U.S. President Joe Biden’s green fuel push has caught edible oils in its tow, helping drive up vegetable oil prices that are already near record highs. The shift raises concerns about global food inflation, according to a Reuters report.
The United Nations’ vegetable oils price index has grown 70 percent to nine-year highs. The index increased 6.2 percent, with palm oil prices lifted by worries over low inventories in major exporting nations, primarily in Asia.
Bad weather in crucial sunflower, rapeseed and soybean hubs, meanwhile, has pinched edible oil output to 10-year lows.
The run-up in edible oil prices has helped fuel a rise in the UN’s broader food price index to its highest since 2014, posing a challenge to economic growth. The current U.S. administration has also projected higher demand for soybean oil.
The sharp price climb in all edible oils is hurting multiple consumers worldwide, who heavily depend on them.
According to the World Food Programme (WFP), food prices were rising, with palm oil 20 percent higher in some places around Yangon’s central city since the beginning of February.
Palm oil, the most widely and affordable used edible oil, is found in everything from biscuits to biofuel.
Pricier oils are also stifling demand in India. The country is expected to curb imports as consumers are forced to cut back despite moves to reopen the economy from the pandemic lockdowns. India’s palm oil imports fell 27 percent in February, to their lowest in nine months.
Malaysian palm oil futures, the price benchmark for the world’s most-traded edible oil, have recently topped 4,000 ringgit per tonne for the first time since 2008.
Rapeseed prices have also also surged to record highs as traders scour for supplies of the oil-rich crop. This has underscored growing strain across oilseed markets in response to booming Chinese and global demand.
Food consumers are already cutting back as a result.
But analysts also believe that palm oil production in Asia is expected to climb from April onwards, which should cool the broader global vegetable oil market. In addition, the push for electronic vehicles will help limit the increased use of edible oil for biodiesel.
Edible oil prices also may be slow to decline due to slow recovery in output and higher global use in biofuel production.