Rise in vegetable oil prices continues: Report

In Germany, UFOP reports that a decline in palm oil production and sharp increase in soybean processing have sent vegetable oil prices climbing. Buoyant demand and surging crude oil prices are additional factors driving the development.

The German trade group advised: “Vegetable oil prices went up substantially over the past six months. The price spread between soybean and palm oil has narrowed significantly since the beginning of August 2016. Prices of palm oil soared by around 24 per cent at the beginning of August, to almost the level of soybean oil. The reason was a surprising 3 per cent decline in output while demand continued to be brisk, which spawned uncertainty. At the same time, decreasing US supplies of soybean oil have driven up soybean oil prices significantly since mid October. US soybean processing reached new record levels and sent soybean prices up as a result. The development in the vegetable oil market is fuelled by the price of crude oil. As crude gets more expensive, vegetable oils gain a competitive advantage as feedstock for biodiesel, boosting demand. In other words, the firming trend in vegetable oil prices will continue on strong demand despite the record soybean crop in the US.”

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