Food inflation fears abate as cooking oils, grains plummet 

Source: Food inflation fears abate as cooking oils, grains plummet | The Herald

Food inflation fears abate as cooking oils, grains plummet
Palm oil, the world’s most consumed edible oil, has plunged more than 45 percent from its record close in April to the weakest level in a year.

Worries over surging global food costs are easing as prices of everything from cooking oils to wheat and corn tumble to the lowest levels in months on increasing physical supplies and as investors reduce their bullish bets on futures markets.

Palm oil, the world’s most consumed edible oil, has plunged more than 45 percent from its record close in April to the weakest level in a year, while wheat has slumped over 35 percent from an all-time high in March, and corn has dropped about 30 percent from its peak for the year.

Russia’s invasion of Ukraine in February choked supplies of grains and sunflower oil from the Black Sea, worsening existing shortages caused by extreme weather and supply-chain chaos.

This sparked fears of a global food crisis, which would hit consumers in poorer nations particularly hard. Prices are now back to levels before the invasion.

Investors have been reducing net bullish positions in US markets as interest rates increase and the threat of recession looms larger. Their net bullish bets on soybean oil have shrunk to the smallest in 23 months, those on wheat are the lowest in four months, and on corn the smallest in eight months.

Palm oil tumbled by the exchange limit in Kuala Lumpur on Wednesday, losing 10 percent by the midday break to 3 757 ringgit a ton, and leading the losses in farm commodities.

Soyabean oil, corn and wheat extended the sharp declines posted in Chicago on Tuesday.

The slump in palm oil comes as top producer Indonesia ramps up exports after easing a ban, inventories rise in Malaysia and production enters the seasonal high cycle.

The plunge in fossil fuel costs will also cut demand for crop-based energy such as biodiesel.

“Large losses in crude oil, a plunge in soyabean oil and escalating palm oil export and production supply are hanging heavily” over the market, said Sathia Varqa, owner of Palm Oil Analytics in Singapore.

Still, the plunge in prices may spur demand from top importers China and India, helped by lower duties. “The good news is that the crude palm oil reference price for Indonesia and Malaysia will be lower for August shipment, triggering a reduction in export taxes,” he said.

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