Vegetable oil prices fall on hopes of a US-Iran peace deal
Soybean and palm oil futures fell sharply on Friday after reports emerged of a possible peace deal between the United States and Iran. Markets reacted positively to the prospect of the opening of the Strait of Hormuz and a de-escalation of the conflict, which caused crude oil prices to fall.
Soybean oil futures in Chicago fell 2.6%, reaching their lowest level since April 20. Palm oil on the Kuala Lumpur exchange lost more than 2% of its value and fell to its lowest level since May 26. The rapeseed market also came under pressure: futures in Paris fell 1.7%.
Analysts attribute this dynamics to the close connection between the energy and biofuel sectors. Lower oil prices are making biofuel production less attractive, which in turn is reducing demand for vegetable oils used as feedstock for biodiesel and other renewable fuels.
Adding to the pressure on the rapeseed market is the fact that this crop is an important feedstock for the production of sustainable aviation fuel (SAF), biodiesel and renewable diesel. Expectations of a stabilisation in the crude oil market are causing investors to reconsider the demand outlook for these fuels.
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