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FAO price indices for oilseeds, vegetable oils and oilmeals

Last updated in January 2021

Commentary on the recent development of prices *


In December, FAO’s price index for oilseeds rose for the seventh consecutive month, up 3.5 points (or 3.0 percent) from November and marking the highest level since May 2014. By contrast, the oilmeal index remained virtually unchanged after increasing for five months in a row. In the meantime, the price index for vegetable oils moved up by 9.3 points (or 7.6 percent), reaching an eight-year high. All three indices remained sharply above the corresponding values of last year.

The latest increase of the oilseed index mainly reflected firming values of soybeans, rapeseed and sunflowerseed. International soybean prices rose for a seventh consecutive month, recording six-and-a-half year highs in December. While robust global import demand, especially from China, and higher than anticipated crushings in the United States of America continued to underpin prices, the soy market also reacted to developments in South America, where the 2021 crop entered into the vegetative phase. In early December, decent rainfall in southern Brazil and parts of Argentina’s producing regions led to expectations of improved growing conditions, giving rise to a temporary relaxation in prices. However, international quotations rebounded in mid-December fuelled by both, prospects of reduced export availabilities in Argentina following prolonged strikes of port workers and fresh concerns over progressively dryer weather across the entire region. As for rapeseed, in December, international prices recorded a ninth successive monthly increase, prompted primarily by a downward revision in Canada’s production estimate for the 2020/21 crop. Furthermore, in the European Union, the recovery of production in the 2021/22 season is expected to be limited due to below-average plantings, despite reports of favourable weather conditions across the bloc’s western states. Sunflowerseed prices also remained on an upward trajectory, buoyed by sharply lower global output, while global export supplies were expected to shrink further, following the Russian Federation’s decision to hike export duties to bring down domestic prices.

FAO’s oilmeal index, contrary to the upward movement observed in oilseed prices, remained virtually unchanged in December, mainly reflecting stable soymeal quotations. Reportedly, the recent rise of soymeal prices to multi-year highs prompted margins in livestock production to fall, in turn causing lower imports by key consuming countries. On the other hand, prices received support from both, the release of reports confirming the rapid recovery in China’s hog herds and the strikes in Argentina mentioned above, which affected crushing operations and port logistics in Argentina – the world’s leading soymeal exporter.

With regard to vegetable oils, the persistent firmness in the price index stemmed primarily from higher palm oil values, while prices of soy, rapeseed and sunflowerseed oils also increased. International palm oil prices rose for a seventh month in succession, chiefly reflecting lingering supply tightness in major producing countries. Particularly, in Malaysia, persisting production slowdowns coupled with a brisk pace of exports gave rise to concerns over likely further contractions in domestic reserves, which by end-November had dropped to the lowest level since June 2017. In addition, market participants expected shipments by Indonesia – the world’s leading supplier – to slow down following a hike in the country’s palm oil export duties. As for soyoil, international prices climbed to seven-and-a-half year highs, mainly on account of rising uncertainties regarding Argentina’s export, due to the prolonged strikes. While they drew strength from the firmness of the palm oil market, rapeseed and sunflowerseed oil prices also received support from robust global import demand.

Looking at the annual averages, in 2020, all three indices posted marked year-on-year increases. The oilseed index averaged 96.6 points, up 9.8 percent from 2019 and the highest level since 2014, while the oilmeal index rebounded by 12.3 points (or 15.5 percent) but remained below the average recorded in 2018. In the meantime, the index for vegetable oils averaged 99.4 points, rising 19.3 percent from 2019 and marking a three-year high.  
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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; sunseed, EU, cif Rotterdam (please note that sunseed has been added to the index only in January 1976).
  • 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.