Late December

Dear community, 

Please enjoy a fresh overview of the veg oil industry

Ukraine

Ukraine’s oilseed crop is to reach 21.7 million tons, standing at 94% of last season’s volume (UKROLIA Prom). Of that, over 13 million tons are estimated to account for sunflower seeds (USDA). While Soybean harvests hit a record 6.1 million tons, rapeseed and SFS production saw declines, and farmer SFS sales remain low, with relatively slow price reductions.

Port buying levels for SFS are at $1,030–$1,050 per ton, while local prices fell to UAH 51,500 (~$1,228). Meanwhile, RBDW SFO is priced at $1,190 FCA, with bottled oil costing $1.20 per liter. 

Ukraine faces slow crushing activity due to price drops, potentially leading to shortages before Ramadan demand spikes. Export challenges from Ukraine include reduced cash-based trade, further monopolizing the market for large players.

Russia, China, and India

Russia’s sunflower harvest is nearly complete (96.8% as of December 19). 

Exporters are offloading physical oil stocks, with export duties rising from $30 in November to $90 in December, and potentially up to $180–250 in January. Spot sales in India are under pressure – at $1,150 or below. Lower prices may push Russia to export sunflower oil to China, where bids range from $1,120–$1,140 for CSFO.

Rapeseed oil exports from Russia to China remain minimal, with Chinese buying levels at $950–$960. Meanwhile, logistics challenges due to winter conditions are causing delays and many vessels are rolled over.

Soybean

The soybean market is experiencing significant turbulence. 

Soybean futures fell flat last week, marking a 2.6% weekly loss and reaching their lowest levels since 2020. This decline is fueled by expectations of a vast Brazilian harvest in the coming months. Chicago soybeans dropped 2.6%, putting immense pressure on the soy complex. Additionally, Chinese soybean meal prices hit their lowest since 2016, with meal prices being a key determinant of the soybean complex.

Market uncertainty has driven fund liquidations, particularly in biofuel and aviation sustainable fuel sectors. 

India’s tentative CNF soybean oil offers stand at:

• $1,072 for January (+$500 BOF)

• $1,028 for February (+$260 BOH)

• $1,026 for March (+$250 BOH)

  
  

GCC offers CDSBO for spot shipment at $1,120, while Black Sea FCA levels for container loading in February hover around $1,000.

Pam

Palm oil prices are narrowing against vegetable oil as the difference shrank from $150 PMT to just $30 PMT. Palm oil remains the price leader, with KLC March contracts breaking strong support levels at MYR4,500, now targeting MYR4,180. Market confusion persists due to a lack of clarity over Indonesia’s biofuel policy.

Palm oil’s affordability boosts stockpiling while dampening soft oil demand. Without crude oil and petroleum byproduct price increases, vegetable oils will remain under pressure. 

The USA’s upcoming biofuel program is critical and may exacerbate price pressures. Currency devaluations in Russia and China (under U.S. pressure) support exports and soften prices, while Ukraine’s export structure changes could further consolidate market power among big players.

Market Outlok

The global vegetable oil market faces considerable challenges and uncertainties in the short to medium term. Price pressures continue from weak demand, volatile currency fluctuations, and policy uncertainties surrounding biofuel programs in the USA and Indonesia. Additionally, geopolitical and logistical hurdles, such as Ukraine’s evolving export structure and Russian export duties, are reshaping supply chains and trade flows.

Despite recent price drops, stockpiling in some regions and an expected recovery in demand ahead of Ramadan could provide temporary relief. However, oversupply risks, driven by record harvests in Brazil and Ukraine, alongside weak crushing margins, suggest that market conditions will remain turbulent. 

In the long term, recovery will hinge on clearer biofuel policies and a rebound in crude oil prices to stabilize demand for vegetable oil alternatives.

That’s all for today.