Oil prices fell 6%, increasing pressure on agricultural markets

Source:  GrainTrade

The decision of the US Federal Reserve and the EU Central Bank to tighten monetary policy to curb inflation after significant inflows into the economy during the pandemic could slow economic growth and reduce energy demand, to which oil prices responded on Friday by falling 5-6 %. This has increased pressure on the prices of agricultural products, especially those used in biofuel production.

August futures for Brent crude fell 6% to $ 113.12 / barrel and WTI crude for 6.8% to $ 109.56 / barrel. Brent crude fell for the first time in 5 weeks and WTI crude for the first time in 8 weeks.

Oil prices remain under pressure from fears of a very slow recovery in China’s economy after the lockdown, as most of Shanghai was closed again on Saturday for mass testing of сovid, although a two-month quarantine was lifted on June 1.

Russia says it will boost oil exports despite sanctions and discounts, and is affecting the market by blocking exports and escalating tensions in Libya.

After the statement of the President of Kazakhstan on the support of Ukraine and non-recognition of the quasi-groups “DNR” and “LNR”, the export of Kazakh oil through Russian ports was blocked.

Fighting has intensified in eastern Libya, where Russia’s Wagner military-industrial complex is fighting, and oil production could fall by 1.1 million barrels per day to 100,000 barrels per day.

During June 4-10, the amount of crude oil stored on tankers around the world increased by 12% to 103.11 million barrels.

In the United States, gas station prices have risen to record levels: gasoline – up to $ 5,016 / gallon, diesel – up to $ 5,798 / gallon, which will soon reduce demand, analysts say.

Falling oil prices have increased pressure on prices for corn, soybeans, rapeseed and vegetable oils used in biofuel production.

On the Chicago Stock Exchange, November soybean futures for the week fell 1.9% to $ 625 / t, July soybean futures – by 9% to $ 1625 / t, November canola futures – by 7 , 2% to 974.5 CAD / t or $ 749.6 / t.

On the stock exchange in Malaysia, August futures for palm oil for the week fell by 8.5% to 5454 ringgit / t or $ 1240 / t.

At the Paris MATIF, August rapeseed futures for the week fell by 2.4% to 766.75 € / t or 805 $ / t.

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