Palm and Soybean Oil Prices Decline Slightly Due to Increased Production
Over the past week, palm and soybean oil prices have shown a slight decline due to data on increased production in Malaysia and the completion of soybean harvesting in Brazil and Argentina, which increased the supply of soybean oil.
According to estimates by The Farm Trade, a consulting and trading firm based in Kuala Lumpur, palm oil production in Malaysia in May sharply increased by 13.48%, leading to a rise in palm oil stocks in Malaysia to a three-month high despite relatively good exports in May.
August palm oil futures on the Bursa Malaysia exchange fell by 4% to 3917 ringgit/ton or $830/ton for the week, despite a trend of oil price recovery, responding instead to a slowdown in export rates.
According to cargo surveyors Intertek Testing Services and AmSpec Agri, exports of Malaysian palm oil products from June 1 to June 10 fell by 20.4% and 21.6%, respectively, compared to May 1 to May 10.
Local analysts note further production growth in June, and according to the LSEG forecast published on Friday, dry weather "will persist in palm oil production areas in Sumatra and West Malaysia," while periods of increased humidity "may support palm growth in production areas in Kalimantan and Sabah."
On the Chicago exchange, July soybean oil futures fell by 1.3% to $961/ton (-3.3% for the month) for the week, and December futures fell by 1.6% to $971/ton (-4.3%) amid increased soybean planting rates in the USA. As of June 9, 87% of planned areas had been sown, compared to 84% on average over five years, and the condition of the crops is rated as good to excellent on 72% of the areas, compared to 59% last year.
The stabilization of oil prices will prevent significant declines in vegetable oil prices.
August Brent crude oil futures on the London ICE Futures exchange rose by 4% to $81.5/barrel (-1.6% for the month) for the week, almost fully compensating for the decline the previous week amid stronger economic news from the USA, news of increased global air travel and fuel demand, the strengthening of the dollar, and a statement by Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman that OPEC+ might pause or reverse its decision to increase oil production if prices fall.
