Edible oil prices rose steeply in the last quarter of 2009, driven largely by China buying huge quantities of soya beans from the US, according to Gordon Kirkwood of consultancy Eccelso.
Increases in the price of mineral oil, due to optimism about a recovery in the global economy, also kept prices as high as vegetable oil. The two oil prices are linked, as vegetable oil is used by the biofuel industry. Palm oil prices rose from around E440 (£382)/tonne in October 2009 to around E580 (£504), as British Baker went to press, while sunflower oil broke the E700 (£608)/tonne mark in the first week in January from around E570 (£495)/tonne in October 2009. Rapeseed and soyabean oil cost around E660 (£573)/tonne, up sharply in the past two months.
"The narrowing price difference of palm and rapeseed oils is remarkable," said Kirkwood. "Appreciating mineral oil prices have played an important role. Price strength of the competing oils has helped the price of palm oil to climb to higher levels as well and there has been uncertainty as to whether future production in Indonesia and Malaysia can keep up with global demand."
Edible oil prices could have surged much higher if it hadn’t been for improvements in the soya bean growing climate in South America, he added. "The general perception is that the South American crops are getting bigger. If this hadn’t happened, we would have seen much higher price levels."