`Vegetable Oil Prices Rise While Olive Oil Prices Remain Steady - Olive Oil Times
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Vegetable Oil Prices Rise While Olive Oil Prices Remain Steady

By Ephantus Mukundi
May. 25, 2021 08:07 UTC
Summary Summary

Vegetable oil prices, includ­ing rape­seed, soy­bean, and palm oil, have risen due to reduced palm oil pro­duc­tion and increased demand for bio­fu­els, with the trend expected to con­tinue in the first half of 2021. Meanwhile, olive oil prices have remained sta­ble since March, but the slow­ing down of prices is attrib­uted to fac­tors such as reduced oil yield from low-qual­ity olives due to adverse weather con­di­tions.

According to the United Nations’ Food and Agriculture Organization (FAO) food price index, veg­etable oil prices rose by 162 points in April, with a month-to-month increase of 2.9 points or 1.8 per­cent.

The increase was dri­ven by the ris­ing prices of rape­seed (canola), soy­bean and palm oil. During the same period, olive oil prices held firm fol­low­ing a steady increase up until March.

Vegetable oil prices are also ris­ing due to reduced palm oil pro­duc­tion, par­tially caused by a Covid-19-fueled labor short­age in Malaysia, a major palm oil pro­ducer.

See Also:Global Olive Oil Production Will Hit Four-Year High, USDA Estimates

According to the Council of Palm Oil Producing Countries, palm oil prices will con­tinue on their upward trend for the first half of 2021 due to La Niña weather pat­terns, which also neg­a­tively affected palm oil pro­duc­tion in Malaysia.

However, in the sec­ond half of 2021, bet­ter crop man­age­ment and suf­fi­cient rain­fall might boost pro­duc­tion, which is likely to slow down prices.

In mid-March, Malaysian palm oil price futures con­tin­ued on an upward tra­jec­tory to peak at $968.70 per ton for the first time in more than a decade.

Soybean, sun­flower and canola oils have been post­ing sig­nif­i­cant gains too. Vegetable oil prices have increased along with crude oil prices as some are used to make bio­fu­els.

In the mean­time, soy­bean short­ages have dri­ven up its oil prices as ani­mal feed mak­ers in the United States hoarded the prod­uct toward the end of 2020. Soybeans are the pre­ferred veg­etable pro­tein for use in ani­mal feed.

China, a sig­nif­i­cant soy­bean pur­chaser, is also expected to con­tinue buy­ing vast vol­umes of the crop in 2021.

These two events have both con­tributed to the demand for soy­beans, dri­ving prices up to four-year highs.

The reduc­ing sup­ply and high demand for soy­beans will likely entice farm­ers to plant more hectares of the crop in 2021. This may sta­bi­lize soy­bean prices later in the year.

In the mean­time, olive oil prices have largely held steady since March, which had seen a rapid increase in prices.

However, the pace slowed down and stead­ied in April. The slow­ing down of prices is attrib­uted to low-qual­ity olives yield­ing less oil due to sev­eral fac­tors. Among these is Storm Filomena, which dropped 50 cen­time­ters of snow in Spain’s cen­tral and north­ern regions and caused con­sid­er­able dam­age to olive groves.

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