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Last Update: December 2018

Commentary on the recent development of price indices

In November, FAO’s price index for oilseeds notched up 0.6 points (or 0.4 percent), but still remaining below the level of last year’s corresponding month. By contrast, the price indices for oilmeals and vegetable oils continued to lose strength, shedding, respectively, 2.8 and 7.6 points (or 1.7 and 5.7 percent) – marking the seventh contraction in succession for oilmeals and the tenth for vegetable oils. While the meal index remained above last year’s corresponding value, the vegetable oil index recorded a twelve-year low.

The modest change in the oilseed index reflects mostly stable soybean, rapeseed and sunflowerseed quotations during the course of November. After October’s moderate recovery, in November, international soybean prices saw a small increase of 0.6 percent, with upside momentum provided mainly by signs of a possible easing in the US–China trade tensions as well as reports of heavy rainfall hampering sowing operations in Argentina. At the same time, a number of factors exerted downward pressure on prices, notably: i) a promising crop in Brazil, ii) the prospect of record-high inventories world-wide, particularly in the US, and iii) slowing import purchases by China, given the uncertainties surrounding progress in the US–China trade talks. Noticeably, in line with the latest developments, soybean export prices in the US and Brazil continued to follow diverging trends: whilst US quotations showed mild strength supported by signs of a possible breakthrough in the US–China talks, Brazilian prices kept declining in response to forecasts of heavy supplies into the new season. On the other hand, international rapeseed quotations softened marginally, marking a first month-on-month drop since June. In November, seasonal harvesting pressure in Canada, combined with sluggish global rapeseed import demand, outweighed the upside effect coming from concerns over reduced 2019/20 plantings in the EU. Sunflowerseed prices remained unchanged at historically low levels, as earlier forecasts of bumper crops in the Black Sea region were confirmed.  

With regard to oilmeals, FAO’s meal price index diverged – for the second consecutive month – from the trend observed for oilseed prices. International meal quotations dropped for the seventh month in succession, led by further contractions in global soymeal prices that primarily reflected developments in China, where, in addition to further African swine fever outbreaks, the possibility of reduced Sino–US trade tensions weighed on domestic protein meal prices.

The fresh slide in FAO’s vegetable oil index has been driven by weakening values across global vegetable oil markets. The downward trend has been led by palm oil, whose price plunged by another 9 percent month-on-month, reaching its lowest level since August 2006. Besides persistently large inventories held in leading exporting countries, falling global mineral oil prices also exerted downward pressure on palm oil values. Furthermore, import demand from India, the world’s leading palm oil buyer, continued to be subdued, due to ample supplies of locally produced oilseeds. In Indonesia, the slump in international palm oil export quotations led the Government to suspend the levy that is collected from palm oil exporters (see section b), in an attempt to maintain the country’s competitiveness on overseas markets. As for soybean oil, after a short-lived rebound in October, in November, international prices resumed their downward trend, dropping to a three-year low. Reportedly, lucrative processing margins resulted in record crush volumes in the US and elsewhere (e.g. in the EU, Pakistan and Egypt), causing a surge in soyoil availabilities. With regard to sunflower oil prices, their relentless decline remained tied to the prospect of record-high global sunflowerseed supplies, following bumper crops in the Black Sea region and a prospective increase in Argentina’s output. 



Components of the oilseeds price index: Soybeans, US, cif Rotterdam; Copra Phil./Indo., cif NW Eur. port; Rapeseed, Europe, 00, cif Hamburg; Linseed, Canada, No.1, cif NW Eur. port; Sunseed, EU, cif Rotterdam (please note that sunseed has been added to the index only in January 1976).

Components of the oils/fats price index: Soybean oil, Dutch , fob ex-mill; Sun oil, EU, fob NW Eur. port; Rape oil, Dutch, fob ex-mill; Groundnut oil, any origin, cif Rotterdam; Cotton oil, US, PBSY, fob Gulf; Coconut oil, Phil./Indo., cif Rotterdam; Palmkernel oil, Mal./Indo., cif Rotterdam; Palm oil crude, cif NW Eur. port; Linseed oil, any origin, ex-tank, Rotterdam; Castor oil, ex-tank Rotterdam.

Components of the meals/cakes price index: Soy meal, 44/45%, fob ex-mill Hamburg; Sun pell., 37/38%, Arg., cif Rotterdam; Rape meal, 34%, fob ex-mill Hamburg; Copra exp. pell., Phil., domestic; Palmkernel  exp., 21/23%, cif Rotterdam.