At the beginning of the new year, vegetable oils are becoming more expensive on the world market. One of the key factors driving this price movement is the rise in oil futures, while relatively low demand from key importers is a powerful factor restraining upward price trends.

• According to “Agro Perspektyva,” over 11 months of 2021, sunflower exports from Ukraine amounted to 75.52 thousand tons totaling $36.84 million, compared to 153.68 thousand tons totaling $54.66 million during the corresponding period in 2020. Recall that the profitability of sunflower seed production in 2020 was 39.4%, in 2019 it was 23.5%, in 2018 – 32.5%, in 2017 – 41.3%, and in 2016 – 63.0%;
• Rapeseed prices on the Parisian exchange Euronext are renewing successive record levels, and soybean quotes have reached a 4-month maximum amid concerns about a possible crop reduction in South America due to precipitation shortages in Argentina and southern Brazil;
• According to S&P Global Platts experts, Brazilian soybean producers will achieve record volumes of the oilseed crop in the 2021/22 MY (142.8 million tons), which is likely to put pressure on the markets of key competitors – the USA and Argentina. USDA analysts expect Brazil’s soybean production in the 2021/22 MY to amount to 144 million tons, compared to 138 million in the 2020/21 MY;
• According to the report of the Council of Palm Oil Producing Countries, palm oil prices will remain high next year. This will be a consequence of production remaining limited due to the sharp rise in the prices of mineral fertilizers and a long-standing labor shortage.

The rise in oil prices is supported by news of the reduction of its reserves in the United States and information about the relatively mild course of the disease caused by the Omicron strain.

Palm oil futures have been rising over the past week amid expectations of reduced production in December due to difficulties in harvesting that arose after floods in eight states of Malaysia.

Against this background, Ukrainian-produced sunflower oil also became more expensive, despite the decrease in demand from key importers. Thus, according to Ukroliyaprom data, Ukraine reduced sunflower oil exports by 15% to 1.35 million tons during September-November compared to the same period last year due to falling demand from China and India.

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

In the sunflower segment, prices moderately increased during the reporting week. Sunflower seeds rose in price by an average of 3.3% on both EXW basis and CPT-plant terms. The key driver of this movement is the increase in sunflower oil prices.

Yes, Ukrainian-produced sunflower oil on an FOB basis in Black Sea ports rose in price again and traded in the range of 1370-1385 $/ton by the end of the reporting period. As mentioned above, the current price trend is due to the movement of oil quotes and the rising prices of other key vegetable oils. At the same time, it is highly likely that the current situation will last no more than a few weeks, as key importers of such products have currently accumulated significant domestic stocks, and the supply of new harvest soybeans and their processed products from South American countries will significantly affect the market balance in the near future.

Soybean prices on the domestic market remained stable during the reporting week. On an EXW basis, soybeans traded in the range of 15500-15900 UAH/ton. Under CPT-port terms, the oilseed occupied the price range of 16300-16700 UAH/ton.

In the rapeseed segment, prices last week were also predominantly stable, maintaining high positions on both domestic and export bases. Thus, on FOB terms, they fluctuated in the range of 765-775 $/ton. It should be added that the value of the nearest rapeseed futures contracts on the Euronext exchange is currently updating its historical maximum almost every day.