Rising cooking oil costs pressuring food inflation
Tightening global supplies of crude oil and vegetable oils are continuing to drive steep food inflation.
The University of Missouri’s Ben Brown says Russia’s invasion of Ukraine has driven up the price of crude oil and limited the region’s sunflower oil exports, causing large price hikes for cooking oils…
“We’ve seen vegetable oil prices trade at their highest prices ever,” he said. “We’re trading at 83 cents a pound when just five months ago we were trading in the 20 to 30 cent range per pound.”
July soybean oil futures closed at $.8472 per pound Wednesday, roughly a cent below the all-time contract high.
He tells Brownfield the sharp price increases are pushing vegetable oil exporters to hold onto their products to control local inflation which is amplifying the issue globally.
Brown points to Indonesia blocking crude palm oil exports.
“A restriction from Indonesia, the world’s largest producer of palm oil; they produce about 59 percent (of global exports),” he said. “[That] would send vegetable oils, including soybean oil, higher.”
Brown said vegetable oil price jumps will get worse if drought in the upper U.S. Plains and southern Canada expands and decreases canola oil production.
Brown said the U.S. is highly unlikely to restrict soybean oil or other ag exports to stop rising food costs as it would also diminish farm prices.
Brownfield interviewed Brown on this week’s Weekly Commodity Market Update.