Global supply of vegetable oil is declining - LMC




Global supply of vegetable oil is declining. But the improvement of this situation is possible due to the increase in palm oil production or the processing of oil crops. Said in his speech Aaron Henson, analyst of LMC International, at the international conference "VegOilTrade-2023" in Rotterdam.

The expert noted that in Indonesia, a decrease in palm oil production was observed due to the slowdown in the growth of areas under oil palm trees and the renewal of old palm trees with new ones. It is expected that in 2023, the increase in the area will reach only 40 thsd ha, which is 20% of the usual level.

At the same time, there is currently a high probability of a recurrence of the natural phenomenon El Niño, which could lead to a significant reduction in palm oil production in both Indonesia and Malaysia in 2023/24 MY.

"Palm oil is the driver of downward dynamics in the market of vegetable oils. The decline in palm oil production in Indonesia will continue for 20 years," the expert believes.

Separately, A. Hanson paid attention to the market of soybeans and its by-products in South America, that in the current season, Brazil "did everything possible to compensate crop losses in Argentina." In particular, Argentina lost about 20-22 million tonnes of soybeans in the current season and must turn to the import of oil to ensure the operation of its processing industry.

In turn, Brazil increased soybean production by 22-24 million tonnes per year. Thus, increased oil refining in Brazil will meet the needs of the domestic biofuel industry.

An increase in the volume of soybean processing is also observed in the PRC, although somewhat less than previous expectations.

In the US, the growth of soybean processing and soybean oil production will go towards meeting the needs of the domestic biofuel industry, the expert noted.

"The supply of vegetable oils will decrease for another six months. At the same time, an increase in demand is expected in a few years due to the development of the biofuel industry," said A. Henson.