Rising oil prices support vegetable oil prices, but the expected sharp seasonal increase in the supply of cheap rapeseed and sunflower oil from Ukraine and the Russian Federation is putting pressure on prices

The reduced supply of sunflower oil from the Black Sea region continues to support strong demand for palm and soybean oil from India, while rapeseed oil prices are falling, even despite the sharp increase in oil prices.

October Brent crude futures have risen 12.7% to $89/barrel in the last 7 days and are trading 7.2% higher than a month ago, due to the lack of Trump's promised deal with Iran and the opening of the Strait of Hormuz, which will support demand for biofuels.

The increased shelling of Ukrainian ports has stopped sea exports, but the Armed Forces of Ukraine are retaliating by attacking Russian terminals and vessels in the Black Sea, which is also limiting export supplies from Russian Black Sea ports.

Demand prices for sunflower oil in India increased by another $15/t to $1,485-1,490/t CIF Mumbai during the week amid the suspension of exports from Ukraine and increased risks of disruption of sunflower oil supplies from Russian Black Sea ports. Demand prices for Russian sunflower oil for delivery in September fell by $50-60/t to $1,310-1,320/t FOB during the week due to rising freight costs and in anticipation of a new cheaper harvest.

In Ukraine, the demand prices for sunflower oil remain at $1,320-1,335/t with delivery in August to Danube ports, but since almost all plants have stopped processing sunflower and switched to processing rapeseed, the supply of sunflower oil on the market is minimal.

Low rapeseed prices in Ukraine contribute to increasing its processing and increasing the supply of rapeseed oil, the prices of which are also gradually decreasing due to the increase in the cost of delivery to the EU and the seasonal increase in supply in the EU.

During the week, rapeseed oil prices in Ukraine decreased to 1000-1020 €/t FCA plants or 1040-1050 €/t loaded on Eurocars at the western border, while prices with delivery to Germany remain at 1170-1200 €/t. The price of oil delivery by tanker trucks from Ukraine to the EU increased from 100 €/t to 170-200 €/t in a few weeks. Quotes for European rapeseed oil decreased by $10/t to $1480-1485/t FOB Netherlands.

December soybean oil futures on the CBOT exchange in Chicago rose 0.9% to $1,500/t (-4.3% month-on-month), but remain under pressure from improving weather conditions and forecasts of an increase in the US soybean harvest.

During the week, spot prices for soybean oil in Brazil increased by $5-10/t to $1,195-1,200/t FOB, and soybean oil futures in Dalian (China) increased by $5/t to $1,240-1,245/t.

September palm oil futures on the Bursa Malaysia exchange rose 1.1% to 4,748 ringgit/t or $1,160/t (+2.7% in three weeks) over the past 7 days, amid India's 50% increase in palm oil imports in July, but prices are being held back by further increases in production and inventories in Malaysia.

The blockade of Black Sea ports will lead to a decrease in raw material prices in Ukraine and the Russian Federation, so we expect an increase in the supply of cheap rapeseed oil and sunflower oil in September - October, which, against the background of a seasonal increase in the supply of soybean oil in the USA and rapeseed oil in Canada, will increase pressure on the quotations of all vegetable oils.