Mixed Market Reactions Despite Increased Exports

Soybean and palm oil futures traded relatively flat over the past week, despite data indicating increased exports from Malaysia and a drop in canola and canola oil prices. Additionally, the markets showed little reaction to the reduced forecasts for the sunflower harvest in Ukraine and the Russian Federation due to heat waves.

Soybean Oil Futures Fluctuate

Early July Surge and Subsequent Decline

December soybean oil futures in Chicago saw a 10% rise in early July, only to fall over the following two weeks to $993 per ton, marking a 3% increase for the month. This fluctuation occurred under the pressure of favorable weather conditions for the US soybean crop.

USDA Reports Favorable Conditions

According to the USDA's National Agricultural Statistics Service (NASS), 68% of US soybeans remain in good or excellent condition, compared to 54% last year. Additionally, crop development is 5% ahead of the five-year average, contributing to the market's steadiness.

Impact of Active Exports

Active soybean exports from Brazil and increased supplies of soybean oil and meal from Argentina have added pressure to global soybean quotations, balancing out the market dynamics.

Palm Oil Futures See Minor Increase

Weekly Performance

September palm oil futures on Bursa Malaysia rose by 1% during the week to 3,969 ringgits per ton, or $850 per ton, despite a significant increase in July exports.

Export Data

Surveyors Intertek Testing Services and AmSpec Agri Malaysia reported that Malaysia's palm oil exports increased by 39.2-41.4% from July 1-20 compared to the same period in June. Although oil production is also on the rise, the increase is less substantial, potentially leading to lower inventories and higher quotes by the month's end.

Sunflower Oil Prices Hold Steady

Global Price Trends

According to Trading Economics, the average price of sunflower oil with delivery to buyers increased by 0.5% to $910 per ton over the week. Despite forecasts of a 15-20% decrease in sunflower harvests in Ukraine and the Russian Federation, prices remain under pressure from increased supplies of rapeseed and soybean oil.

Ukrainian Market Dynamics

In Ukraine, demand prices for sunflower oil remain stable at $900 per ton with delivery to ports and $830-850 per ton FCA (Free Carrier) at the factory.

Brent Oil Futures Decline

Weekly and Monthly Trends

September Brent oil futures fell by 3.3% to $81 per barrel over the week, marking a 4.9% decline for the month. This decrease is attributed to worse-than-expected data on the state of the US economy, which could reduce long-term oil demand. Additionally, growing political uncertainty, including President Biden's decision not to run for re-election, has influenced market sentiment.

Impact on Vegetable Oil Prices

A drop in oil prices to $80 per barrel or below is expected to increase pressure on vegetable oil prices, as recent price increases were driven by biodiesel producers.

The current market conditions highlight the interconnected nature of global commodity markets. While favorable weather and increased exports support stability in some areas, broader economic and political uncertainties continue to influence overall market trends. Stakeholders should remain vigilant and adaptable to navigate these complex dynamics effectively.