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Edible Oil Market Update

(09/16/2022)

VENTURA NEWS & VIEWS
September 16, 2022 

Edible Oil Market Summary

Soybean Oil Summary

The shortened holiday week started with a sharp selloff in CBOT soybean oil futures, though the losses were largely erased by Friday’s close. October futures traded down as much as 7% before bouncing higher largely on technical support, ending the week down just under 2%. Soybean crop conditions were again left unchanged this week at 57% good-to-excellent, in line with last year. All eyes are on the USDA’s September WASDE report due out on Monday. The average trade guess for 2022/23 US soybean yield is 51.5 bu/acre which would be a slight drop from USDA’s August estimate, but would still be the 2nd highest yield on record.

Canola Oil Summary

Canola futures hit a 14-month low this week on an increase in farmer selling and weaker rapeseed markets. Higher than anticipated rapeseed yields in Europe and forecasts calling for near record high production in Australia are expected to challenge Canadian canola exports. Harvest is slowly getting underway in Canada though it is not expected to ramp up for another 10-15 days; early indications show improved oil yield over last year’s drought-stricken crop. Nearby canola oil basis has recently eased as a result of the favorable crop outlook. However, an EPA approval allowing canola oil to be used as a pathway into biofuel is anticipated in the coming weeks, which could limit further downside potential for basis.  

Palm Oil Summary

BMD palm oil futures closed lower for the 4th consecutive week, falling 8% to 3509MYR and settling firmly below the psychologically important level of 4000MYR. Demand concerns heavily pressured prices as China extended COVID-related lockdowns and restrictions across several regions. As one of the top palm importers, China is a major demand center whose limited buying interest may lead to further inventory builds if it doesn’t soon change. The Malaysian Palm Oil Board (MPOB) releases August supply and demand data on Monday. Analysts expect month end stocks to hit the highest level in 2 years and for production to post healthy seasonal gains. With improving supply/demand fundamentals and historically weak South American soybean oil basis, palm oil prices may continue to face headwinds.

Source: Ventura Foods News & Views