Prices of Vegetable Oils Rise Due to Speculation in the Oil Market and Export Restrictions
The speculative rise in oil prices, driven by the threat of escalating conflict with Iran, which accounts for about 2% of global oil production (2 million barrels per day), continues to impact the vegetable oil market. An additional factor contributing to the price increase is the export restrictions on sunflower oil from Ukraine.
This is reported by AgroReview
Trends in Oil and Vegetable Oil Prices
Over the past week, March futures for Brent crude oil have risen by another 3.8%, reaching $67.5 per barrel, the highest level since the end of September. Overall, they have increased by 9.8% over the month. The market anticipates the start of a U.S. operation against Iran, as a U.S. carrier group is already in the region. However, analysts believe that the U.S. is likely to limit itself to economic pressure and blocking Iranian oil exports rather than conducting a direct military operation.
February futures for palm oil on the Bursa Malaysia exchange increased by 4.7% over the week, reaching the highest level since October — 4260 ringgits per ton ($1078 per ton). However, the price increase was limited due to a slowdown in export rates over the past week. For the first 25 days of January, palm oil exports from Malaysia increased by 8-10% compared to the same period in December, although in the first half of January, this figure reached 15-17%.
Situation in the Soybean and Sunflower Oil Markets
At the Chicago Mercantile Exchange, March futures for soybean oil rose by 3.6% over the week, reaching $1200 per ton (a 10% increase over the month). This was influenced by both rising oil prices and increasing sunflower oil prices. In Brazil, soybean oil prices increased by $50-60 per ton — to $1190-1200 per ton FOB due to limited supplies at the end of the season. Meanwhile, 5% of the new soybean crop has already been harvested, which is expected to lead to an increase in supply soon. At the Dalian exchange in China, soybean oil prices rose by $20 per ton — to $1190 per ton over the week.
“The spike in prices for Black Sea sunflower oil to $1300/ton FOB has increased supplies from Ukraine and Russia, leading to a decrease in the offered prices for Russian sunflower oil over the week by $30-40/ton to $1250–1270/ton FOB, while in Ukraine, demand prices for sunflower oil delivered to ports also fell by $10/ton to $1260-1280/ton.”
Due to weather conditions — frosts and snowfalls — deliveries of sunflower seeds to factories have been complicated, but producers are gradually resuming operations at oil extraction plants. It is expected that the activation of supplies and sales will continue against the backdrop of rising global prices.
Additionally, the frosts in the U.S. have caused a twofold increase in gas prices, further supporting oil quotations. It is forecasted that next week, the frosts in the U.S. will begin to subside, and developments regarding Iran and seasonal increases in the supply of vegetable oils are also anticipated.