Global food inflation gets reprieve as wheat to palm oil tumble

22 Jun, 2022 - 00:06 0 Views
Global food inflation gets reprieve as wheat to palm oil tumble

eBusiness Weekly


Agricultural commodities fell as traders weighed an improved outlook for global food supplies, with
signs pointing to burgeoning palm oil exports from Indonesia and a large Russian wheat crop this

Palm oil slumped further into a bear market, dropping about 9% on Monday and another 1.8% on
Tuesday, as top shipper Indonesia ramps up shipments. That’s a turnaround from the end of April when
prices hit a record closing high as the country temporarily banned palm oil exports to cool domestic food
inflation and the war in Ukraine restrained sunflower oil trade.

In Chicago, wheat and corn prices fell about 2% as trading resumed after a holiday. The outlook for
North American wheat supplies is picking up, while analysts continue to increase their estimates for
Russia’s wheat crop, which is expected to be near or at a record after favourable weather in spring.

The declines offer some relief for consumers around the world who face rapidly increasing living costs
and growing food insecurity. The United Nations’ food price index has eased from a record high in
March after Russia’s invasion choked exports from Ukraine, one of the top grain and vegetable oil

“There are signs that the global food crisis may be nearing its peak,” said Chua Hak Bin, an economist at
Maybank Investment Banking Group. He added that palm oil’s slump will reduce the pressure on
cooking oil prices.

Indonesia is speeding up palm oil shipments to “flush out” its overflowing stockpiles, a move that will
challenge cargoes from rival Malaysia. Data show Malaysia’s exports fell more than 10% in the first 20
days of June from the previous month. Volumes sank to India and Europe but increased to China.

Price hikes for edible oils in China will likely end with the restoration of palm oil supply, according to
Chen Bin, a Shandong-based analyst at Shanghai Ganglian E-Commerce Holdings Co. Given that palm is
the world’s most used edible oil and a key raw material in the food processing industry, the price slump
will ease global food inflation significantly, she said.

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