Oil prices crossed the level of $40/barrel and supported by the vegetable oil markets

Yesterday, oil prices continued to grow, and quotes of WTI rose by 6% to 37,88 $/barrel and Brent by 4% to 40,24 $/barrel for the first time in 3 month and crossed the psychological level of $40/barrel.

Prices supports evidence of a decrease in oil reserves in the United States, with increased industrial activity, as well as negotiations on OPEC+ on further reduction of oil production.

Quotations of palm oil exchange in Malaysia yesterday rose 2.5% to 2341 Ringgits/t and 547 $/ton after the price of oil, and also supported by the appreciation of ringgit against the dollar and reduced the forecast of sunflower oil production in may against the background of increased exports.

Futures for soybean oil in the US rose yesterday by 1.2% to 618,4 $/ton, and soybeans – 1% to of 312.9 $/t on the news about the continuation of the procurement of U.S. soybeans by Chinese companies is contrary to the decision of Chinese authorities to suspend purchases of agricultural products from the United States under the trade deal. Perhaps it was the recent purchases of soybeans by China to the United States because it actively imports soy from Brazil.

Experts INTL FC Stone increased its forecast of soybean production in Brazil by 0.3 million tons to 120.9 million tons and export 1 million tons to 77 million tons, while last year the country gathered 115 million tons of soybeans, of which exported 74.5 million tons.

In may, Brazil exported 15.5 million tonnes of soybeans, which is 45% higher than may, 2019 and is the second largest monthly export of which 74% was shipped to China. During January-may, Brazil exported 49 million tonnes of soybeans, of which 74% in China, whose share in the exports of soybeans last year did not exceed 40%.

Chinese refiners despite signed in January trade agreement with the US prefer the cheaper and more quality of Brazilian soybeans, the increased purchasing which reduces the need to import vegetable oils.

Increase in price of sunflower oil to the level 830-835 $/t for delivery in India lowers the demand from customers who start to buy cheaper soybean or palm oil.

Ukrainian sunflower oil is expensive, primarily due to the lack of proposals for large batches. After the growth of prices for delivery in July-August to 750-760 $/t FOB, bid prices for delivery in September-October also rose to 700-715 $/t FOB, even though the projections for the increase in sunflower crop in Ukraine and Russia in the new season.