Crude palm oil (CPO) futures rebounded sharply on Tuesday May 28, with strong support coming from a stronger vegoils complex.
The most-active third-month CPO futures contract for August delivery on the Bursa Malaysia Derivatives Exchange jumped by 2.4% to 3,963 ($843) ringgit per tonne, with the third-month contract closing at its highest price since April 23.
CPO futures on Bursa Malaysia got off to a healthy start, tracking the strength in Chinese vegoils, and soybean oil futures on the Chicago Mercantile Exchange were trading higher during Asian hours after pausing on Monday May 27 for the US holiday.
Chinese vegoil futures also rose sharply, with the most-active palm oil contract on the Dalian Commodity Exchange closing 1.99% higher at 7,774 yuan ($1,073) per tonne and the equivalent soybean oil contract moving up by 1.66% to 8,106 yuan per tonne. The equivalent DCE soymeal contract, meanwhile, fell by 0.86% to 3,439 yuan per tonne.
The most-active rapeseed oil contract on the Zhengzhou Commodity Exchange rose by 1% to close at 8,913 yuan per tonne.
In the physical market, CPO trades were heard done to India for June shipment at $942.50-945 per tonne CFR east coast India and $947.50-950.00 per tonne CFR west coast India, while Chinese buyers picked up around two olein cargoes for July shipment at $905 per tonne CFR South China.
Offers for CPO out of Indonesia were heard around $907.50 per tonne FOB, with buying ideas hovering around $900 per tonne FOB.
Market participants will be paying close attention to full-May palm oil export estimates for Malaysia — which are expected at the end of the week — for further indications of demand recovery which would keep prices supported; palm oil demand is anticipated to have improved because of attractive prices below rival oils for nearby months.
On the news front, Indonesia’s palm oil exports in March totaled 2.56 million tonnes in March, up by 18.2% from February, according to the Indonesia Palm Oil Association (Gapki), while production grew by 5.5% month on month to 4.49 million tonnes.
Domestic palm oil consumption was reported at 1.898 million tonnes in March, marginally higher than February’s 1.864 million tonnes, with end-month stocks in March coming in at 3.3 million tonnes, compared with 3.264 million tonnes a month earlier.
In the Americas, soyoil futures bounced back higher after two consecutive sessions of losses with underlying support from crude and palm oil, while soymeal futures plummeted.
The July soyoil contract on the CME increased by 1.4% from the previous close to 45.58 cents per lb at the time of publication. This increase erased about half of the losses accumulated during the downswing started on May 21.
Underlying support came primarily from higher Malaysian palm oil futures, the upswing across the vegoils complex in China and higher crude prices. Plunging soymeal futures also contributed to the uptick in soyoil prices through product-spreading dynamics.
The July CME soymeal contract dropped by 2.9% on Tuesday to $375.20 per short ton at the time of publication, more than offsetting the steep gains on Friday May 24.
The downswing in soymeal futures had a strong bias to the front end of the curve and came after contracts posted gains of nearly 5% over the previous week.
In the physical market, soyoil bases were mixed in South America on Tuesday.
The Argentine July soyoil basis was assessed at a discount of 4 cents per lb to the July CME futures contract, up by 0.9 cents per lb from the previous assessment on Friday.
In Brazil, the July soyoil basis rose by 0.1 cents per lb to a discount of 3.65 cents per lb to July futures.
Soymeal bases mostly increased in Brazil, with the July premium assessed at $11.50 per short ton over July CME futures, up by $3 per ton from the previous assessment.
In Argentina, the July soymeal premium was assessed at $12.50 per short ton over July futures, down by $1 per ton from Friday.
Rapeseed oil markets in European ports were relatively stable on Tuesday.
Sunflower oil bids in six European ports rose compared with Monday, while offers were little changed.
Offers for rapeseed oil for June were unchanged at €1,025 ($1,111.4) per tonne against buyers’ ideas at $995 per tonne FOB Rotterdam, down by $5 per tonne from Monday.
July rapeseed oil bids were heard at €991 per tonne, with an offer heard at €999 per tonne FOB Rotterdam.
Rapeseed oil trades were heard at €994-995 per tonne for loading in November, December and January, FOB Rotterdam.
Sunflower oil for July, August and September shipments was offered at $1,040 per tonne FOB and traded at $1,035 per tonne FOB, and trades were heard at $1,030 per tonne and $1,037 per tonne FOB.
The sunflower oil market in the Black Sea region was again quiet on Tuesday with a low number of offers.
There were no firm ideas heard throughout the day, but sellers’ indicative levels were at $980 per tonne CIF Mersin, while buyers reported bids of about $850 per tonne CIF Mersin for June shipment.
Spot buyers at ports reported a price idea of $875-880 per tonne CPT Pivdennyi-Odesa-Chornomorsk (POC), while sellers targeted $890 per tonne and higher.
In other news, sunflower seed sowing in Russia has advanced to 85.7% of the forecast area, or 9.17 million hectares out of 10.7 million ha. At the same point in 2023, 8.53 million ha had been sown out of 9.85 million ha.