`Edible Oil Prices Expected to Keep Increasing, Olive Oil Levels Remain Steady - Olive Oil Times

Edible Oil Prices Expected to Keep Increasing, Olive Oil Levels Remain Steady

Jul. 20, 2021
Ephantus Mukundi

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Consumers of edi­ble oils are likely to con­tend with two years of high prices before mar­kets sta­bi­lize and return to what is con­sid­ered nor­mal lev­els, Paul Meyers, the vice pres­i­dent of com­mod­ity analy­sis at Foresight Commodity Services told a con­fer­ence last month.

With the excep­tion of corn oil in the United States, Meyers said that edi­ble oil prices are cur­rently more than dou­ble what they were one year ago.

According to the United Nations Food and Agriculture Organization, oilseed and veg­etable oil prices have steadily increased for the past 13 months.

See Also: Olive Oil Prices

This is mostly dri­ven by high soy­bean oil prices. A lack of pro­duc­tion in North and South America com­bined with high demand means that prices will likely not return to nor­mal for the next two years, Meyers added.

For this to take place, the U.S., Argentina and Brazil would need to pro­duce more soy­bean oil or demand from some of the largest con­sumers, includ­ing the biodiesel sec­tor, would need to decrease.

New sup­plies of soy­bean oil from Argentina and Brazil were poised to add pres­sure to soy­bean oil prices in 2021, but drought caused by the La Niña in South America resulted in lower yields.

Along with soy­bean oil prices, sun­flower, palm and canola oil prices have also remained high as pro­duc­tion of both crops decreased in the 2020/21 crop year.

The sup­ply of sun­flower oil con­tin­ued to tighten through the first half of 2021 as a result of poor har­vests due to drought in Russia, Ukraine, Romania, Moldova and Bulgaria. Ukraine and Russia com­bine to pro­duce about 80 per­cent of total global sun­flower pro­duc­tion.

Unfavorable weather con­di­tions in Canada and the European Union are pre­dicted to hurt the pro­duc­tion of canola oil in the upcom­ing 2021/22 crop year, which has com­bined with steady demand to cre­ate what the FAO called con­tin­ued global sup­ply tight­ness.”

Meanwhile, in Malaysia, Covid-19 pan­demic-related lock­downs have pre­vented for­eign labor­ers from return­ing to the plan­ta­tions result­ing in low pro­duc­tion of palm oil. Foreign work­ers make up about 70 per­cent of the sec­tor’s work­force.

This sup­ply dynamic resulted in high oil prices in the first half of 2021. The Covid rebound also has helped drive up prices as the economies get back on track and coun­tries reopen fol­low­ing the pan­demic.

As more coun­tries loosen Covid-19 restric­tions due to the suc­cess of vac­ci­na­tion pro­grams, the restau­rant, hotel and cater­ing indus­tries are also likely to have a bull­ish effect on edi­ble oil prices.

According to the World Bank fore­casts, edi­ble oil prices will con­tinue to rise in 2021 due to low sup­plies and high demand until 2022 when they are expected to sta­bi­lize.

The finan­cial orga­ni­za­tion revised its April 2021 Oils and Meals Index by 30 per­cent from its October out­look after it was appar­ent that the stocks and pro­duc­tion of major edi­ble oils did not grow as expected.

Meanwhile, International Olive Council data show that olive oil prices have remained steady over the past month in the three bench­mark mar­kets of Jaén, Bari and Chania, but have increased sub­stan­tially com­pared with the same period last year and in 2019.

A com­bi­na­tion of lower-than-expected global pro­duc­tion in the 2020/21 crop year, paired with grow­ing imports and increas­ing global con­sump­tion had pushed prices up for 16 con­sec­u­tive months from January 2020 to May 2021.





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