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Last Update: October 2017

Commentary on the recent development of price indices

In September, all three FAO price indices trailing the oilseed complex shifted upward. The indices for oilseeds and oilmeals, which fell in the month of August, rose by respectively 1.7 and 4.4 points, or about 1 and 3 percent. The vegetable oil price index recorded an increase of 7.4 points (or 4.5 percent), rising for the second month in succession and marking a 7-month high. Compared to last year, the oilseeds and oilmeal indices fared somewhat below the values recorded in September 2016, whereas the vegetable oil index matched the level observed 12 months ago.

The upward turn in the oilseed and oilmeal indices primarily reflects developments in the international soybean market. Quotations for soybeans, and even more so soymeal, strengthened mainly on concerns about unfavourable sowing conditions in South America, where plantings risk to be delayed because of pronounced dryness in Brazil and excessive rains in Argentina. Continued strong import demand for soybeans, in particular by China, also supported world prices. On the other hand, price gains were capped by further upward revisions – based on higher yield estimates – in the official soybean production forecast for the United States. Regarding other oilcrops, international quotations for rapeseed rose for the third consecutive month, primarily reflecting deteriorated production prospects in Australia and Ukraine, which amplified prevailing concerns about tight global availabilities during the 2017/18 season.

Last month’s appreciation in the vegetable oil price index was mainly driven by palm oil, whose international quotations rose for a third consecutive month, marking a 4-month high. The protracted strength in palm oil values stems from lower-than-anticipated output in Southeast Asia, where production continues to be affected by unstable weather conditions and, in the case of Malaysia, protracted shortages in labour force, which threaten to keep yield levels below potential. The firmness in prices also reflects robust global import demand arising from relatively low inventory levels in several importing countries, notably India and China. Spill-over strength form the soybean complex also contributed to the appreciation in palm oil values. As to the other oils, soyoil quotations firmed under the influence of higher soybean values and in response to on-going changes in the biodiesel policies of the United States and the European Union, which could affect the overall trade and consumption pattern of biodiesel and their feedstock, including soybean oil. Firmer rapeseed oil values, which mirror the price path of rapeseed, also contributed to the rise in the index. Moreover, the vegetable oil sector has been subject to spill-over effects from the global mineral oil market, where prices appreciated steadily over the last few weeks.


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.