Although not everyone agrees that we are the beginning of a long structural bull market for commodities, economic revivals, less investments due to past low prices, low stocks, inflation expectations, Chinese buying, government policies (e.g., Green Deal) are all alleged reasons for the expected long-term uptrend. 

Petroleum trades around $67, its highest price in 13 months, mostly supported by tighter global supplies than anything else. But also copper just hit its highest level in 9 years at $9342/t. 

In our markets the export prices of animal fats in the U.S. Gulf ports exploded this month (+40%) as demand from biodiesel producers exceeds supplies. Linseed oil quoted $180 above sunflower seed oil! Good quality olive oil prices increased significantly in the last few weeks to a 2-year high. Since October cottonseed oil prices increased 50%. And all other oil prices continued to rise to historically high levels as fundamentals remain bullish. 

High prices incite farmers to increase their spring crop plantings. So, the market expects soybean acreage growth in the U.S. and planting of sunflowers in the Ukraine, Russia and in EU will also increase. But like for the already sown winter crops the outcome is subject to weather conditions and months away. 

Some expected a better oil supply in AMJ due to a traditional seasonal increase in palm oil production and the South American soybean crop coming on the market as of now. Some even see beneficial influence from the rain in Spain on the coming blossoming of the olive trees which could weigh on prices until the new harvest.

But all that is too optimistic because global rapeseed stocks will dwindle till July, global sun seeds till A/S and soybeans till October. The U.S. might import soybeans this season. All going well, pessimistic views are that stock recovery is not expected till 2022. Markets are tight and inverted: higher prices for nearby positions than for deferred reflect that tightness.

The U.S. saw this week the highest prices since 2013 following strong demand for biodiesel and recovering food markets and concerns for a slowdown in processing due to a lack of soybean availability! 

South America might keep further price increases limited but Brazil continues to be behind on harvest (about 37% complete and yields disappointing). These delays also support prices in the U.S. 

In EU, prices for refined soybean oil increased in the last few days and it is expected that biodiesel demand for soybean oil will remain high. But also, in Brazil biodiesel demand already picked up. 

This season global consumption is to exceed global production. 

For the first time ever the acreage of palm oil trees in Malaysia decreased due to less re-plantings in 2020. Older trees are also yielding less. Palm oil production in both Malaysia and Indonesia remains problematic and developments (seasonal increase of production) will have to be followed up closely. Strength in other oils of course support palm oil prices. An (unlikely) unexpected drop in demand from China or biodiesel producers could also temper prices. 

Strong demand from China for both Canadian and European rapeseed and/or oil continues to support. Demand from biodiesel has been slow but food demand is pretty inelastic. Prospects for the new crop are moderate and next season EU will have to import more rapeseed than this season. 

Due to bad weather in large parts of Spain in January, the global olive oil production was revised down to a 4 year low at 3.17 Mmt. As such not dramatic as ending stocks of previous seasons and this season were/are historically high. More worrisome is that due to the wet and cold weather, the quality of the olives suffered. So, there is less extra quality grade, which explains the large price difference with the so-called lampante quality, which is refined olive oil. Prices continued to increase in the last few weeks. 

Who will blink first? For the moment the high prices don’t seem to be doing what they should do: destroy demand. Very tight situation!