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FAO price indices for oilseeds, vegetable oils and oilmeals

Last updated in September 2021

Commentary on the recent development of prices *


In August, FAO’s price indices for oilseeds and oilmeals continued sliding from their recent historic peaks, shedding, respectively, 1.3 and 1.4 points (or 1.0 and 1.3 percent) from their July levels. By contrast, the vegetable oil index rebounded by 10.3 points (or 6.7 percent) from July’s five-month low. Noticeably, all three price indices remained markedly above their respective year-earlier levels, particularly in the case of vegetable oils.

The latest drop of the oilseed price index mainly reflected lower soybean and sunflowerseed values, which more than offset higher rapeseed quotations. In August, international soybean prices fell for a third consecutive month, largely owing to favourable weather conditions observed in major growing areas in the United States (US). Particularly, beneficial precipitations received in the Midwest region eased earlier concerns about dry conditions, while additional rainfalls were forecasted to arrive in early September. On the demand side, actual crush in the US was again reported below market participants’ expectations, while the prospect of only moderate import demand from China also exerted downward pressure on soybean values. As for sunflowerseed, in August, international prices continued their decline from the historic peaks recorded in early 2021, dropping to their lowest level since October 2020. Clearly, prospects of a record global sunflower crop in the 2021/22 season weighed on prices – even if recent reports of dryer-than-usual conditions in parts of the Black Sea region casted doubts over yield potentials in that area. By contrast, after easing somewhat in the past two months, rapeseed prices rebounded in August, underpinned by deteriorating crop prospects in Canada, where the impact of hot and dry weather turned out more severe than earlier anticipated.

With regard to oilmeals, the enduring decline of the index mostly stemmed from lower soymeal prices. In China, the world’s top consumer of oilmeals (derived predominantly from imported seeds), growth in local soymeal uptake slowed down in recent months, chiefly due to reduced feeding profitability in the country’s hog industry. Furthermore, with the restocking of China’s domestic pig herds largely completed, following nationwide African swine fever outbreaks, expansion of feed demand is deemed to decelerate compared to the last two years.

As for vegetable oils, the marked rebound in FAO’s price index observed in August mainly reflected higher palm, rapeseed and sunflowerseed oil values, while soyoil prices remained virtually unchanged. International palm oil quotations reverted to recent historic highs in August, underpinned by protracted concerns over below-potential production in Malaysia, fuelled by lingering migrant labour shortages. Reports of lower-than-expected inventory levels in the country provided additional support to international prices. As for rapeseed oil, world prices were bolstered by firm demand in the European Union, amid prospects of tightening global supplies. In the meantime, sunflower oil quotations rebounded after falling markedly in June and July, fuelled by limited export availabilities in the Black Sea region, prior to the arrival of the 2021/22 harvests. Conversely, soyoil prices did not follow the upward momentum observed in the vegetable oil complex. While uncertainties regarding the biodiesel admixture mandate in the US together with falling crude mineral oil prices weighed on soyoil values, the downward pressure was contained by robust import demand from biodiesel producing countries, which coincided with tight South American export availabilities.      
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* Effective 2 July 2020, the base period of FAO’s price indices has been shifted from 2002–2004 to 2014–2016.

  For more details on this revision, please see the feature article of the June 2020 issue of Food Outlook.

 
 

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Explanatory notes:

FAO's price indices are calculated using the Laspeyres formula; the weights used are derived from export values of each commodity for the 2014–16 period. The indices are based on the following international spot prices for nearest forward shipment (provided by Oil World):

  • 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; sunflower seed, fob Black Sea (please note that sunflower seed has been added to the index only in January 1976 and, until December 2012, referred to EU, cif Rotterdam).
  • Components of the vegetable oils 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.

    NB: For the period 1961–1969, only annualized values are available and the indices have been calculated using export unit values extracted from FAOSTAT.