Argentina is one of the main exporters of both soy and sunflower oil. These products have attracted the markets, along with record harvest that strengthen the placement of these products overseas. However, in the following months the market key variabes may determine a falling trend, due to many factors, among which we find the growing plantations of oleaginous in the United States, the fright about the spread of aviar flu, and the intensive competence of oils from Southamerican countries –mainly Argentina and Brazil.
With regards to the soy oil, exportations are below the expected range for the year 2005. The behavior of markets is unexpectable, and can produce fluctuating changes that affect the forecast of every export plan, since the gold, silver, and oil price tend to affect and generate a domino effect over soy evolution and its derivatives. Anyway, if the current sown fields consolidate, even with a lower average yield, it is possible to reach a relation stock/consumption of 30% for the campaign 2006/2007, the highest since the season of 1985/86. For this season, Southamerican export sales turn aggressive and appeal to discounts and attractive offers in order to conquest markets. All the same, the possibility of rises are tied to news in the international stage.
With regards to the sunflower oil, the quotes of vegetable oils in Rotterdam Square and the main exporting ports have shown important increases in recent years. The highest figures were around 7% for sunflower and rape oil. Its last quote –April, 2006- sunflower oil went up 35 dollars closing in 650 u$s/t (615 in the quarter and 605 previous month). We can work out that vegetable oils have shown rising trends, with no falls in any market or plaza. However, prices should keep at this level to produce benefits. According to Oil World, oleaginous’ world prices are being pressed by a high demand. World production of oleaginous might reach a record figure of 384.7 millions of tons (377.7 the previous year) and would exceed the consumption level in 6 million.
Among vegetable oils, soy oil may be benefited in the short-term because of the boost of biodiesel –like it happens with sugar-. Sunflower oil could also benefit from this favorable trend, besides the important global offer. To sum up, according to the information forecast for the second term of 2006, the demand of vegetable oil would increase along with a reduction in stocks and a growth in the demand of soy and sunflower oil, thus, strengthening prices in the medium and long term.
We should bear in mind that the oil production chain are part of the value of the value chain of the crop and getting a cost reduction is extremely important to keep its competitive advantage in the market. At the same time, argentinian exporters must take advantage of this chance, since our country is a reference and leader in sunflower oil exportations.
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