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Last Update: January 2016

Commentary on the recent development of price indices

In December 2015, the FAO price indices for oilseeds and for oils strengthened by, respectively, 1.8 points (1.3 percent) and 3.3 points (2.4 percent), while the price index for oilmeals shed 6.2 points, dropping by 3.9 percent month-on-month. All three indices fare at multi-year lows.

The slight increase in the oilseeds index primarily reflects developments in the soybean market, notably deteriorating production prospects in Brazil (where, depending on the region, crops continued to suffer either from dryness or excessive rainfall) and planting delays in Argentina, due to heavy rains. At the same time, old-crop sales by Argentina fell short of market expectations, whilst import demand by countries in Asia, notably China, remained strong, thus allowing international soybean prices to climb to nine-week highs towards the end of December. The oilseeds index was also buttressed by a firming of firm rapeseed prices, in response to marked international demand for the seed and disappointing production prospects in Ukraine and India.

International oilmeal prices, especially those of soymeal, continued to weaken in December, causing the corresponding FAO price index to drop for the fifth consecutive month. The steady slide in prices reflects an unusually strong pace of soybean crushings, notably in South America, and the prospect of record, possibly burdensome global soymeal availabilities in 2016. Policy changes in Argentina, the world’s leading supplier of soymeal, exerted further downward pressure on prices:  in addition to lifting all currency controls and unifying the country’s official and parallel exchange rate, the Argentine government lowered the export tax for soymeal, a move expected to stimulate exports of the commodity in the coming weeks and months.

The modest rise in the vegetable oil price index was driven by soybean oil, the prices of which leaped to 6-months highs, principally reflecting persisting uncertainties regarding Brazil’s soybean crop and the prospect of firming soyoil demand worldwide.  In the 2015/16 season, market observers expect soyoil to compensate for the stalling supplies of other vegetable oils, notably palm and rapeseed oil. International palmoil prices remained stable in December, as concerns about possible production declines in Southeast Asia (due to persistent unfavourable weather) were counterbalanced by reports of weak global import demand and rising inventories. Falling crude oil prices and declines in competing soyoil also weighed on palm oil values.  



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.