US FAS cuts palm oil export estimates amid surge in soybean oil sales

Global palm oil export estimates for July of the 2022-2023 marketing year reached 51.181 million mt, down from June, led by a reduction in Malaysia's sales projections, US Foreign Agricultural Service oilseeds world markets and trade report showed July 12.

While Malaysia's palm oil export sales estimates fell by more than 1.31% to 16.50 million mt in July, the sales forecast for Indonesia—the leading vegetable oil and palm oil exporter—remained at 29 million mt, unchanged from June.

High prices through much of the 2021-22 MY have contracted vegetable oil trade, with palm oil volume affected the most. The biggest reduction in imports has been from China, where overall vegetable imports have dropped by half, the FAS report noted.

According to the report, even with the recent drop in prices led by Indonesia's repeal of the export ban and implementation of the export acceleration program, global trade in palm oil isn't expected to rebound, with buyers are waiting to see how low prices will go before they reenter the market.

Soybean sales surge

On the other hand, soybean oil export estimates were revised slightly higher in July to 12.80 million mt. This increase in oil derivative sales was led by a more than 5% month-on-month surge in Brazil's sales projections to 2 million mt.

But export estimates for Argentina, the leading soybean oil supplier, fell slightly to 5.8 million mt in July. The sales projections for the EU and the US remained at their previous month's level of 1.1 million mt and 635,000 mt, respectively.

The record crush of soybeans in Brazil has coincided with record meal exports and decade-high soybean oil sales as both meal and oil export forecasts have risen for the fourth month in a row. Exports have been boosted by greater exportable supplies on a higher crush and reduced competition from other leading exporters, such as Argentina and the US.

Brazil soybean meal export estimates rose 18.1 million mt in July, whereas the production forecast of soybean oil and meal in the country led by higher crushing has been pegged upward at 9.53 million mt and 38.35 million mt, respectively.

Also, earlier record high palm oil prices, restrictive Indonesia trade policies, and conflict in Ukraine pushed importers to switch from palm and sunflower seed oil to soybean oil, the FAS report noted.