The Mintec Category Index (MCI) for EU vegetable oils declined for the third consecutive month in August 2022, down by 8.1% month-on-month (m-o-m) to EUR 1,108/MT. The decline in the index was because of falling prices in the EU rapeseed oil, palm oil and sunflower oil markets. Yet, EU soybean oil prices were up in the month.
In August, EU rapeseed oil demand was slow as market sources reported that most players were well covered. Thus, the average Mintec Benchmark Prices (MBP) for Rapeseed Oil Spot FOB Rotterdam, was down by 5.6% m-o-m to EUR 1,614/MT. Improvements in both domestic (+4.4% year-on-year (y-o-y)) and global (+14% y-o-y) crop for the 2022/23 marketing year (MY) provided the market with the bearish sentiment, further contributing to the MBP decline. While output is expected to rise, the EU is set to vote to restrict the usage of soybean oil in its biodiesel blend between the 12th and 14th of September 2022. If realised, demand for rapeseed oil by the biodiesel sector could increase, thus, posing an upside risk to EU rapeseed oil prices.
Looking at the EU palm oil market, the average MBP for Palm Oil CIF Rotterdam was EUR 1,052/MT, down by 14.1% m-o-m in August. Indonesia’s palm oil supply glut combined with increasing supply from Malaysia led to the m-o-m decline. Yet, the palm oil MBP began to rise in the second week of the month as demand increased due to palm oil’s relative cheapness compared to alternative vegetable oils. According to market sources, China’s palm oil stocks are low compared to their average levels. If demand from China were to pick up, this could pose an upside risk to prices in the short term. However, newly announced COVID-19 lockdowns in China would be a watch factor as this is likely to limit any potential demand increase.