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International prices of oilseeds, oilmeals and vegetable oils declined in March

International oilseed, oilmeal and vegetable oil prices
26/04/2019

In March, all three FAO price indices trailing the oilseed complex slipped downward. While the indices for oilseeds and oilmeals shed, respectively, 3.2 and 1.9 points (or 2.2 and 1.2 percent) from their February level, the vegetable oil index fell by as much as 5.9 points (or 4.4 percent), thus reversing the upward trend observed during the three preceding months. Although all three indices continued to fare below their respective year-earlier levels, the oilmeal index dropped to its lowest value since September 2017.

The modest drop in the oilseed price index mainly reflected weakening values of soybeans and rapeseed, while sunflowerseed quotations remained virtually unchanged. After fluctuating in a narrow range for three months in a row, international soybean prices finally fell by 2.4 percent in March, marking a 5-month low. Besides responding to improved crop prospects in parts of South America due to favourable weather conditions, markets also reacted to a slowdown in the US-China trade talks, which thwarted hopes for an imminent agreement. Despite recent Chinese purchases of US soybeans, aggregate US shipments to China since the start of the marketing year remained well below expectations, thus idling plans to scale down the United States’ record-high old crop inventories. Furthermore, recent flooding was expected to slow down fieldwork in the United States’ Midwest, possibly encouraging farmers to plant less maize and more soybeans (which are sown later) than originally planned – a scenario that would exacerbate the country’s already burdensome supply situation. Rapeseed prices also weakened in March, in part reflecting trade policy measures. China, one of the world’s leading rapeseed importers, suspended imports from two major Canadian rapeseed suppliers, citing phytosanitary reasons. The news gave rise to concerns that the trade flow disruption could push up Canada’s inventories to burdensome levels, which – combined with reports of subdued rapeseed demand in the EU and increased 19/20 plantings in Australia, Eastern Europe as well as Canada– exerted considerable downward pressure on prices. As for international sunflowerseed values, the upward trend observed in January and February came to a halt in March, given improved farmer selling in northern hemisphere countries and a larger-than-earlier anticipated harvest in Argentina.

The fresh drop in the price index for oilmeals mostly followed the course of the oilseeds index. While sluggish global demand and ample inventories continued to weigh on soymeal prices, the aforementioned developments in the rapeseed sector prompted concerns over possible slowdowns in global rapeseed meal trade, hence depressing international prices.

With respect to vegetable oil, the latest drop in FAO’s price index mainly reflected weakening values of palm, soy and rapeseed oil. After three consecutive increases, international palm oil quotations contracted markedly in March, reflecting the onset of seasonal output increases as well as fresh concerns over subdued global import demand and ensuing stock build-ups in key exporting countries. Additional steps taken in the EU towards a gradual phasing-out of palm oil-based biodiesel also affected market sentiment. Meanwhile, international soyoil prices retreated as profitable margins continued to boost crushings in the US, contributing to higher than expected oil production and inventory levels. International rapeseed oil prices dropped to an 11 month-low in March, under the influence of rising rapeseed inventory levels in Canada and good crop prospects in the Black Sea region.

Source: EST: OILCROPS Monthly Price and Policy Update