Acceleration of harvesting and falling oil prices are putting pressure on vegetable oil quotes

The drop in oil prices this week by 5-5.9% immediately led to a drop in stock market quotations for palm and soybean oil.

December soybean oil futures on the Chicago Stock Exchange fell 3.8% to $1,218/t from Monday (-13% for the month, -5.4% for the year) against the background of a good pace of soybean harvesting, an increase in new crop offers and improved crop forecasts due to favorable weather in September. According to forecasts, in 2023 the soybean harvest in the USA will amount to 112.8 million tons compared to 116.4 million tons last year, and exports will reach 48.7 million tons (54.2 million tons in 2022/23 MR). This will increase supply in the domestic market, where at the end of the previous season there was a supply shortage due to strong exports, which caused soybean oil prices to rise to $1,500/t in August, although palm oil prices remained stable at that time, and rapeseed and sunflower – went down.

December palm oil futures on Malaysia’s Bursa exchange fell 2.8% to 3,608 ringgit/t or $764/t yesterday amid weaker demand from major buyers India and China. In China, there is a weekend from September 29 to October 6 on the occasion of the Mid-Autumn Festival and the National Day.

In September, palm oil futures fell by 6.06%, although before that they increased for two months in a row.

India, the world’s top buyer of vegetable oils, cut its imports by 19% in September from August as refiners cut purchases by 26% as inventories rose to record levels.

Malaysia’s palm oil stocks hit an 11-month high and are 12% higher than last year, while production is 6.1% higher than last year.

The Palm Oil Association of Indonesia predicts that palm oil production will grow by 5% year-on-year, with end-of-year reserves at 3.2 million tons.

Demand prices for Ukrainian sunflower oil, under the pressure of increased offers, fell to $820/t with delivery to buyers, but offer prices are $650-700/t FCA plant, despite the decrease in purchase prices for sunflower to UAH 11,000-11,500/t with delivery for plant, which is 15-20% inferior to last year’s level.

The prices of meal and cake are falling against the background of the blocking of exports to Poland and the increase in the cost of logistics, which reduces the profitability of sunflower processing.

Traders hope for an increase in the volume of deliveries through the Black Sea ports, but the intensification of exports from the Russian Federation increases the pressure on world prices.