January 2025 Outlook Report: Oils

- Key Indicators: Global freight prices averaged USD 3,634.40 per 40-foot container in Dec-24, a 2.42% month-on-month (MoM) increase. This rise is attributed to increased pre-Lunar New Year (LNY) 2025 demand, frontloading in anticipation of the now-averted International Longshoremen's Association (ILA) port strike slated for Jan-25 and expected tariff hikes. Meanwhile, the World Bank's fertilizer index dropped by 0.09% MoM to an average of 119.61 points in Dec-24. This minimal decline was primarily driven by a drop in urea and diammonium phosphate (DAP) prices, which offset an increase in potassium chloride. The Food and Agriculture Organization (FAO) Vegetable Oil Price Index averaged 163.3 points in Dec-24, marking a 48% MoM drop driven by lower prices for soybean, rapeseed, and sunflower oils, which more than offset the slight rise in palm oil prices.

- Soybean Oil: Soybean oil prices in the United States (US) dropped in Dec-24, driven by rising imports of used cooking oil (UCO) for biofuel production. Argentina’s soybean oil prices fell, supported by record Nov-24 exports exceeding 630,000 metric tons (mt) and strong demand from India and China. Global vegetable oil shortages are expected to sustain Argentine export momentum.

- Palm Oil: Malaysian palm oil prices rose, driven by supply constraints from heavy rainfall and flooding in Dec-24, which reduced production for the fourth consecutive month. Crude palm oil (CPO) futures reached a 2.5-year high, with palm oil trading at a premium to soybean and sunflower oils due to limited global supplies. Despite India's import duty hike, Malaysia's palm oil exports to India grew 16.4% year-on-year (YoY) to 2.67 million metric tons (mmt) from Jan-24 to Oct-24, supported by trade agreements. Adverse weather and production challenges are expected to sustain high prices into early 2025.

- Sunflower Oil: Sunflower oil prices declined across key markets in Dec-24. Influenced by lower processor purchase prices, reduced farmer sales, and increased competition from low-cost Russian exports, Ukrainian prices fell. Russian prices decreased due to an abundant supply from a strong harvest and alternative oil competition. EU prices dropped, pressured by high crushing levels and increased imports from Russia and Ukraine.