February 2025 Outlook Report: Oils

- Key Indicators: Global freight prices averaged USD 3,945.46 per 40-foot container in Jan-25, marking a 7.3% rise from Dec-24 and a significant 35.63% year-on-year (YoY) increase. This rise was driven by general rate increases (GRIs), pre-Lunar New Year (LNY) 2025 demand, and global trade tensions. Meanwhile, the World Bank's Fertilizer Index averaged 124.29 points in Jan-25, marking a 3.91% month-on-month (MoM) increase, driven by higher prices for urea, diammonium phosphate (DAP), and potassium chloride. The Food and Agriculture Organization (FAO) Vegetable Oil Price Index averaged 153 points in Jan-25, a 5.61% MoM decline but a substantial 24.9% YoY increase. The monthly drop was primarily driven by falling global palm and rapeseed oil prices, while soy and sunflower oil quotations remained stable.

- Soybean Oil: The United States (US) soybean oil prices surged in Jan-25, rising 8.05% MoM, driven by strong biofuel demand and increased exports, particularly to India. The United States Department of Agriculture (USDA) raised its 2024/25 export forecast to 1.6 billion pounds (lbs), boosted by tighter palm oil supplies. Despite high domestic stocks and record soybean crushing, prices remain volatile, influenced by biofuel policies, renewable diesel demand, and soybean production uncertainties. Argentina’s soybean oil prices fell 1.64% MoM in Jan-25 due to global oversupply and biofuel policy shifts, though the European Union-Mercosur trade deal may support exports.

- Palm Oil: Malaysia's palm oil prices dropped 11% MoM amid ongoing weather disruptions, including late 2024 flooding, and tighter production forecasts from the USDA for the 2024/25 marketing year (MY). Despite these challenges, Malaysia stands to benefit from the Malaysia-United Arab Emirates Comprehensive Economic Partnership Agreement (MY-UAE CEPA), which is expected to improve market access in the Middle East and North Africa (MENA). The export tax on crude palm oil remains at 10%, adding pressure to pricing dynamics.

- Sunflower Oil: Ukraine’s sunflower oil prices fell slightly by 0.36% MoM in Jan-25 due to reduced production and lower exports, with strong demand from India and the EU supporting its market position. In Russia, prices decreased by 0.92% MoM due to increased production, with record harvests and rising exports to China and Central Asia, though export duties will increase in Feb-25. EU sunflower oil prices dropped by 1.30% MoM in Jan-25, impacted by significant production declines, particularly in France and Hungary, and expected to remain volatile amid tightening supply.