Low demand for even cheap palm oil pushes soybean and sunflower oil prices down

According to AmSpec Agri Malaysia, for January 1-20, compared to the same period in December, Malaysia reduced palm oil exports by 38.5% from 921.8 to 566.5 thousand tons, in particular, the export of crude palm olein - from 327.9 to 99 ,3 thousand tons, palm olein - from 243.4 to 206.2 thousand tons, stearin - from 72.9 to 41.6 thousand tons, crude palm kernel oil - from 36.9 to 10 thousand tons. At the same time, the export of refined palm oil grew from 54.7 to 71.5 thousand tons.

The reduction in exports is due to the long weekend in China and Malaysia for the celebration of the new year and a drop in demand due to the slowdown in the economy. Stock exchanges in China and Malaysia will resume work on January 25, and quotes are likely to continue to fall on export data and news of the introduction of EU tariffs on fatty acids from Indonesia.

April palm oil futures on Malaysia's Bursa exchange rose 1.64% to 3,904 ringgit/t or $911.5/t last week.

In order to protect the internal market from competitors, the European Union introduced an anti-dumping duty in the range of 15.2% - 46.4% on fatty acids from Indonesia, which mainly contain palm oil and are used in cosmetics, food products and medicines. In response, the Indonesian president said that the EU's attempts to limit the actions of developing countries in relation to their own resources indicate a return of Europe to the "slippery practices of the era of colonialism."

Low palm oil prices are increasing pressure on soybean and sunflower oil markets. So, the March futures for soybean oil in Chicago last week fell by 2.9% to $1,365/t, and for sunflower with delivery to buyers - by 5% to $1,170/t CIF (according to the Trading Economics platform) against the background increase in offers from Ukraine and the Russian Federation.

In the Russian Federation, the duty on the export of sunflower oil remains zero for the fourth month in a row, and the indicative price, relative to which the duty is calculated, was $1,207.6/t in January (1,178.1 $/t in December).

The increase in the export of Ukrainian sunflower oil through the grain corridor increased the volume of offers on the market, so the demand prices for DAP - Poland, Romania, Bulgaria fell to $1,100-1,150/t. The world market expects a drop in meal prices following a drop in feed grain prices, which will lead to a drop in sunflower prices in Ukraine.

According to the experts of the Solvent Extractors Association, in 2022/23, India can increase the export of meal by 60% to 2.82 million tons compared to the previous season. In particular, in December 2022, 433.43 thousand tons of meal were exported, while in December 2021 - only 170.87 thousand tons. The increase in exports is facilitated by the fall in domestic prices, which increases the competitiveness of products. Currently, India is one of the main suppliers of rapeseed meal (at an average of $255/t FOB) to Vietnam, South Korea, Thailand and other Southeast Asian countries.

The main agricultural regions of Argentina experienced heavy rains over the weekend, which will reduce speculative demand for soybeans and processed products and increase pressure on oil prices.