Palm Oil Market :
The palm oil market is very slow today in India as MDEX is closed and traders are not getting any direction. Such days are important as most of the consolidation happens during a holiday, followed by short covering on the opening day. Our view remains unchanged: as the market progresses towards RM 4150 and above, we advise our traders to start making small shorts, increasing them once we test RM 4450, while buying during corrections towards RM 3750. Production is decreasing, India is entering the festive season, and demand for edible vegetable oil is increasing, which will provide enough support. Bearish traders are looking at crude oil prices, hoping that softer crude could put pressure on vegetable oil, but we expect crude to remain stable and slowly inch higher towards 100 by the end of this year when the requirement for heating oil increases. In India, offers are mostly unchanged from Friday, and there are not many trades reported.
Bean Oil Market:
Bean oil rallied to nearly 50.00 on Friday, with August settling at 49.75 (+91), and today it is trading at 48.16 (-39). We may see some consolidation after the significant rally last week, with 50.00 acting as short-term resistance. We reiterate that if prices test 47.50, it will be a buying opportunity, and we advise our readers to be ready to make temporary shorts towards 52.50 or higher.
Basis prices, on the other hand, are adjusting to accommodate commercial demand, with flat prices to India still offered between USD 1050-1040 for July-August positions. August, which traded to India in good volumes between USD 975-1000, is seeing profit-taking, and the next round of buying will emerge when prices rise higher. We are confident that bean prices can test 12.00 before the end of the year, and meal prices also look supportive to reach 370. This will make bean oil encounter strong resistance around 52.50 or higher, while dips towards 46.50 will provide good opportunities for long positions.
At current prices, we suggest traders slowly exit their long positions and refrain from making any shorts until prices test above 51.50. Basis prices remain mostly unchanged for August (-600) and September (-670), keeping flat prices unchanged for India. Resistance CNF India will be around USD 1100, with strong support observed between USD 950-1000.
Sunflower Oil Market:
Sunflower oil is very stable as Ukraine has mostly completed its old crop campaign, and only Russia has limited stocks remaining. We will not see any major or aggressive sellers of sunflower oil, and prices will remain at a premium to bean oil. With bean oil moving higher towards USD 1045 for August, it makes sense for Indians to buy sunflower oil even at USD 1060. Those who have purchased bean oil as a hedge can unwind the spread by selling bean oil and buying sunflower oil today.
Locally in India, we are seeing good stocks, with about 522,000 MT of sunflower oil landing in India in June. In just three months (April-June), India saw total imports of 1.2 million MT, and a similar volume is expected for July-September. Ukraine is largely committed, and we will see an increasing share of Russian imports to India. We advise traders not to make shorts in sunflower oil yet and wait for prices to test USD 1100. For long positions, India continues to buy between USD 1030-1040. India traded some volumes for WCI at USD 1037-1039, which are today being offered around USD 1050.
The sunflower oil market has the potential to rally quickly, which will give the next direction to the entire vegetable oil complex. Russian crop prospects are not looking good in terms of yield, and Ukraine is also lacking in area. We will update our readers once we have more clarity on the overall crop, but it is clear that it will not be as large as last year.
