Early January

Hello everyone,

Please enjoy a fresh overview of the food oil market.

🌴 Palm Oil

Palm oil futures remain under pressure as production has exceeded expectations (particularly in Malaysia), driving inventories up. According to Dorab Mistry, prices are unlikely to recover until output clearly declines and stocks begin to normalize.

Production surprised the market by roughly 1 M tons on the upside, while biofuel demand, especially from the U.S., has underperformed. Malaysian inventories are now expected to exceed 3 M tons, well above earlier forecasts.

Although recent price corrections have improved palm oil’s competitiveness versus soybean and sunflower oil, demand remains weak. Fund investors have largely exited, removing speculative support.

Bottom line: palm oil faces near-term headwinds from oversupply and high stocks. A bullish narrative may only re-emerge later in 2026 as production tightens.

🌱 Soy Complex

The current structure of the soy complex points to a corrective rather than trend-driven market. Price rebounds across soybeans, soyoil, and meal appear technical and lack follow-through, with upside quickly sold.

A key signal comes from the physical market: FOB prices and basis levels across major origins remain under pressure, indicating comfortable supply and little urgency among buyers. Without tightening in the physical market, futures struggle to build a sustainable uptrend.

India’s short-term increase in crude oil prices last week (with trades around $1,165–1,175 for March/spot) reflects localized demand and logistics rather than a global shift in fundamentals.

Exports from Ukraine remain minimal, while Turkey continues to trade at elevated domestic prices and Egypt faces a clear supply deficit. However, these regional pockets of tightness have not translated into broader global shortages.

🌻 Sunflower Oil

Sunflower oil exports from Ukraine remain extremely low (~300 k tons per month), keeping it the most expensive oil in the complex. This tightness, however, is localized.

In India, a temporary supply deficit has emerged due to delayed vessel arrivals. January imports are expected to be nearly half of December levels, pushing demand into February–March. Active buying is seen around $1,340–1,360 CIF, while Mersin trades near $1,310 CIF.

In Ukraine, flexitank insurance costs have jumped to around 4%, spiking logistics expenses. Alternative routes via European ports add 10–20 days of transit, further lifting prices.

Together, these factors point to a short-term supply squeeze rather than a structural global shortage.

🌾 Rapeseed, Canola & Spreads

Rapeseed and canola markets are supported by low inventories and seasonal factors, particularly in Canada. While canola futures continue to trend higher on ICE Futures Canada, this strength is driven by local fundamentals.

Palm oil remains at a discount to soyoil, signaling comfortable supply and capping upside across the vegoil complex. Meanwhile, sunflower oil continues to trade at a firm premium due to localized Black Sea tightness.

Bottom line: palm–soy–sunflower spreads confirm a corrective market phase rather than a sustained bullish trend.

🌍 Global & Macro Factors

Ramadan-related buying is keeping soy and sunflower oil prices firm, particularly into Egypt, but this support remains largely regional. Palm oil demand stays weak through the winter months.

In China, markets remain sideways across soybeans, soyoil, and palm oil, with no backwardations or signs of supply stress. China is not acting as a price driver at this stage.

January and February remain challenging for Black Sea logistics due to low temperatures and extended holidays. Ongoing attacks on Ukrainian ports, volatile energy prices, and rising logistics costs continue to weigh on trade flows.

Overall, the markets remain fragile, with localized support offset by geopolitical, logistical, and cost-related headwinds.

That’s all the news for now. Thank you for your attention, and stay tuned for the next update!