Vegetable oil prices rise following crude oil prices

The lack of progress in negotiations between the US and Iran, as well as Trump’s constant threats to resume attacks, have kept crude oil prices high for a week, which is supporting vegetable oil prices.

July Brent crude futures rose 2.7% to $111/barrel during the week (+23% month-on-month) as the blockade of oil exports from the Strait of Hormuz continues and the risks of renewed war in the Persian Gulf increase.

Iran continues to fill its tankers near the main crude oil terminal on Kharq Island (where almost 30 tankers have accumulated) due to a lack of free capacity, and the US military has blocked the exit from the Gulf for 89 Iranian tankers, which practically blocks Iran’s financial capabilities and may lead to a halt in oil production in the near future.

The economic situation in Iran continues to deteriorate, but the IRGC military declares readiness to continue the war and refuses to negotiate. Analysts expected the US to resume attacks on Iran over the weekend or on Tuesday, but yesterday Trump announced a postponement of the strikes for several days at the request of Qatar and Saudi Arabia to continue negotiations with Iran.

June palm oil futures on the Bursa Malaysia exchange rose 2.3% to 4,585 ringgit/t or $1,152/t during the week on the back of rising oil prices and forecasts of high energy prices until the end of the year, as well as increased demand for biofuels.

July soybean oil futures on the Chicago SWOT traded at $1,663/t during the week (+8.6% month-on-month), supported by high oil prices and Trump’s statements about increasing sales of agricultural products from the US to China.

It should be noted that soybean oil prices in Daylian (China) remain stable at $1,235/t for May delivery, while spot soybean oil prices in Brazil have reached $1,270-1,300/t FOB and in Argentina – $1,320-1,350/t FOB, responding to the increase in Chicago quotes. At the same time, sunflower oil in Argentina has increased in price to $1,300-1,320/t FOB and is trading at a discount to soybean oil.

Last week, sunflower oil demand prices in India remained at $1,390-1,400/t CIF Mumbai, but soybean oil supply prices rose to $1,340-1,360/t CIF Mumbai.

During the week, prices for Russian sunflower oil increased by $10/t to $1,300/t FOB, while demand prices for Ukrainian sunflower oil remained at $1,315-1,320/t for delivery to Black Sea ports.

Vegetable oil markets are seeing rising supply prices, limited by falling demand from importers. As a result, sellers are forced to contain price increases and compete for buyers who choose the cheapest oil, which is currently palm oil and, oddly enough, sunflower oil, which is in some cases cheaper than soybean oil.