Oil prices fall back to pre-Ukraine conflict levels

The price of frying oil and fat has dropped and in some cases prices have fallen back to pre-Ukraine war levels.

The news will offer some light relief to business owners who, since March, have seen record highs, with rapeseed oil increasing in price by 70% and palm oil by 40%. Soaring prices have been driven by panic buying amid concerns over shortages ever since the Ukraine-Russian conflict broke out.

Ukraine is the largest exporter of sunflower oil in the world and Russia the second largest.

Gary Lewis, president of The National Edible Oil Distributor’s Association (NEODA), comments: “We saw a panic rise in March, which pushed prices up so much that it hurt global demand, and what we’ve seen in the last couple of weeks is a panic fall, which has caused quite a big correction in prices.”

As well as a fall in demand, concerns over rising interest rates and inflation as well as slowing economies have caused some investors-speculators in these markets to cash in some of the profits, driving prices down further. In addition, Indonesia lifting its temporary ban on palm oil exports – a tactic introduced to support domestic prices – has released supplies onto the market, easing pressure further.

“It’s like a tumbling effect,” says Gary. “Fish and chip shops should see the correction in prices in the market now, with some frying mediums, in particular palm oil, recovering to pre-Ukraine war levels.”

One positive impact of rallying oil prices this year is the effect it has had on stimulating planting, with more sunflower grown already and additional rapeseed going into the ground in the next couple of months.

“This will have a positive long-term effect because it is making farming more economic,” explains Gary.

He warns, however, that the industry is not out of the woods yet with the hot, dry weather a potential concern for the next season’s crops as well as rising Covid cases.

“We are still seeing problems with labour in Indonesia and Malaysia, which rely on foreign workers from poorer countries where Covid restrictions are in place.

“We saw a report yesterday which said palm oil production is only rising slightly when it should be jumping up. At the moment it’s not a big problem because exports are down where obviously demand has been hit by these high prices. But once demand starts to kick in, that will change. With resurging Covid cases worldwide, it’s something we have to have on the horizon.”

There was also a warning to users of beef dripping, with Gary advising that while supplies have improved slightly and prices have eased, there is still an overall shortage due to an increased demand for biodiesel.

“Diesel prices and crude oil prices have rallied to record highs too so we’re seeing bio-diesel margins looking better. This means people are buying more rape, soybean oil, and particularly beef tallow animal fats, to use in bio-diesel.

“Things are much better than they were, but I don’t want people thinking this is the start of a major fall, it’s really just the market recovering and correcting itself.”