Global food fears ease as price of cooking oil and grains plummets
- Palm oil, the world’s most consumed edible oil, has plunged about 45 per cent since April, while wheat slumped 35 per cent, and corn dropped 30 per cent
- The dramatic reduction in prices may spur demand from top importers China and India, which is good news for suppliers Indonesia and Malaysia
Worries over surging global food costs are easing as prices of everything from cooking oils to wheat and corn tumble to the lowest levels in months on increasing physical supplies and as investors reduce their bullish bets on futures markets.
Palm oil, the world’s most consumed edible oil, has plunged more than 45 per cent from its record close in April to the weakest level in a year, while wheat has slumped over 35 per cent from an all-time high in March, and corn has dropped about 30 per cent from its peak for the year.
Russia’s invasion of Ukraine in February choked supplies of grains and sunflower oil from the Black Sea, worsening existing shortages caused by extreme weather and supply-chain chaos. This sparked fears of a global food crisis, which would hit consumers in poorer nations particularly hard. Prices are now back to levels before the invasion.
Palm oil tumbled by the exchange limit in Kuala Lumpur on Wednesday, losing 10 per cent by midday to 3,757 ringgit a ton, and leading the losses in farm commodities. Soybean oil, corn and wheat extended the sharp declines posted in Chicago on Tuesday.
The slump in palm oil comes as top producer Indonesia ramps up exports after easing a ban, inventories rise in Malaysia and production enters the seasonal high cycle. The plunge in fossil fuel costs will also cut demand for crop-based energy such as biodiesel.