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International prices of oilseeds unchanged in February, prices of oilmeals continued to fall while those of vegetable oils appreciated

International oilseed, oilmeal and vegetable oil prices

In February, FAO’s price index for oilseeds remained virtually unchanged for the second consecutive month. However, the oilmeal index continued its fall, losing another 9 points (or 5.5 percent) to hit its lowest value since October 2017. The price index for vegetable oils, on the other hand, appreciated for a third month in a row, gaining 2.3 points (or 1.8 percent). The three indices tracking the oilseeds complex all fared below their respective year-earlier levels.

The price index for oilseeds started moving sideways towards the end of 2018 and drifted only marginally lower in February, as softer soybean and rapeseed values were largely offset by higher sunflowerseed quotations. International soybean prices continued to fluctuate in a narrow range, reflecting a variety of factors. On the supportive side, the ongoing US-China trade negotiations were reportedly making good progress, raising hopes for a resumption of US soybean purchases by China. More specifically, the Chinese Government committed to resume purchasing US soybeans during the remainder of the 18/19 marketing season (see details below). Fresh concerns about unfavourable growing conditions in parts of South America in early February and continuously firm crushing demand in the US also lent support to prices. On the other hand, several factors exerted downward pressure on soy prices: i) the prospect of record high end-of-season inventories in the US; ii) concerns over slowing import demand; and iii) improved weather conditions in both Argentina and Brazil towards the end of February. International rapeseed prices dropped somewhat in February, tied to subdued import demand in several destinations (e.g. Mexico and Pakistan), as well as confirmation of larger than anticipated stocks at the end of December 2018 in Canada. By contrast, international quotations of sunflowerseed firmed for the second consecutive month, marking the highest level since August 2018, as upbeat import demand coincided with limited export availability due to slow farmer selling.

With respect to oilmeals, the fresh drop in the index largely reflected renewed concerns over subdued global consumption. In particular, soymeal demand in China, the world’s leading protein meal consumer, has been hit by both curtailed feed uptake in the pig sector (following the outbreak of African Swine Fever) and recent efforts by the country’s compound feed industry to diversify protein sources in order to reduce dependence on soymeal.

As to the vegetable oil index, the latest appreciation primarily reflected higher values of palm, soy and sunflower oil. International palm oil quotations rose for the third consecutive month, as pronounced seasonal output contractions in leading producing countries coincided with robust domestic demand, especially from the biodiesel sector. Reportedly, in Indonesia, oil palm yields were further negatively affected by low fertilizer application during 2018, when farmers tried to economize on production costs due to depressed palm oil prices. Soy and sunflower oil prices too appreciated in February, underpinned by limited global supplies and, in general, by firming mineral oil prices. Soyoil values also received support from the EU’s decision to exempt Argentina’s leading producers of (soyoil-based) biodiesel from paying anti-subsidy duties provided they abide to certain terms (see details below).

Source: EST - OILCROPS - Monthly Price and Policy Update - FAO