Vegetable oil prices in April reached their highest level on record since Agrarmarkt Informations-Gesellschaft (mbH) started recording in 1995. Sunflower oil was valued at EUR 1,341 per tonne fob ARA at the end of April 2021, which was more than double the previous year’s level. Support mainly came from limited feedstock supply in the EU, Ukraine and Russia. The scarcity curbed processing and, as a result, reduced availability.

Asking prices for soybean oil stood at EUR 1,245 per tonne fob Germany in the last week of April. This was double the previous year’s  level. The main reason for the strong price increase was concerns over adequate supply of feedstock. Initially, the Brazilian soybean harvest was delayed. Then, concerns sparked by a lower-than-expected US soybean area estimate for 2021 drove prices up further. Strong demand from China provided yet another boost to prices.

Rapeseed oil market participants too were concerned that supply could tighten in the current season. Again, these concerns were stoked by the limited availability of feedstock. China’s buoyant buying interest further fuelled the mood of tension. At EUR 1,213 per tonne fob Germany, rapeseed oil traded at around 75 per cent above the previous year’s level at the end of April.

Palm oil recorded the biggest year-on-year increase at 121 per cent to EUR 1,055 per tonne CIF Rotterdam. Stocks of the second largest exporter – Malaysia – are expected to dwindle sharply. The reason is that the country suffered a lack of workforce due to Covid-19, which resulted in restricted production and, consequently, curtailed global supply.

The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has welcomed the price trend as a fundamentally positive development. After all, especially in the case of rapeseed, price incentives, along with crop rotation restrictions, are the main factor leading to economically optimised crop rotation plans. In other words, these price signals have come at the right time for farmers to take them into account when planning sowings. According to the UFOP, with a processing capacity of more than 9 million tonnes, German oil mills heavily rely on German and European rapeseed to satisfy demand for rapeseed oil and GM-free rapeseed meal for animal feeding purposes.

In light of the uncertain conditions due to the GAP reform, biofuels policy and crop protection policy, an adequate price level is needed. The UFOP has strongly emphasised that the development in prices anticipates the trend required to set off the reduction in yields intended by the EU Commission for all kinds of crops and the cut in farmers‘ incomes due to the new set-aside policy. The association has said that instead of developing marketing alternatives for the industrial and energy use of sustainably produced greenhouse gas-efficient feedstock, the EU Commission’s policy is putting a curb on existing and proven sales paths. As a consequence, the Commission prevents a clear and prospective signal from being given to farm owners‘ successors. The UFOP is convinced that the EU Commission’s policy will be reflected in market prices – just as it will be consumers who will ultimately have to bear the cost of fossil CO₂ emission pricing.