Soy Oil Gains on Overseas Demand.

The refined soy oil futures started the year 2011 on a positive note as prices opened sharply higher tracking a rally in overseas market.

Supply concern due to unfavourable weather condition in major producing countries led the CBOT soy oil futures to settle at yearly high on Friday. The near month contract soy oil futures rose 2% on Friday.

This rise in international market gave underlying support to Indian market. Domestic traders advanced their oil buying on anticipation of lower import of oil from Argentina following possible crop loss in that country. Rising demand for oil for food and fuel also support the rise.

The refined soy oil futures are expected to extend its positive trend on follow through buying and taking support from strong overseas market. BMD palm oil futures are trading higher taking cues from Friday’s gains in CBOT soy market.

With the likely fall in Argentina soy output due to hot and dry weather condition Indian soy oil imports in 2011 is likely to be lower, which will attract buying in the futures market. Argentina is largest supplier of soy oil for India.

India’s soy oil imports in November were down 59% Y/Y at 31,970 tons. This trend is likely to continue for December. Rising demand for oil as food and fuel is another bullish factor for the market.

Higher landed price of oil due to rise in international price amidst nil import duty may attract buying in the futures market.

Source : commodityonline.com