Market Update March 7th 2023
March 7, 2023
As Q1 2023 draws towards an end, what have we learnt about the market so…
The inter connection between the edible oils was brought into sharp focus last week. Palm Oil started a run backed in some way by higher crude oil prices but mainly with news from Malaysia that stocks there were down and that this year’s crop would be smaller then last years. With crude oil much firmer that ignited a fear in the market with poor weather effecting Soybean in some areas and Chinas energy issues slowing crushing there. All these factors meant Palm Oil hit record highs and has dragged other edible oils with it. PKO and Coconut oil just along for the ride as demand between the interchangeable oils spills over. Coconut oil nudging midweek the 2200 level up some 45% from same time a month ago. Shippers of desiccated who had held their prices since early Sept withdrew from the market to see just how high things could go. Buyers in Europe scrambled to cover open positions for Q1 and Q2 2022.
Philippine shippers are already being pushed at the moment with staff issues related to COVID hampering production and demand at very high levels. Also Europe’s push for environmentally friendly food ingredients and sustainability puts more pressure on coconut as its by far the more preferred option over Palm oil. No prices are being quoted yet for 2022 but they will be significantly higher then before.
Can edible oil prices stay this high? Its hard to see where relief will come from at the moment. Some of the high prices is down to perception but there is also a very real shortage of come edible oils. Demand continues to soar and with no end in sight for labour shortages caused by COVID its looking like high prices will be here for a while yet. Oh and don’t forget its typhoon season. Supply of coconut remains good at the moment but that could change.
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