Vegetable oils continue to rise in price amid speculative oil price increases
Oil prices rose on Iran escalation risks, lifting vegetable oils already supported by tight sunflower oil supplies. Brent hit four-month highs, while palm, soy and sunflower oils gained. Black Sea prices eased on higher offers. Frosts and seasonal factors will shape near-term supply and price direction.
Speculative growth in oil prices has intensified in anticipation of an escalation with Iran, which accounts for 2% of global oil production, or 2 million barrels per day. This is supporting vegetable oil prices, which were already rising amid restrictions on sunflower oil supplies from Ukraine.
March Brent crude futures rose another 3.8% this week to $67.50 per barrel (up 9.8% month-on-month), reaching their highest level since late September, in anticipation of a US operation against Iran, as an aircraft carrier group has already arrived in the region. However, analysts believe the US will simply block Iranian oil exports and apply economic pressure, forcing negotiations, rather than launch a military operation.
February palm oil futures on Bursa Malaysia rose 4.7% this week to their highest level since October at 4,260 ringgit/t (US$1,078/t), but a slowdown in exports over the past week limited price gains. Malaysia’s palm oil exports for the first 25 days of January increased by 8-10% compared to the same period in December, compared to 15-17% for the first 25 days of January.
March soybean oil futures on the CBOT rose 3.6% over the week to $1,200 per ton (up 10% over the month), supported by rising oil and sunflower oil prices. It’s worth noting that soybean oil prices in Brazil rose by $50-60 per ton over the week to $1,190-1,200 per ton FOB due to a lack of supply at the end of the season. However, 5% of the new crop has already been harvested, so supply will soon increase. In China, prices on the Daylian exchange rose by $20 per ton over the week to $1,190 per ton.
The jump in prices for Black Sea sunflower oil to $1,300/t FOB increased offers from Ukraine and Russia, which led to a decrease in the asking prices for Russian sunflower oil over the week by $30-40/t to $1,250-1,270/t FOB, while in Ukraine, the bid prices fell by $10/t to $1,260-1,280/t.
Frosts and snowfalls are limiting sunflower supplies to factories, so processors are gradually resuming operations at oil extraction plants, and we expect supplies and sales to increase amid rising global prices.
Frosts in the US have doubled gas prices, which is also supporting oil prices. Therefore, next week we expect frosts in the US to subside, the situation in Iran to develop, and a seasonal increase in the supply of all vegetable oils.
To Read more about Edible Oil News continue reading Agriinsite.com
Source : Ukr Agro Consult
