Vegetable oil prices have risen to their highest level on record.
Between May 2020 and March 2022, the United Nations Food and Agriculture Organization (FAO) Vegetable Oils Index has risen 219.9% from 77.7 to 248.6 (see Figure 1).
Vegetable oil is a global food staple used in food preparation and cooking. The prices of other food staples, including cereals and dairy, have also increased rapidly in recent months.
Figure 1: Monthly FAO Food Price Indices – Nominal (January 2020 to March 2022)
Several factors have contributed to recent price rises:
These factors are expected to continue supporting high vegetable oil prices for the rest of 2022.
Australian vegetable oil exporters are likely to gain from record high prices. High prices and favourable seasonal conditions are expected to lead to record Australian oilseed exports in 2021–22 (ABARES 2022).
Australia’s reputation as a reliable supplier of high-quality agricultural products is particularly important at a time of increasing uncertainty in global markets.
Exporters should continue to monitor announcements from trading partner governments to adapt to emerging opportunities.
High vegetable oil prices (Figure 2) have led some major vegetable oil exporting countries to introduce export restrictions.
Export restrictions are intended to ensure domestic supply and reduce domestic prices. However, export restrictions also reduce the amount of vegetable oil available for global trade. Reduced global supply may drive further international price increases. It may also create supply gaps for some countries, particularly those highly reliant on vegetable oil imports.
Figure 2: Global vegetable oil prices (1 January 2020 to 7 April 2022)
In 2020–21, Russia and Ukraine exported 76% of the volume of world sunflower oil exports (Figure 3). The Russia–Ukraine conflict has led to the closure of Ukrainian sunflower-crushing facilities and ports. Economic sanctions and uncertainties around Black Sea shipping routes have also reduced Russian exports of sunflower oils.
Disruptions to sunflower oil exports will lead to increased demand for other vegetable oils, such as palm oil, soybean oil and canola oil, as consumers seek to substitute. This will put further upward pressure on already record high prices and, in some cases, create supply shortages.
In 2020, the European Union accounted for 28.7% of global sunflower imports. India accounted for 14.8% and China accounted for 11.1%.
Figure 3: Global sunflower oil exports by country (2019–20 to 2021–22f)