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MUMBAI, 11 Jan (Commoditiescontrol):Dorab Mistry, Director of Godrej International, shared a detailed analysis of the global edible oil market at the 7th Pakistan Edible Oil Conference (PEOC) held at Mövenpick Hotel in Karachi. His presentation highlighted the interplay of production, demand dynamics, and policy challenges impacting palm oil and other major vegetable oils.
Indonesia’s Palm Oil Trilemma
Mistry outlined the challenges in balancing exports, food demand, and biofuel production:
Exports vs. Biofuel: Increasing biofuel mandates have reduced export volumes, raising sustainability concerns for BPDPKS (Indonesia's Palm Oil Fund).
Food vs. Biofuel: Rising domestic biofuel demand inflates prices, reducing affordability for food consumption.
Exports vs. Food: The rising export demand pressures local food supply and affordability.
Energy Demand & Global Production Challenges
Global energy demand grew by 3.5 Mn MT in 2023–24, with a further rise of 4 Mn MT expected in 2024–25, driven by increased capacities in Indonesia, Brazil, and the USA. Indonesia’s palm oil production dropped to a 3-year low of 45.6 Mn MT in 2024, with recovery expected in 2025 by +2.5 Mn MT.
India: A Bright Spot for Demand
India remains a key player in the edible oil market. Imports are forecasted to remain steady at 16 Mn MT in 2024–25, with palm oil at 8.5 Mn MT, soybean oil at 4.5 Mn MT, up from 3.5 Mn MT in 2023–24, and sunflower oil stable at 3 Mn MT. However, farmers face challenges with large oilseed stocks and tight crushing margins, while uncertainty over the 20% import duty hike continues to linger.
Key Veg Oil Trends
🌴 Palm Oil: Production recovery in 2025 and potential subsidy reforms in Indonesia could improve competitiveness.
🇧🇷 Soybean Oil: Brazil’s record crop stabilizes global supply, but dry weather in Argentina presents risks.
🌻 Sunflower Oil: Tight Black Sea supply has driven prices higher, but increased plantings in Ukraine and Russia could boost availability in 2025.
🌾 Rapeseed/Canola: Lower yields in Europe and Canada support prices, but strong mustard production in India offsets supply concerns.
Global Market Challenges
The depreciation of the Brazilian Real is affecting export competitiveness. Oversupply of soya meal and distillers' dried grains (DDG) is weighing on global prices. Depressed crude oil prices are adversely impacting biodiesel margins, with unfavorable POGO and BOGO spreads.
Outlook & What to Watch
President Biden’s agricultural proposals for 2025 could spark market volatility, with lobbying efforts adding to the uncertainty. Indonesia’s compliance with the B40 biodiesel policy faces delays due to subsidy challenges for non-PSO users, further complicating the global palm oil supply outlook.
(By Commoditiescontrol Bureau; +91 98201 30172)
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