Palm and soybean oil prices rise in response to recovery in crude oil prices

Crude oil prices began to rise again due to a new aggravation in the Middle East, which immediately affected the quotations of palm and soybean oils, which last week were trading at minimum levels. Hamas rejected the US proposal for a truce in Gaza, which was also supported by Israel, and Hezbollah again attacked Israel with more than 320 rockets, which was responded to by Israeli air strikes with more than 100 aircraft.

Over the past two sessions, October futures for Brent crude oil have risen by 4% to $79 per barrel (down 1.6% for the month). Expectations of an open attack on Israel have increased again, boosting speculative demand for oil.

December soybean oil futures in Chicago rose by 4.4% to $890 per tonne over the week, partially offsetting a 6.8% drop the previous week and a total decrease of 3.5% for the month.

October palm oil futures on the Bursa Malaysia exchange rose by 5.1% over the week, the largest weekly gain since mid-June 2023, reaching 3,869 ringgit per tonne or $885 per tonne.

The price increase did not deter the further decline in palm oil exports from Malaysia in the first 20 days of August by 16.7-18.4% (according to surveyors Societe Generale de Surveillance (SGS), Intertek Testing Services and AmSpec Agri Malaysia).

According to traders, Indonesia’s plans to increase the share of biodiesel in the blend to 40% in January from the current 35%, as well as growing demand from major buyers, China and India, support the price.

Indonesia’s Ministry of Energy tested biodiesel blended with 40% palm oil on trains in July and plans to conduct several more tests in power plants, agricultural machinery and the shipping industry, which are expected to be completed in December.

Higher consumption of palm oil for biodiesel in Indonesia, which is expected to reach about 15 million tons per year, will lead to lower exports and increase demand for oil from Malaysia.

Tags: sunflower oil, soybean oil, prices, palm oil