Vegoils commentary: CME soyoil down on product-spreading, Asian vegoils firm

Crude palm oil (CPO) futures inched up on Monday April 29, aided by strength in related vegoils, though trading was cautious with the market waiting further indications for April’s supply and demand performance while Chicago soyoil prices faced headwinds due to surging soymeal quotations.

The most-active third-month CPO futures contract for July-delivery on the Bursa Malaysia exchange rose by 0.64% to 3,921 ringgit ($822) per tonne, recovering some of the losses from Friday April 25, tracking firmer overnight soybean oil futures on the Chicago Mercantile Exchange (CME) and other Asian vegoils.
 
Chinese vegoil futures rose on Monday, with the most-active palm oil contract on the Dalian Commodity Exchange closing 1.39% higher to 7,434 yuan ($1,025) per tonne while the equivalent soybean oil contract rose by 0.95% to 7,650 yuan per tonne.
 
The most-active rapeseed oil futures contract on the Zhengzhou Commodity Exchange also rose by 1.61% to 8,439 yuan per tonne.
 
Preliminary estimates from cargo surveyor Intertek Testing Services (ITS) have put Malaysian palm oil exports for the full month of April at 1.24 million tonnes, or 6.75% lower from a month before, with finalized estimates expected on Tuesday April 30 along with other cargo surveyor estimates.
 
If the estimates are accurate, it would mark a reversal from ITS’ earlier estimates for April 1-25, which had put exports for the period up by 1.53% month on month and estimates from earlier in the month, which indicated growth in Malaysian palm oil exports for April.
 
Meanwhile, production estimates from the Southern Peninsular Palm Oil Millers Association (SPPOMA) had also put production for April 1-25 up by 4.11% month on month, another reversal from estimates for April 1-20 and April 1-15, which had indicated a drop in output.
  
Market participants are also waiting for Indonesia’s announcement for its CPO reference price for May, with most sources expecting that it will remain at the current tier of $830-880 per tonne, which effectively keeps the export duty and levy unchanged from April, though it is likely to come in close to the next tier given the recent shifts in palm oil prices.
 
In the physical market, offers for olein to the east coast of India were heard around $910 per tonne CFR for May, while Chinese buyers were heard to have picked up one to two olein cargoes for August shipment around $868 CFR per tonne.
 
CPO offers to India were hovering at $947.50-957.50 per tonne CFR west coast India for May shipment and $940-950 per tonne CFR for June through the day while there were also talks of CPO traded to India for May shipment around $942-945 per tonne CFR east coast India, though some market sources disputed the trade’s conclusion.

In the Americas, soymeal futures surged on April 29, putting pressure on soyoil prices while the labor union of Argentina’s oilseed crushing industry announced a strike that could hamper the country’s crush activity and the shipment of beans and downstream products.

The July soyoil contract on the Chicago Mercantile Exchange (CME) dropped by 1.5% day on day to 44.87 cents per lb at the time of publication.

The Argentine Oilseed Crushers Union (SOEA) announced a strike, which starts on Monday, for an indeterminate period, with multiple entities in the country mobilizing against the government’s proposed economic law reforms.

Roughly 80% of all crushers in the country are expected to be impacted.

While the strike could have a widespread impact on the world’s biggest soybean meal and oil exporter’s crush and export activities, some market sources said it is still hard to know if it will be short- or long-lived.

Soyoil prices lost steam despite a firmer tone in Asian vegoils markets and a somewhat weaker US dollar, while lower crude prices put additional pressure on prices.
 
Soymeal futures surged with a bias to the front end of the curve, with July CME contracts up by 3% fay on day to $354.90 per short ton at the time of publication.

The spike came despite a plunge in wheat prices following the recent rally, with the Argentine strike potentially leading some investors to add a near-term risk premium to the market.

In the physical market, South American soyoil basis were mixed on Monday, with premiums rising in Argentina and dropping for most shipping windows in Brazil.

The soyoil basis for June loading was assessed 0.45 cents per lb higher in Argentina at a discount of 6.85 cents per lb to July CME futures; in Brazil, the June basis edged down by 0.4 cents per lb to a discount of 6.55 cents per lb to the same futures contract.

Premiums in Argentina are more competitive than in Brazil for most of the price curve.

South American soymeal premiums for June loading were lower in Brazil and higher in Argentina on Monday.

The June soymeal basis was assessed at a premium of $3 per short ton in Brazil and $10.50 per short ton in Argentina, both over the July CME futures.

Brazilian soymeal premiums remain cheaper than those in Argentina up to October, a situation that is expected to change once Argentina’s harvest and sales start to pick up.

Sunflower and rapeseed oil markets at European ports were relatively calm on Monday, with almost complete price stability compared with last week.
 
Sunflower oil in six European ports was offered at $980 per tonne FOB against buyers’ idea of $960 per tonne FOB with loading in May-June.
 
Rapeseed oil for May shipment was offered at €1,005 ($1,074.66) per tonne FOB Rotterdam on Monday, while bids were heard at €977 per tonne FOB Rotterdam.
 
The sunflower oil market in the Black Sea region was quite sluggish on Monday, with a limited number of sellers at fairly high prices from $890 per tonne CIF Mersin and Izmir, while buyers’ ideas were heard at $865 per tonne CIF Mersin and $850-860 per tonne CIF Izmir, with delivery in May.
 
India CIF sunflower oil was offered inactively, with offers at $960 per tonne and no bids disclosed.
 
Spot purchases in Ukrainian ports have slowed since the end of last week, while some buyers had built up the necessary inventory and did not force further purchases, with bids at $810 per tonne CPT Pivdennyi.

Editor’s note: The buyers’ ideas for sunflower oil in six European ports was incorrectly stated as $860 per tonne in the 26th paragraph. This has been corrected to $960 per tonne.