Falling palm oil prices increase pressure on sunflower oil and sunflower prices in Ukraine

The decline in Malaysian palm oil prices is accelerating, and yesterday February futures on the Bursa exchange fell by 1.2% to 4,758 ringgit/t or $1,070/t (-7.6% for the week) amid reduced demand, especially from India, which has stepped up purchases of cheaper soybean and sunflower oil.

 

According to estimates by surveyors ITS and AMSPEC, Malaysia reduced palm oil exports by 6.7-9.8% to 660-671 thousand tons between December 1 and 15 compared to the same period in November.

 

At the same time, India increased its vegetable oil imports in November by 12% compared to October, from 1.459 million tons to a record 1.628 million tons, in particular sunflower oil by 43% to 341.9 thousand tons, soybean oil by 20% to a 3-month high of 410 thousand tons, while palm oil by only 5% to 850 thousand tons.

 

Sunflower oil imports to India increased due to active supplies of oil from the Russian Federation, the prices for which sellers were willing to lower, as a result of which the demand prices for CFR India fell to $1,180/t.

 

In the 2024/25 MY, Ukraine exported 1.5 million tons of sunflower oil, in particular, 371.5 thousand tons in September, 484 thousand tons in October, and 481 thousand tons in November. Over the 12 days of December, oil exports decreased by 19% compared to the same period in November to 165 thousand tons.

 

Demand prices for Ukrainian sunflower oil with delivery to Black Sea ports have fallen to $1,090-1,100/t, and to Poland or Bulgaria – to $1,150/t. But importers from the EU, despite the sharp increase in prices for rapeseed and rapeseed oil in the EU, almost do not buy Ukrainian sunflower oil, as they have significant stocks.

 

According to Trading Economics, the average price of sunflower oil delivered to customers fell by 1.8% to $1,275/t (-3.5% per month) during the week.

 

Prices for sunflower with 50% oil content delivered to the plant this week fell by 200-300 UAH/t to 25,000-25,500 UAH/t amid falling oil prices, but processors are willing to pay a premium for large batches.

 

Rising prices for feed corn and wheat supported prices for sunflower meal, which rose at ports by $5-8/t to $195-200/t, which will improve processing margins and allow for higher sunflower prices.

 

January soybean oil futures on the Chicago Board of Trade fell 2.1% to $919/t yesterday (-2.6% for the week, -9.1% for the month) under pressure from forecasts of increased global soybean production.

 

The Malaysian Palm Oil Board estimates that the country's palm oil production will decline for the fourth consecutive month in December as heavy rains delayed the harvest.

 

The reduction in production in Malaysia will soon stop the fall in palm oil prices, so sunflower oil prices will be pressured by increased supplies of cheap soybean oil from South America and the USA.