MUMBAI, 11 Jan (Commoditiescontrol):The 7th Pakistan Edible Oil Conference (PEOC), held at the Mövenpick Hotel in Karachi took place on January 10–11, 2025 , brought together industry leaders, traders, and policymakers to discuss global and regional trends in the edible oil market. One of the keynote speakers, Mr. Thomas Mielke, Director and Editor of Oil World ISTA, Germany, presented crucial insights into the dynamics of the global vegetable oil market, shedding light on production trends, supply-demand imbalances, and price outlooks for 2025.
Palm Oil Price Premiums Unlikely to Last
Mielke highlighted a significant divergence in palm oil prices, with Indonesian palm oil commanding a premium of $1,270/ton in November 2024, compared to $995/ton in September. He projected that these premiums are unlikely to sustain beyond early 2025, as competing oils like soybean and sunflower oil are currently undervalued. Deferred positions for sun and soybean oil are priced $80–150 lower than palm oil, signaling potential corrections in the coming months.
Global Vegetable Oil Supply Growth Slows
According to Mielke, global supplies of 17 oils and fats are forecasted to grow by only 1.9 million tons in the 2024/25 marketing year (October–September), a stark contrast to the previous year’s increase of 8.2 million tons. This slowdown stems from tightening stocks and limited production growth. The report emphasized that price elasticity of demand remains a key factor influencing market movements, particularly for major oils like soybean, sunflower, and rapeseed oil.
Palm Oil: Declining Production Trends
The presentation underscored challenges in palm oil production, with annual growth in major producing countries such as Indonesia and Malaysia slowing significantly. Palm oil production fell to a three-year low of 45.6 million tons in 2024 due to lower yields and rising domestic use. A recovery of 2.5 million tons in palm oil and 0.3 million tons in palm kernel oil is anticipated for 2025. However, long-term production dynamics appear constrained, with average growth likely to slow to 1.4 million tons annually through 2030.
Soybean Oil Gains Market Momentum
Global exports of soybean oil surged to a record 4.8 million tons during September–December 2024, driven by strong demand and lower prices. Argentina emerged as a key supplier, exporting 2.53 million tons during this period. In contrast, palm oil exports dropped to an eight-year low, reflecting weaker output and strong domestic consumption in producing countries.
India's Edible Oil Imports
India’s quarterly edible oil import data revealed a mixed trend for the 2024/25 marketing year. Palm oil imports are forecasted to decline to 9.20 million tons, down from 10.26 million tons in 2022/23, while soybean oil imports are expected to rise sharply to 4.70 million tons, driven by competitive pricing. Sunflower oil imports, meanwhile, are anticipated to remain steady at 3.05 million tons, reflecting stable demand.
Production Outlook for April–September 2025
Mielke projected a bearish outlook for soybean and soy meal prices for the second quarter of 2025, with potential downward corrections driven by anticipated supply improvements. Palm oil is expected to be offered at discounts to competing oils like soybean and sunflower oil during April–July 2025, as supply pressures ease.
Challenges Ahead for the Global Market
The presentation highlighted key challenges facing the global vegetable oil market, including:
Declining stocks worldwide: Stocks are forecasted to continue shrinking in 2024/25, adding pressure to already tight markets.
Dependence on Indonesia and Malaysia: The two leading producers accounted for a combined 53% share of global vegetable oil exports. However, reduced production has raised concerns about supply stability.
Geopolitical and economic uncertainties: Volatility in global financial markets, trade barriers, and climate-related disruptions pose additional risks.
Mielke emphasized the importance of monitoring the B40 biodiesel mandate in Indonesia, which could further constrain global palm oil availability by diverting supplies to domestic biofuel production.
Conclusion
The insights shared by Thomas Mielke highlighted the complexities of the global vegetable oil market, characterized by volatile prices, constrained supplies, and evolving trade dynamics. As the world’s largest importer of edible oils, Pakistan’s market participants closely watched the forecasts, aligning their strategies with the anticipated trends.
The conference provided a platform for stakeholders to deliberate on the challenges and opportunities in the edible oil sector, underlining the importance of collaboration and innovation to navigate a turbulent market environment.
(By Commoditiescontrol Bureau; +91 98201 30172)
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