New times in the oil market - palm oil has become more expensive than soybean and soybean oil

Palm oil was typically the cheapest among other vegetable oils due to its lower quality and traded at a discount of $100-150/t to soybean oil and $200-300/t to soybean oil.

But for the current season amid a sharp increase in global soybean production, soybean oil quotes in Chicago have fallen to $910/t and are trading $220/t lower than palm oil in Malaysia.

February palm oil futures on Bursa rose to 5,032 ringgit/t or $1,135/t due to increased demand for palm oil from the biofuels industry, particularly in Indonesia (the world's largest producer of the product), as well as strengthening of the ringgit against the dollar and lower crop forecasts.

In 2024/25, the share of palm oil in the global production of vegetable oils will be 36%, soybean oil - 30%, rapeseed oil - 15%, and sunflower oil - 9%.

An 11% decrease in global production of sunflower oil this season should support its prices and increase the premium compared to soybean and palm oils, but for now Ukrainian oil prices remain lower than palm oil at $1,100-$1,120/t FOB .

The decrease in demand for Ukrainian oil is due to a reduction in imports by European buyers against the background of an increase in local production of soybean and rapeseed oil.

According to the European Commission, the import of oil to the EU decreased by 21% compared to the previous season, in particular soybean oil - by 66%, rapeseed oil - by 50%, palm oil - by 18%, and sunflower oil - by 17%. As of December 1, the EU imported only 832,000 tons of sunflower oil, of which 778,000 tons came from Ukraine.

At the same time, EU countries increased imports of oil crops and soybean meal. Compared to the corresponding period of the previous season, the import of oilseeds to the EU increased by 8%, in particular soybeans by 7%.

The decrease in sunflower production in Ukraine compared to last year from 15 to 10-11 million tons will reduce the amount of sunflower oil offered on the world market. However, after the start of the full-scale invasion of Ukraine, the Russian Federation increased sunflower oil exports to China and India (the main global importers of this product) and moved Ukraine from the position of a leading supplier thanks to significant discounts and deepening cooperation with these countries.