High demand fuels global vegetable oil prices

New Delhi, Jan 21 | Updated: Jan 22 2007, 06:23am hrs
Global prices of vegetable oils are likely to rule high in the next two months due to shortfall in oilseeds output and greater demand. Sharp increase in demand for bio-fuels, apprehension that the rising El Nino phenomena may spoil crop prospects in Malaysia, Indonesia and Latin American countries, stray incidences of Asian soy rust, and strong demand for vegetable oils in Europe, India and China are all likely to push vegetable oil prices northward.

According to Nagaraj Meda of the Hyderabad-based TransGraph Consulting Ltd, the increase in vegetable oil prices was triggered by the uptrend in wheat prices following drought-led supply reduction in Australia and diversion of soybean crop area in US to corn.

Studying the market fundamentals, Meda has projected that CBOT futures in March, 2007 for soyoil would rise in the range of 27.80 to 31.50 cents per pound, that of soybean in the range of 680 to 780 cents per bushel and that of soymeal in the range of $197-$240 per 976 kg (short tonne). The prices of Argentina soyoil (one month forward) will range between $590-$670 a tonne and that of Argentina soymeal in the range of $290 to $230 a tonne.

The spot prices of Argentina sunflower will range between $600- $665 a tonne in the next two months.

Oil Spoil

Sharp increase in demand for bio-fuels, apprehension that the rising El Nino phenomena may spoil crop prospects in Malaysia, Indonesia and Latin American countries
Oilseeds output may decline by one million tonne over the previous year

The BMD crude Palm oil (CPO) futures in April 2007 will range between 1825 to 2150 Malaysian ringit a tonne, while second month forward prices of Malaysian palmolein will range between $550- 620 a tonne. Following the global trend, Meda said that NCDEX futures prices in February for soyoil will range between Rs 460 to 495 per 10 kg, that of soybean in the range of Rs 1,390 to 1,500 per quintal and that of rapeseeds in the range of Rs 365 to 400 per 20 kg.

According to Meda, in India, oilseeds output may decline by one million tonne over the previous year and production of vegetable oils from domestic oilseeds output will be 6.5 million tonne against 6.83 million tonne in the previous year. Indias import of vegetable oils may rise to 5 million tonne in 2006-07 from 4.4 million tonne in 2005-06.