Early May

Good day, ladies and gentlemen

The prestigious international oil conference, #GLOBOIl, took place in Dubai this week, focusing on end-of-season prices and pivotal topics such as supply disruption and the industry's trajectory.

We see a possibility of a slight decrease in oil demand, with biodiesel being a significant factor. The world is shifting towards EV and hydrogen, while India's successful ethanol program underscores its commitment to ramping up production in the field. 

At that, experts assert that feed demand will be the primary driver for the oil industry and attention is shifted to India as a major force in the market. The country's consumption is expected to rise from the current 14.2 kg of oil per person a year to a minimum of 20 kg, with Pakistan currently at a 22 kg mark.

Sunflower oil became the soft oil choice in India this year, with a lower CIF price undercutting palm olein and allowing Indian consumers to explore SFO. The current supply of sunflower oil stands at 3M MT, with the potential to exceed this figure if prices remain stable. CSFO bulk MJJ prices range around $950-955.

China's demand for CSFO is rebounding, with prices surpassing $940. On the other hand, SFO exports from Ukraine have surged by 19% YoY since the start of the 2023/24 season, amounting to 4.4 MMT in cumulative exports from September to April. Experts anticipate a shortage of sunflower oil in July and August due to this sunflower seed prices in Ukraine increasing (currently at UAH17,000 per ton) and limited supply. Meanwhile, refined sunflower oil is priced around $900-940. 

Destantion major producers cover their stocks until September to mitigate risks.

While Russia maintains a substantial stock of sunflower seeds, payment hurdles have affected sales. 

Experts are closely monitoring the bean market, particularly in Argentina. Notably, we saw a sale of 160k MT Oil to China last week. Heavy rainfall in Brazil threatens to dampen soybean yield, and it is important to monitor how the country's beans will be distributed to Turkey, Iraq, and India. 

The conference showcased different opinions on palm oil. While some advocate for a depressed price to stimulate demand, others believe palm will stabilize and find its own demand niche without being the cheapest option. Experts note the political and business stability of palm-producing countries, as well as the increasing number of refineries and packing units. CPO offers a higher price compared to olein. Indonesia's refinery capacity has surged to 70 million.

Looking ahead to the 2024 harvest in Ukraine, the market anticipates a reduction in sunflower harvest and oil supply in the upcoming season. Weather forecasts predict a scorching summer, potentially hampering the oilseed harvest and bolstering prices. Additionally, reports indicate a decline in SFS production in Russia from 16.7M tons to 15.6M tons.

That's all the news for today. Thank you for your attention, and stay safe.