Still narrow palm olein-sunflower oil spread weighs on palm buying

The spread between refined bleached deodorized (RBD) palm olein and crude sunflower oil has remained narrow in the past few weeks, dampening buying sentiment for palm oil as buyers switch to sunflower instead.

Price-sensitive buyers in key destination markets such as China, India and the Middle East are likely to purchase more sunflower oil as it is priced more attractively.

On a CNF India basis, sunflower oil was offered at a premium of $45/mt to RBD olein today for October and November shipments.

The spread for December shipments is smaller, with sunflower at a $35/mt premium to RBD palm olein, according to Fastmarkets data.

This spread has been at similar levels since end-September but was at around $150/mt in July and around $400/mt a year ago.

Lower sunflower oil offers have been prompted by higher availability of sunflower seeds from Russia and Ukraine, which has contributed to greater crushing and oil supply.

In the 2023/24 season, Ukrainian crushers expect to harvest 13-14 million mt, which is on average 10% higher than last year.

Similarly, higher production from the world’s second largest exporter of palm oil, Malaysia has also kept palm olein offers from rising.

Malaysia’s crude palm oil (CPO) production in September rose by 4.3% to 1.83 million mt amid Malaysia’s seasonal peak production season, with the state of Sabah registering the highest monthly production growth at 8.3% higher to 418,052 mt.