Organic Oils Market Insight Report – April 2021
Welcome to our Organic Oils Market Insight Report – April 2021 ! It has been a tumultuous year in the vegetable oil market. At Spack International, we feel it’s important to keep our customers and prospects apprised of driving factors. This report will outline the various forces that are affecting vegetable oil pricing, especially as the novel COVID-19 virus continues to spread across the world. Our latest appraisal of current market trends will reflect the effects of this ongoing pandemic.
Generally speaking, vegetable oil prices have been on the rise. Demand for conventional vegetable oil has been increasing, which in turn leads to increases in organic ingredient pricing following this trend. There have been a multitude of factors which has resulted in increased pricing. The shipping industry has been restructuring and has turned into a less competitive environment with only a few global players dictating the rules.
Increased demand, along with reduced capacity of freight options, has been a driving factor in increased pricing across the board. In addition, there has been a higher demand for home consumer products, a shortage of global shipping containers and underdeveloped capacity in the U.S. which has resulted in congestion in ports. Shipping costs to the United States has tripled, and even quadrupled, in some instances.
Another factor affecting increased wholesale prices has been an overall rise in packaging materials. We have experienced significant increases in plastic and metal pricing since the pandemic began. Soybean and palm oil are the big drivers in the global vegetable market. When soybean and palm oil prices are high, people look for alternative vegetable oils which has a trickle-down effect on the vegetable oil industry.
Other factors are quotas and taxes established in countries, such as Russia, which calls for a certain percentage of supply to stay within the country. In Russia, for example, for every 1,000 metric tons of ingredient, only 600 metrics tons are available for export. The remaining 400 metric tons has to remain in Russia.
Organic Sunflower Oil Insights
Organic sunflower seed prices have been increasing and are the highest we’ve seen in 13 years. There is high demand from China and other countries that consume and stock, and high pricing attracts speculation to the market. This speculation has resulted in farmers sitting on their supply and riding out the market, anticipating receiving even higher prices for their seed. At a certain point, the stored supply eventually has to be released and could possibly cause a relief in the market in coming months. We do anticipate end market pricing to remain high for some time due to problems in the shipping industry illustrated above. When current stock runs out, prices will go up because there is simply too little product being shipped to the U.S. to meet demand.
Demand is increasing on the consumer level due to the pandemic as consumers are spending more on food items, and an uptick in demand for organic and healthy options has been on the rise. Is there any good news in all this? We anticipate that as the COVID-19 pandemic begins to become better managed, combined with increased crop planted by farmers, this may soften the pricing on the new crop. In Europe, harvesting takes place in late summer, early fall. Please keep in mind, this is also speculation and only time will tell.
We have seen the premium on organic high oleic sunflower oil remain intact, and linoleic and high oleic premium margins have not offered much change. Initial higher demand for organic linoleic sunflower oil due to increased high oleic pricing last year is expected to soften next year due to shortage of organic linoleic raw materials, caused mainly by overall high sunflower oil demand. Spack has plenty of Organic High Oleic Sunflower Oil available for fast delivery throughout the USA and Canada. For more information on our Organic Sunflower Oil, click here.
Organic Palm Oil Insights
We have witnessed similar results in the organic palm oil industry due to the factors outlined with sunflower oil above. Most oils are related in pricing in the vegetable oil market. If the price of one ingredient rises, users will look to alternative oils for substitution. This, in turn, drives the pricing of the alternative oils up as well. We continue to see higher prices in the palm oil market, but with each harvest, it offers up the opportunity to adjust pricing based on climate, crop issues and other factors affecting the new raw materials.
Spack has a long standing and unique relationship with our farmers in West Africa for our organic palm oil. Peak seasons occur in March and April and again in July and August every year, with harvesting taking place throughout. Low season for fruit of the palm is noted in November through February. Spack has new harvest RSPO Organic Palm Oil from Africa coming in soon. See here for more information on our Organic Palm Oil.
Organic Virgin Coconut Oil Insights
Currently, organic virgin coconut oil raw materials have been scarce and we’ve seen increased pricing on this ingredient as well. The coconut palm is one of the most useful and iconic trees in the world, thanks to its fruit. Unlike most fruiting plants, mature coconut trees produce their fruits year-round rather than in one specific season. We are experiencing an overall increased demand and decreased supply of organic virgin coconut oil worldwide.
Spack International is thrilled to announce our plantations and production factory will be fully producing product in our new facility in Vietnam in a few weeks. We should be seeing inventory in the U.S. beginning in May, 2021. In the near future, Spack will offer a full, detailed article outlining our VCO production facility in Vietnam. For our VCO, see this page.
For our latest organic oil products available see our product assortment. If you are interested in retail and foodservice packing of organic vegetable oil please visit our parent company’s website.