A 9% drop in palm oil and a 3.6% drop in soybean oil prices for the week will increase pressure on sunflower oil prices

A 3.7% drop in oil prices for the week added pressure on palm oil prices, which were heavily overbought. Lower prices for palm oil will allow it to compete with soybean oil and strengthen its position in the Indian market, which is increasing imports of sunflower oil.

Speculators are closing short oil positions in palm oil that they opened on expectations of an escalation in the Middle East that could end in a full-scale war between Israel and Iran.

June Brent oil futures on London's ICE Futures exchange fell 3.7% to $87.4/barrel (+2.8% for the month) for the week and may fall further if Iran does not escalate the situation. The decision of the US Congress to allocate aid to Ukraine and Israel will make Iran and the Russian Federation understand that Western countries will not allow them to violate the world order with impunity.

June palm oil futures on Bursa Malaysia fell 9% for the week to 3,926 ringgit/t, or $821/t (-10.6% for two weeks), amid slower exports and lower soybean oil prices.

Chicago May soybean oil futures fell 3.6% to $978/t for the week (-10% in two weeks) amid advancing soybean harvest in Argentina and lower soybean prices.

According to Trading Economics, the average price of sunflower oil with delivery to customers for the week fell by 0.7% to $867/t (-2% in two weeks), in particular in Ukraine – by $5-10/t to $790-800 $/t with delivery to Black Sea ports, $840/t with delivery to Bulgaria and $870-880/t with delivery to Italy.

According to the Vegetable Oil Producers Association of India (SEA), in the 5 months of FY2023/24, the country increased the import of sunflower oil by 20.9% to 1.35 million tons compared to the corresponding period last year, and decreased the import of palm oil by 22.9 % to 2.59 million tons and soybeans – by 39.6% to 882.94 thousand tons.

At the same time, the Russian Federation increased supplies of sunflower oil to India by 53.7% to 490.62 thousand tons, Romania - by 3.2 times to 486.78 thousand tons, Argentina - by 2.3 times to 165.92 thousand tons.

On Friday, the Russian Federation attacked two oil extraction plants in the port of Pivdenny to reduce the export of sunflower oil from Ukraine and gain an advantage in the world market for sales of Russian oil. After the "gas war" with Europe in 2022 and the "grain" war with Ukraine in 2022-23, the Russian Federation started a new war against Ukrainian sunflower oil.