Weak demand lowers vegetable oil prices, but Egypt buys soybean oil 20% more expensive
The global market for vegetable oils remains under the pressure of low demand, as against the backdrop of a sharp increase in the price of energy carriers, the incomes of buyers are falling, and they are forced to save more and more. First covid-19, and now the war in Ukraine has led to a change in logistics chains and an increase in oil and food prices, and a decrease in the income of the population causes a recession in the world economy, as a result of which the prices of goods fall.
As an example, palm oil prices, after rising to $1,500-1,600/ton, fell to $770/ton, and are now $875/ton, but demand is not increasing. December palm oil futures on the Malaysian exchange traded steady at 4,121 ringgit/t or $875/t this week on forecasts of higher production and inventories and lower exports, which in the October 1-25 period were down from the corresponding period in September by 3.5% according to Intertek Testing Services, or by 0.6% according to Societe Generale de Surveillance.
December soybean oil futures on the Chicago Stock Exchange rose by 4.2% to $1,618/t for the week on forecasts of increased demand.
The Brazilian Association of Biofuel Producers Aprobio appealed to the government of the country with a request to return to the plan approved by the CNPE in 2018, the operation of which was stopped due to the covid pandemic and the war in Ukraine. He predicted that from January 2023, the share of biofuel in motor fuel should increase to 14% (B14), from March - to 15% (B15), and now it should be 13% (B13). However, in fact, this indicator has been left at the level of 10% (B10). According to Aprobio estimates, 19.8 million tons of vegetable oils will be used for biodiesel production in Brazil in 2022, and up to 30 million tons in 2023 if the country switches to the B15 mandate.
Egypt's GASC yesterday held an international tender for the purchase of vegetable oils with delivery in December and a domestic tender for the purchase of soybean oil with a payment deferral of 180 days. 5 lots of sunflower oil at the price of $1425-1497/t C&F were offered for the international tender, the cheapest of which was a lot of 6 thousand tons at a price of $1425/t C&F, and only one lot of 14 thousand tons of soybean oil from the Russian company Aston, which ended up buying GASC, although its price of $1,600/t C&F was 20% higher than the price of the previous tender. Only one batch of soybean oil of 3,000 tons was offered at the local tender at a price of 35,000 pounds/t or $1,772/t. It is worth noting that the price levels of sunflower and soybean oil offers were almost equal to the prices of the "pre-war" tender of February 16, 2022.
The results of the tender show that after the fall in September-October, the prices of oil offers have recovered to the pre-war level, and sellers are not ready to sell products at prices lower than last year.
