The demand for corn oil has been heated since the end of 2019, the lack of availability in the market has caused prices to rise. However, the scenario has intensified with the impacts of the current coronavirus pandemic (COVID-19), as our corn oil suppliers mainly serve the beverage and brewery industries, which have considerably reduced the consumption of raw materials due to the closure bars and restaurants, which in the city of São Paulo alone, add up to more than 50,000 establishments. As a consequence of the decrease of these by-products generated in the corn industry, the factories reduced their production, supplying less oil and bran, interfering in the availability vs. demand in the corn oil market. In Brazil, the current forecast is that corn oil should only be available for sale from September, at a price 30% more expensive than the one sold a month ago. The domestic market suffers from this shortage, since whoever has the product ends up choosing to export it, since the price of the foreign market, in addition to being aggressive, becomes more attractive with the conversion of a dollar above five reais. Soy oil, the flagship in Brazil, has also been feeling the impact of the consequences generated by the virus. The first shock was even before the virus arrived on Brazilian soil, when the crisis occurred in China, since the Chinese are the biggest buyers of soybeans, and also with the volatility of the exchanges, causing CBOT and the dollar to rise and down every day, creating instability and causing many market players to withdraw. In addition, the delay in the harvest meant that the oil, which is normally available between February and March, only came out a month later, and when we finally started to have oil, the virus arrived. With the social isolation, and the closing of several shops, the circulation of vehicles drastically decreased and with that the consumption of fuel. Oil is on the verge of collapse, having the lowest price of the last 20 years, hitting one of the main industries in the country, BIODIESEL. The low fuel consumption added to the low oil price, led the biodiesel industries, which today consume a large part of vegetable oils in Brazil and balance the prices of commodities in the domestic market, reducing their production by 30 to 50%. The Biodiesel Auction, which had its 2nd stage canceled, is already forecasting a significant drop in purchases, which will impact the market in a way never seen before. What sustains the market is the sudden and thirsty return of China, which in early March returned to buy soybeans from Brazil. In addition, major crushers are exporting oil, taking advantage of the excellent exchange rate and selling the product from Brazil to prevent prices from falling with excess oil in the local market.
Source: Aboissa