After an impressive upside rally, edible oils like Soya oil and Crude Palm oil have retraced back from the respective highs and have been moving lower since past few days. Market was overheated hence soaring price levels was adversely affecting the domestic demand in the entire oil complex basket. Globally, export demand has slowed due to sharp price appreciation in Malaysian/Indonesian palm oil as well as soy complex in markets of US, Brazil and Argentina. As such the recent price correction is justified. Oilseeds like soybean and rm seed have been trending downwards since last two weeks.
Negative global cues and fears of duty reduction by the government for controlling the price rise had maintained pressure over the futures market during the recently ended week. Today a meeting is scheduled amongst government officials in context to price control measures in edible oils, at 3 pm. It may be noted that the markets have mostly factored in the possibility of duty reduction in pulses and oils in last few sessions therefore the bearish impact is unlikely to continue for a longer period even if there is a duty reduction announcement in the meeting.
If we analyse the charts of CPO/Soya oil/RM Seed and Soybean, we do not see change in the broader term price view, therefore the view remains bullish for all these commodities. In case of Soybean, June Soybean has a strong support region between 6775-6825. We expect the contract to move towards 7100-7150 levels if closes above this level. Otherwise the fall may be towards 6300-6500 where we may see prices stabilising and resuming the upward trend. Similarly, June RM seen will halt its downward journey this week if closes above 6720-6740 for a day or two.
Under this situation, June RM seed will try to move upwards towards 7150-7200. If the contract fails to close above 6720/6740, then a downward push can bring prices towards the 6400-6500 level. On the other hand, NCDEX June Soya oil and MCX May CPO will tend to reverse the losses this week if manage to close above 1360/1175 respectively. This price action may be observed in case there is no reduction in the import duty otherwise we may observe prices moving towards lower support levels of 1320-1330/1140-50 respectively.
