Vegoils commentary : Vegoils futures continue to firm across markets, regions
Crude palm oil (CPO) futures extended their gains for a second day on Tuesday April 23, buoyed by strength in related vegetable oils. Early gains were moderated at the close of trade, with market participants awaiting further indications on production performance amid a relatively steady export pace.
The most active CPO futures contract for July-delivery on the Bursa Malaysia exchange inched up by 0.63% to close at 3,969 ringgit ($830) per tonne, after closing higher at the end of the early trading session at 4,010 ringgit per tonne, tracking overnight gains in soybean oil futures on the Chicago Mercantile Exchange (CME) and a firmer rapeseed complex.
Chinese vegoil futures also closed higher in tandem with the upward movement seen in the wider vegoil complex, with the September palm oil contract on the Dalian Commodity Exchange closing 1.06% higher at 7,442 yuan ($1,027) per tonne, while the equivalent soybean oil contract rose by 2.09% to 7,618 yuan per tonne.
The September rapeseed oil futures contract on the Zhengzhou Commodity Exchange jumped by 4.24% to 8,387 yuan per tonne, tracking the overnight rise in rapeseed futures in Europe and canola futures on the Intercontinental Exchange (ICE).
In the cash market, olein was traded to India at $932.50 CFR west coast India and $927.50 CFR east coast India for May shipment earlier in the day, while CPO offers were hovering at $965-970 CFR west coast India for May shipment and $955-960 CFR west coast India for June.
Offers for olein to China were around $910 per tonne CFR and $900 per tonne CFR for July and August cargoes, with talks of a May cargo traded.
On the news front, Malaysia has raised its CPO reference price for May to 4,273.93 ringgit per tonne from 3,958.58 ringgit per tonne in April.
The increase effectively keeps the tax rate at 8% but raises the payable export tax to 341.91 ringgit per tonne, up from April’s 316.69 ringgit per tonne.
Indonesia is also expected to announce its CPO reference price for May in the coming days, with market participants anticipating an increase which would effectively raise the payable export taxes for CPO to $169 per tonne from $142 per tonne in April, with taxes for other palm oil products to rise as well.
In the Americas, soyoil futures continued to edge higher for the third consecutive session on Tuesday, following Monday’s bargain buying and borrowing additional support from rising crude prices.
The July soyoil contract on the CME lifted by 0.7% on the day to trade at 45.99 cents per lb at the time of publication, the highest level in a week.
Underlying support continues to come from what seems to have been oversold market conditions after the steep plunge seen between April 5 and April 18.
A spike in crude prices contributed to the upswing, as did firming US soyoil cash prices on Monday and stronger vegoils prices in Asia and Europe.
Soymeal futures were broadly unchanged, with the July CME contract trading at $345.20 per short ton at the time of publication.
Moderate downward pressure from product spreading dynamics was broadly offset by firming grain prices.
In the physical market, Argentinian soyoil basis for June loading softened by 0.8 cents per lb day on day, assessed at a discount of 6.8 cents per lb to the CME July futures contract.
In Brazil, the June basis fell by 0.5 cents per lb day on day and was assessed at a discount of 6 cents per lb to July futures.
Soymeal basis dropped in Brazil and Argentina on Tuesday.
The June soymeal basis was assessed at premiums of $3 per short ton in Brazil, down by $1 per short ton day on day, and of $5.50 per short ton in Argentina, down by $1.50 per short ton from the previous assessment.
The market for rapeseed and sunflower oil in European ports strengthened again on Tuesday on weather and geopolitical concerns.
Rapeseed oil offers for May were steady at €970 ($1,033) per tonne, with bids rising to €951 per tonne from €945 per tonne to meet the offers.
This pulled prices for the front month up by €3 per tonne.
Rapeseed oil prices have risen by around €15 per tonne since last Friday, partly on concerns that recent colder weather in Europe may affect the rapeseed market.
Some sources were skeptical that the weather would have a sustained impact, with one telling Fastmarkets “I don’t see and others don’t see a real impact.”
No rapeseed oil trades were reported on Tuesday.
Sunflower oil in six European ports for loading in May and June was offered higher at $990 per tonne FOB, with bids also rising to $970 per tonne FOB from $965 per tonne FOB to catch up.
Sunflower oil prices rose by $20 per tonne on the day as a result.
Sunflower and rapeseed oil prices were partly hit by a sense of greater war risk after a Wilmar terminal and oil tanks were destroyed in a missile attack on Pivdennyi, Ukraine, last Friday.
“Mainly [sunflower oil] impact, as far as I see… spilled into the rape complex with close link and a general feel of more issues to [agricultural] assets,” one source told Fastmarkets.