The Mintec Category Index (MCI) for EU vegetable oil declined by 18.6% month-on-month (m-o-m) to EUR 1,218/MT on the 17th of June 2022. This represents a decline of 22.2% from the record high reached on the 14th of March. However, the MCI remains up by 29.2% year-on-year (y-o-y).
The decline observed in June is attributable to several factors. Firstly, increased imports of sunflower oil from the Black Sea region have put downward pressure on EU sunflower oil prices. According to market sources, EU sunflower oil imports reached their highest level in over three months during the second week of June. Thus, the Mintec Benchmark Prices (MBP) for EU sunflower oil fell by 14.7% m-o-m to EUR 1,680/MT on the 20th of June. This also had a knock-on effect on the prices of alternative vegetable oils (rapeseed oil and palm oil) as buyers reduced demand due to better coverage.
Furthermore, on the 23rd of May, Indonesia reversed the ban on palm oil and derivative exports and replaced it with a Domestic Market Order (DMO). An export acceleration scheme was put in place on the 7th of June by the government of Indonesia to expedite palm oil shipments. This came as a relief to the global vegetable oil market, further contributing to the decline in the EU MCI due to an increase in supply. The EU MBP for palm oil was assessed at EUR 1,257/MT, down by 16.7% m-o-m on the 20th of June.
According to the United States Department of Agriculture (USDA), the global vegetable oil supply for the 2022/23 MY is forecast to increase by 3% y-o-y. Expectations of higher output and improvements in supply conditions could continue to put pressure on EU vegetable oil prices. However, high input costs, logistical disruptions and inflationary pressure could keep prices elevated y-o-y.