Spack‘s Market Insights Report

April 2024

What’s been going on in the vegetable oil market since the last Spack Market Insights Report?

The canola and sunflower oil market saw a correction in pricing over the last 12 months, offering the lowest pricing in several years, similar to pre-pandemic pricing. Sunflower seed crushings reached a record level in the last quarter of 2023.  As a result, European exports of sunflower oil have increased sharply.

Canola oil has seen an increase in world consumption, with the biggest increases registered in the US. However, the year-on-year growth is likely to slow down considerably in 2024 through August.

With the most recent data and information, world supplies of vegetable oils have exceeded initial estimates the current season.  This has resulted in a continuing pressure on the market.  In the meantime, we continue to see sizable year on year increases of vegetable oil consumption, largely driven by expanding biodiesel production and increasing demand Asia, India and China.  Also upwardly affecting vegetable oil prices are increased ocean freight rates on imports from Europe to the USA thus far in 2024.
In general, these increases seem to be fairly stable and we do not see huge changes on the short- to mid-term.

In the tropical oils market, the transition from surplus towards a deficit has already begun.  In the palm oil market, this resulted in higher pricing. Another factor is shipping costs for Asia to the USA have been trending upwards again.   In some cases, prices have more than tripled, resulting in upward pressure for coconut and palm oil.   On a global scale, this uptrend in pricing has lately been stalled due to customers alternating palm oil usage with more attractive sunflower and canola oil pricing.

At the moment, the demand for organic sun and canola oil is still slower than normal, although it is starting to pick up.  Organic Sunflower Oil stocks and contracts built up in 2022 (due to the war situation) are starting to shrink, so there is renewed interest from customers.  It is expected that customer interest will continue upwards again in the second half of this year.  Getting to pre-war levels will take some time to attain. Even despite the low raw material prices, the market remains mild.  Last year, there was enough product, and with all the carry-over, it put considerable pressure on prices.

For Organic Canola Oil, demand has been weaker last year than 2022, and this has resulted in less production.  We now see less availability and significant increase in prices, especially in Europe. Current Organic Sunflower Oil prices are rising as well as stocks are dwindling.

Based on the above, we expect an increase in prices on the short to mid-term, also due to persistent issues in logistics; specifically issues regarding the borders, Ukraine, the Red Sea, and the Panama Canal. Ukraine is again a wild card, as expectations indicate Russia will make further gains towards West-Ukraine.  That might have a serious impact on the market in the mid- to long term.

It is forecasted that new harvests of organic sun and canola will become more expensive.  We also expect there will be fewer organic plantings because many farmers had to sell their organic products as non-organic last harvest due to low prices.  The new trend currently is a short position rather than long, meaning there are more spot orders and short contracts than long contracts.  Once that changes, it might have an increasing effect on rising prices.

Please contact us via our website or phone:  833-756-8645 to discuss your sunflower, canola and coconut oil needs and current pricing.

The Spack International Team

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