Weekly Edible Oil Report:
Kuala Lumpur Crude Palm Oil Futures (KLC)
* Key Events: KLC recorded a 2.09% rise, mainly driven by improving demand and strength in CBOT soybean oil. Palm oil is now trading at a discount compared to soybean oil, boosting demand. Indian and Chinese importers are actively stocking up. However, with increasing production, Malaysian stocks are expected to remain high.
* Technical Analysis: KLC (July) has crossed the resistance level of 4000, but a close above 4200 is necessary for a stronger trend confirmation. Fundamentals for palm oil are mixed, and the uncertainty surrounding China-U.S. tariffs may cause market volatility.
CBOT Soybean Oil Futures
* Key Events: Hopes for a China-U.S. tariff agreement pushed CBOT soybean oil up by 3% early in the week. However, after China denied any agreement at the end of the week, CBOT soybean oil (July) failed to sustain above the 50 resistance level and declined. Over the last two weeks, CBOT soybean oil prices have gained by 10–12 INR/kg.
* Technical Analysis: 50 is a critical resistance level. Until a weekly close above this level happens, it is advised to stay cautious with buying.
Indian Market
* Palm Oil: Despite KLC’s strength, palm oil prices in India dropped by 1–2 INR/kg. Port stocks are low, but domestic demand remains extremely weak. The price gap between soybean oil and palm oil at Kandla has narrowed to just 1.5 INR/kg. Buying stocks for mid-May to June delivery looks attractive. In the near term, palm oil prices are expected to fluctuate within a narrow range of 3–4 INR/kg.
* Soybean Oil: Although CBOT soybean oil rose by 12 INR/kg over the past two weeks, Kandla soybean oil prices showed only a 1–2 INR/kg drop. Due to the intense summer heat, edible oil demand remains extremely weak in India. Any price dips until mid-June could provide good buying opportunities for stocks.
* Strategy: Buy forward month stock on declines in Kandla soybean oil. In the short term, focus only on spot trading.
Mustard Oil
* Price and Outlook: Weakness in soybean and palm oil also affected mustard oil. Jaipur Kachchi Ghani fell by 3 INR/kg, slipping below 1300 INR/kg. 1250 INR/kg is a strong support level. Another 3–4 INR/kg decline is possible from current levels. Long-term investors can consider buying on dips. Major price rallies are unlikely before April-May, but some strengthening is expected from mid-May onwards.