Sunflower oil prices in Ukrainian ports fell by $60 FOB last week
Vegetable oil prices have dropped sharply over the past week, with sunflower oil falling $60 per ton at Ukrainian ports, driven by weak demand and falling palm and soybean oil prices. Oversupply, high spreads with other oils, and strong South American harvest forecasts continue to pressure the market.
Over the past week, vegetable oil prices have dropped significantly. Sunflower oil has fallen the most: from the beginning to the end of the week, its price on the FOB Ukrainian ports basis fell by $60. This was reported by Serhiy Repetsky, a partner at Sunstone Brokers, in a comment to Latidundist.com.
The fall began with the palm oil market, which fell by $20–30 every day due to increased inventories and reduced exports from Malaysia and Indonesia. This dragged down soybean oil on the Chicago Stock Exchange, and then sunflower oil, since demand for it is currently very weak, says Repetsky.
The main problem is the too large spread between sunflower and other types of oil. At the beginning of the week, the difference was about $180 with soybean and $200 with palm oil on the CIF India basis, and in the markets of Spain and the Netherlands — more than $120. Because of this, India has not been buying sunflower oil at all for the second week. European countries and India are almost fully supplied for November-December, so active demand is not expected in the near future.
The analyst noted that additional pressure on prices is being created by forecasts from South America: the weather in Brazil and Argentina is favorable, there are no risks to the harvest. Argentina is forecasting a record 6.1 million tons of sunflower harvest, but even its active offers of oil at $1,170 FOB do not find sufficient demand.
“Accordingly, from the beginning to the end of the week, sunflower oil on a FOB basis at Ukrainian ports lost $60. It is obvious that with the prices for sunflower seeds that were, this gives the processor a negative processing margin. Therefore, either sunseed should adjust in price, or we will observe further lull in the demand market and active switching of plants to processing rapeseed and soybeans. “Price recovery is unlikely,” says Repetsky.
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Source : Ukr Agro Consult
