Vegetable oil prices fell to a five-month low in December, dragged down by oversupply of palm oil from Southeast Asian producers and a difficult situation persisting in the EU market.

The vegetable oil price index of the Food and Agriculture Organization of the United Nations (FAO) rallied initially in the fourth quarter of 2017, but came crashing down 5.6% between November and December, hitting the lowest it had been since June 2017, German oil industry group UFOP said on 18 January.

According to market research firm Agrarmarkt Informations-Gesellschaft (AMI), weaker asking prices on palm and rapeseed oil hit the sector especially hard, as growing output and falling international demand of palm oil sent supplies in Indonesia and Malaysia soaring to a two-year high.

The tumbling palm oil dragged rapeseed and soya oil prices down as well, with the surprise increase in Australian and Canadian rapeseed production in 2017/18 adding further pressure on rapeseed.