The FAO Vegetable Oil Price Index rose 2.0% in July, to 195.7 points, reaching its highest level since June 2022, according to data released by the Food and Agriculture Organization of the United Nations on August 7.
Key Facts
- The FAO Vegetable Oil Price Index rose 2.0% in July, to 195.7 points, its highest since June 2022.
- Malaysian palm oil futures climbed to 4,819 ringgit on August 18, their highest close since April 3.
- Down as much as 40% from a year ago, Ghana's 2026/27 cocoa forecast falls to 450,000 metric tons.
Palm and soy oil prices drove July's increase, according to the FAO. Declines in sunflower and rapeseed oil only partly offset the gain.
Firm biodiesel demand from Indonesia and higher crude oil prices lifted palm oil, outweighing seasonally higher production in Southeast Asia. Soy oil rose on robust US feedstock demand and stronger global import competitiveness, the agency reported.
El Niño Risk Emerges as Common Driver Across Markets
Malaysian palm oil futures for November delivery closed at 4,819 ringgit ($1,187.53) a metric ton on August 18, the highest settlement since April 3. Reuters attributed the move to traders positioning for a possible 2027 output disruption tied to El Niño risk.
Far-month contracts traded above 5,000 ringgit on the same day, led by the February-to-May 2027 tranche. The US Climate Prediction Center flagged the risk on July 8. The pattern emerging across the equatorial Pacific could be among the strongest El Niño events in more than 75 years, the agency said.
West Africa's Crop Outlook Worsens Heading Into Harvest
Ghana's cocoa regulator COCOBOD cut its 2026/27 production forecast on July 30. The board now projects 450,000 to 550,000 metric tons for the coming season.
It is down from 750,000 tons projected for 2025/26, per Barchart. It cited swollen shoot disease, aging farms, and El Niño risk to West African rainfall.
Traders Are Betting the Sugar Shortage Gets Worse
NY sugar futures closed up 3.56% on Tuesday, their highest level in 15 months. London white sugar rose 3.15% to its highest close in 16 months, per Barchart.
The move followed a Bloomberg report that India is considering cutting sugar import duties ahead of festival-season demand. Several trade houses have widened their 2026/27 sugar deficit forecasts since late July.
They cite the same El Niño pattern threatening rainfall in Brazil, India, and Thailand, the world's three largest producers.
