The Food and Agriculture Organization of the United Nations (FAO) vegetable oil price index dropped 12% over the past year to reach its lowest level since December 2018 as a result of a slide in palm and soyabean oil prices, according to Germany’s Union for the Promotion of Oil and Protein Plants (UFOP).
The index, which shows the changes in international prices for 10 different vegetable oils, weighted with their export shares in world trade, declined six points to 126 points, UFOP said on 10 July.
“This translates to a 1.6% decrease from the previous month [June] and also the lowest level since December 2018,” UFOP said.
International prices for palm oil at the Bursa Malaysia exchange dropped just less than 10% over the past six months, according to Agrarmarkt Informations-Gesellschaft (AMI) data.
“The reason was sluggish demand on the global market on which the largest palm oil producing countries, Indonesia and Malaysia, account for almost 90% of palm oil supplies,” UFOP said. “Seasonal output growth in Southeast Asia also had a negative impact on the market. Prices of soyabean oil also flagged because of low export prospects and forecasts of adequate global supply.
UFOP said that the price situation in the vegetable oil markets would be even more dramatic if countries such as Argentina, Brazil, Indonesia and the USA did not ease market pressure by raising national blending quota requirements for soyabean and palm oil biofuels, which led to a rise in producer prices.
“With production capacities of more than 6M tonnes, Indonesia is the world's largest producer of biodiesel. The country is promoting a programme to launch diesel with a 30% incorporation rate (B30).”