Sunflower oil prices in Ukraine remain under pressure from falling demand for soybean and palm oil and low prices for oil from Russia

Amid increasing supply, demand for vegetable oils continues to decline, especially as the Chinese New Year celebrations approach.

Heavy rains are delaying the soybean harvest in Brazil, which, amid drought in Argentina, is supporting soybean oil prices. However, better weather in early February may increase pressure on prices.

Increase in export duties on sunflower oil in Russia from February 1 by 10% to 180 $/t (due to the increase in the indicative price by 4% per month to 1068,5 $/t) led to a sharp increase in the supply of Russian oil on the world market at reduced prices, which significantly reduced the demand for Ukrainian products.

As of January 24, the difference between the prices of Ukrainian and Russian sunflower oil on CIF Mersin basis reached $40/t, the highest level since November last year.

Ukrainian crushers do not have significant stocks of sunflower and are working almost “off the wheels”, so the cost of oil is very high. At the same time, half of the plants are facing a shortage of raw materials, as farmers are holding back sales in anticipation of further price increases.

According to Trading Economics, the average price of sunflower oil for delivery to buyers decreased by 1.6% to 1271 USD/t for the week (-2.8% for two weeks).

Demand price of sunflower oil for delivery to the ports of Ukraine this week remain at the level of 1100-1110 $/t, while the supply price rose to 1130-1150 $/t due to a sharp increase in prices for sunflower.

April futures for palm oil on the Bursa exchange in Malaysia for two weeks fell by 5.2% to 4218 ringgit/t or 965 $/t due to the reduction in exports in January. According to surveyors, Malaysia in the period 1-25 January reduced exports of palm oil products in comparison with the corresponding period of December by 18.9-24.1%.

Rising prices for soybean oil supports neighboring vegetable oil markets, but the reduction of duties in Argentina, a record soybean crop in Brazil and possible new trade wars involving the United States in February could dramatically change the situation.

March futures for soybean oil on the Chicago stock exchange for two weeks decreased by 2.6% to 991 $/t (+10% for the month), but the market expects the introduction of new duties between China and the United States.

According to the national information center of China for grain and oils CNGOIC, the stocks of the three main types of vegetable oils in the country decreased compared to last year by 6.5% to 1.85 million tons, in particular palm oil – from 790 to 470 thousand tons, while soybean increased from 830 to 900 thousand tons, and rapeseed – from 350 to 480 thousand tons.

Tags: sunflower oil, prices