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Vegetable Oil Prices Increase in the Beginning of 2018 but Do not Have the Conditions to Keep Growing

China Agriculture Report By CnAgri2018-02-09 11:11:29China Agriculture Report Print
Keywords:Oilseeds Grains
Starting in November 2017, domestic vegetable oil prices began a new round of decline, hitting a record low in the end of the year. At the beginning of 2018, domestic vegetable oil prices rose generally, of which the prices of palm oil, rapeseed oil and soybean oil grew around 100 RMB/ton from the first week, respectively.
The support of the international market is the greatest motivation: La Nina may affect the soybean production in South America; international crude oil futures remain strong; USD exchange rate decreases. All these factors will support the global oilseed prices. In addition, the Chinese New year will stimulate the price to rise sharply.
However, we believe that the above factors are mainly short-term effects. The pressure of global oversupply has not been alleviated in the long term, so prices do not have the conditions to keep growing.
A.Currently the possibility and intensity of the most influential La Nina is small and the effect is short, far different from the strong La Nina from 2010 to 2012.
B.Global soybean products are expected to remain at a record high of 350 million tons in 2018, the market supply is abundant. In 2018, palm oil output is expected to be growing and according to the forecast from USDA, Indonesia and Malaysia will witness a output increase of 2.5 million tons and 1.7 million tons, respectively.
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