Palm oil has become the most expensive vegetable oil among the world’s four main vegetable oils, as consumers have used it as a substitution to the sunflower.

The palm oil has become the world’s most expensive vegetable oil among the four vegetable oils as consumers have substituted sunflower with the palm oil. The supply of sunflower is disrupted, especially around the Black Sea, due to the military invasion of Russia to Ukraine.

Based on reports of Reuters on Tuesday, 01 March 2022, premium palm oil price could pressure consumers in Asia and Africa due to rising cost of energy and foods that had forced them to reduce palm oil consumption and turned to soybean oil.

The price of crude palm oil (CPO) was reported at around US$1,925 per ton, including transportation cost and insurance, as compared to the price of crude soybean oil at around US$1,865 and the price of rapeseed oil at around US$1,900. But traders could not offer sunflower oil due to supply problem resulted from the closure of seaports as a result of the Russian military attacks against Ukraine.

The price of palm oil in India exceeded the price of soybean oil, triggering a change of buying patterns. Black Sea area contributes 60 percent of the total production of sunflower and 76 percent of its total exports.

“Refineries in Asia and Europe have increased their purchase of palm oil for the next one month delivery to replace the sunflower oil. The purchase has lifted the price of palm oil to the irrational level,” said a dealer with a global trading company based in Mumbai, India.

The production of soybean in Argentine, Brazil, and Paraguay is expected to decrease due to dry weather.

“Consumers have the choice to purchase soybean, but quick shipment of soybean is limited, so that it needs longer time to reach Asia as compared to the shipment of palm oil,” they said.

Consumers in Asia, who rely on palm oil, are sensitive to a price spread of more than US$50 per ton compared to soybean and sunflower.

The price of premium palm oil will be only temporary and could decrease during the next few weeks as consumers are expected to turn to soybean in April.

“Most of the demand for palm oil exports will be fulfilled by Malaysia, as Indonesia has limited its palm oil export. Then it will become the biggest beneficiary from the current geo-political condition,” an Indian refiner said. (*)

Source: idxchannel.com | Featured image via detik.com