Vegetable oil quotes fall under pressure from seasonal supply increases despite high oil prices

In the September supply and demand report, USDA experts again improved the global oilseed balance , raising the forecast for global oilseed production by 2.44 million tons to a record 723.46 million tons, which will exceed the 2025/26 MY figure of 701.04 million tons by 22.42 million tons (686.96 million tons in 2024/25 MY, 657.74 million tons in 2023/24 MY). The forecast for global vegetable oil production has been increased by 0.42 million tons to a record 245.37 million tons, which will exceed the 2025/26 MY figure of 39.76 million tons by 5.6 million tons (230.8 million tons in 2024/25 MY, 218.2 million tons in 2023/24 MY).

Vegetable oil markets remain under pressure from rising oil prices, which have risen 22% in a month amid Houthi attacks on Saudi Arabia's oil infrastructure and a possible blockade of the Bab el-Mandeb Strait. November Brent crude futures rose 11.2% to $109/barrel in the week.

November palm oil futures on Bursa Malaysia fell 1.9% to 4,883 ringgit/t or $1,200/t in the past 7 days, suggesting that rising oil prices are not boosting demand for palm oil, which is mainly used to produce biofuels, which has pushed palm oil inventories in Malaysia to record levels.

December soybean oil futures on the Chicago SWOT fell 0.4% to $1,550/t during the week (unchanged for the month), but are 35% above last year's level. We expect soybean oil quotes to fall under pressure from the new harvest and increased supply in the US.

During the week, spot prices for soybean oil in Brazil increased by $10/t to $1,210-1,220/t FOB, while soybean oil futures in Dalian (China) remained at $1,360-1,370/t against the backdrop of the start of domestic harvest and increased soybean purchases from the USA and Argentina.

Sunflower oil demand prices in India decreased by $10/t to $1,430/t CIF Mumbai in a week under pressure from increased supply from the Black Sea region.

In Ukraine, demand prices for sunflower oil also fell by $100/t to $1,100-1,120/t for delivery to Danube ports during the week due to increased shelling of ports and an increase in freight costs.

Quotations for European rapeseed oil fell by $10-20/t during the week to $1,435-1,440/t FOB Netherlands against the backdrop of an increase in the supply of cheap rapeseed oil from Ukraine, the prices for which decreased to $1,190-1,200/t DAP Ukrainian-Polish border.

In the coming weeks, we expect oil prices to decline after a long speculative rise, which, against the backdrop of a seasonal increase in the supply of oilseeds, will lead to a further decline in vegetable oil prices, especially sunflower in India and soybean in the USA.