Sunflower oil prices rose to a 6-month high

Oil prices tumbled 9.7-11% last week amid a slowdown in the global economy due to high interest rates and a tightening of monetary policy by the Fed, as well as expectations of reduced oil demand due to the spread of Covid-19 in China. Following them, prices for vegetable oils fell, in particular, palm oil fell in price by 11.3% for the week.

January Brent oil futures during the week fell by 9.7% to $87.6/barrel (-4.2% for the month), and December WTI oil futures fell by 11.2% to $80 /barrel (-7.5%).

The main reason for the drop in prices is the expectation of a decrease in demand for energy in China, where the number of new covid diseases increased from 24 thousand at the beginning of the week to 45.4 thousand cases at the end of the week, which is a maximum of 6.5 months, although at the beginning of the month it was recorded at 1-3 thousand new diseases.

Two weeks ago, China reduced the quarantine period for foreign travelers from 10 to 5 days, which must be spent in a hotel or government facility, after which another 3 days must be spent at home. According to Nomura analysts, as of November 3, more than 10% of China’s GDP was affected by the covid-19 restrictions.

The market expects that this week the G-7 will announce a maximum price for Russian oil, which will increase the pressure on global quotations and reduce the profits of the Russian Federation, which it is directing to the war with Ukraine.

December palm oil futures on the Malaysian exchange last week fell 11.3% to 3,850 ringgit/t or $846/t (-13.4% on the month), showing the biggest weekly drop in 4 months amid a strengthening rate ringgit and a possible drop in demand for palm oil from the biofuel industry.

December soybean oil futures in Chicago for the week fell by 5.9% to $1,600/t (+1.7% for the month), although the day before they reached a 5-month high of $1,696/t.

Sunflower oil prices rose to a 6-month high last week, following the soybean oil market, as well as against the backdrop of delayed harvesting and a possible decrease in the sunflower crop in the Russian Federation and forecasts of reduced processing in Ukraine, where oil refineries are shutting down due to a lack of power due to infrastructure damage. Demand prices for Ukrainian sunflower oil for delivery to Bulgarian ports remain at $1,240-1,250/t DAP, while Russian oil offer prices have risen to $1,250-1,300/t FOB.

Tags: Ukraine, China, sunflower oil, prices, palm oil