Vegetable oil prices fall under pressure from increased supply from Argentina

The Argentine government's decision to temporarily lift export duties on agricultural products has increased uncertainty in vegetable oil markets, as the seasonal increase in global supply of sunflower and rapeseed oil is being compounded by active sales of soybean and sunflower oil from Argentina at significant discounts.

The first to react were October palm oil futures on the Bursa exchange in Malaysia, which fell 2.3% yesterday to 4,343 ringgit/t or $1,035/t after almost 5 weeks of price stability. On the Dalian exchange, the most active soybean oil contract fell 3.14%, and palm oil CPO1 fell 2.92%.

December soybean oil futures on the Chicago Board of Trade fell 6.6% to $1,099/t (-10% per month) over the week due to the lack of export prospects to China and uncertainty over the US Administration's policy on biodiesel production quotas for 2026-27.

During the week, soybean oil prices in Brazil fell by $35-40/t to $1,105-1,110/t FOB, and on the Chinese exchange in Dalian – by $10/t to $1,177-1,180/t.

The news that China contracted about 500,000 tons of Argentine soybeans immediately after Argentina lifted tariffs will further increase pressure on soybean and soybean oil prices and reduce demand for soybeans from Brazil and the US.

In Ukraine, demand prices for sunflower oil remain at a high level of $1,170-1,190/t with delivery to Black Sea ports, but supply is growing, and buyers are contracting more cautiously, as prices for Russian oil have decreased by another $15-20/t to $1,160-1,165/t FOB in a week.

Prices for sunflower oil for delivery to India in September-October remain at $1,275-1,288/t C&F due to the delay in deliveries of the new crop from the Black Sea region, but under the pressure of significant supply from Argentina in October, a price decrease can be expected.