Edible oil prices around the world have been rising this year, with Malaysian palm oil futures soaring more than 40 percent, soybean oil prices rising more than 50 percent and rapeseed oil prices hitting new highs.
The price of palm oil, the world's most consumed vegetable oil, surged to record highs last week, raising concerns about global food price inflation.
<h2>The reason for the soaring price of vegetable oil</h2>
Bloomberg noted that the reason for the spike in palm oil prices was "the release of pent-up demand after the pandemic as the economy reopens, while as energy prices soar, the prospects for renewable fuel use are greater, and production in major producing countries is lower than expected".
Sathia Varqa, owner of Palm Oil Analytics, a Palm Oil Analytics firm in Singapore, said: "Not only is palm oil supply tight, allowing it to continue to maintain higher prices, but rising energy prices are also contributing. ”
Due to the restrictions on the employment of foreign workers due to the epidemic, which has exacerbated the labor shortage, Malaysia's palm oil production has fallen sharply this year. The Malaysian Palm Oil Commission reported that production in the first nine months of this year was the lowest level since 2017.
Varqa said palm oil prices rose unstoppable until policies such as higher interest rates could cool commodity markets were implemented.
In addition, the analysis of CITIC Construction Investment Securities believes that:
The global pricing hub for palm oil is in Malaysia. According to the current agency's phased production and export tracking of horse palm in October, under the october month-on-month production and export estimates that are still at a high level, horse palm stocks can hardly be said to have improved too much, and may still shrink further with the seasonal decline in production.
At the end of the year to next year, la Niña, which is of junior high school intensity, may bring floods to Southeast Asia, further increasing the risk of palm oil production, which is expected to keep palm oil quotations in the regions before the second quarter of next year strong overall, limiting the opening of the profit window and inventory reconstruction of domestic palm oil imports.
Not only palm oil, but also soybean rapeseed oil prices are also unstoppable.
According to drewry shipping research (Drewry) analysis, in January and May this year, traders in order to prevent the recurrence of lockdown and quarantine measures, carried out corresponding replenishment activities, coupled with the United States, Brazil and Argentina and other countries pay more attention to biofuels, squeezed some major importers to use it as edible oil supply, thereby pushing up the global soybean oil price: from 1099 US dollars / ton in January to 1569 US dollars / ton.
Soybean oil prices normalized in June after lower demand for biofuels in the United States. But Drewry believes that as the epidemic in major Asian importing countries gradually improves and the economy gradually recovers, the demand for edible oil will further increase. The tightening of supply in the soybean oil market is likely to continue into 2022.
In terms of rapeseed oil, due to the sharp decline in the expected output of Canada in 2021-2022, the main rapeseed exporter, the rapeseed oil quotation this year is also strongly supported, even if the demand in the demand country shrinks, it is difficult to shake the price.
<h2>Concerns about global food price inflation have intensified</h2>
The FAO Food Price Index includes a basket of food products such as cereals, vegetable oils, dairy products, meat and sugar. The soaring price of vegetable oils led to the rise of the index.
Last month, the index hit a ten-year high. This has exacerbated concerns about global food price inflation.
Global food prices have soared to a decade-high, a bad sign for emerging-market economies where households are allocating more of their budgets to food.
Albert Edwards of Societe Generale warned before the pandemic that rising food prices would trigger social unrest.
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