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OFIC 2014 Congress - Oils and fats deficit in 2015

The global oils and fats market is in transition and faces a deficit in 2015, making palm oil more important for consumers next year and beyond, Thomas Mielke, executive director of Oil World told the OFIC Congress and OFI Asia 2014 exhibition in Kuala Lumpur, Malaysia on 5 November.

However, the negative campaign against palm oil has led to a slowing of plantings, the effects of which will be felt by 2018/19.

Mielke forecast below normal global growth of oils and fats production in 2014/15, which is expected to total just 3.9M tonnes against 10.6M tonnes in 2013/14, leading to a strengthening of prices.

Palm oil production is expected to increase by just 2.4M tonnes against 3.9M tonnes/year in the last three years, resulting in palm oil prices of around 2,500 Ringitts/tonne in the January-March 2015 quarter.

Malaysia's production of palm oil in 2014/15 is expected to total 19.8M tonnes against 20.2M tonnes in 2013/14 and Indonesian production 21.9M tonnes against 29.9M tonnes in 2013/14.

While soyabean production would increase, "soyabeans alone cannot prevent a deficit in vegetable oils," Mielke said.

OFIC 2014 Conference alongside OFI Asia 2014In the long-term, Mielke said the rising world population, increasing urbanisation, the growth of the middle class, dietary changes and biofuels demand would lead to a growing dependence on palm oil at a time when palm oil growth seemed to be slowing.

In 10 years' time, by 2025, the world was expected to require 32M tonnes more palm oil, a projected rise in production to 51M tonnes in Indonesia (from a production of 22.5M tonnes in 2010) and 26.5M tonnes in Malaysia (from a 2010 production figure of 16.99M tonnes).

It is questionable whether these figures can be achieved, he said.

Currently, palm and palm kernel oil account for 33% of global oils and fats production and 61% of global exports, on just six percent of land planted to oil crops around the world.