Fluctuation is shaped by shifts in commodity markets and Indonesia’s new biofuel plan
Palm oil industry labourers at work. Picture: 123RF/TAN KIAN YONG
The price of palm oil has been surging, sending its discount to soya-bean-oil futures from more than $150 a ton six weeks ago to less than $26 a ton on Friday. Given the way hedge funds have cut bullish bets on soya-bean oil in recent weeks, the spread could flip to a premium soon for the first time in almost a decade.
Soya beans have the opposite problem. Thanks to China’s suspension of oilseed imports from the US and slack demand for animal feed as a result of African swine fever, even the devastation that the Midwest crop suffered in flooding earlier in 2019 hasn’t been sufficient to squeeze the market to the point where prices start to pick up.
Soya beans aren’t the best friends of the rainforest, either. While most of the glut is a result of China’s boycott of American crops, the vegetable oil market is almost as international as the one for crude oil, and Brazil wants to become the Saudi Arabia of soya.
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