Precipitation in South America lowers soybean prices, which increases pressure on sunflower prices

Over the weekend, long-awaited precipitation took place in Argentina and southern Brazil, which will continue for another 10 days. They will improve the prospects for the soybean harvest and reduce speculative pressure on quotes.

The market was supported by data from the National Oilseed Processors Association (NOPA) on an increase in soybean processing in the United States in December to a record 5.07 million tons, compared with 4.88 million tons in November.

March soybean futures on the Chicago Stock Exchange after the release of the January USDA report fell by 2.9% to 4 499.7/ton, which is still 4.6% higher than the previous month's level.

Following a sharp rise in oil prices and a recovery in palm oil prices, soybean oil futures rose 1% to.1,300/ton yesterday, adding 11.5% of the price for the month.

Prices for Ukrainian sunflower oil last week decreased by 2 20-30/ton to F 1340-1360 / ton FOB under the pressure of low export demand and increased competition with much cheaper soybean and palm oils.

March palm oil futures on the Malaysian stock exchange recovered to last week's level of 5034 ringgit/ton or 1203 р/ton.

According to the State Customs Service, Ukraine exported 2.04 million tons of sunflower oil during September – December 2021, which is 6% lower than the corresponding indicator of my 2020/21, although according to forecasts, the export of sunflower oil in my 2021/22 will grow by 25% compared to the previous season to 6.6 million tons.

The low rate of sunflower processing in the first half of the season is due to the containment of seed sales by producers in anticipation of higher prices. According to APK-Inform experts, in September – November 2021, the volume of sunflower processing decreased by 8% compared to the same period in 2020 from 4.4 to 4.1 million tons. although the sunflower harvest in 2021//22 mg increased by 20% compared to the previous season to a record 16.5 million tons.  

Purchase prices for sunflower in Ukraine, following the prices for sunflower oil, fell to the level of last week 19700-21000 UAH/ton (693-740 $/ton with VAT) with delivery to the plant for oilseeds of 48-50%, although the hryvnia exchange rate against the dollar fell by 2.4%.

To boost oil exports in the second half of the season, processors and farmers will be forced to reduce margins and supply prices, especially given the increase in soybean supplies from South America in February and March.