Tight supplies of vegetable oils, evident in particular the sunflower oil market, will allow soyoil to escape the worst of the correction engulfing the soy complex, Oil World analysts have said.

The influential analysis group restated a warning of "considerable downward pressure" on soybean and soymeal prices in the first six months of 2010, citing pressure from supplies releases by the newly-begun South American harvest.

"We expect rapid disposals of the record South American crop," Oil World said, saying volumes of Brazilian soybeans for export will continue increasing into March.

For soymeal, "world production will rise faster than demand, resulting in an accumulation of stocks and price pressure".

Margin prop

However, soyoil would remain supported during the "transition" in oilseed markets by a squeeze on many rival vegetable oils, including palm oil, whose main producers, Indonesia and Malaysia, are entering a period of seasonally production.

"Soyoil prices will stay comparatively firm, with soyoil increasing its share of the combined product value, financing a larger part of the crush margins in the months ahead," Oil World said.

Thus far into 2010, soyoil has matched the 10% falls in prices of soybeans and soymeal in Chicago's spot contracts.

'Dramatic change'

Sunflower oil prices would prove particularly strong thanks to a 10% drop in sunflower production in 2009-10, which will enforce a drop of 3.4m tonnes in crushings, year on year, in the last nine months of the crop season.

Sunflower oil was set to expand the premium of $50-60 a tonne over soyoil and rapeseed oil it had achieved in recent weeks.

"This premium will widen further to ration [sunflower oil] demand successfully in coming months," Oil World said.