Palm oil futures continue to rise in price, while importers increase purchases of cheaper soybean oil

Despite Malaysia's crude palm oil production increasing in July to the highest level since September 2024, as well as the growth of palm oil inventories in Malaysia to a nearly two-year high, futures continue to rise amid China's decision to limit Canadian canola supplies and rising prices for sunflower oil from the Black Sea region.

October palm oil futures on the Bursa Malaysia exchange rose 4.2% to 4,435 ringgit/t (about $1,055/t) on Monday (after the release of production and stock data), bucking a 10.5% drop in oil prices in two weeks and posting a weekly gain of 4.7%. Prices rose after China decided to abandon Canadian canola, which should boost demand for palm oil.

On the Chinese Dalian exchange, soybean oil futures rose 1.49% and palm oil CPO1 rose 1.4%.

Prices for sunflower oil delivered to India increased by $15-20/t to $1,235-1,240/t (CIF Mumbai) during the week, but prices for Russian sunflower oil delivered in August-September decreased by $20/t to $1,130-1,140/t FOB during the week against the backdrop of forecasts of a good harvest and the beginning of a seasonal decline in prices.

Export demand prices for sunflower oil in Ukraine remain at $1,140–1,150/t with delivery to Black Sea ports, while prices on the domestic market remain at UAH 52–60,000/t or $1,170–1,200/t on FCA terms due to supply shortages and seasonal demand for bottled oil.

In Brazil, soybean oil prices for August delivery rose by $15-20/t to $1,130-1,135/t FOB in a week, supported by a 1.7% increase in December soybean oil futures in Chicago from Monday to $1,176/t, driven by a reduction in the forecast for soybean production in the United States. At the same time, Chicago quotes lost 6.4% in two weeks under the pressure of falling oil prices.

The price of rapeseed oil has decreased to $1,180-1,185/t FOB Netherlands for delivery in August.

In the August world oilseed balance for 2025/26 MY, FAS USDA experts lowered the forecast for world vegetable oil production by 0.4 million tons compared to July estimates to 234.64 million tons, which will be 2.5% higher than the previous season's figure of 229 million tons (in 2023/24 MY - 222 million tons). They predict a decrease in sunflower oil production by 0.5 million tons to 21.36 million tons, which will still exceed the previous season's figure of 20.2 million tons.

According to Reuters, India will increase soybean oil imports in 2024/25 compared to the previous season by 60% to a record high, as refiners increase its purchases against the backdrop of lower prices than for palm oil. At the same time, palm oil imports will decrease by 13.5% to a 5-year low of 7.8 million tonnes.

Increased supplies of rapeseed and sunflower oil in the coming month will slightly increase pressure on global vegetable oil prices, but the situation will depend on the further trend in oil prices.