News
16.10.2009
Big supply, weak demand weighing on sun oil in Europe
Ample supply and weak demand are weighing on sun oil prices in Europe but some market experts say output is likely to shrink going forward, which should lend support to the market. While sun oil is usually the most expensive of the liquid oils, it has traded at a discount to soybean and rapeseed oil for several months as large stocks have met with thin demand.
"There is more than enough sun oil," said one trader. "Demand is very thin, stocks are more than ample and inquiries are negligible," said another. Sun oil for October/December extank was quoted at $850 a tonne on Thursday. This compared to about $895 per tonne for November/January rape oil fob exmill and $911 a tonne for November/December soy oil fob exmill. Public stocks of sun oil in Rotterdam stood at more than 63,000 tonnes this week, compared to about 53,000 tonnes of rape oil.
Growing health consciousness among consumers boosted demand for sun oil in recent years, encouraging some food manufacturers to increase their use of it due to its relatively low level of saturated fats compared to some other oils. Traders said this trend had eased somewhat in the economic downturn as bargain prices have trumped health concerns among cash-strapped consumers.
Oilseeds analysts Oil World expect an increasing shortage of sunseed supply in coming months, as crop estimates have been scaled back in Spain, Russia and Romania and poor planting progress in Argentina may lead to lower than expected output in early 2010. "The global market is in a transition from ampleness to short supplies," Hamburg-based Oil World said in a report, adding that it expected sunseed and sun oil's price discounts to narrow compared to soybeans, rapeseed, and their oils. Oil World revised down its world production forecast for sunflowerseed to 31.7 million tonnes for 2009/10, compared to 34.36 million tonnes in the previous season.
Reuters
