The Hindu Business Line : Asian demand seen supporting vegoil market

HIGHER soyabean output in the US may be driving global oilseeds production up this season, augmenting global supplies and pressuring prices down; but with strong demand, Asia is likely to come to the rescue of vegetable oil producers and exporters.

Global vegetable oils and fats demand in 2004-05 is projected to rise by a healthy 5 per cent. Asia is seen as the motor behind this growth because of sustained increases in incomes in China, India and some South and Southeast Asian countries.

Utilisation of soyabean oil and palm oil is anticipated to increase the most while consumption of sunflowerseed oil is likely fall, the Food and Agriculture Organisation (FAO) said.

Biodiesel is providing a new support against falling prices. The demand for non-food purposes, notably the production of biodiesel, is expected to account for an increasing share of total demand.

Production of oil crop-based biodiesel is seen expanding worldwide as some countries — notably the European Union and recently also the US — are implementing policies to stimulate production and consumption of biofuel.

This is resulting in additional capacities to produce such products coming on stream, FAO pointed out.

Clearly, the recent surge in petrol prices is contributing to this development. According to private estimates, in the enlarged EU, between 10 and 15 per cent of vegetable oil production (particularly rapeseed oil) could be used as biodiesel this season.

As for India where vegetable oil imports dropped considerably during 2003-04, FAO said foreign purchases are anticipated to again exceed five million tonnes (4.4 mt) as domestic production is expected to fall short of last year's record levels.