Since this year, with the rise in global prices of agricultural products, food oil prices in the international market also showed an upward trend. Futures prices for soybean oil and rapeseed have continued to hit new highs, and wholesale and retail prices have followed suit. Many food oil exporting countries to share the dividends of the rise at the same time, but also appeared in the home market price of high inflation caused by the hidden worry.
1. International futures market prices remain high, with record highs and recent prices at historic highs.
This year, the United States Chicago Board of Trade (CBOT) soybean futures, Canadian Winnipeg Commodity Futures Exchange (WCE) canola futures, Malaysia Derivatives Exchange (BMD) gross palm oil futures, and other internationally influential food oil futures price index appeared to be a sharp upward trend.
Soybean is the base product of food oil and the most important futures variety. And rapeseed oil, palm oil, etc. are seen as substitutes in the international market. Therefore, here is the CBOT soybean market as an example to illustrate the price trend. From the opening of the market on January 3, to July 13, opened at 700.7, the highest 948.3, the lowest 671.3, closed at 948.1, up 257.6 (all units are cents / bushel), or 36.7%. Its trend went through three stages. The first stage, from January 10 CBOT soybean index of the lowest point of 671.3 cents / bushel (1 bushel of soybeans = 27.100 kilograms) has been speculated to the highest point of February 22 813.5 cents / bushel, the most substantial 142.2 cents / bushel. The main speculative factor is the United States professional farmers organization (Pro Farmer) in the meantime threw out a survey report, showing that the United States new season soybean acreage may be sharply reduced by 860 to 9.4 million acres. The second stage: from the lowest point on April 24, 732.2 cents / bushel start, has been speculation to June 18, the highest 882.4 cents / bushel, the highest range of 150.2 cents / bushel, and this stage of the main influencing factor is the weather. The weather factor speculated more than 100 cents / bushel. Phase 3: From the June 22nd low of 817.4 cents/bushel has been speculated to the July 13th high of 948.3 cents/bushel, whose maximum range is 130.9 cents/bushel. Futures prices hit a three-year high. This was mainly due to the June 29th USDA released a report that threw all market participants for a loop, i.e.: the U.S. 2007 soybean acreage is expected to be 64.081 million acres, which is a sharp cut of 3.059 million acres from the March figure, and much lower than the market's general forecast of an average of 67.838 million acres (with a forecast range of 66 - 69 million acres). The day CBOT soybean contracts once up to open.
After the market's systematic three-stage speculation on seeded acreage - weather conditions - seeded acreage, making CBOT soybeans up nearly 260 cents per bushel. It is worth noting that the previous CBOT soybean is rising - planted acreage increase - down - planted acreage reduction - -re-rise cycle pattern, and now there is a new situation is rising - acreage reduction - and then rise - and then reduce acreage Vicious cycle pattern.
In July, the U.S. Department of Agriculture issued a monthly supply and demand report, the global 2007-2008 soybean production is expected to reach 222.1 million tons, lower than the June forecast of 225.3 million tons, and lower than the 2006 236.1 million tons. In fact, in addition to Brazil, the world's several other major soybean-producing countries, soybean production have varying degrees of reduction, including the United States soybean production was lowered to 71.4 million tons (June forecast of 74.7 million tons, in 2006 for 86.8 million tons). Argentina's soybean production is forecast at 47 million tons (47.2 million tons in 2006-2007). China's soybean production is forecast at 15.6 million tons, also down from 16.2 million tons in 2006-2007. However, Brazilian soybean production is forecast to reach 61 million tons, unchanged from the June estimate and above the 2006-2007 figure of 59 million tons.
On the demand side, global soybean use was revised down slightly to 234.2 million tons (from 234.3 million tons in the June forecast and 225.2 million tons in 2006). Global soybean exports are projected at 75.5 million tons, unchanged from the June forecast, and 70.5 million tons in 2006, with Argentina's soybean exports projected to be raised to 10.2 million tons (8.6 million tons in the June forecast, and 8.0 million tons in 2006), and Brazil's projected at 29.7 million tons (29.7 million tons in the June forecast, and 24.6 million tons in 2006). The U.S. is projected at 27.8 million tons (29.4 million tons in June and 29.7 million tons in 2006). This would also result in lower global soybean ending stocks at the end of September 2008 to 51.87 million tons (June forecast 54 million tons, 2006 64.17 million tons).
Overall, the report confirms the market's recent concerns about tight global soybean supplies next year, which makes the market extremely sensitive to any factors that may lead to lower yields in the United States or lower acreage sown to soybeans in South America. From the latest weather forecasts, the western U.S. corn planting belt may appear hot and dry weather, and the end of July and August is the U.S. soybean key podding and grouting period, hot and dry weather will lead to soybean yield potential is impaired. In addition to weather factors, the rise in U.S. soybean prices is also to encourage Brazilian farmers to increase the sowing area. Brazil's new soybean sowing area is generally expected to be higher than in 2006, more than 5 percentage points, but from the continued strength of the real exchange rate, which is clearly not conducive to Brazilian soybean planting gains, because Brazilian soybeans are mainly used for export, so the dollar relative to the weaker the real, the more the farmers to return to the earnings of the less. Now the real exchange rate is located in nearly 7 years high, 1 real can be exchanged for 0.53 U.S. dollars, before the end of the year may reach 1 U.S. dollar for 1.8 reais. Therefore, before the start of the soybean planting season in South America (that is, the next three to four months), Chicago soybean futures prices to maintain high chances of running, especially if the U.S. Midwest hot and dry weather conditions, in order to be able to encourage South American farmers to increase as much as possible the area of soybean planting, to make up for the decline in U.S. soybean production brought about by the global supply gap.
