The oil and oilseed market had been in a bullish mode in 2021. As a result, the prediction was there could be price corrections for the commodities of this sector in 2022. However, the market is still in an appreciative mode as of now.
Though the price is still moving up, the concern of how long this trend will continue.
According to market experts, several factors impact the trend of the oil and oilseed market.
Factors That Influences The Market
Domestic Market Trend
- India imports 60 percent palm oil from Indonesia.
- The Country revised its Domestic Sales Obligation (DMO) rule for the palm oil exporters. The revision mandates the exporters to sell 30 percent of their stock instead of 20 percent in the domestic market.
- India imports a significant share, i.e., 70 to 80 percent of the soybean oil from Argentina.
- On March 13, the Country revised its export duty from 10 percent to 33 percent.
- Also, Argentina stopped the registration for soy oil and meal export.
- The Ukraine and Russia war has already impacted the import of sunflower oil from the Black Sea region. It is causing a sharp price hike in the sunflower oil in India.
- It is predicted that the sunflower oil import can be about 50 to 70 thousand tons from Argentina and European countries in April-May. But the price of oil arriving from these regions will be pretty high.
- On average, India imports 250 thousand tons of sunflower oil monthly, facing a drastic drop due to the war.
- Last week, the price of sunflower oil recorded from Argentina and Europe was between $2400 and $3000 per ton.
- The Indian oil imports of sunflower, soybean, and palm will significantly decrease in the coming months.
- Adding to that, the edible oil stock available in the Indian ports is on a continuous decline. It is at a nine-month low. Now it stands at 76,701 tons, which is a drop by 46,099 tons in a week.
- The harvest of mustard has started in India and is predicted to be 11,1 million tons against last year’s 8,5 million tons.
- There is a significant increase in the arrival of mustard bags in the market. Compared to the last fifteen days, the arrival is now 1.225 million bags instead of 650 thousand bags.
International Market Trend
- The benchmark of soybean oil in Argentina and the commodity price decreased by 1,70 percent last week.
- The benchmark for palm oil in Indonesia. The oil price increased to an all-time high at $1965 per ton, which rose 3.4 percent last week.
- Malaysian palm oil future is also up by $101,47 per ton. The price has improved after it experienced a drop of $28.28 per ton during the last three weeks.
- According to market analysts, the future of Malaysian palm oil will be up significantly. Also, the prediction is it will reach a historic high of $1533,51 per ton by July.
- Even Chicago soybean oil future is up by 1.18 percent and has been rising for the seventh consecutive week.
- Brazil and Argentina have also decreased their soybean crop sowing, which will impact the oil market and India in the long term.
- Next month is the sowing season of the sunflower oilseed in Ukraine. Unfortunately, it will be impacted due to the war, and the sowing will be down by at least ten t0 15 percent.
- As a result, India will suffer the most as most of the import is done from the area.
- China is doing its best to combat the price hike in the oil market by releasing from the strategic reserve stock of soybean, soy oil, and rapeseed oil.
Future Of India
All these factors will influence the Indian oil market in the long run. In addition, the landed cost of the oil has increased significantly due to all export restrictions, war, lowering in production, and increased freight prices.
The oil import was already low in February, and as per experts, it will decrease further in March. According to reports, 890 thousand tons import of oil in March is expected. Compared to February it is down by 7 percent when the import was reported to be 954 thousand tons.
There will be an increase in palm oil import but a significant decrease in soybean oil. On the other hand, it is expected the import of sunflower oil in March may go up by four percent.
The Indian mustard seeds are now in high demand for crushing, and the margin received by the crushers is also improving. Therefore, the new crushing figure is expected to be about 1,1 million to 1,2 million tons instead of 0,6 to 0,7 million tons in March.
Market experts state that due to the increase in the arrival of mustard oil, there can be minute corrections in the prices, but until May, the oil and oilseed market will stay bullish.
For more information, facts and figures, become a member. Click here.