Vegetable oil quotes are stable, but pressure on sunflower oil prices is increasing

The New Year celebrations in China and Asia are somewhat reducing activity on the global vegetable oil market – demand is declining, trading is not taking place, but quotes remained stable during the week, and only sunflower oil prices in the EU received additional pressure from increased supply.

April Brent crude futures fell 1.9% to $67.50 a barrel on the week as ongoing talks between the US and Iran continued to weigh on palm oil prices, which are still 6.5% higher than last month. Iranian officials said they had reached a “general agreement” with the US on the nuclear deal.

May palm oil futures on the Bursa Malaysia exchange fell 2% to 4,014 ringgit/t or $1,030/t in a week amid a decline in exports in the first 15 days of February by 11-15% and forecasts of increased production in February.

March soybean oil futures on the US SWOT during the week traded at the highest level since July 2023 at $1,260/t (+9% month-on-month) supported by forecasts of increased soybean oil exports to India after the reduction of mutual tariffs. Despite the announced tariff reduction, experts doubt the ability of US soybean oil to compete on price with products from South America due to high logistics costs and increased demand in the US from the biofuel industry. Currently, palm oil remains the cheapest product for Indian buyers, while soybean oil from the US is significantly more expensive on a delivery basis.

It is worth noting that the acceleration of the harvest of the record soybean crop in Brazil has already led to a drop in soybean oil prices in Brazil this week by $20/t to $1,160-1,165/t FOB.

At the same time, soybean oil prices on the Daylian exchange in China fell another $5/t to $1,175/t during the week.

The General Administration of Customs of the People’s Republic of China (GACC) reduced the import value-added tax (VAT) on 16 types of agricultural products (including refined and unrefined sunflower oil, refined rapeseed oil) from 13% to 9% from February 2, which may increase import demand.

Prices for sunflower oil delivered to India decreased by $10/t to $1,410/t CIF Mumbai during the week, but Russian sunflower oil bid prices increased by another $10-20/t to $1,290-1,310/t FOB due to delivery delays.

In Ukraine, demand prices for sunflower oil also increased by $10-20/t last week to $1,280-1,290/t with delivery to ports.

This week, the EU sunflower oil market is experiencing a sharp decline in demand due to Bulgarian processors purchasing 400,000 tons of cheap sunseeed from Argentina , which will arrive at factories in March.

Markets will remain stable for another week due to low demand from Asian countries, and then the Ramadan holiday will come, which will reduce demand in the Middle East. Against the background of a seasonal increase in supply from South America, all this will lead to an even greater drop in vegetable oil prices in March.

Tags: Ukraine, sunflower oil, prices, edible oils