Demand from India is supporting global prices for palm and soybean oil

Global palm and soybean oil prices continued to rise, supported by strong demand from India and reduced vegetable oil supplies from the Black Sea region. Higher crude oil prices are providing additional support by improving the economics of using vegetable oils for biofuel production.

October palm oil futures in Malaysia rose 2.4% over the week to a four-month high of MYR 4,860/t ($1,196/t). India remains one of the key drivers, with its demand up 47% over the past seven months. However, Malaysian palm oil stocks reached a two-year high of 2.63 mln tons in July, which could limit further price gains.

December soybean oil futures in Chicago gained 2.2% over the week to $1,533/t. Prices were supported by an increase in US soybean crushing to 5.9 mln tons in July from 5.3 mln tons a year earlier, while soybean oil stocks fell 9.4% month on month. Spot soybean oil prices in Brazil also increased to $1,200–1,205/t FOB.

In the sunflower oil market, reduced Black Sea supply is keeping prices elevated. Indian bid prices remained at $1,485–1,490/t CIF Mumbai, while Russian sunflower oil for September delivery rose by $30–40/t to $1,350–1,360/t FOB. In Ukraine, bid prices remain at $1,310–1,335/t for delivery to Danube ports, but supply is limited.

However, market pressure could increase in September as seasonal supplies of sunflower, rapeseed and soybean oils expand. Expectations of a larger US soybean crop and increased supplies of Canadian rapeseed oil could also weigh on prices, making further market dynamics increasingly dependent on demand from major importers and the situation with Black Sea logistics.

Tags: soybean oil, prices, India, Malaysia, palm oil, demand