Cotton Oil Prices Seen Declining After U.S. Shortage


U.S. cotton oil prices that are twice that of soybean oil will probably fall in the next few months with shipments from Australia helping to ease a “severe shortage,” according to Oil World.

U.S. cottonseed crushing plunged 30 percent to 420,000 metric tons in the April to June period, “creating a severe shortage of cotton oil and meal,” the Hamburg-based researcher said in a report. Cotton oil prices in the U.S. averaged 87.6 cents a pound in June, compared with 40 cents a pound for soybean oil, according to data compiled by Bloomberg. The oils used in cooking were about the same price in August. Cotton oil prices fell for the past two weeks.

“U.S. cotton oil prices should continue to decline in coming months but it remains to be seen to what extent their competitiveness on the export market can be restored,” Oil World said. “The U.S. accounted for roughly half of world cotton oil exports in recent years.”

Cotton prices themselves have dropped 17 percent this year through yesterday as rain benefited the crop in Texas, the biggest U.S. grower. Farmers grow cotton for the fiber and the seed is secondary.

World production of cottonseed is forecast to decline about 2 percent to 43.1 million tons in 2014-15, a five-year low, Oil World said in the report. Crush will drop 2.4 percent to 32.77 million tons, with declines in China and India and gains in the U.S., it said. Australia exported 27,000 tons of cottonseed to the U.S. in May, “bringing some relief to the supply shortage faced by crushers and the dairy feed sector in the U.S..”

– Bloomberg