Vegetable oil prices remain under pressure from increased supply of soybean oil
Vegetable oil prices have rebounded after falling last week, although they remain under pressure from a seasonal build-up in soybean and palm oil supplies, as well as a drop in oil prices.
Despite oil prices falling 3.2% for the week, soybean oil in Chicago and palm oil in Malaysia rose between 2.2% and 3.2%, recovering from losses at the end of last week.
July soybean oil futures in Chicago rose 3.2% this week to $980/t (-9% for the month) on news of a loss of 1-2 million tons of soybeans in Brazil.
June palm oil futures in Malaysia rose 2.2% to 3,930 ringgit/t or $830/t from Monday on forecasts of bad weather in Indonesia.
The Indonesian Meteorological Agency has warned that thunderstorms and tornadoes may pass through the country from May 7 to 13, which may lead to landslides and floods. From May to August, a dry season will be established on 64% of the country's territory, which will negatively affect the yield of palm trees.
On the exchange in Dalian, the most active soybean oil contract rose by 1.51% yesterday, and palm oil - by 2.22%.
India, the main global buyer of vegetable oils, in April compared to March increased its import of edible oils by 13% to 1.3 million tons, in particular, palm oil - by 41% to a 3-month maximum of 682 thousand tons, and soybean oil - by 79% to a 10-month high of 391,000 tons, while sunflower oil imports decreased by 48% to 233,000 tons. The increase in purchases is due to a drop in crude palm oil (CPO) prices for the month by $50/t to $920/t CIF (with delivery to India in June), while soybeans on the same terms are offered at $920/t, and sunflower at $945/t.
According to Trading Economics, during the week the average price of sunflower oil with delivery to buyers fell by 0.7% to $851/t, in particular in Ukraine – by $5-10/t to $780-790/t with delivery to the Black Sea ports sea.
Export prices for Russian sunflower oil rose by $5-10/t to $815-825/t FOB Black Sea ports, which slightly reduced demand from India and China. In the Russian Federation, the indicative price for sunflower oil, from which the export duty is calculated (0% rate in the current season), is $766.7/t, which confirms the willingness of exporters to sell oil at this price.
