Vegetable oils continue to rise in price amid speculative oil price increases

The speculative rise in oil prices has intensified in anticipation of an escalation with Iran, which supplies 2% of global oil production or 2 million barrels per day. This supports vegetable oil prices, which were already rising amid restrictions on sunflower oil supplies from Ukraine.

March Brent crude futures rose another 3.8% to $67.5/barrel (+9.8% month-on-month) to their highest level since late September in anticipation of the US operation against Iran, as an aircraft carrier group has already arrived in the region. But analysts believe that the US will simply block oil exports from Iran and put economic pressure, forcing negotiations, rather than conducting a military operation.

February palm oil futures on Bursa Malaysia rose 4.7% to their highest since October at 4,260 ringgit/t or $1,078/t, but a slowdown in exports over the past week has limited price gains. Malaysian palm oil exports in the first 25 days of January were up 8-10% year-on-year, although they were up 15-17% in the first 15 days of January.

March soybean oil futures on SWOT rose 3.6% to $1,200/tonne (+10% month-on-month), supported by rising crude oil and sunflower oil prices. It should be noted that soybean oil prices in Brazil rose by $50-60/tonne to $1,190-1,200/tonne FOB during the week due to a lack of supply at the end of the season, but new crop soybeans have already been harvested on 5% of the area, so supply will increase soon. In China, prices on the Daylian exchange rose by $20/tonne to $1,190/tonne during the week.

The jump in prices for Black Sea sunflower oil to the level of $1,300/t FOB increased offers from Ukraine and the Russian Federation, which led to a decrease in the offer prices of Russian sunflower oil per week by $30-40/t to $1,250-1,270/t FOB, while in Ukraine, the demand prices for sunflower oil with delivery to ports per week also decreased by $10/t to $1,260-1,280/t.

Frosts and snowfalls are limiting sunflower supplies to factories, so processors are gradually resuming the operation of oil extraction plants, so we expect increased supplies and sales against the backdrop of rising world prices.

Frosts in the US have led to a doubling of gas prices, which also supports oil prices, so next week we expect a decrease in frosts in the US, developments in the situation in Iran, and a seasonal increase in the supply of all vegetable oils.