The U.S. Food and Drug Administration (FDA) announcement Nov. 7 that it plans to phase out the use of trans fat in processed foods could cause demand for soyoil to drop in coming years, opening the door for other edible oil markets.
“The announcement was really a surprise,” Dave Lehman, managing director of commodity research and product development for the CME Group in Chicago, Illinois, said at the Cereals North America global grain conference in Winnipeg last week. “I saw that bean oil (on the Chicago Board of Trade) was down 40 points (yesterday).”
The sell-off of CBOT soyoil continued through Nov. 8, as prices were down over 40 points at mid-morning.
If the plan does go into effect, other oil markets like canola, palm and rapeseed could see increased demand with them possibly serving as replacements for soyoil.
Lehman said the announcement should have “rapeseed and canola folks feeling pretty good.”
The timing was good for Nicholas Kennedy of NYSE Liffe, who made a big announcement regarding a new contract.
“We’re launching as soon as next year a rapeseed oil and meal contract,” he said. “That will be sometime in 2014.”
The FDA did not announce a timeline for their plan to phase out trans fats from processed foods.