Vegoils commentary: Asian vegoils fall, CME soyoil plummets to three-year low
Malaysian crude palm oil (CPO) futures tumbled on Thursday May 9 due to dives across the vegetable oil complex and lukewarm demand.
The most-active CPO futures contract for July delivery on the Bursa Malaysia exchange fell by 1% to 3,830 ringgit ($808) per tonne amid losses in soyoil futures on the Chicago Mercantile Exchange (CME).
Chinese vegoils fell in tandem, with the most-active palm oil contract on the Dalian Commodity Exchange down by 1.7% to 7,406 yuan ($1,025) per tonne, while the equivalent soybean oil contract dipped by 1.4% to 7,698 yuan per tonne.
The most-active rapeseed oil futures contract on the Zhengzhou Commodity Exchange fell in tandem, down by 0.9% to 8,631 yuan per tonne.
In the physical market, offers for CPO out of Indonesia were heard around $900 per tonne FOB for May shipment.
Offers to India on a CFR west coast India basis were heard at $920 per tonne for June and $910 per tonne for July cargoes.
Bids were largely absent in the Indian market, with palm at a narrow discount to other soft oils.
Chinese olein offers for Thursday were also around $10 per tonne lower — at $885 per tonne on CFR for June-August shipments to South China, while a trade was done at around $883 per tonne for June on a CFR China basis.
Chinese customs reported that April vegetable oil imports were at 494,000 tonnes, a 17.7% dip from March and nearly 50% lower than the volume imported in 2023, bringing total edible vegoil imports in January-April to 2.3 million tonnes, 25% lower than the volume imported during the same period of 2023.
Market participants are largely staying on the sidelines in anticipation of the April supply/demand data release from the Malaysian Palm Oil Board (MPOB) and updates from WASDE on Friday May 10 for clearer market direction
In the Americas, soyoil futures plummeted on Thursday May 9 to the lowest level since January 2021 on technical selling and borrowing additional weakness from rival vegoils markets in Asia.
The July soyoil contract on the CME tumbled 2.7% on the day to 42.61 cents per lb, the lowest level for a front-month contract in over three years.
Lower prices across vegoil markets in Asia contributed to pull the soyoil market lower while technical selling and positioning ahead of USDA’s supply and demand estimates, due to be released on Friday, added further downward pressure.
Sources also mentioned a good pace of soybean farmer sales in Argentina, declining soyoil bases premiums and poor biofuels margins in the US as other factors weighing on prices.
Those factors are also helping trigger an addition of net short positions by managed money, adding further downward pressures on the market.
Soymeal futures also traded lower despite the national strike in Argentina, with July CME contracts down 1.2% in the third consecutive downfall.
The backdrop in meal prices had a significant bias to the front end of the curve.
In the physical market, trades of both Argentinian and Brazilian soyoil were heard on Wednesday May 8 after Fastmarkets’ assessment time.
In Argentina, 6,000 tonnes of soyoil for June and July loading, with 3,000 tonnes for each month, traded at a discount of 5 cents per lb to July futures.
Another 2,000 tonnes of Argentinian soyoil for June and July loading, with 1,000 tonnes for each month, traded at a discount of 4.8 cents per lb to the same futures contract.
And 7,000 tonnes of June soyoil were heard traded at a spread to July, at an $11 per tonne inverse structure.
In Brazil, batches of soyoil for June loading traded at discounts of 4.8 cents per lb and 4.4 cents per lb to July futures.
On Thursday, soyoil bases continued to rise steeply in South America, compensating for falling CME futures, with the June basis assessed at discounts of 3.4 cents per lb in Argentina and 3.8 cents per lb in Brazil.
The Brazilian soymeal basis for June loading was assessed at a premium of $6.50 per short ton over the July CME futures contract, down by $1 per short ton from Wednesday.
In Argentina, the June premium fell by $2 per short ton day on day and was assessed at $13 per short ton over the same futures contract.
The market for rapeseed oil and sunflower oil in six European ports was steady on Thursday, with liquidity lacking while most of Europe was absent for the Ascension Day holiday.
Rapeseed oil offers for June were heard unchanged at €977 ($1052.21) per tonne and bids at €967 per tonne.
No rapeseed oil trades were heard on Thursday.
Rapeseed oil prices were therefore unchanged for June, July and August loading.
No bids or offers were seen for sunflower oil, with prices held at the previous day’s level as a result.
The sunflower oil market in the Black Sea region looked firmer amid talk of low sunflower stocks in Ukraine and the transition of sunflower crushers to rapeseed and maintenance, while the number of sellers for sunflower oil supplies in May and the first half of June was limited.
Sunflower oil for delivery in May and the first half of June was offered at $900 per tonne CIF Mersin, against the buyers’ idea of $880 per tonne CIF Mersin, which is $5 per tonne higher than in the first half of the day.
Offers from Ukrainian sellers for May delivery were heard at $895 per tonne CIF Mersin.
Sunflower crushers increased prices due to a lack of offers and low coverage, showing purchasing levels in the range of 16,500-16,800 hryvnia ($416-423) per tonne CPT plant, including VAT, with real purchases at 16,800-18,000 hryvnia per tonne CPT plant, including VAT.
In addition, there was an increase bids from rapeseed crushers, who showed ideas for purchasing new-crop rapeseed with delivery to the CPT plant in June in the range of 16,000-17,000 hryvnia per tonne.
In other news, Ukrainian farmers have sown 75%, or almost 4 million hectares, under sunflowers, and 60%, or 1.2 million ha, under soybeans.
In Russia, 34%, or 3.6 million ha, were sown with sunflower for the 2024 harvest.