The Mintec Category Index (MCI) for EU vegetable oils declined for the second consecutive month, down by 20% month-on-month (m-o-m) to EUR 1,085/MT in July. Global vegetable oil prices were volatile in H1 2022, with the EU MCI reaching a record high price in March due to various factors including the Russia-Ukraine war, Indonesia’s palm oil export ban and high input costs.
The Russia-Ukraine war resulted in a price rally in the vegetable oil complex in March, due to shortages of sunflower oil, as both countries account for over 70% of global sunflower oil exports. Following that, in April, Indonesia (the top global palm oil producer and exporter), banned palm oil exports to ease the upward momentum on its domestic cooking oil prices. This further exacerbated the global supply situation, sending the prices of most oils in April to record highs. However, the index began to trend downwards in May, supported by improvements in supply conditions of palm oil and sunflower oil.
The Indonesian government revoked the palm oil ban on the 23rd of May due to high domestic inventories. Since then, Indonesia has struggled to get rid of its excess supply and has thus put in various schemes to boost both exports and domestic demand. According to market participants, many buyers are reportedly waiting for prices to fall even lower before making purchases as Indonesia needs to get rid of its supply, putting downward pressure on prices. Consequently, the Mintec Benchmark Prices (MBP) for Palm Oil CIF Rotterdam [Mintec Code: CPOR] was assessed at USD 1,065/MT on the 28th of July, down by 19% m-o-m. Also, the MBP for Sunflower 6 ports option declined by 8.2% m-o-m on the 28th of July, due to increasing sunflower oil imports from Ukraine. Looking at the EU rapeseed oil market, the MBP fell to EUR 1,650/MT on the 28th of July, with the benchmark declining by 22% from the record high reached in April, due to lower demand from the biodiesel sector and improvements in the supply of both palm oil and sunflower oil. Many commodity prices have been increasing recently, not just oils.