Palm oil traded near recent highs amid uncertainty about the future of its exports. Soybean prices continued to rise against the backdrop of the weather situation in South American countries.

• The average value of the FAO Food Price Index in January 2022 was 135.7 points, which is 1.5 points (1.1 percent) higher than the level recorded in December 2021. The increase in the index in January was driven by rising sub-indices for vegetable oils and dairy products, which was partially offset by lower sugar prices. The values of the sub-indices for meat and cereals practically remained unchanged;
• Oil World experts forecast a sharp reduction in oil imports to Turkey in March-September 2022 ‒ to 270-300 thousand tons, which is significantly lower than the figure for the corresponding period a year earlier (416 thousand tons);
• Analysts International Grain Council forecasts record gross rapeseed harvests in the 2022/23 MY. Historically high prices and demand give grounds to expect the expansion of global sowing areas to a record 40 million hectares, and, accordingly, a record harvest. IGC expects the largest increase in rapeseed production in Canada and the EU. In Ukraine, the area under rapeseed will increase to 1.1 million hectares;
• According to analysts of the National Association of Grain Exporters of Brazil (Anec), 2.42 million tons of soybeans were exported from the country in January, which significantly exceeds the figure for the same month a year earlier (53.64 thousand tons). The main export destination is China;

We recall that the Indonesian government recently adopted a decision requiring 20% of the volume of palm oil previously intended for supply to external markets to be channeled for sale on the domestic market. As a result, palm oil, which was traditionally the cheapest among the main vegetable oils, is currently trading at a premium to soybean and sunflower oil.

Against the backdrop of significant changes taking place in the palm oil market, India, the world’s largest importer and consumer of vegetable oils, is increasing the shares of sunflower and soybean oil in its imports, while the share of palm oil is decreasing. According to S&P Global Platts estimates, India increased vegetable oil imports by 6% in January compared to December, reaching 1.3 million tonnes. And while palm oil accounted for 63% of Indian imports overall in the 2020/21 MY, this figure dropped to 42% in January 2022.

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

Despite sunflower oil continuing to rise in price on export bases, sunflower seed prices did not show a corresponding movement by the end of the reporting week. On an EXW basis, sunflower seeds traded within the range of 20300-20700 грн/т, while on CPT-plant terms, they traded at 20500-20900 грн/т.

Yes, the price increase for oil raw materials is hampered by reduced demand from processors, who anticipate price decreases after a prolonged period of growth, especially considering that agricultural producers will soon need to replenish liquid funds ahead of the start of spring field work.

As mentioned earlier, Ukrainian-produced sunflower oil on FOB basis in Black Sea ports once again showed growth in price indicators at the end of the reporting period, reaching 1420-1435 $/t (+1.1%).

Soybean prices in the domestic market also continued to rise during the reporting week against the backdrop of the weather situation in Brazil and Argentina. On an EXW basis, soybeans traded in the range of 17200-17600 UAH/t (+3.6%). On CPT-port terms, the oilseed occupied the price range of 17500-18000 UAH/t (+2.0%). The price increase encourages agricultural producers to step up sales.

In the rapeseed segment, prices last week were mostly stable, maintaining high positions on both domestic and export bases. Thus, on FOB terms, they fluctuated in the range of 765-775 $/t.