The global balance of vegetable oils has practically not changed despite the decrease in the forecast for soybean production

The world balance on vegetable oils in February for 2022/23 MY, as in January, almost did not change, although analysts expected a more significant decrease in the forecast of world production due to a drop in soybean production in Argentina.

Compared with the January report, the global balance of vegetable oils for MY 2022/23 underwent the following changes:

The forecast of world production of oils was reduced by 0.04 million tons to 217.58 million tons, which will exceed the 2021/22 MY 2021/22 figure of 208.48 million tons by 4.3%, including the forecast for soybean oil production, which was reduced by only 0.58 to 60.91 million tons (59 million tons in 2021/22MY), which will be compensated by a small increase in the production of rapeseed, sunflower and palm oils. It is worth noting that despite the decrease in sunflower production, it did not lead to a decrease in oil production due to a further decrease in final global residues. The forecast for palm oil production was raised by 0.2 million tons to a record 77.4 million tons, which is 4.9% higher than last season and remains the main driver of price pressure.

The global import forecast has been increased by 0.9 million tons to 83.85 million tons (taking into account the increase in sunflower oil supplies by 0.8 to 9.73 million tons), which will exceed the 2021/22 MY indicator by 8.45 million tons. due to a sharp increase in the supply of palm oil plus 6.97 million tons and rapeseed oil plus 1.44 million tons.

The forecast of world ending stocks was increased by 0.34 million tons to 29.94 million tons (29.38 million tons in FY 2021/22) due to an increase in palm oil stocks by 0.58 million tons to 17.08 million tons (16.8 million tons )

March palm oil futures on the Malaysian exchange traded higher last week ahead of the report, but by the end of the week were down overall, adding 2% for the week and 4% for the fortnight, to trade at 3,931 ringgit/t, or $906/t.

March soybean oil futures on the Chicago Stock Exchange fell 2.5% after the release of the report, but recovered the decline the next day and returned to the level of $1,332/t (+2% for the week, 0 for two weeks).

According to the Trading Economics platform, under the pressure of low demand, the demand prices for sunflower oil with delivery to buyers continued to decline and fell to $1,130/t CIF, while in January they were at the level of $1,200-1,250/t CIF, and in early December they reached $1350/t CIF.

Oil prices may be supported by forecasts of demand growth from China and India.

China’s Ministry of Agriculture slightly raised its 2022/23 edible oil consumption forecast, citing stronger rural-to-urban migration than previously expected. Edible oil consumption is expected to increase by 0.5% to 36.52 million tons compared to 36.34 million tons in the January forecast.

According to data from market operators, in January of this year, India imported 459,000 tons of sunflower oil, which was more than double the figure compared to the previous month. The main supplier of sunflower oil to the country last month was Ukraine, which supplied 155,700 tons. India also imported 82,000 tons from Russia and 57,700 tons from Bulgaria. Small quantities of sunflower oil were delivered from Argentina, Poland, Romania and Turkey.

Increasing supplies of cheaper sunflower oil to India will help restore demand and prices for sunflower oil, which has lost its quality premiums compared to palm and soybean oil over the past six months.

Tags: Ukraine, China, sunflower oil, soybean oil, India, USA, rapeseed oil, supply and demand balance, Argentina