Palm Oil Ends Quarter With a Surge on Global Oilseed Shortage -
Comment of the Day

September 30 2021

Commentary by Eoin Treacy

Palm Oil Ends Quarter With a Surge on Global Oilseed Shortage -

This article from Bloomberg may be of interest to subscribers. Here is a section: 

Demand has soared this month ahead of a major festival season in India, the top importer. Vegetable oils are an important part of the festivities as they’re used to make local sweets, fried food and other treats. Palm oil exports from Malaysia climbed 34% in September from a month earlier, data from AmSpec Agri show, with shipments to India likely to be robust. 

There’s also concern that the suspension of soybean crushing plants in China due to a power crunch may crimp soybean oil output and bolster demand for palm oil. “Fresh Chinese buying today ahead of the Golden Week holidays has helped the palm oil market,” said Anilkumar Bagani, research head of Sunvin Group, referring to the week-long holiday in China that starts Friday. 

He estimates that the crush plant shutdowns in China could translate to a loss of 160,000 to 180,000 tons of soybean oil in the September-October period. This may support higher palm oil purchases given import margins are “less negative” compared with other vegetable oils, he said. 

Eoin Treacy's view

The upward pressure on oil prices is also helping to fuel demand for alternatives like palm oil, soybeans and sugar since they are primary ingredients in bio-diesel and ethanol. The impending holidays in both India and China add an additional wrinkle to supply chains but are not the primary factor behind the run up in prices over the last 18 months.

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