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Week 50: Overview of the world veg-oil market

Soybean

  • Soybean oil prices decreased by -2.5% over the last 7 days on CBOT markets due to an increased forecasted production in the US.
  • Indian Government announced that the country could export up to 2 million tons of soybean thanks to excellent harvest conditions. In comparison, the country exported only 0.2 million tons of soybean last year. This is likely to strengthen the competition between soybean and palm oil in Asia.

Palm oil

  • Palm oil prices have been quite flat over last week and traded around $780-785 on average in Rotterdam. It is the highest level since 2014.
  • Indonesia’s palm oil acreage is expected to grow by 10% in 2017. Farmers will dedicate more land to palm tree plantations to balance the lower production of last year caused by dry weather conditions.
  • Indonesian palm oil output is estimated at around 30-32 million tons in 2016 down from 35.5 million in 2015. The country aims to go back to that production level in 2017. The increased acreage will contribute around 1 million tons to the country’s production and the rest of the recovery should come from better yields.
  • The Malaysian Palm Oil Board announced that CPO exports fell by 5.8% to 1.37 million tons between September and November mainly due to lower demand from India (-12% from October to November) and fierce competition with Indonesian CPO whose exports increased by 39% to 2.41 million tonnes in October.

Rapeseed

  • Rapeseed prices increased significantly over last months in Europe, however, there are price differences between countries. In the UK rapeseed is traded at almost €430 per MT while prices are at €420 per MT in Germany and €410 per MT in France.
  • No major changes have been noticed on rapeseed oil markets over the last 7 days. Rapeseed oil prices remain at around $920-922 per MT on average on Dutch Mill markets.

Euro / Dollar exchange rate

  • After the Federal Reserve’s (FED) announcement to increase the main interest rate by 25 basis points, the dollar increased substantially against the euro. EUR/$ fell to a parity of 1.0365 which is the lowest level in 14 years!
  • Since Wednesday EUR/$ fell by 2.2% from 1.067 to 1.043 today which sets a huge volatility in the biodiesel market. Strong dollar supports biodiesel purchases since all traders’ books are in dollars. Besides, European buyers have to be careful when importing raw material or biodiesel whose prices are often in dollars.