Prices for Canadian WCE canola futures, Malaysian BMD gross palm oil futures and others are essentially moving in the same direction as CBOT. Since 2006, Malaysian crude palm oil futures prices soared nearly 80%, spot prices hit an 8-year high.
2. Three factors support the international palm oil prices
Since July, the international palm oil market rose sharply, 24 degrees of palm oil near-monthly port of shipment delivered on board (FOB) price of $ 797.5 per ton (the same below), compared with the previous week rose by 22.5 U.S. dollars; 33 degrees of palm oil FOB price of 792.5 U.S. dollars, rose by 22.5 U.S. dollars; 44 degrees of palm oil $770, up $10.
The main support factors for the rise of the international palm oil market are as follows: First, CBOT soybean market rose sharply driven. The United States Department of Agriculture significantly reduced the 2007 U.S. soybean sowing area data, resulting in CBOT soybean market rose sharply, the BMD palm oil to play a supporting role. Second, the recent New York Mercantile Exchange (NYMEX) crude oil rose sharply, making palm oil in the biofuels industry demand prospects improve, attracting speculative funds to do more. The Malaysian government plans to 2008 when mandatory in the traditional fuel blended biodiesel, and intends to provide subsidies to ensure the success of biofuel projects, which also formed the BMD palm oil market support. Thirdly, Indonesia raised the base price of palm oil exports, increasing the export competitiveness of Malaysian palm oil. The Indonesian government will gross palm oil benchmark export price from the former 622 U.S. dollars per ton (the same below) to 676 U.S. dollars; 24 degrees of palm oil benchmark export price from 676 U.S. dollars to 746 U.S. dollars; 33 degrees of palm oil benchmark export price from the former 652 U.S. dollars to 737 U.S. dollars. Indonesia raised palm oil export prices in favor of Malaysian palm oil exports, BMD palm oil market is favorable.
3. Global rapeseed supply tends to be tighter, the overall price trend remains upward.
According to the German "Oil World" is expected, 2006/07 global consumption of 10 major oilseed crops is expected to reach 396 million tons, higher than 392 million tons of production over the same period. 2007 global rapeseed production is expected to be 51.6 million tons, higher than the previous year's 47.2 million tons. Of this, EU rapeseed production is expected to reach 17.8 million tons, compared with 16.1 million tons the previous year; China's production is expected to be 11 million tons, down from 12.7 million tons the previous year. Canada's production is expected to improve to 9.8 million tons, compared with 8.5 million tons the previous year; Australia's production is expected to improve to 1.4 million tons, compared with 510,000 tons the previous year. But still not enough to meet the growth in demand, global consumption of rapeseed grew significantly, is expected to 52.2 million tons, compared with 49.1 million tons in the previous year. Rapeseed processing is expected to be 49 million tons, compared with 46.1 million tons in the previous year. From the point of view of ending stocks, it is expected to be 4.7 million tons this year and 5.3 million tons in the previous year, and the ratio of stocks to usage is expected to be 9.0%, compared with 10.9% in the previous year. It can be seen that this year, the global rapeseed supply tends to be tighter, the overall price trend continues upward.
Caused by tight supply and demand is due to a variety of reasons, one of which is the market speculation on biodiesel, and thus expected that the demand for rapeseed oil, soybean oil, palm oil will likely increase significantly, supply and demand fundamentals will be tight. This was more evident in the market reaction at the end of last year, when rapeseed oil and rapeseed prices fell briefly in Germany as energy prices sank, vegetable oil prices were relatively firm and the 9-cent-per-liter energy tax, which came into effect in August 2006, resulted in a decline in biodiesel consumption. So far this year, such a high cost has lost its significance as a biodiesel feedstock due to the dramatic explosion in the prices of soybean oil, rapeseed oil and palm oil. However, there are constantly new forecasts up biodiesel production capacity, which will undoubtedly bring rapeseed supply forced atmosphere, to provide a basis for its high prices.
4. Rising food oil prices in neighboring countries have brought tight supply and increased inflationary pressure.
Palm oil is the main cooking oil for Indonesians, but because of the soaring price of palm oil as cooking oil and biofuel, many Indonesians can not afford to buy, but only to cook without oil. It has already forced many poor Indonesians to switch to boiled, rather than fried food with oil.
As one of the world's largest producers of palm oil, Indonesia will profit from the rise in oil prices, but because the domestic cooking oil prices also rose by one-third, resulting in millions of ordinary Indonesians can not afford. In addition, the increase in cooking oil prices, but also economic policy program officials are concerned about the impact on inflation. Prices of unprocessed food, including cooking oil, rose by more than 10 percent in June this year compared with the same period last year, the largest increase in the basket of goods and services that make up the consumer price index.
India is a major importer of vegetable oils and relies on imports to meet half of its annual edible oil demand. As oilseed production is expected to be reduced this year, this has also made India more dependent on imported vegetable oils. Indian edible oil prices rose due to lower local oilseed production, and international palm oil prices hit several years high, but also bring obvious support.
The recent and sustained strength in Indian vegetable oil prices has brought about continued high domestic inflation rate indicators. By the end of March, India's wholesale price index than a year ago increased by 6.39%, the Indian government in order to calm inflationary pressures, the Indian government has in order to calm down the import tariffs of crude palm oil from 70% to 60%, the 24 degrees of refined palm oil import tariffs from 80% to 67.5%. In contrast, the import tariff on soybean oil remains at 45 percent. As the base price used to calculate the tariff remains at the July 2006 level, this has helped reduce the cost of importing these edible oils and also favored import growth.
Overall, foreign food oil prices are still in an upward trend, in addition to the reduction in acreage and weather factors, the continued depreciation of the U.S. dollar, the global threat of inflation, and investment funds in the futures market is also an important influence. Expected CBOT soybean market is likely to reach 1065 cents / bushel or 1116 cents / bushel.