Cooking oil prices are up 70% – and the worst is still to come

Business Insider SA
The price of edible oils has been on the rise. (Getty)
  • A price jump in edible oils globally has started to reflect on South African shelves, with sunflower oil, canola, and other edible oils seeing massive price hikes.
  • Sunflower oil has seen the highest rise since January 2020, with prices up 69% since then.
  • The global edible oil supply has been affected by poor harvests of oil crops such as sunflower, palm, soya, and canola.
  • The price of oil is expected to remain high over the next three months at least.
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The price of cooking oil has shot up over the past 17 months, causing sunflower oil, a staple in South Africa, to become one of the most expensive oils – thanks to a shortage globally caused by poor harvests of oil producing crops such as sunflower, palm, soya, and canola last year.

Sunflower oil has increased the most since January 2020, soaring 69% in price while canola oil has climbed 53%, said Morne Botes, commercial director for SOILL, which owns the B-Well and African Gold oil brands. 

Sunflower seed oil prices have reached $1,500 (R21,000) per tonne, nearly double what they were before, Luan van de Walt, economist at Grain SA, told Business Insider South Africa.

South Africa does not produce enough vegetable oil to be able to meet local demand; the rest is sourced from Europe. The country only produces 800,000 MT of oil per annum, relative to 950,000 MT it imports from other regions.

"Internationally there have been poor crops on soya, sunflower, palm, and canola – within their respective regions, due to climate conditions. This led to slightly lower supply being available internationally. This in a growing consumption of oil within the population, has led to supply being under pressure with a growing demand," Botes said.

For sunflower oil specifically, there were shortages in sunflower seed production in the Black Sea region, predominantly Ukraine and Russia. This led to lower crops and lower processing, and in turn lower sunflower seed oil volumes, Van de Walt said.

Van de Walt said the domestic price effect, which is influenced by international oil prices, is usually delayed by as much as six months, which is why South African consumers have only recently started to feel the pinch at the tills.

The trouble isn't over yet, Botes said.

"Pricing will remain elevated in the short term, within the next three months, with some reprieve coming towards October/November with the harvesting of sunflower and canola (crops) in Europe. This is if weather permits, and the crops forecasted materialise," said Botes.

Consumers have already been lamenting the steep prices of oil on social media.

Although canola oil has also been affected, it currently trades at a 7% discount when compared to sunflower oil in bulk in the market, which is pushing the industry towards canola oil because of affordability, Botes said.

Botes said that South African consumers, with spending power already hampered by the economic fallout from the pandemic, have been opting for alternatives to sunflower oil, or different producers.

"The end result is consumers having to pay more for their favourite brand. This is leading to consumers switching to different oil types or brands," he said.

"In South Africa, we have seen a significant switch in consumers switching from sunflower to canola, due to price on shelf. Or consumers buying smaller pack sizes and trying to consume less oil, to decrease impact on their wallet," he said.

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