Palm and soybean oil prices fall amid increased supply and lower oil prices

The sharp decline in oil prices is reducing demand for vegetable oils used to produce biofuels, which is increasing competition for buyers among oil sellers.

 

July Brent crude futures fell 11.6% to $99.5/barrel during the week (+2.5% for the month) on expectations of signing a peace agreement and unblocking oil exports from the Strait of Hormuz, as well as information that in recent days Iran has allowed 33 ships to leave the strait, despite US strikes on an anti-aircraft missile system in the port of Bandar Abbas and IRGC boats that were trying to go to sea to lay mines.

 

June palm oil futures on Bursa Malaysia fell 2% to RM4,497/t or $1,134/t during the week, pressured by falling oil prices and reduced exports. According to local surveyors, Malaysia reduced its palm oil exports by 14.5-18% in the first 25 days of May compared to the same period in April, so we expect further declines in quotations to boost exports.

 

July soybean oil futures on the Chicago SWOT fell by 1.4% to $1,638/t during the week (+3.6% for the month), but demand within the US remains significant, so prices will also be high until the new crop appears.

 

At the same time, soybean oil prices in Daylian (China) for delivery in June remain stable at $1,235/t, and on the spot market, soybean oil prices in Brazil are at $1,260-1,300/t FOB.

 

At the same time, sellers from Argentina continue to aggressively offer soybean oil $40-50/t cheaper – at a price of $1,230-1,250/t FOB, and the discount to prices in Chicago has again exceeded $400/t.

 

Soybean oil prices in Europe also remain stable at $1,300-1,310/t FOB Rotterdam, limiting the rise in sunflower oil prices.

 

Last week, sunflower oil demand prices in India remained at $1,400-1,410/t CIF Mumbai, but Russian sunflower oil prices fell by $10/t to $1,290/t FOB as Russian sellers try to compete with Argentine oil, which has risen by $10-20/t to $1,340-1,380/t FOB amid increasing demand.

 

Demand prices for Ukrainian sunflower oil increased by $10/t to $1,325-1,330/t for delivery to Black Sea ports during the week due to reduced supply, as more and more plants shut down due to a lack of raw materials and preparations for the rapeseed receiving season.

 

Active supplies of sunflower from Argentina to Bulgaria and Turkey have led to an increase in the supply of sunflower oil, making it increasingly difficult for Ukrainian exporters to sell expensive domestic oil, especially given the constant shelling of ports.

 

Processors and exporters in Ukraine are not accumulating large volumes of oil in ports, fearing new attacks, and are looking for supply opportunities to the western border.