The spread of the new coronavirus strain is causing another wave of quarantine restrictions in the US and European countries. The consequence of such measures, as usual, is a decrease in business activity, which is also reflected in the decrease in prices for raw materials, particularly oil. Following the decline in oil quotes, futures for palm oil in Malaysia and soybean oil on CBOT show negative dynamics.

• Egypt’s state agency for food procurement GASC last week, following a tender, purchased 39 thousand tons of sunflower oil at a price of 1390$/t CIF, as well as 30 thousand tons of soybean oil from external suppliers (at a price of 1354$/t CIF) and 37 thousand tons of soybean oil from internal suppliers (at a price of 1342$/t CIF);
• According to Oil World experts, Indonesia increased palm oil exports to 2.58 million tons in October 2021 compared to 2.3 million in October 2020. The main volumes were exported to China, the EU, Pakistan, and India;
• According to updated estimates from OilWorld analysts, global soybean exports began to recover, but the cumulative volume of deliveries in September-November 2021 was still 3.6 million tons lower than in the corresponding period last year (39 million tons versus 42.4 million);
• The Brazilian Association of Vegetable Oil Producers Abiove raised its forecast for soybean production in the country in the 2021/22 MY by 0.7 million tons compared to the figure announced earlier – to a record 144.8 million tons, which will exceed the previous year’s oilseed harvest by 6.5 million.

The reduction in vegetable oil prices is facilitated by data from a recent USDA report, according to which the forecast for global vegetable oil production has been increased by 0.18 million to 214.97 million tons, which is 8.52 million higher than the 2020/21 MY figure. At the same time, agency analysts note that growing demand for renewable energy sources and increased consumption of oils in biofuel production will support prices.

The forecast for global vegetable oil imports was lowered by 0.29 million to 86.52 million tons (81.38 million tons in 2020/21 MY), including for India – by 0.35 million to 14.894 million tons (13.8 million in 2020/21 MY), which, amid an increase in its own rapeseed oil production, will reduce soybean oil imports by 0.325 million to 3.4 million tons.

According to our price monitoring data, during the reporting period, multidirectional price adjustments were recorded in the domestic markets for key oilseeds and their processed products.

In the sunflower segment, prices dropped significantly during the reporting week. Sunflower seeds became cheaper by an average of 5.2% during the reporting week, both on EXW basis and under CPT-plant conditions. The main reason for the downward trend is the reduction in sunflower oil prices. Even processors who are experiencing raw material shortages are currently in no hurry to buy sunflower, given the trend of falling oil prices.

Thus, in the near future, the negative price trend in the sunflower segment is expected to continue. Ukrainian sunflower oil traded on FOB basis in the Black Sea ports ranged between 1320-1340 $/t (-2.9%) at the end of the week. Export prices for Ukrainian sunflower oil fell to the lowest level since the beginning of the current season, due to reduced external demand and negative price trends in related markets.

Soybean prices on the domestic market continued to grow slowly last week, reversing a long period of stability or decline. On an EXW basis, soybeans rose by an average of 1.3%, and on CPT-port terms, by 1.2%. At the same time, given the reduction in external demand, the direction of price movement may change again in the near future.

In the rapeseed segment, prices were mostly stable last week, maintaining high positions on both domestic and export bases. Thus, on FOB terms, they fluctuated in the range of 765-775 $/t. It is worth adding that the cost of the nearest rapeseed futures contracts on the Euronext exchange is currently renewing its historical maximum daily.