Against the backdrop of speculative growth in oil prices, palm oil rose in price by 5.5%

News about the intentions of Saudi Arabia and the Russian Federation at today’s meeting of OPEC+ to agree to cut production immediately by 1-1.5 million barrels/day led to a speculative increase in oil prices, which supported vegetable oil markets. The first to react, as usual, were quotes for palm oil, which rose by 5.5% since Monday.

December Brent oil futures rose by 7.7% to $91.8/barrel (+10% for the week) from Monday, and November futures by 8.8% to $86.5/barrel (+12% in a week). The driver of growth was rumors that at the meeting of OPEC+ on October 5, it will be decided to significantly reduce oil production. However, analysts believe that this will not significantly change the situation, since in most OPEC+ countries, oil production is significantly lower than the target levels of production.

In the third quarter of 2022, oil prices fell by almost 25%, and in general, quotations fell for four consecutive months after a jump at the beginning of the Russian war against Ukraine.

The markets ignored the news that EU ambassadors agreed on a new package of sanctions against Russia, which will contain price restrictions on Russian oil. These sanctions may be adopted as early as October 6, 2022, which will lead to an increase in the discount on Russian oil on the world market.

Palm oil futures on the Malaysian exchange were up 5.8% since Monday at 3,614 ringgit/t or $778/t (+2% for the week), offsetting last week’s decline.

Indonesia, the world’s largest palm oil producer, has announced it may extend a zero duty on edible oil exports until Oct. 31, adding to pressure on quotes.

Due to lower prices of palm oil compared to other competing oils, India in September increased its imports compared to August by 21% to 1.2 million tons, while soy – by 10% to 270,000 tons, and sunflower – by 22 % to 165,000 tons. Prices for palm oil for delivery in September are almost $300/ton lower than for soybeans.

Experts expect India’s palm oil imports to remain stable in October thanks to heavy discounts and increased demand amid festivals. According to dealers, at CIF India with delivery in October, crude palm oil is offered at $855/t, soy oil at $1,207/t, sunflower oil at $1,200-1,250/t.

Imports of sunflower oil increased due to a reduction in the premium for it compared to soybean oil after the resumption of supplies from Ukraine, the world leader in its production, through grain corridors since August.

Tags: palm oil, Ukraine, sunflower oil, Indonesia, prices, Malaysia