Global market of vegetable oils is facing a perfect storm, declared Aaron Hanson, analysts of LMC International within Asia Grains&Oils Conference 2022 on April 7.
“There are a number of factors that places the burden of balancing supply and demand in oils markets”, – the expert said.
Particularly, he pointed out the weather that had cut soybean and canola output and slowed the recovery in palm oil production as well as soared input costs, led by fertilisers, that would harm crop yields. Additionally, efforts to control local food prices, such as via Indonesia’s quotas on exports, have reduced the availability of supplies for importers. Moreover, many governments remain unwilling to cut biodiesel mandates to release oil for food uses.
“War in Ukraine has undone the predicted increase in sunflower oil availability. In January, Black Sea sunflower oil exports were expected to grow well over 2 mln tonnes to 13.5 mln in 2021/22 MY. We now expect a drop in forecasted Black Sea exports of close to 4 mln tonnes”, – A. Hanson added.
Looming prospect of demand destruction to equilibrate supply and demand, likely to hit hardest in Africa.
