Falling palm oil prices put pressure on sunflower and soybean oil prices

Amid rising oil prices, India’s prime minister has urged residents of the world’s largest country to conserve energy and reduce oil consumption, which has fueled pessimism among palm oil sellers, whose supplies to India fell by 26% in April, leading to lower prices.

June palm oil futures on Bursa Malaysia fell 3.2% during the week to a two-month low of 4,438 ringgit/t or $1,130/t amid increased production, which led to an increase in inventories in Malaysia for the first time in 4 months.

A sharp drop in demand for palm oil from India and an increase in supply of soybean oil from South America continue to put pressure on prices.

Soybean oil prices in Brazil fell by $30-40/t to $1,190-1,220/t FOB in the week, although July soybean oil futures on the Chicago SWOT fell by only 0.9% to $1,636/t (+12% month-on-month), supported by high oil prices and domestic demand in the US. The US soybean complex is awaiting the results of Trump’s visit to China and agreements to increase soybean exports to China. Although, as we recall, China has already promised to buy 25 million tons of soybeans from the US, but has purchased only about 12-14 million tons.

Last week, sunflower oil demand prices in India fell by another $10/t to $1,390-1,400/t CIF Mumbai, which increased pressure on Russian sunflower oil prices, which fell by $5-10/t to $1,285-1,290/t FOB.

In Ukraine, demand prices for Ukrainian sunflower oil also decreased by $5-10/t during the week to $1,315-1,320/t with delivery to Black Sea ports.

Markets continue to be supported by high oil prices, with June Brent futures up 4.4% to $106/bbl in the week (+18% in the month) after the breakdown of US-Iran talks. Markets now expect a new military escalation in the Persian Gulf following Trump’s visit to China and a prolonged period of high oil prices (at least until the end of the year), which in turn will support high vegetable oil prices.