Palm oil continues to rise in price, which supports soybean and sunflower oil prices

Despite a sharp decline in oil prices, palm oil continues to rise on forecasts of production cuts in Malaysia and Indonesia.

December palm oil futures on Bursa Malaysia rose 7.6% last week and fell 1.6% on Monday (against a 6% drop in oil prices), but in the following two sessions rose again by 3.7% to a 3-year high of RM4,695/t or $1,073/t (+8.9% in two weeks).

Prices support expectations of a recovery in demand from China following the government's announced stimulus measures. Traders expect a drop in exports due to rising prices, but believe that a rise in the premium for sunflower oil will prompt buyers to step up purchases of palm oil.

The Indonesian government is increasing the indicative price of crude palm oil from 893.64 to 961.97 $/t from November 1, so the export duty will be 124 $/t, which will increase the prices of Indonesian oil in the world market.

December soybean oil futures on the Chicago Stock Exchange rose 2.3% to $965/t yesterday (+0.9% for the week, +2% for the month), recovering from Monday's decline.

According to Trading Economics, during the week the average price of sunflower oil with delivery to buyers increased by 5% to $1,289/t (+10% for the month).

The premium for sunflower oil compared to soybean and palm oil is increasing due to a sharp reduction in supplies from Ukraine, caused by a shortage of sunflower offers from producers and an increase in purchase prices for it.

At the same time, soybean oil prices remain lower than palm oil, amid significant inventories in China and increased imports of cheap soybeans into China. This restrains the rise in sunflower and palm oil prices.

Prices are also pressured by a reduction in the import of vegetable oils to the EU. According to the European Commission, in the 2024/25 FY (as of October 20), the EU reduced oil imports compared to the same period of the previous season:

• soybean - by 65% to 80 thousand tons,
• rapeseed - by 51% to 90 thousand tons,
• sunflower - by 18% to 590 thousand tons,
• palm - by 17% to 980 thousand tons.