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Vegetable oils recover slightly but trend remains lower

Harvest in Brazil now in excess of 50% and concerns on Argentina crop has had little impact. Premiums on Soybeans FOB Brazil has essentially dropped from +30 to even since Jan31 showing that it has been difficult to find buyers. On the Vegetable oil side, we are also seeing premiums weakening almost immediately whenever futures rise and bid/ask spread remains large. Meanwhile on the European side, we see that Rapeseed oil remains the cheapest oil and curve is essentially flat to end of year at 1100Euro/Mt FOB Dutch Origin which is now only 30Euro/mt cheaper than Soyoil and 60Euro/mt cheaper than Sunflower oil. It would appear that a lot of Russian/Ukrainian Sunflower oil has made it to India displacing soybean oil as January imports into India of Sunflower oil were a record 461,000MT. Oilshare contribution on screen remains at less than 40% telling us we are hardly running out of Soyoil at the moment but the developing story of emerging mad-cow disease in Brazil could have a large impact on feed demand. This is a story to watch as we move close to Argentina harvest knowing that storage for the remaining 25% of the Brazilian soy crop will be very difficult to find.

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