An increase in palm oil stocks in Malaysia is putting pressure on soybean oil prices

The seasonal increase in the supply of cheap sunflower oil from Ukraine and the Russian Federation puts pressure on soybean and palm oil quotations. The depreciation of the ruble allows traders from the Russian Federation to significantly lower oil prices.

The report of the Ministry of Internal Affairs and Communications Association dated October 10 confirmed analysts' forecasts of an increase in palm oil reserves in Malaysia for the fifth month in a row. In September, they rose 9.6% from August to an 11-month high of 2.31 million tons. Palm oil production rose 4.33% to 1.83 million tons, while exports fell to 1.2 million tons. At the same time, according to surveyors, for October 1-10, Malaysia increased the export of palm oil by 12.5-29.6% compared to the same period in September.

December palm oil futures on Bursa Malaysia yesterday fell another 0.4% to a 3.5-month low of 3,552 ringgit/t or $753/t (-4.4% for the week, -6.2% in two weeks).

December soybean oil futures in Chicago fell 5.1% to $1,160/t from Monday (-13.9% month-on-month) as soybean and soybean meal prices fell to 4-month lows.

In September (the first month of the 2023/24 season), Ukraine exported 357,000 tons of sunflower oil, which is the lowest figure since July 2022. In 2022/23, the export of sunflower oil amounted to 5.6 million tons, which is significantly higher than the 4.5 million tons of the 2021/22 season.

Demand prices for Ukrainian soybean oil remain at the level of $820/t with delivery to buyers, but offer prices on FCA-plant terms are decreasing. Sunflower prices, after rising to UAH 11,500-12,000/ton with delivery to the factory, also began to fall.

In the October report due out today, USDA experts are likely to raise their forecast for global sunflower production, which will increase pressure on vegetable oil prices in the near term.