Palm oil prices rise despite record stocks, keeping neighboring markets from falling

Palm oil quotes are showing speculative growth on forecasts of a reduced harvest in Indonesia, which supports soybean and sunflower oil prices, as demand for them from importers will increase as palm oil prices rise.

 

As analysts expected, Malaysian palm oil stocks reached a record high of 3.51 million tonnes at the end of September, amid four consecutive months of increased production and a simultaneous decline in exports.

 

December palm oil futures on the Bursa Malaysia exchange have risen by 2.7% to 4,682 ringgit/t or $1,140/t over the past 7 days (+1.6% since the beginning of the month), supported by an increase in exports in the first ten days of October by 33-35% and a reduction by USDA experts in the Indonesian harvest forecast by 2.5 million tons. It should be noted that the local association has reduced its forecasts to a lesser extent, so the increase in quotes is mainly speculative in nature.

 

December soybean oil futures on the Chicago SWOT fell 2.8% to $1,498/t (-3.4% month-on-month) on the back of an unexpected increase in the US soybean harvest forecast.

 

Spot prices for soybean oil in Brazil remained at $1,220-1,240/t FOB during the week, while soybean oil in Argentina is offered at $1,200-1,220/t FOB. At the same time, soybean oil futures in Dalian increased by $20/t to $1,330-1,335/t.

 

Demand prices for sunflower oil in India remain at $1,390–1,400/t CIF Mumbai, but there is an increase in supply from the Black Sea region at $1,400–1,450/t CIF Mumbai.

 

In Ukraine, prices for sunflower oil remained low during the week at $1,100/t FCA-factory and $1,200/t with delivery to the western border, but the cost of road and rail logistics is increasing, and factories do not have time to ship processed products on time, which may lead to the shutdown of some enterprises. Demand prices for sunflower oil with delivery to Turkey are $1,320-1,340/t, which supports demand, but it can be quickly closed by the Russian Federation with supplies of cheap oil.

 

European rapeseed oil quotes traded at $1,385-1,390/t FOB Netherlands during the week amid the low euro exchange rate against the dollar and increased rapeseed oil supply.

 

Favorable weather has allowed for increased sunflower harvesting in Ukraine and the Russian Federation, so the supply of sunflower oil will continue to grow, but logistical constraints will greatly reduce domestic prices.