With the onset of the Black Sea conflict in early-2022, an effective shutdown of Ukrainian export channels heightened fears about global sunflower oil availabilities and caused a broad-based spike in vegetable oils prices. How has the situation evolved since then, and what is the market outlook for the main vegetable oil types: soybean, sunflowerseed, rapeseed/canola and palm?

Soybean oil: Ample supplies expected in South America
With US biofuels producers absorbing record amounts of soybean oil, the country's export availabilities have dwindled and dispatches are projected at a record low in 2023/24. In contrast, Brazilian supplies have been more than sufficient to absorb domestic and international demand. Argentina, where volumes channelled to the biofuels sector are relatively small, remained the biggest exporter in 2022/23 despite a plunge in soybean production. In anticipation of bigger harvests and expanded processing, South American surpluses should be large in 2023/24.

Sunflower oil: Prices retreat sharply on expanded processing and exports
Reflecting expanded sunflowerseed supplies for processing in the Russian Federation and Ukraine, sunflower oil values have dropped sharply from their 2022 peaks. The Black Sea Grain Initiative was important in facilitating Ukrainian exports from early August 2022 until the suspension of the deal in July 2023, in addition to increased shipments across western borders to the EU. Despite the continuing conflict and logistical challenges, Ukrainian sunflower oil exports have been consistently large during 2023, with Russian suppliers also dispatching sizeable amounts. Amid heavy outturns and an uptick in processing, sunflower oil exports could rise further in 2023/24.

Rapeseed/canola oil: Trade at elevated levels
Heavy world rapeseed/canola outturns in recent seasons have swelled availabilities for processing and boosted rapeseed/canola oil exportable surpluses, most notably in Canada. Global trade is seen at historically high levels in 2022/23 and 2023/24, with rising demand also linked to US canola oil imports from Canada, including for biofuels sector use.

Palm oil: Plentiful supplies satisfy growing demand
For palm oil, the most abundantly produced and consumed vegetable oil, plentiful supplies have been central in keeping markets in check, with global production seen at a record in 2023/24. While industrial demand has risen significantly, shaped by biodiesel mandates in Indonesia, supplies have been sufficient to satisfy food consumption. Together with Malaysia, both countries have also been able to satisfy growing export demand.

Conclusion and outlook
After reaching historic peaks in 2022, international vegetable oils quotations have fallen steeply, with quotations of all types 50 percent or more below their recent highs. Looking ahead to prospects for 2023/24, markets will likely be characterized by sizeable harvests and expanded processing in leading vegetable oils exporters. On the demand side, food use will remain the largest component of uptake. However, biofuels mandates will ensure that industrial requirements continue to account for a sizeable – and potentially larger – share of consumption.