya oil price has dipped marginally to Rs 52 per kg on Friday from the previous close of Rs 52.7 per kg.

With crude soya oil price turning weak for the past seven days in international markets, the refined soya oil prices for the futures contract have also started moving down. Impacted by the sentiment, refined soya oil for the January contract closed at Rs 53.13 per kg at NCDEX and at Rs 53 per kg on the MCX platform.

The futures price trend suggests that the refined soya oil is likely to be rangebound within Rs 52-53 per kg till soyabean arrives in bulk quantities, which is expected to continue till March next year, said traders. Overall, the market impression is that due to increase in production of soyabean and groundnut, edible oil prices in general are expected to be lower in the next six months.

The market perception in this respect gets reinforced with a study by the Centre for Monitoring of Indian Economy, which estimates that due to increase in production of those two oilseeds, edible oil production in the 2007-08 oil year (November-October) may rise by nearly 16% to 6.7 million tonne (mt). In the current year, soyabean production increased to 9.4 mt from 8.6 mt last year and that of groundnut to 5.2 mt from 3.7 mt.

The spot soyabean price continues to remain flat at Rs 1,780-1,785 per quintal at Indore market and at Rs 1,750-1,760 per quintal at Kota (Rajasthan). With the harvest of the current kharif crop going in full swing, 6-6.5 lakh bags (1 bag can store 90 kg) are now hitting the spot markets daily.

Increase in supply against weak demand for soyabean from stockists and traders at this juncture has also led to lacklustre activity in its futures contracts.

At NCDEX, the December contract price ended at Rs 1,778 per quintal.

However, mild speculation about the price outlook for January has pushed the futures prices marginally, resulting in the January contract ending at a price of Rs 1,798 per quintal.