Palm oil is falling in price, despite record imports to India in August

Amid rising Malaysian palm oil inventories and lower soybean oil prices, November palm oil futures on Bursa fell 3.6% to RM3,901/t or $837/t since Monday (-0.7% for the week ).

They were not supported even by the increase in palm oil imports to India, which in August reached a 9-month high of 1.12 million tons compared to 1.09 million tons in July. On the eve of the festival season, importers stepped up purchases, so India increased vegetable oil imports by 5% compared to July to a record 1.85 million tons, including sunflower oil by 11.5% to a 7-month high of 365,000 tons, and soybean oil by 11.5% 3.7% to 355 thousand tons.

Amid the widening price spread between palm and sunflower and soybean oils, refiners will continue to increase purchases of palm oil in anticipation of strong demand during the festival period.

According to the Solvent Extractors’ Association of India (SEA), in MY2021/22 India’s average monthly vegetable oil imports were 1.17 million tonnes. Increased demand from the world’s main importer of vegetable oils could lead to a reduction in palm oil stocks in Indonesia and Malaysia, which will contribute to the growth of prices for it.

Palm oil stocks in Malaysia will hit a 6-month high of 1.89 million tonnes at the end of August as production rose more than exports.

A speculative rise in oil prices will support vegetable oil prices, but reduced oil demand from India and China will limit the rise in quotations.

December soybean oil futures on the Chicago Stock Exchange fell 0.7% to $1,383/t yesterday (-1% for the week, +4.6% for the month), despite the worsening state of soybean crops in the US.

Prices for sunflower oil with delivery to buyers during the week remain at the level of $910/t, but the approach of sunflower harvesting and the improvement of harvest forecasts in Ukraine and the Russian Federation will soon lead to a seasonal drop in prices, especially for Ukrainian oil, the export of which through deep-sea ports is still blocked.

Tags: sunflower oil, prices, palm oil