In Edible Oils Market, Eccelso MD Gordon Kirkwood’s monthly report, he noted the food industry was relatively recession-proof, even if margins were under some pressure. And a product mix between indulgence and value items was essential.
In the edible oils market, the production of rape oil for 2009/10 is forecast to decline by more than 3m tonnes. Hot weather in South America stressed some of this year’s soy bean crop and, in some areas, has reduced yields.
The report stated that the price rally, given the effect of the recession, had been overdone and would see some correction. The palm oil cycle is seeing rising production figures each month for the next six months, and sunflower seed production is set to increase again this year in Ukraine.
In terms of prices, rape oil has increased by $160 a tonne since early February. From February to May, palm oil has increased by US$225/t, sunflower oil has risen by US$150/t and soya oil has increased by US$160/t.
"We do not advise buyers to be short [of stock] over difficult summer months and possible volatile weather markets," said Kirkwood. "Given favourable weather, increased planting in the US, increased yield cycle in palm, increased rape in the EU and increased sunflower crops in Central Europe, we could see harvest pressure on prices from mid-August, or sooner."