Market Update: Edible Oil July 2022
26 July 2022

OVERVIEW

The edible oils market is on a weekly downward trend from recent highs – except for olive oil, which is having a tough time. It’s important to note that despite a downward weekly trend, prices are still much higher YoY. A lot of these increased prices will trickle through to production cost over the coming months.

RAPESEED OIL

  • The Euronext rapeseed price RSSP declined by 11.2% MoM to EUR 743/MT in June.
  • This decline is attributed to expectations of improved domestic supply for the 2022/23 MY (Jul ’22-Jun ’23) and expectations of a recovery for global crop for the 2022/23 MY.
  • In addition, EU rapeseed oil RSOR fell by 6.2% MoM to EUR 1,670/MT in June, on the back of reduced demand amid an improvement in global supply conditions of alternative oils (palm oil and sunflower oil).
  • This was due to negative margins for producing the biodiesel FAME (Fatty Acid Methyl Ester) from rapeseed oil causing biodiesel players to pull back from the market.
  • The harvest is underway, so the next month should see offers being made for new crop.

OLIVE OIL

  • Benchmark Prices for Olive Oil Extra Virgin EXW Andalusia at €3.65/kg, up €0.10/kg from the previous assessment.
  • Trading in the Andalusian olive oil market picked up as weather concerns for the new crop caused market players to seek to purchase current supplies.
  • A number of indications were heard higher than the previous assessment moving the assessment price upward as a result.
  • €3.65/kg is very high, the same was thought last July at €2.91/kg, compared to the 2020 prices which were at €1.91/kg.

SUNFLOWER OIL

  • Despite a quarterly decline in the prices of Sunflower oil, the YoY change of SFO remains up 35.6% at £1243.10/MT.
  • Ukraine is currently exporting larger quantities of sunflower seed to compensate for reduced crush processing of sunflower seed due to closures of crushing facilities amid the Russia-Ukraine war.
  • According to the United States Department of Agriculture (USDA), the Ukrainian sunflower seed export forecast for the 2021/22 marketing year (MY) (Sept ’21-Aug ’22) is expected to rise by 650,000 MT to 1 million MT.
    • This is a significant rise compared to Ukrainian seed exports in previous years, up by 423% YoY.
    • The EU is expected to receive the bulk of this increase.
  • On the other hand, Ukrainian sunflower oil exports have been revised downwards by 22% YoY to 4 million MT for the 2021/22 MY due to the disruptions to crush facilities.
    • This has presented an opportunity for other sunflower oil exporters to benefit from a larger share of the sunflower oil export market.
    • In particular, Turkey’s sunflower oil exports are set to increase by 13.5% YoY to 725,000 MT for the 2021/22 MY.
  • Ukrainian sunflower seed declined by 15.9% MoM and by 27.4% YoY in June to USD 432/MT in line with reduced domestic crushing demand.
    • Also, the MBP for Ukrainian sunflower oil was down by 7.3% MoM but remained up by 34.9% YoY in June at USD 1,600/MT.
    • This decline was due to improved global supply of alternative oils following Indonesia revoking its palm oil ban on the 23rd of May.
  • However, Ukrainian sunflower seed output for the upcoming 2022/23 MY (Sept ’22-Aug ’23), is projected to fall to its lowest level in ten years to 9.5m tonnes.
    • This represents a decline of 29.5% from the previous ten-year average and could pose an upside risk to domestic sunflower oil prices.

PALM OIL

  • Prices [MBP] for Crude Palm Oil CIF Rotterdam assessed at $1,260.50/mt down $43.00/mt on the week.
  • This was largely due to Indonesia removing their $200/mt export levy effective from 15 July to 31 August, which has allowed Indonesian sellers to offer the product for lower prices.
  • Market players estimates 7 million metric tonnes of palm oil products currently within storage.
  • This means that more or less all palm storage within Indonesia is full of oil and this has forced the selling at a lower price.

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