Vegetable oil price index hits multiyear high
In November, the FAO vegetable oil price index reached its highest level since April 2014. It was driven by firming prices for all main vegetable oils, especially palm oil.
FAO’s vegetable oil price index, which illustrates the changes in international prices of the 10 most important vegetable oils in world trade, averaged 121.9 points in November. This translates to a significant rise of 15.4 points, or 14.5 percent, month on month, and marks the highest level since March 2014. Support primarily came from higher palm oil prices. However, prices for soybean, rapeseed and sunflower oil also edged higher in November.
According to investigations conducted by Agrarmarkt Informations-Gesellschaft (mbH), international prices of palm oil climbed for the sixth month running. The reason was the sharp decline in global stocks due to substandard output in the key palm oil-producing countries combined with buoyant global demand. Prices for soybean oil rose in the light of the reduced availability for exports in South America and strong buying interest, especially from India. Prices for rapeseed and sunflower oil also climbed based on limited supply. Moreover, all vegetable oil prices benefited from rising international mineral oil prices.
The Union zur Förderung von Oel- und Proteinpflanzen e.V. (UFOP) sees the increase as an absolute necessity in view of producers’ incomes and previous years’ price levels. The association has made the point that rising production costs and regulatory requirements that lead to reduced yields can only be offset by sufficiently high producer prices. UFOP has strongly emphasized this point in relation to the EU Commission’s current considerations regarding the biodiversity and “Farm to Fork” strategies. The association has called for an overall policy that would take into account and overcompensate for potential negative implications for farmers’ incomes. Above all, the planned “Farm to Fork” strategy would have to be reflected in rising producer prices. UFOP has noted that arable farmers are seeking alternatives to extend crop rotation systems. Referring to the “10 + 10” strategy UFOP adopted last year, the association has pointed out that it wants to play an active role in this process.