Seasonal increase in supply puts pressure on vegetable oil prices

Despite the sharp increase in oil prices over the past two weeks, palm and soybean oil quotes have shown relative stability, while increased supply of sunflower and rapeseed oil continues to push prices down.

 

November Brent crude futures rose 3.4% for the week (+14% for two weeks) to $98/barrel as renewed missile strikes between the US and Iran and restrictions on oil supplies through the Strait of Hormuz kept demand for biofuels and prices for vegetable oils and oilseeds high. But good harvests and global balances for soybeans, rapeseed and sunflower in 2026/27 MY limit further oil price gains.

 

November palm oil futures on the Bursa Malaysia exchange have not changed in the last 7 days and are trading at 4,976 ringgit/t or $1,231/t (unchanged in two weeks) against the backdrop of declining demand from India.

 

According to the MPO report dated September 10, Malaysian palm oil production in August will increase by 1.5% compared to July to 1.82 million tons, while its exports will decrease by 5.2% to 1.32 million tons, while palm oil stocks will increase by 4.9% to a record level of 2.76 million tons. The increase in stocks and the fall in demand may at some point significantly adjust prices.

 

December soybean oil futures on SWOT fell 2.7% to $1,557/t during the week (+2.4% month-on-month) and remain under pressure on expectations of increased supply from the new crop and a possible increase in the US soybean harvest forecast.

 

During the week, spot soybean oil prices in Brazil remained at $1,190-1,210/t FOB, while soybean oil futures in Dalian (China) rose by $15-20/t to $1,350-1,370/t, supported by rising soybean prices in the US and Brazil.

 

Sunflower oil demand prices in India fell by $30/t to $1,440/t CIF Mumbai in a week due to a sharp increase in supply from the Black Sea region.

 

Demand prices for Russian sunflower oil for delivery in September-October decreased by another $30-40/t to $1,250-1,260/t FOB during the week amid restrictions on vessel calls to Black Sea ports due to shelling and falling sunflower prices under the pressure of forecasts of a large harvest in the Russian Federation.

 

In Ukraine, demand prices for sunflower oil also fell by $30-40/t to $1,200-1,220/t for delivery to Danube ports during the week due to constant shelling and increased risks during shipment.

 

Against the backdrop of rising rapeseed and canola prices, European rapeseed oil quotes increased by $25-30/t to $1,450-1,460/t FOB Netherlands during the week, but the offer prices of cheap rapeseed oil from Ukraine remain at $1,280-1,320/t with delivery to Poland, which limits further growth in rapeseed oil prices in the EU.

 

The lack of prospects for the start of ceasefire negotiations between the Russian Federation and Ukraine will continue to block exports, so the supply of cheap oil and oilseeds from Ukraine with deliveries to the EU through the western borders will grow and increase pressure on prices.

 

In addition, we should expect Trump's actions (announcements of a new truce with Iran or another opening of the Strait of Hormuz) to reduce oil prices on the eve of the US Congressional elections (to be held on November 3), which will also increase pressure on vegetable oil prices.