Stefan Vogel, Head-Agri Commodity Market Research at Rabobank on Friday said that he is bullish on the vegetable oil sector as well as the food grain sector. However, he is not bullish on the wheat and rice sector.
Vogel also believes that it is not the end of the rally and expects prices to remain relatively high. “I feel we are not at the end of this rally yet. This market is extremely nervous, we are looking right now at weather problems in corn in South America and Brazil where it is very dry, we are seeing US planting on-going right now and there is hope for an increased area of corn but it is not a substantial increase because we also need much more soybean. So the fight for acres in the US is on and it is not easy to just stimulate both production to the levels that we need. So, I fear that if we get only normal yields, then we will see these prices remain relatively high,” he said in an interview to CNBC-TV18.
According to hi vegetable oil prices are rising but it will be very hard to stimulate production.
“We are seeing prices rising, especially in the vegetable oil segment. That is the strongest rising segment. Palm oil is amongst the leaders there, but also soybean oil is strong, we see corn seed oil being strong. So, it is clearly a situation where we need to find extra supplies in the world and that is very difficult. Palm is a tree crop and you cannot just easily increase production from one year to another. So we are relying on the increase of production coming from the soft seed side and the soybean side,” he said.
He also said that the palm oil supply is low, but demand is strong. “We are hoping that palm oil continues to perform better than it has in the last month. Palm oil supply has been low, but the demand is strong. That will be something where we need to see how the rationing happens by high prices,” he said.Watch the video for more.