Main points
- Oil prices have risen 13% due to the breakdown in talks between the US and Iran, but the vegetable oil market remains stable.
- Palm oil futures fell by 0.5%, and sunflower oil prices in Ukraine increased to 1,320-1,325 USD per ton.
The oil market is stable / Photo by Magnific
Oil prices have surged since the breakdown of talks between the US and Iran, but the vegetable oil market has remained stable for now. However, analysts warn that this equilibrium may be temporary.
Oil prices are rising, but the oil market is still stable
The breakdown in talks between the US and Iran late last week triggered a sharp rise in oil prices, Grain Trade reports. Brent crude futures jumped 13 percent this week to $111 per barrel.
Despite this, experts say the vegetable oil market has reacted with restraint. Soybean oil futures on the Chicago Board of Trade added just 0.4 percent after a sharp rise earlier.
Physical markets are also relatively stable. In China, soybean oil prices have risen to $1,250 per ton, in Brazil to $1,190-$1,200 per ton, and in Argentina to $1,140 per ton. At the same time, the significant discount of South American products to American products is holding back further price increases.
Palm and sunflower oil under market pressure
Palm oil futures on the Bursa Malaysia exchange fell 0.5 percent for the week to 4,536 ringgit per tonne, equivalent to about $1,149 per tonne. Despite the earlier rise, prices have effectively returned to late February levels.
A decline in palm oil exports from Malaysia in April and ample supply in the physical market are also keeping prices from rising.
The situation on the sunflower oil market is mixed. Cheaper products from Argentina are putting pressure on prices in India, where quotes have fallen to 1,410-1,415 USD per ton. At the same time, Ukrainian oil has risen in price to 1,320-1,325 USD per ton based on delivery to Black Sea ports.
An additional factor for Ukraine was damage to infrastructure in Chornomorsk, which may limit the activity of processors.
Analysts note that markets are closely monitoring developments in the Middle East. If tensions do not ease, rising oil prices could drag down the prices of grains and oilseeds.
Sunflower oil prices rise faster than oil: the processing market is under pressure
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Sunflower seed prices in Ukraine increased by $9 per ton, reaching $744 per ton.
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Processing is under pressure due to rising raw material costs, which outpace the rise in prices for finished products.
At the same time, the meal segment, which amounted to 258 thousand tons, remains heavily dependent on one key buyer – China, which accounts for 149 thousand tons of exports. Such concentration increases the risks for the market in case of changes in demand.