16 Juni 2020

FAO vegetable oil price index falls to eight-month low

UFOP Chart of the week (21 2020)

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Decreases in prices of palm oil, soybean oil and rapeseed oil show through more strongly in the FAO price index than do increases in asking prices for sunflower oil. Consequently, the index declined for the third month running.

The April FAO price index for vegetable oils slipped 7.2 points, or 5.2 per cent, compared to the previous month to 131.8 points. This was the lowest level since August 2019 and also the third decline in three months running. The reason was falling prices for palm oil, soybean oil and rapeseed oil. In contrast, sunflower oil became more expensive. Palm oil dropped especially sharply compared to the previous month.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has stated that the slump was mainly due to the corona-related economic downturn and the associated sharp decline in diesel and biodiesel consumption to meet blending quota requirements. The pressure on prices was also exacerbated by the ruinous competition in crude oil production. Crude oil prices recently hit historic lows. UFOP has pointed out that, at the same time, larger than expected palm oil production and increased supplies in Malaysia put pressure on vegetable oil prices.

Prices for soybean oil and rapeseed oil were also pulled down. Soybean oil was under additional downward pressure from swelling supply based on a temporary significant increase in US processing volumes. In contrast, international sunflower oil prices rebounded slightly in April on support from brisk import demand and concerns about shortages in exportable supply.

Source: UFOP, Chart of the week (21 2020), press release, 2020-05-20.

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