Host: Theo Venter, Global Market Analyst, Tridge.
Presenters: Prince Yawson, Snr Global Market Analyst, Tridge.
Panelists: Ferhat Erdem, Origination Manager - Türkiye, Yun Primawan, GMI researcher - Indonesia, Jasurbek Ayopov, Global Market Analyst- HQ.
1. Current Global Supply and Demand Situation.
2. Key Drivers Shaping the Short-Term Outlook.
3. Panel discussion.
Tridge’s May webinar, “Overview and Outlook of Global Oils & Oilseeds Market”, explored the significant challenges facing the oil and oilseed markets, including the collision of increased demand and limited supply.
Current Global Supply and Demand Situation
Main Speaker, Prince Yawson shared insights on the production trends of the main oils and oilseeds, consumption numbers, exports, imports, ending stocks, and in some cases, stocks to use ratios, to ascertain the current supply and demand balance sheet and what that means for the market.
Key Drivers Shaping the Short-Term Outlook
Prince further examined the drivers pushing the various variables, what the supply and demand balance means for the market, the impact on market prices and where prices will move toward, at least in the short term. The price evolution of palm oil, olive oil, oilseeds rape, and oilseed sunflower and were also examined.
The presentation was followed by a panel discussion where the panelists, including the presenter, answered questions put to them by the host. A follow-up was put to the main speaker Prince on how rapeseed and sunflower could substitute each other based on their prices. Prince answered by saying at the retail level, there is only a tiny differentiation between the two, and buyers don't consider strongly which to buy, but, at the processing level, there could be substitution based on price, e.g., in the biodiesel sector where if sunflower oil is highly discounted to rapeseed, processors wouldn't mind using sunflower oil if the price discount outweighs the cost of bleaching sunflower to produce rapeseed oil.
On the status of the oil and oilseed supply in the region of the panelist, and how it has changed given the radical events in recent years? Ferhat mentioned record high temperatures and lack of rainfall over a couple of seasons in Europe slashed olive oil harvest and aided in pushing olive oil prices up. However, he added, Türkiye’s olive oil exports in 2021-22 increased by 50% compared to the previous period aided by help from the Türkish government to olive oil farmers.
Yun, giving an insight on the situation in Indonesia mentioned, from June, the Indonesian government will introduce its own palm oil exchange and also roll out the domestic obligations on palm oil, the latter to give security to the market and ensure the stability of prices. Yun also mentioned the B35 biodiesel mandate from the Indonesian government is effective with the government looking at growing new crops on the back of the low yield of current old crops. Webinar host, Theo, reiterated the point that tree crops like palm oil take a while to yield, unlike field crops.
Jasurbek on his part reinforced the point about Russia and Ukraine being top producers of sunflower oil going further to note, 2022 being a challenging year for Ukraine owing to a reduction in their production and exports numbers of sunflower seed and oil. Prince added, looking at the situation in Ukraine and the rest of the world, sunflower production on the global scale is in a comfortable stead.
For the second question, “What potential risks and opportunities do buyers and suppliers face in the oil and oilseed markets?” Yun, who is based in Indonesia contended the short-term challenge will be the expected increase in the production numbers of other vegetable oils and its impact on palm oil since vegetable oils compete for a share in the vegetable oil mix. He added, the introduction of Indonesia’s own palm oil exchange will create opportunities helping the country to price its own palm oil and further influence the palm market. Jasurbek gave his response to the questions as “buyers can expect two potential risks: supply disruption and regulatory and trade barriers.
“Increasing consumer preferences for healthier foods and Mediterranean diet, rapid expansion in the food and beverage industry and the growing health consciousness among consumers are some of the factors that would drive olive oil”, according to Ferhat. Supply chains have become sensitive to any conflict, he added, so governments avoiding conflicts in their region is essential going forward. On Jasur’s part, any conflict and geopolitical event will not only affect the vegetable oil market but every agricultural commodity, and changes in government policy will also affect markets. Yun completed the panel discussion by saying any changes in sunflower oil will affect palm oil as the two oils compete with each other.