2024-09-26 22:03:50
This isn’t unheard of, but it’s not that common either: soybean oil has been stolen the title of the cheapest oil on the market, to the detriment of palm oil. An observation a priori very cyclical, which should not change the habits of producers.
In the edible oil market, one constant is: palm oil is less expensive than its competitors. Except in exceptional moments, and that is what happens today, due to a double phenomenon: the rise in the price of palm oil, which has increased by 10% this year, and the decline in soybean oil, which it lost 9%. Markets were visibly reassured by the prospect of a record soybean harvest UNITED STATES – almost 125 million tons according to the latest report from the United States Department of Agriculture (USDA).
Palm oil, for its part, owes its increase to strong demand from the countryIndonesia for biodiesel eIndthe largest buyer. In this country, demand is expected to decline in December and January, when lower temperatures will cause palm oil to freeze and make it less useful in cooking, but is expected to be partially offset, globally, from demand for palm oil from the Chinese New Year and Ramadan in the first quarter of 2025.
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Narrow long-term outlook
Palm oil supply is still ample, but limiting factors at the two major producers could suggest production is declining.
In MalaysiaLabor shortages impact harvests and leave millions of dollars worth of fruit left on trees. Companies with fragile cash flows do not renew their plantations which then age and become less productive.
In Indonesia, export restrictions and the desire to increase energy self-sufficiency have reduced the volumes of oil traded over time.
This premium of palm oil over soy should only be temporary, it is even described as “ hypercyclical » by some analysts. On the other hand, global demand is on the rise and could, in the long term, push up palm oil prices, explains Jean-Marc Roda, regional director for insular Southeast Asia at CIRAD, the international cooperation in agricultural research for development, because the surfaces are not expandable.
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