Cooking oil prices in India and China are climbing as drought in South America and Southeast Asia are pushing up the prices of soybean and palm oil. India relies on imports for more than half of its edible cooking oil supply and is significantly affected by global price shifts. Drought in Brazil and Southeast Asia are causing production shortages sending crude palm oil futures in Malaysia to an 18-month high. The UN Food and Agriculture Organization’s price index rose 2.6% in February over the month before, and its vegetable oil index increased 4.9%. This time of year is particularly critical for oil palm trees. If rainfall does not improve over the next few weeks flowering and fruit set will be affected and will result in yield loss in the coming ten months. India is also the biggest importer of sunflower oil from Ukraine, the world’s biggest producer. Political unrest and tensions in that country have caused delays in shipments and have caused wholesale prices of sunflower oil to jump 10% in India in the past month. Palm oil prices in China are currently higher than soy oil – an unusual occurrence that could cause bulk consumers of palm oil such as restaurant chains, etc. to switch to soy oil. Forecasters indicate that the dry weather is expected to continue for another month, but if an El Nino weather pattern materializes which usually causes dry weather in Asia, palm oil production could be low for some time.
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