Palm Oil Prices Decline Amid Increased Production
The global market for vegetable oils is seeing a significant shift, with a rise in the supply of palm and soybean oils restraining price growth. Despite this, sunflower oil prices continue to climb due to speculative trading.
July futures for palm oil on the Bursa Malaysia exchange fell by 1% over the week to 3936 ringgit/ton or $834/ton. This stability has persisted for nearly two months, influenced by rising production and declining exports. According to Oil World, Malaysia’s palm oil production increased by 13.5% in May compared to the previous month, reaching 1.75 million tons, which is also 12.3% higher than the same period in 2023 (1.52 million tons).
High production and falling prices in the first half of May allowed Malaysia to boost exports to 1.38 million tons, compared to 1.08 million tons in May 2023. Since the start of 2024, Malaysia has produced 7.26 million tons of palm oil (6.64 million tons in January-May 2023) and exported 6.31 million tons (5.92 million tons). Palm oil stocks in the country at the end of May were estimated at 1.75 million tons (1.69 million tons a year earlier).
Soybean Oil Prices Remain Stable
July futures for soybean oil in Chicago remained virtually unchanged over the week, trading at $963/ton but fell by 4.1% over the month amid the completion of harvesting in Brazil and Argentina and favorable planting conditions in the USA.
Sunflower Oil Prices Surge
According to Trading Economics, the average price of sunflower oil delivered to buyers increased by 2.5% over the week to $943/ton, up 10.8% over the month. This rise is due to reduced supply from Ukraine and increased demand from importers in India and the EU.
The latest tender in Egypt indicated that prices for soybean oil have remained steady, and the number of supply offers has increased, which has helped limit the rise in sunflower oil prices.
Global Vegetable Oil Production and Consumption Forecast
In its June report, FAS USDA slightly lowered the forecast for global vegetable oil production in the 2024/25 marketing year by 0.39 million tons to 227.89 million tons, still 1.9% higher than in 2023/24 MY (223.8 million tons in 2022/23 MY and 218.33 million tons in 2021/22 MY). This adjustment is primarily due to a reduced forecast for rapeseed oil production by 0.34 million tons to 33.68 million tons compared to 33.97 million tons in the previous season.
The forecast for global vegetable oil consumption in 2024/25 MY was slightly reduced by 0.06 million tons to 224.84 million tons (218.82 million tons in 2023/24 MY, 211.2 million tons in 2022/23 MY, and 202.8 million tons in 2021/22 MY). Consequently, the forecast for global ending stocks of oils in 2024/25 MY was reduced by 0.11 million tons to 29.8 million tons, which is 6.5% lower compared to the current season (31.74 million tons, 29.9 million tons, and 29.59 million tons). This decrease is mainly due to reduced stocks of palm and rapeseed oils.
The global vegetable oil market is experiencing a complex interplay of increased production and varying demand, leading to fluctuations in prices. While palm and soybean oils see stable or declining prices, sunflower oil prices are on the rise, driven by speculative trading and market dynamics.