Soybean and rapeseed oil quotes respond to oil price spikes, but physical markets remain under pressure from increased supply

Instability in the Middle East is causing strong volatility in the oil market, which also affects the quotes of agricultural futures, especially vegetable oils.

Thus, last week, September Brent crude futures rose by 13.5% to $101/barrel, fell by 20% on Monday (+13.5% per month), and this morning rose again at the start of trading by 4.8% amid the US response to new strikes by pro-Iranian forces from Iraq on US military bases.

It should be noted that palm oil futures on the Bursa Malaysia exchange continue to demonstrate relative stability, almost not reacting to oil price jumps, and over the past 7 days have grown by only 0.7% to 4642 ringgit/t or $1136/t and are trading at the same level as three weeks ago. According to surveyors, palm oil exports from Malaysia in the 25 days of July grew by 8.1-15.9% compared to the same period in June, which supports quotes, especially due to increased demand from the EU against the background of declining demand from India.

December soybean oil futures on the CBOT exchange in Chicago fell 5.6% to $1,520/t (+3.8% month-on-month), responding to the drop in oil and soybean prices at the beginning of the week.

During the week, spot prices for soybean oil in Brazil remained virtually unchanged at $1,205-1,215/t FOB, and soybean oil futures in Dalian (China) for August delivery were $1,250-1,255/t.

Demand prices for sunflower oil in India increased by $5/t to $1,455-1,465/t CIF Mumbai during the week amid reduced supply from Ukraine, which sellers of Russian sunflower oil continue to take advantage of, raising prices by another $20/t to $1,350-1,365/t FOB.

Demand prices for new crop sunflower oil from China remain at $1,360-1,380/t CIF for delivery in September.

In Ukraine, purchases with delivery to Black Sea ports have practically stopped due to constant shelling, but there are offers to purchase sunflower oil at a price of $1,320-1,335/t with delivery to Danube ports.

The shelling of Ukrainian ports and attacks on civilian vessels off the coast of Ukraine by the Russian Federation continue, so sea exports remain paralyzed, which has already led to a sharp increase in the supply of Ukrainian rapeseed on the EU market with delivery in August-September and remains the main factor putting pressure on rapeseed prices, although volatility in the oil market is also adding nervousness to the rapeseed and rapeseed oil markets in the EU.

November rapeseed futures on the Paris stock exchange fell by 4.6% to €531/t over the past 7 days (+2.3% per month), and rapeseed oil prices in the EU fell by $50-60/t over the week to $1,490-1,510/t FOB Netherlands in anticipation of a sharp increase in the supply of cheap rapeseed oil from Ukraine.

Demand prices for rapeseed oil with delivery to the western border of Ukraine remain at the level of €1,050/t or $1,190-1,200/t, and with delivery to the EU - at the level of $1,250-1,260/t, while demand prices with delivery to China have decreased by $20-25/t to $1,250-1,260/t CFR, so we expect a further decrease in prices.

The reduction in the forecast for rapeseed and sunflower yields in the EU will slightly stop the fall in rapeseed and rapeseed oil prices in the EU in the near future, especially against the backdrop of another increase in oil prices.