Vegoils commentary: CPO, soyoil bounce back following Tuesday’s slump

Crude palm oil (CPO) futures recovered from the previous day’s losses to close higher on Wednesday May 15, propped up by firmer related vegoils and bargain buying.

The most active three-month CPO futures contract for July-delivery on the Bursa Malaysia Exchange closed 1.02% higher at 3,854 ringgit ($815) per tonne, staying in positive territory throughout the day.

Chinese vegoil futures were mixed, with the most active palm oil contract on the Dalian Commodity Exchange closing 0.21% higher at 7,532 yuan ($1,041) per tonne, while the equivalent soybean oil contract inched up by 0.54% to 7,810 yuan per tonne.

Meanwhile, the most active rapeseed oil contract on the Zhengzhou Commodity Exchange fell by 1.36% to 8,783 yuan per tonne, tracking lower overnight canola futures on the Intercontinental Exchange (ICE).

Indications of weaker export demand had limited downward pressure on palm oil prices, with Malaysian palm oil exports for the first half of May estimated lower on the month by cargo surveyors Intertek Testing Services (ITS) and Amspec Agri Malaysia.

ITS placed exports 5.19% lower from April 1-15’s estimates at 600,777 tonnes, while Amspec reported volumes 17.59% lower at 574,760 tonnes.

In the physical market, Chinese buyers were more active, with trades done for June and July shipment at $888 and $882.50 CFR per tonne, while CPO was also heard traded to India at $950 CFR west coast India for May shipment.

CPO was also offered at $930-935 per tonne CFR west coast India for June, with buying ideas around $925 per tonne CFR.

Offers for Indonesian CPO were also heard around $900 per tonne FOB for June cargoes, with offers for olein at $857.50 per tonne FOB Indonesia for July.

Meanwhile, freight rates for palm oil vessels moving from Southeast Asia to key Asian destinations diverged this week.

Rates for 18,000-20,000 tonne vessels from Southeast Asia to west coast India dipped by $1 per tonne to $47 per tonne, while rates for 10,000-12,000 tonne vessels from Southeast Asia to China narrowed upward by $1 to $36-45 per tonne from $35-45 per tonne the previous week.

In the Americas, soyoil futures bounced back on Wednesday May 15 after Tuesday’s steep losses, while soymeal contracts moved narrowly.

The July soyoil contract on the Chicago Mercantile Exchange (CME) increased by 1.3% on the day to 43.95 cents per lb at the time of publication.

The bounce back came following firmer palm oil prices in Malaysia earlier in the day and an uptick in crude quotations.

Technical buying could have provided further support following Tuesday’s losses of over 4%.

Soymeal futures, meanwhile, were broadly steady on the day despite some downward pressure from product-spreading dynamics and falling grain prices.

The July CME soymeal contract was trading unchanged from Tuesday’s close level at $373.50 per short ton at the time of publication.

In the physical market, South American soyoil premiums were mixed, trending lower across the curve in Argentina and for farther delivery months in Brazil.

The June basis in Argentina edged slightly lower on the day to a discount of 4.45 cents per lb to July CME futures.

The premium for the same loading month in Brazil also dropped slightly by 0.15 cents per lb on the day to a discount of 3.65 cents per lb to the same underlying futures contract.

Soymeal premiums surged in Brazil, with the June basis up by $6 per short ton to a premium of $12 per short ton to July CME futures.

The surge in Brazil’s basis narrowed the price gap with meal premiums in Argentina, where the June soymeal basis was assessed $2.50 per short ton higher on the day at a premium of $12.50 per short ton to July futures.

Sunflower and rapeseed oils in European ports were relatively stable on Wednesday, with no significant changes in indications from sellers and buyers.

Sunflower oil was offered at $1,000 per tonne FOB against buyers’ idea of $992.50 per tonne FOB — $42.50 per tonne higher than at the time of market opening — while loading was implied in July, August and September.

Rapeseed oil bids for shipment in August, September and October were heard at €960 ($1,037) per tonne FOB Rotterdam, while buyers’ ideas were heard at €955 per tonne FOB Rotterdam.

The lack of sunflower oil offers in the Black Sea region supported prices, while sellers’ offer levels were not firm and buyers raised prices to $895-900 per tonne CIF Mersin for delivery in May-June — $15-20 per tonne higher than the day before.

Spot bids at ports were at $820 per tonne CPT Pivdennyi-Odesa-Chornomorsk (POC), while sellers’ levels were not lower than $830 per tonne CPT POC.

Sunflower remained highly in demand with a low number of offers, forcing crushers — who previously showed low bid levels — to adjust prices upward, while the average buyer level for sunflower seed with an oil content of 50% was 18,000 hryvnia ($451) per tonne CPT plant, including VAT.