Market Update 10th August 2022
August 10, 2022
Several factors have affected edible oils in the last week, with most adding to the…
Force Majeure – the act of being unable to fulfil a business contract because of forces beyond your control.
Not often do we get to hear it used twice in one week, yet yesterday, Gazprom, the Russian gas supplier, sent a letter to clients stating that it is unable to fulfil supplies.
Also, this week we hear that Sri Lankan shippers of coconut products have also declared ‘Force Majeure’ on some shipments due to internal issues with fuel and civil unrest.
In Gazprom’s case, they are blaming sanctions from the West, but also, it’s believed this is a Russian ploy to extend the West’s pain with high energy prices and cost of living crisis in the hope of pressuring the west to drop sanctions. However, if nothing changes with the war or sanctions, then some European countries fear a winter of gas shortages and possible blackouts.
So even with the possibility of a recession looming for the US and Europe still, crude oil prices remain firmer on energy supply fears.
It’s yet to be seen what effect Sri Lanka issues will have on the coconut market. But it may help to keep prices slightly firmer as supply dips. Also, we may see some buyers having to dip into the spot market looking to replace lost shipments.
Palm oil fell sharply last week, driven lower by oversupply, building Indonesian stockpiles, and continued worries about demand from China as lockdowns persist.
But with the stronger crude oil price, Palm oil suppliers’ prices edge up higher, although still below the 4,000 level.
Coconut oil hovers just under the $1,500 level, supported by Crude oil prices.
But other edible oils have traded lower as fears over recessions and plentiful supply have pushed prices down.
It’s the summer holiday season in Europe, with buyers tending to stay away from the office, so interest dips, but will Sri Lankan issues catch some out?
The war in Ukraine still weighs heavily on the market, along with a downturn in consumer spending due to the cost-of-living crisis.
But with shippers slowing production to match the downturn in orders, stock could become an issue come September.
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