Rising global biofuel production will keep global vegetable oil supplies tight in coming months, possibly keeping prices high, Hamburg-based oilseeds analysts Oil World forecast on Tuesday. "In a number of countries, governments continue to step up their biodiesel targets, mostly enforced by mandates, and largely regardless of the feedstock availability and the repercussions on prices," Oil World said.
Global 2010/11 production of the 17 main oils and fats is likely to rise 3.5 percent on the year to 175.83 million tonnes it estimates. But consumption is likely to increase 4.2 percent and will be above output at 176.72 million tonnes, it said.
The 2010/11 demand rise of around 7 million tonnes "will be hard to satisfy in view of problems on the production side and may imply additional price strength", it said. "The biofuel market will account for at least 3.3 million tonnes of this increase and the implied expansion of food use of less than 3.7 million tonnes is probably barely sufficient to cover population growth and rising demand due to higher income," it said.
Global 2010/11 soyaoil output is likely to rise by 3.2 million tonnes on the season but this is likely to be partly offset by a 0.7 million tonnes fall in rapeoil output and a 0.3 million tonnes drop in sunoil production following poor rapeseed and sunflower seed harvests, it said.
"A recovery of palm oil production in Malaysia and Indonesia in 2011 would be of utmost importance for the world market in view of insufficient production of seed oils," it said. Indonesian 2010/11 palm oil output is likely to rise to 23.79 million tonnes from 21.75 million tonnes in 2009/10 and Malaysian production will rise to 18.20 million tonnes from 17.86 million tonnes, it forecast. "We consider it likely that such a production increase will be readily absorbed by the market," it said.