Sunflower Oil Prices Drop by $60 Due to Weak Demand
Over the past week, the vegetable oil market has experienced a significant price decline, with sunflower oil seeing the largest drop. The price of sunflower oil on a FOB basis at Ukrainian ports fell by $60 from the beginning to the end of the week.
This is reported by AgroReview
Price Changes in the Global Oil Market
The price decline began in the palm oil market, which lost $20–30 in value daily due to increased stockpiles and reduced exports from Malaysia and Indonesia. This led to a decrease in soybean oil prices on the Chicago Exchange, and subsequently, sunflower oil prices, which remain very weak in demand.
The Impact of Demand and Price Spread
A key factor has been the excessively large price difference between sunflower oil and other types of oil. At the beginning of the week, the spread between sunflower and soybean oil was about $180, and $200 with palm oil on a CIF India basis. In European markets, particularly in Spain and the Netherlands, this difference exceeded $120. As a result, India has not purchased sunflower oil for the second consecutive week, and European countries and India have secured sufficient volumes for November–December, which reduces the prospects for active demand in the near future.
Additional pressure on the market comes from harvest forecasts from South America: favorable weather in Brazil and Argentina poses no risks for the new harvest. Argentina is expecting a record sunflower harvest of 6.1 million tons; however, even active offers of oil at $1170 FOB are not finding adequate demand.
“Accordingly, from the beginning to the end of the week, sunflower oil on a FOB basis at Ukrainian ports lost $60. It is evident that with the current sunflower prices, this gives processors a negative processing margin. Therefore, either sunflower prices need to adjust, or we will continue to observe a lull in demand and an active shift of factories to processing rapeseed and soybeans. A price recovery seems unlikely,” says Repecky.
It is expected that in the absence of significant changes in the price and demand ratio, the sunflower oil market will remain under pressure, and processors may shift towards producing rapeseed and soybean oil.