July 2024 Outlook Report: Oils

- Key Indicators: Global freight prices jumped 38.60% in Jun-24 to USD 4282.67, rising more than USD 1,000 MoM. This increase results from an early start to the ocean peak season, high global port congestion along with continued disruptions in the Red Sea. The World Bank fertilizer index jumped nearly 10 points to 118.2 in Jun-24, a 8.99% increase, roughly back to its level in Dec-23. The increase resulted from increases on fertilizer prices across the board, especially urea prices.

- Soybean Oil: In 2024/25, the US expects to be a net exporter of soybean oil with a decline in its price premium due to increased use of alternative feedstocks for renewable diesel production, particularly in California. Soybean oil's share in biofuel feedstock consumption fell from nearly 45% in early 2022 to below 35% in early 2024. Production is forecasted to reach a record high, driven by a 4% increase in domestic demand, leading to reduced imports and a modest recovery in exports. Soybean oil futures rose 6.8% on the CHX due to higher biodiesel use, rising crude oil prices, and anticipated biofuel demand. Argentina's soybean sales dropped 45% MoM in June 2024, affecting exports, while Brazil's soybean oil production is projected to increase by 1% YoY, with exports declining by 44% YoY.

- Palm Oil: In Apr-24, Indonesia's palm oil consumption fell by 0.26% to 1.893 million metric tons (mmt), with exports dropping by 14.94% to 2.178 mmt. Crude Palm Oil (CPO) exports declined at 46.7%. Conversely, Palm Kernel Oil (PKO) exports surged from 0.2 thousand metric tons (mt) in Mar-24 to 6 thousand mt in Apr-24. Exports to China, India, and Bangladesh fell sharply. In May-24, Indonesian palm oil exports dropped by 27.11% YoY. Furthermore, Malaysian palm oil futures fell but rebounded later in Jun-24 due to lower production forecasts and higher soybean oil prices. The Malaysian Palm Oil Association (MPOA) projected a 6.3% YoY decline in production for Jun-24. IMPAC plans to propose windfall tax revisions for Budget 2025. Malaysia's 2023 palm oil production was 18.5 mmt, much lower than Indonesia's 48 mmt, prompting new government support schemes for smallholders.

- Sunflower Oil: In the 2023/24 MY, Ukraine significantly increased sunflower oil exports, reaching 714 thousand mt on May-24, a 14% MoM rise and the highest volume since Jan-21. Between Sep-23 and May-24, Ukraine exported a record 5.14 mmt, driven by high demand, competitive pricing, and stable port operations. However, near-record processing rates and a reduced oilseed harvest have led to low stock levels, anticipating a decrease in processing and supply from Jun-24 to Aug-24. The EU remains the primary market, accounting for 60% of exports, with Ukraine holding a 93% market share in the EU. In the same MY, Russia's sunflower oil production is forecasted to reach a record 7.55 mmt, a 13.5% increase from the previous season, boosting exports to 4.59 mmt, a 14.3% rise. Sunflower oil prices in Russia increased by 22.35% YoY, with a significant portion exported to China, causing other buyers to switch to Ukraine. Russia will maintain a zero export duty on sunflower oil for the 14th consecutive month while reducing the export duty on sunflower meal by 42%.