Brent crude rose from $104 to $112 per barrel over the week, and vegetable oil markets moved with it. The trigger was fresh US threats to resume attacks on Iran, reports of attacks on the UAE and Saudi Arabia, and Iran’s announcement of a new body to oversee the Strait of Hormuz. Vegetable oil markets have been trading in close correlation with Brent since the conflict began, and this week was no exception.
El Nino is running as a parallel risk. NOAA forecasts an 82% probability of El Nino emerging by July 2026. Dry conditions are already being reported in Indonesia, Malaysia, and the Philippines. MPOB estimates that if El Nino conditions strengthen and persist, irreversible damage to oil palms could begin emerging 8 to 22 months later.
BMD crude palm oil partially recovered after a mid-week dip driven by profit-taking and uncertainty over Indonesia’s B50 programme, which is set to start July 1. There are open questions about allocations for subsidised versus unsubsidised participants. The Indonesian government has also handed roughly 2.37 million hectares of seized plantations to state-owned Agrinas Palma Nusantara, bringing the total under government control to 4.12 million hectares. Market participants are watching closely for any impact on investment and yields. SPPOMA reported palm production for May 1 to 15 declined 16.42%.
In the soy complex, CBOT soybean oil recovered to 75.63 cents per pound after news that China committed to purchasing at least $17 billion in US agricultural products over three years. The E15 bill in the US remains a live risk for soybean oil demand: FAPRI and CBO analyses warn the legislation could reduce demand for biomass-based diesel, and the American Soybean Association has privately advised members it cannot support the current form of the bill.
MATIF rapeseed (August contract) rose to EUR 529 per tonne, lifted by Brent and dryness reports in Germany, Poland, Hungary, the Czech Republic, and the Baltic states. Australia’s canola crop is forecast at around 6.8 million tonnes for 2026/27, but El Nino-related heat and dryness is cited as a risk factor. Sunflower oil (FOB 6 ports) reached $1,510 per tonne, with ADM’s Chornomorsk crushing plant confirmed idle since end of April due to plant damage. A tenth consecutive Argentine sunflower seed shipment failed EU inspection on pesticide grounds. Vesper estimates accumulated sunflower oil supply in the EU during September to April is running around 14% below the same period last year.
Coconut oil weakened slightly while palm kernel oil eased on lower week-on-week crude palm oil prices. Extra virgin olive oil in Spain dipped from EUR 4,338 to EUR 4,256 per tonne on improving 2026/27 harvest expectations, with total availability for next season potentially reaching around 2.1 million tonnes including carryover.
The full Vesper report covers the Q2 to Q4 outlook for palm, soy, rapeseed, sunflower, coconut, palm kernel, and olive oils: https://app.vespertool.com/market-analysis/3008
