Duty Hike Pushing Indian Veg Oil Prices Higher

Domestic vegetable oil prices have risen sizably since the steep increase of import duties on Sept 13....On Sept 17, prices of soya oil, sunflower oil and RBD palm olein were 11–13% higher than on Friday on the Indian wholesale market. However, the price increase registered during the past two days reflects the impact of the higher duties only partly...

US Soya Oil Stocks Falling to 10-Month Low in August

Sharply lower than expected soybean crushings and comparatively high domestic usage further reduced US soya oil stocks in August...Soybean crushings of NOPA members declined to 4.3 Mn T in August, 0.4-0.5 Mn T below expectations and the lowest monthly crush in 4 years...

Crop Losses in the Black Sea Region Seen Curbing World Exports in 2024/25

World exports of sunflower oil are forecast to decline by at least 2.1 Mn T from the record of an estimated 16.0 Mn T in Oct/Sept 2023/24, even on the assumption that stocks in the supplying countries are reduced sizeably towards the end of this season. Limiting factors are to be seen in a sharp reduction of sunflowerseed crushings by approximately 4 Mn T worldwide and in the lower oil content of this year’s crop, following partly severe drought  in the Black Sea region....

Most of the required demand-rationing likely to occur only in the second half of the season, forcing consumers to switch primarily to soya oil....More details in the WEEKLY...

China/Canada Trade Dispute Changing Global Trade Flows

The threat of Chinese import restrictions on Canadian canola has added an additional risk to the already volatile global supply and demand outlook for rapeseed & canola in 2024/25. Chinese authorities have reportedly initiated an antidumping probe into canola imports from Canada in response to Canadian restrictions on Chinese electric vehicles last week. Canola futures reacted to the deteriorating export prospects and dropped by 4% on Sept 3. The downtrend continued in overnight trading.

However, details and timing of any measures are still unclear. Hereunder, we summarize possible implications of such a decision:

    1) Timing: Statements from Chinese authorities so far only indicate a probe into potential import restrictions, creating a window of opportunity for Chinese crushers to step up imports prior to actual sanctions.

    2) Extent: During the last trade conflict, which started in early 2019, China blocked canola imports from the two largest Canadian exporters, while shipments of canola oil and meal were not affected. The extent of the new restrictions as well as the products involved will thus be major swing factors to watch. During the previous conflict, China stepped up imports of canola oil and meal to at least partly offset a shortage of them on the domestic market.

    3) External effects: How will global trade flows change in case of Chinese import restrictions on Canadian canola? We expect that China will step up imports of Russian rapeseed in 2024/25, promoted by this year’s record Russian crop of at least 4.9 Mn T (up 0.7 Mn T from a year earlier) and prohibitively high EU import duties on Russian oilseeds and products, which are likely to keep rapeseed crushings in Russia (primarily at plants located at the Baltic Sea) below potential.
 

Large Uncertainties on Supply and Demand Sides

Important uncertainties are shaping up for producers and consumers of vegetable oils in 2024/25. A key variable to watch is to be seen in the magnitude of the prospective declines in world production of sunflower oil and rapeseed oil, contrasting with ample to burdensome supplies in 2023/24. The palm oil market will have difficulties to offset shortages in seed oils owing to the persisting structural problems such as aging trees and subdued yields.

Indeed, ample global soybean supplies shaping up in 2024/25 represent the biggest reservoir for the vegetable oil market. However, the assumed above-average growth in soybean processing will result in a further massive increase of soya meal production...

11-12 Mn T Increase in World Soya Meal Usage Required in 2024/25

We currently expect world production of soya meal to reach a record 272.5 Mn T in Oct/Sept 2024/25, implying an increase of more than 12 Mn T in the second consecutive season. Following relatively tight supplies in Oct/Dec 2023, world soya meal output already recovered substantially in Jan/Aug 2024, exerting price pressure.....

In contrast to the sizeable increase in world soya meal output, combined production of the 7 other major oilmeals is forecast to decline by  1.7 Mn T in 2024/25 compared to an increase of an estimated 3.4 Mn T expected in the current season... More details in the MONTHLY...

Changes in Trade Flows

Significant changes in trade flows have started to occur and will continue throughout the 2024/25 season. Harvesting of rapeseed is largely completed in the European Union, the UK and Ukraine, with yields and production this year considerably reduced from a year earlier. Rapeseed production in the EU-27 is seen declining sharply by 2.6 Mn T from a year earlier to 17.5 Mn T.

Rapeseed prices in the European Union have strengthened relative to Canada and other origins to attract larger imports and supplement insufficient domestic supplies. We anticipate world exports of rapeseed & canola to decline to a 3-year low of 17.9 Mn T in July/June 2024/25 compared with 19.0 Mn T a year earlier. Significant declines in Ukraine and Australia contrast with prospects of considerably larger exports of Canada and Russia...