Palm oil trades significantly cheeper than soybean and sunflower, but seasonal increases in supply could tip the balance

A sharp rise in palm oil prices in the first half of the year has dented demand, but analysts expect it to pick up in the second half amid lower quotes. It is not yet clear whether soybean and sunflower oil prices will decline due to the seasonal increase in supply.

September palm oil futures on Malaysia's Bursa rose 1.9% over the past week, although they were down 2% on Friday at 4,172 ringgit/t, or $932/t.

October soybean oil futures in Chicago rose 1.6% to 1,495%/t on Friday, adding 2.2% overall for the week.

Export prices for Black Sea sunflower oil last week also rose to $1350-1400/t FOB Black Sea ports.

Premiums for soybean and sunflower oil compared to palm oil already reach $350-450/t, which will strengthen demand for palm oil in the near future and force soybean and sunflower oil producers to lower prices to boost sales.

According to the estimates of Oil World experts, during January-July, the import of palm oil decreased compared to the same period last year by 4 million tons, from 28.4 to 24.08 million tons, in particular to China - from 3.57 to 1.73 million tons , India - from 4.49 to 4.09 million tons, Pakistan - from 1.79 to 1.4 million tons, EU countries - from 4.12 to 3.46 million tons. During the period of restrictions on the export of palm oil from In May-July, when prices rose to $1,350-$1,500/ton, Indonesia's global imports fell the most - immediately by more than 2 million tons, from 12.54 to 10.18 million tons compared to the same period last year.

Now the prices of palm oil on the world market have decreased compared to other oils, so the experts of Oil World (Germany) expect in the medium term an increase in demand for it from importers, who will need to replenish stocks.

Since September, the Russian Federation has sharply reduced the duty on the export of sunflower oil from 15,987 rubles/t to 8,621 rubles/t, based on the indicative price of $1,583/t. This will increase the supply of Russian sunflower oil on the world market and increase pressure on prices.