The end of the New Year holidays in China activated the market of vegetable oils

The end of the New Year holidays in China has traditionally activated vegetable oil markets, which led to an increase in stock market quotations for palm and soybean oil.

Palm oil futures in Malaysia rose to a three-week high in the past three sessions amid flooding in the country’s southern states that could reduce output and forecasts of increased palm oil consumption in Indonesia, which plans to cut domestic oil sales.

On Friday and Monday, March palm oil futures on Bursa Malaysia rose 4% to 3,936 ringgits/t, or $927/t, fully reversing the previous week’s decline.

March futures for soybean oil on the exchange in Chicago rose by 1.1% to $1,350/t yesterday (-2.5% for the month) amid forecasts of dry weather in Argentina.

On the Dalyan exchange, soybean oil contracts rose in price by 1.5%, and palm oil contracts by 1.8%.

Oil quotes are falling on expectations of interest rate hikes by major US and EU central banks, and have not been supported even by increased tensions in the Middle East following the attack on military facilities in Iran and a possible boost in demand from China.

March Brent crude oil futures fell by 2.9% to $84.9/barrel (+3.5% for the month) in two sessions.

Export demand for Ukrainian sunflower oil remains low, in particular from China, as the arrival of ships to the Black Sea ports is slowed down, and MEZs operate unstably due to power outages, which disrupts delivery schedules.

Purchase prices for sunflower oil for delivery to Black Sea ports fell to $1,000/t, as refiners actively export only their own oil and do not buy additional volumes due to the 2-4 week delay in ship arrivals.

So far, Ukraine has not observed the traditional February increase in demand for sunflowers from processors, as they do not have time to export their products, while farmers are actively selling sunflowers to obtain working capital on the eve of spring field work. An increase in sunflower acreage in the western and central regions to a record level could lower forward sunflower and oil prices and increase price pressure as early as spring 2023.

Tags: China, sunflower oil, soybean oil, prices, Malaysia, palm oil, USA, Argentina