Palm and soybean oil quotes continue to receive support from active demand from India

The cessation of grain and oil exports from the Black Sea ports of Ukraine, and then from the ports of the Russian Federation, continues to stimulate demand for palm and soybean oil from importers, which is why quotes for palm and soybean oil are increasing.

 

October Brent crude futures have risen by 2.2% to $91/barrel over the past 7 days (+4.6% month-on-month) due to the lack of a deal with Iran and the opening of the Strait of Hormuz, as well as continued attacks on tankers, which supports prices for vegetable oils used to produce biofuels.

 

October palm oil futures on the Bursa Malaysia exchange rose 2.4% in the last 7 days to a 4-month high of 4,860 ringgit/t or $1,196/t (+4.2% month-on-month) on the back of stronger demand from India (up 47% in the last seven months), despite Malaysia's palm oil inventories rising in July to a 2-year high of 2.63 million tons. At the same time, according to surveyor Intertek Testing, palm oil exports from Malaysia fell 7.9% in the first 15 days of August compared to the same period in July, which could cool markets in late August when inventories rise even further.

 

December soybean oil futures on the CBOT in Chicago rose 2.2% to $1,533/t (-3.4% month-on-month), supported by an increase in US soybean processing volumes in July from 5.3 to 5.9 million tons year-on-year and a 9.4% month-on-month decline in soybean oil inventories. Forecasts of an increase in the US soybean harvest and an increase in Canadian rapeseed oil supplies in September will add pressure to the price.

 

During the week, spot prices for soybean oil in Brazil increased by $5-10/t to $1,200-1,205/t FOB, and soybean oil futures in Dalian (China) increased by $15-20/t to $1,260-1,265/t.

 

The increased shelling of Ukrainian ports has stopped sea exports, but the Armed Forces of Ukraine are retaliating by attacking Russian terminals and vessels in the Black Sea, which is also limiting export supplies from Russian Black Sea ports.

 

Sunflower oil bid prices in India remained at $1,485-1,490/t CIF Mumbai during the week amid halted exports from Ukraine and the Russian Federation and reduced supply from Argentina. Russian sunflower oil bid prices for September delivery rose again by $30-40/t to $1,350-1,360/t FOB due to limited supply and rising freight and insurance costs.

 

In Ukraine, demand prices for sunflower oil remain at $1,310-1,335/t for delivery in August to Danube ports, but there are almost no offers.

 

Rapeseed oil prices in Ukraine remain at 1000-1020 €/t FCA plants or 1040-1050 €/t loaded on Eurowagons at the western border, and are supported by demand from the EU, where prices remain at 1170-1200 €/t with delivery to Germany. At the same time, during the week, quotes for European rapeseed oil decreased by 30 $/t to 1445-1450 $/t FOB Netherlands, so we expect further saturation of the markets with offers and a decrease in prices.

 

The seasonal increase in the supply of rapeseed, sunflower and soybean oil will increase pressure on the markets in September, especially against the backdrop of rather low raw material prices in Ukraine and the Russian Federation, so Black Sea oil will be able to easily compete on the world market when logistical supply routes are built bypassing Black Sea ports.