Vegoils commentary: Asian vegoils futures firm further; support CME soyoil futures

Crude palm oil (CPO) futures rose on Wednesday March 20 on gains in the vegoil futures on the Dalian Commodity Exchange in China and on the CME in Chicago.

The most-active third-month CPO contract on Bursa Malaysia for June-delivery jumped by 1.8% to close at 4,273 ringgit ($901.86) per tonne, extending gains from the midday session.

Chinese vegoil futures rose on Wednesday, with the most active palm oil contract up by 2.5% day on day to 8,362 yuan ($1,161) per tonne, and the equivalent soybean oil contract rose by 0.8% to close at 7,890 yuan ($1,096) per tonne.

The most-active rapeseed oil contract on the Zhengzhou Commodity Exchange climbed by 0.8% to 8,375 yuan ($1,163) per tonne.

In the physical market, offer levels firmed; a CPO cargo with April shipment on a CNF east coast of India basis traded at $1,022.50 per tonne in the earlier part of the day, while offers were heard around $1,040 per tonne CNF west coast of India for April shipment.

Olein offers to China were $15 per tonne higher at $1,010 per tonne CNF South China for April and $992.50 per tonne for May, while olein offers out of Indonesia were at $985 per tonne FOB for April shipment and $972.50 per tonne for May.

Offers on an FOB basis for CPO out of Indonesia were at $1,000-1,010 per tonne.

Freight rates for 18,000-20,000 tonne vessels from Southeast Asia to the west coast of India and Pakistan rose by $2-3 per tonne week on week to $48 per tonne on March 20.

Cargo surveyors Intertek Testing Services (ITS) and Amspec Agri Malaysia estimated Malaysian palm oil exports for the first 20 days of March at 821,820 tonnes (up 7.42% month on month) and 787,534 tonnes (up 16.42% month on month) respectively.

In the Americas, soyoil and soymeal futures firmed on Wednesday amid increased soybean export demand, higher palm oil prices and some underlying technical support.

The May CME soyoil contract rose by 1.1% day on day to 48.69 cents per lb at the time of publication, more than offsetting losses from Tuesday March 19.

Despite downward pressures from lower West Texas Intermediate and Brent crude oil prices, the soyoil market was supported by higher palm oil prices from the earlier Malaysian session.

Soymeal futures increased sharply by 1.5%, with May contracts trading at $339 per short ton at the time of publication.

Reports that China purchased Brazilian soybean cargoes and possibly Argentine cargoes overnight, along with strong domestic soymeal sales in the Asian country, helped underpin the market.

Flash export sales of 120,000 tonnes of soybeans for the 2024-2025 marketing year were reported by the US Department of Agriculture (USDA), adding to the positive momentum on the export side.

The large net short positions on the soymeal and soybean markets also contributed to the increase.

In the physical market, the Argentine soyoil basis for May loading gained 0.1 cents per lb on Wednesday, and was assessed at a discount of 8.2 cents per lb to May futures.
 
In Brazil, the May basis fell by 0.15 cents per lb day on day to a discount of 7.15 cents per lb to the same futures contract.
 
Argentine soymeal basis for May loading was assessed at a premium of $8.50 per short ton over May futures, down by $1.50 per short ton compared with Tuesday.

In Brazil, the May basis fell by $1 per short ton day on day and was assessed at a premium of $1.50 per short to the underlying contract.

Sunflower oil at six European ports was trending lower on Wednesday, with offers falling to $940 per tonne FOB, down by $10 per tonne from the day before, and buyer offers were at $925 per tonne FOB with April/May/June loading.

Price levels for rapeseed oil were almost stable compared Tuesday at €930 per ton versus €912 per ton FOB Rotterdam for loading in April-May.

Rapeseed oil volumes for May/June/July delivery traded at €915 per tonne on Wednesday, and at €917 per tonne FOB Rotterdam and €914 per tonne FOB Rotterdam for August/September/October shipment.

Sunflower oil in the Black Sea region was offered at $880 per tonne CIF Mersin, against buyers’ ideas of $860-865 per tonne with delivery in March-April.

The significant spread between sellers and buyers offers restrained trade.

Spot buyers purchase levels in deep-water ports were at $770 per tonne CPT Pivdenny and $785 per tonne CPT Izmail.

The market for sunflower meal in the ports was inactive, with buyer offers at $173-175 per tonne for non-pellets and up to $185 per tonne for pellets in CPT deep-sea ports.