The most important vegetable oils have become more expensive since the COVID-19 restrictions were eased - in particular sunflower oil.
According to information published by Agrarmarkt Informations-Gesellschaft, prices for vegetable oils have increased considerably in Germany since the beginning of May.
Support came mainly from the easing of COVID-19 restrictions. The lifting of restrictions in private and public life, including freight and passenger road traffic, caused demand for transport fuels to rebound.
This also led to a rise in demand for biodiesel for blending and, consequently, also increased interest in buying vegetable oils.
The raise of the quota on greenhouse gas (GHG) emission from 4% to 6% in 2020 is also likely to account for the significant increase in demand. Because quotas can no longer be carried over from the previous year, GHG emission reduction requirements must be fully achieved by physical material that is placed on the market this year.
This rule applies throughout the EU and is likely to result in a continuing growth in demand for biofuels till year-end.
There were also other factors that lent support to prices in the past three weeks. For example, soybean oil benefited from firm soybean prices in Chicago. These were driven by China's brisk purchases and speculation about this year's US crop.
However, sunflower oil prices showed the steepest increase.
The rally started on 11 August when sunflower oil cost the equivalent of €684 per tonne. Within the following five weeks, it climbed almost €200 per tonne, a level not seen in seven years.
Consequently, sunflower oil was more expensive than rapeseed oil for the first time in more than two years.
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