Mid July

Dear all,

Hot air from Africa has covered Ukraine, resulting in an unusually hot summer this year, with temperatures of 30 degrees Celsius consistently recorded for the past two weeks, reaching as high as 35 degrees Celsius in some regions. Unfortunately, these high temperatures coincide with frequent power outages caused by Russian shelling, making it difficult for people and businesses.

The extreme heat is expected to impact crop development and prices, as farmers have already started warning customers about potential crop damage and other related issues. Notably, temperatures have also soared in many other producing nations, posing a risk of higher costs for livestock feed due to a potential dip in production.

According to experts, the sunflower harvest in Ukraine is expected to start two weeks earlier than planned, around August 10-15. However, given the current summer heat, it is unlikely that the projected oilseed harvest of 14.3 million tons for the 2023/24 marketing year will be achieved.

Furthermore, the sunflowers belts in Vinnytsia and Chernihiv regions are experiencing a high level of danger, according to World Ag Weather.

At some European ports, sunflower oil was offered at $1,070 per tonne FOB, against buyers' idea of $1,050 per MT FOB (Jul / Aug / Sep loading). Additionally, there have been trades of sunflower oil for October, November, and December shipments at $1,070 per tonne FOB in these ports.

In Russia, the sunflower harvest for 2024 is expected to decrease by 8.4%, while the rapeseed and soybean harvests are predicted to increase.

The European Union's oilseed area for the 2024/25 marketing year is forecasted to remain almost stable.

In Ukraine, the rapeseed harvest is ongoing, with approximately 40% completed as of July 15th. The market expects a crop size of 4.8 million tons.

The CPT market in Ukraine is weak, with few sellers and buyers ready to offer $910+ at Yuzne. The supply for SFO in August is expected to be at its lowest. Meanwhile, crushers in the eastern part of Ukraine still don't foresee the possibility of renewing crushing operations due to the availability and price of seeds and oil, as SFS prices crossed UAH 20k (~$482.30) per Mt.

At the same time, refined oil is offered at $980+ per Mt, with a maximum offer of $1,000. The supply of refined oil is relatively stable, however, the electricity problems in Ukraine are leading to increased costs.

Soy oil supply remains low in the Black Sea region, with offers at $900 per Mt EXW (Aug shipment), which appears high compared to the price of seeds and future availability. Ukrainian soybeans are expected to be less competitive in the Egyptian and Turkish markets until the end of the season due to ample supplies from the US and Brazil.

China has stocks of approximately 7.2 million tons of soybeans, which is not a significant number. In the coming days, soybean imports are expected to drop in India, leading to tight soy oil stocks. Egypt's demand is still low. Experts predict stability in soy oil prices for the coming month, supported by demand from China and India and the coming festival seasons in both nations.

In June, Malaysia's palm oil stocks reached a four-month high due to a steeper decline in exports compared to production. Crude palm oil production decreased by 5.23% – down to 1.62 million tons, while palm oil exports plunged by 12.82%, reaching 1.21 million tons. Supply problems from Malaysia and Indonesia, including the unavailability of containers and an increase in freight rates, are causing CIF prices to rise. If this trend continues, we may see an increase in freight rates from the EU and Black Sea regions as the demand for containers rises.

Rapeseed crushing has started in the Black Sea region, with Chinese bids potentially dropping from $1,000 in May to the current buying bid level of $960.

The most recent offers of Ukrainian SFO to China were at $995 per tonne CIF, while Russian SFO was offered at $990-1,015 per tonne CIF. Chinese bids are currently at $975 per Mt for Russian oil.