Mdex began the day with a slight decline, and by lunchtime, we were observing December futures down by 12 points at RM 3737. At the time of preparing this report, they are trading at -24 points at RM 3725. Malaysian exports have shown a modest increase of 2.4% in the period from 1-20 September compared to the same period in August. However, despite increasing production, exports are not rising at a commensurate pace, potentially leading to a buildup of stocks. We maintain our view that palm oil prices are in a consolidation phase and may experience a small technical rebound before trending lower. Palm oil is likely to find support between RM 3450 and RM 3550, and we suggest our readers consider long positions within this range. To exit long positions, target levels between RM 3850 and RM 3950, and for those looking to initiate short positions, consider levels around RM 4250 to RM 4450. If global conditions remain unchanged, crude oil could potentially reach USD 100, driving stronger demand for palm oil, which could lead to significant price rallies. However, India and China are currently experiencing sluggish consumption with ample stocks, making it more likely for prices to correct lower towards RM 3450. Offers to India for Refined, Bleached, and Deodorized (RBD) palm oil are around USD 850, but buyers are aiming for USD 820. It’s worth noting that most vegetable oils, except for soybean oil, have the potential to trade lower. We recommend considering long positions once CNF India prices touch the USD 800 mark. For today, we anticipate prices on Mdex to rebound, and before closing, we may witness prices crossing RM 3750 levels for December futures, keeping the current market range intact.
CBOT soybean oil settled lower, with December down by 65 points at 60.29 and January down by 61 points at 59.72. At the time of composing this report, December is marginally up by 6 points at 60.35, while January remains unchanged at 59.71. As previously mentioned, CBOT soybean oil is expected to correct further, possibly drifting towards 57.50 before testing long-term support levels at 54.50. During this correction, the basis, currently at -1800, is likely to correct back towards -1500, potentially putting flat price soybean oil below USD 900 on FOB terms. We anticipate a correction of approximately USD 100 on soybean oil, which could make it an attractive trading option. Offers for bean oil to India range from USD 1010 to 1020 for Argentine origin, while we hear that Russian-origin soybean oil is finding its footing at USD 950 or lower. Some afloat parcels are trading at USD 930 for India, but local oils are available at even more competitive prices. We’ve received reports of offers in Kandla at INR 790 plus duty, representing a significant disparity compared to Argentine offers. The Indian soybean seed crop is expected to be around 11 million, although these numbers could decrease due to recent excessive rains. The Indian market may need to consider imposing anti-dumping duties on sunflower oil to avoid potential closures or negative margins for crushing plants.
Black Sea Ukraine sunflower oil is encountering resistance to further price declines. Significant developments have occurred, including CPT prices trading as low as USD 650, FOB offers at USD 700, and buyers in Mersin looking to purchase at USD 750, eventually settling at USD 800. Meanwhile, India has traded sunflower oil a few times at prices ranging from USD 860 to 865. Europe remains the only region where Ukrainian produce faces restrictions to protect the domestic industry. Rape seed prices at Rotterdam are trading within the range of USD 450 to 455, while sunflower seeds landing there could be available at USD 420 to 430. The harvest is currently in progress, and the pressure on the crop may push prices slightly lower. We once again recommend that our readers consider long positions at the current prices and avoid panicking when prices correct by the last 5%