Monthly Stock Comparison 2022

Despite the significant recovery of PO stock level in July (up by 40.9%) and also the reversal of 6-month downtrend witnessed since beginning of 2022, total stocks of 3 major vegetable oils continue to drop in July and charted a multiple-year’s record low of 1.22 million MT, a m-o-m drop of 6.3% or 82,000 MT from June. With this 2nd consecutive month drop of total stock, the volume is also sharply below the monthly average stock level recorded in 2021 at 1.57 million MT by 22.3%. 

With the global vegetable oils prices charted sharp drops concurrently in June and further into the month of July, this has triggered the demand from end users, after most being held back or slowed down the operation due to high raw materials cost in first half of 2022. With a sharper drop of PL price compared to SBO, a price discount reappeared in mid-July. At end July, the discount had widened to RMB650/tonne. This has made PL more attractive than SBO, especially to medium-pack cooking oil packers. Also, during summer, PL does not need fractionation for its use, and reduce costs and raise the volume of PL included in cooking oil.  Besides that, with the overall price of vegetable oil has gone down by as much as 44% in the domestic market from its peak, most SME food manufacturers would want to recover profits when consumer demand strengthens in the second half of 2022. With this prospects in place, the cargoes arrival of PO in July is expected to be stronger than the historically low volume recorded in June (despite the unavailability of customs import data) as importers will beef up their effort to take advantage of the business opportunities lying ahead. Nevertheless, as the pace of demand was slower than import volume, this has caused the build-up of PO in July.

Different from PO, stock level of SBO reversed its upward trend and dropped to 4-month low of 784,100 MT. This was partly due to the poor crushing margin at average of –RMB52.50 in July, which is also the 3rd consecutive month that the soybean crushing margin remained in the negative territory this year.  The poor crushing margin was mainly due to the poor margin in the swine farms which causes the slowdown in soybean meal consumption.  However, as the PL discount against SBO only reappeared in July, the demand for SBO was stronger against PO, and this has caused the digestion of some of the SBO stock in the month of July due to the lower SBO output from crushing activities, and led to the drop in SBO stock.

Stock level of RSO continues to drop for the 5th consecutive month in 2022, and charted the 17-month record low of 165,100 MT in July.  Due to the high prices and shortage in supplies of both RSO and rapeseed, the demand for RSO in China will remain low, until the Russia-Ukraine war being resolved, and also recovery in rapeseed production in Europe.  With the total import of RSO and rapeseed in Jan-Jun 2022 was only approximately 37% and 51% respectively of what was recorded in same period last year, the users could only rely on the stock available in the local market and also depending on the high output of rapeseed in China.

July 2022 stocks are 67% lower than July 2021 and 25% lower than the previous month, June 2022. July 2022 stocks, at 209k, are at another historical low level and such low levels have not been seen as far back as one can remember. This is because of the major price correction taking place in global oils markets. Specifically, CPO stocks have touched another historical low of 40k, whereas CDSBO stocks have risen to 168k, even higher than the previous month stock of 143k. This could be because of the short lead time in supplies of POP compared to the longer sailing time for CDSBO. With falling prices, imports are on a hand-to-mouth basis. Whilst POP stocks fell by 70% compared to June 2022, Soft Oils stocks witnessed an increase of 17%. CSFO stocks continue to be at low levels in the absence of Ukrainian supplies but this may change in the coming months due to resumption of exports. RBD Olein stocks continue to fall sharply in light of CPO becoming more competitive with adjustments in Indonesian export duties/levies. Indian processors can only hope that this situation continues. SBO stocks benefited most during this month, rising 18% compared to June 2022 whilst SFO stocks came down to negligible levels in view of continued supply constraints from Black Sea ports. SFO stocks decreased almost 100% compared to July 2021, SBO stocks decreased by 25%, and PPO stocks fell 82% during the same period. The Ukraine situation will continue to influence the composition of the import basket, especially SBO/SFO. This is an opportunity for PO suppliers to step forward and regain some of the lost ground. However removal of certain import duties/cess on Soft Oils has made them more competitive, throwing up new challenges for PPO. Suppliers will have to live with the fact that the Indian market is getting used to operating with significantly lower stock levels as nobody wishes to be caught with high-price stocks.

At the end of July 2022, the edible oil stocks at Port Qasim Authority (PQA) and Karachi Port Trust (KPT) have recorded a figure of 286,430 MT which is 198.61% higher than the closing stocks of the previous month. Out of the total 286,430MT of stocks available at Port Qasim Authority and Karachi Port, the stocks of RBD palm oil is showing the highest share of 49.42% followed by palm olein 33.88%. Palm oil and its various fractions have a share of 87.22% in the total ending stocks.

The oils and fats imports and arrival in Pakistan registered a total of 314,000 MT which resulted in enhancing the level of local stocks to a more comfortable level. The stocks are likely to exceed 300,000 MT at the end of August 2022 as the arrivals in the month of August are also likely to remain in the range of 280,000 – 300,000 MT.

Source: MPOC Market Intelligence

Stock figures will be updated no later than the 10th of every month

July 2022 stocks are 59.93% lower than June 2021 and 61.10% higher than the previous month, June 2022. Meanwhile, POP Stock increased by 58.61% compared to June 2022, Soft Oil stocks increased by 63.49%. RBD Olein stocks continue to be at healthy levels compared to CPO, thereby indicating sustained imports. Palm Oil & soft oil stocks have increased due to drop in prices in international markets.

The Govt. Subsidiary organisation TCB has started distributing palm oil and soybean oil at lower cost and selling to retail customer over the country from June, resulting in increased import volume of palm oil in July. Due to lower price as well as market demand, POP likely to increase in Aug 22 as well

US ending stock reported a total of 1,146,000 MT for May 2022, reflecting a decrease by 0.95% compared to the previous month. From that amount, the ending stock of soybean oil decreased by 0.95%. No changes were reflected by palm oil, sunflower oil and rapeseed oil end stocks when compared to the amount from the previous month. Sizably higher soybean plantings in the USA, Brazil, Argentina and China are expected to boost the global soybean area by about 5 million ha. Most of the increase in soybean supplies will occur from early 2023 onwards when South American crops become available. In the USA, soybean plantings were done in mid-June. Weather forecasts for June and July 2022 are favourable for US summer crops. August is the most important month of pod-setting and filling stages for US soybeans. In South America, estimated soybean production in Brazil, Argentina, Paraguay and Uruguay is estimated to increase by 27.2 million MT.