The oil and the oilseed market are currently in a bullish mode and are expected to stay that way in the coming days. However, according to experts, the trend is not backed with security but mired with factors that can put the market into a correction mode. But with the war between Russia and Ukraine, the volatile nature of the market is becoming evident.
There have been quite a few developments that have been impacting the market.
- India imports about 4 to 5 hundred thousand tons of sunflower oil vessels from Russia and Ukraine, which has halted.
- There is an increase in the benchmark price for soybean and palm oil, which reached an all-time high last week.
- Indonesia has increased the tariff value for crude palm oil by $144,46 per ton while retaining its export duty price.
- China has decided to release the oilseeds and edible oil from its strategic reserves, benefiting India.
- In India, the arrival of new mustard seeds has increased in the last few days. But that is not impacting the price negatively. With the demand in the crushing mills high, the processors are receiving a significant margin.
- The mustard oil price is expected to fill the gap between soybean oil and palm oil as the latter two prices have increased significantly.
The International Market Scenario
- In Brazil, the soybean price was up by 7.4 percent. The country has already harvested 33 percent of its products compared to last year’s 15 percent during this time.
- In Argentina, the soybean oil price increased by 5.95 percent and went to an all-time high of $1664 per ton. The chances are the price might go further up for the oil as the harvest is expected to be 39 million tons instead of the earlier prediction of 42 million tons.
- The price hike in soybean and soybean oil is observed in South America as the crop production is expected to be less by 27 million tons compared to the earlier assumption.
- Palm oil prices in Indonesia went to an all-time high by 14.6 percent. The regulation on their export of palm oil, which was lower, has resulted in the international market going bullish for the commodity.
- Malaysian palm oil was experiencing a downward trend for the last few weeks, but it regained and was up by $101,85 and reached its all-time high at $1 539,18.
- Chicago soya oil future was increased by $ 1,18.
- The USA, the second-largest producer of soybean and soy oil, is expected to increase its sowing area for the crop to 88.2 million acres compared to last year’s 87.2 million acres. Likewise, the yield is expected to be about 3462 kg per hectare, compared to 3456 kg per hectare. As a result, the projection of new crops arriving in the market from the country is expected to be about 12,22 million tons this year in August-September compared to last year’s 12,07 million tons.
Impact Of The Russia – Ukraine War On Indian Oil Market
These two countries combined to produce 56 percent of the sunflower oil in the world. They are 76 percent stakeholders in the global export market of sunflower oil. As a result, it will impact India considerably.
The price of the oils in India is expected to move up further as sunflower oil is the cheapest among the imports done by India in the edible oil sector compared to soybean oil and palm oil. But to make up for the lack of import of sunflower oil from the Russia-Ukraine region, India has to increase its import of soy oil and palm oil, both of which are expensive. As a result, the price of edible oil in the Indian market will increase.
It has been estimated India’s import of edible oil is down by 23 percent in February with 960 thousand tons compared to 125,2 thousand tons. Of all the edible oil imports, India has reduced the sunflower oil import by 59 percent in February. The decrease in imports has already impacted the edible oil stock in India. In a single week, that is, February 19, the stock dropped to 49 946 tons from 146 251 tons.
Indian Market
There is a steady increase in the arrival of mustard bags in the stock market. The arrival has increased from 215 thousand bags to 675 thousand bags in the last fifteen days.
Despite the increase in the arrival, the farmers are receiving a good price for their crops.
Will The Market Come Under Pressure?
There is the prediction by experts that with the increase in the harvest of the soybean in Brazil, and rapid harvesting, the chances are the market can correct its price in the coming days. Similarly, when a new crop arrives in the US with increased production, the market can get capped for soy oil. Also, the demand for imported oil can be impacted by the increase in the supply of mustard oil, which will offer a better price in the market than soy and palm oil. As a result, both soy and palm oil can undergo correction in the coming days.
For more information, facts and figures, become a member. Click here.