In the last 30 days, there have been pronounced increases in all vegetable oils, with the increase in palm oil standing out, but also very significant increases in sunflower, soybean and rapeseed. In the latter cases, due to the unfavourable weather for oilseeds.
All this has led to palm oil becoming more competitive globally. July weather in the northern hemisphere will be critical for price developments in the coming weeks. The table below shows the evolution of some oils and other relevant factors in recent weeks:
Since the beginning of June, a number of circumstances have pushed the price of vegetable oils upwards. Among them are:
• Soybean planted area in the US is significantly lower than expected.
• Soybean crops are not good in the US.
• Unfavourable weather in Canada and Western Europe.
• Lower than expected palm oil production in Asia.
• Concerns about production in Australia.
In rapeseed, although Stastcan estimates that the total area will be higher than expected, there are concerns about dryness and crop deterioration in parts of Canada. Temperatures are expected to remain above or well above normal in the west when crops are in the key yield determination period. At the end of June, only 43% of the canola crop was rated “good/excellent” in Alberta (down from 71% the previous year). Private analysts are cutting the production forecast by more than 1 million tonnes (approx. 5%), and are predicting that it could be worse.
In the case of palm oil, there are opposing views on the effect of El Niño on production: MPOB forecasts that the El Niño peak will impact in early 2024 and considers it unlikely to impact Malaysian palm oil production in the second half of the year. However, other market participants attribute lower Malaysian palm oil production to water stress caused by early signs of El Niño in Sabah.
The market is looking carefully for changes in the weather pattern. If the expected increase in production materialises in the coming months, palm oil prices could become a little more competitive against other oils in the short/medium term.
To learn more about the market situation, we invite you to download and read the our Market Report by clicking the button above, where we discuss the following points:
1. Vegetable oil prices
2. Oilseeds and vegetable oils: a complex situation
3. Soybean oil
4. Rapeseed oil
5. Sunflower oil
6. Palm oil