Soya Oil Falls as India Sowing Data, Argentina Rain Weigh on Prices

For traders watching the US market, the USDA's weekly export sales report showed net soybean oil sales of 8,400 tonnes for the week ending June 12, down sharply from 130,200 tonnes the prior week. China was absent from the buyer list for the second consecutive week. The slowdown in Chinese purchases adds to headwinds for a market already facing competition from Argentine and Brazilian cargoes at a discount.

The soybean complex – meal, oil and the underlying bean – has been under pressure since mid-May as the US planting season wraps up with no material weather threat. The USDA's June acreage report, due June 30, is the next scheduled data point that could change the path. Analysts surveyed by Reuters expect soybean planted area at 86.75 million acres, slightly above the USDA's March estimate of 86.51 million acres. A number at or above the high end of the range would reinforce the bearish supply outlook through harvest.

Malaysian palm oil futures, which trade as a substitute for soya oil in many Asian markets, also fell on the week, pressured by the Indian sowing data and a stronger ringgit. The two oils typically trade within a spread of $100-$150 a tonne; that spread has narrowed to about $110, within the range where refiners can switch between them without significant cost penalty.

The near-term risk for longs is that the supply-side story continues to dominate. Sowing progress in India, favourable US weather, and Argentina rain are all pushing in the same direction. A reversal would require a demand-side catalyst – a pickup in Chinese buying, a biodiesel mandate change, or a weather event – none of which is visible as the week closes.