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 Mahamad Rodzi Abdul Ghani
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 Business Line
 Global vegetable oil prices likely to firm up

Mumbai , June 11 For 2006-07, global production of major oilseeds is projected at 389.4 million tonnes (mt), little changed from 390.1 mt of the previous year, while oilmeal production is projected higher at 220 mt (212 mt).

World vegetable oil production will reach a new high of 119.88 mt, the US Department of Agriculture said in its latest world agriculture supply and demand estimate.

Soya output

Production of the world's largest oilcrop soyabean is projected at 222 mt (220 ml.t).

While the world's largest producer USA is expected to harvest 83.8 mt in 2006-07 (unchanged from previous year), both Argentina (41.3 mt) and Brazil (56.0 mt) are likely register a small increase because of increased area and higher yields respectively.

On the other hand, China's soyabean output is projected slightly lower at 16.9 mt (17.2 mt).

A four per cent decline projected for world rapeseed and sunflowerseed output would mean reduced availability of high oil content seeds.

Interestingly, China's soyabean imports are projected to reach a new high of 31.5 mt in 2006-07, up 4 mt from the previous year.

Bean imports are necessary to meet rising demand for animal feedstuffs for the burgeoning livestock sector.

Protein offtake

Protein meal consumption is likely to grow 7 percent in China, which accounts for 40 per cent of the increase in global protein meal consumption.

USDA sees global protein meal consumption higher by 4 per cent in 2006-07 mainly due to gains for soyabean meal.

Global vegetable oil consumption is projected to rise 5 per cent to about 120 mt (114.5 mt), led by increases for EU-25, China and India.

Increased consumption in EU is primarily due to increased industrial use of rapeseed and palm oil as biodiesel production continues to expand.

Vegoil stocks

World vegetable oil stocks are projected to decrease 9 per cent to 7.87 mt (8.64 mt).

All this is somewhat bullish for the world market.

Projected production and consumption both of world vegetable oil is in a state of fine balance for the ensuing year.

A small change in supply or demand can have a disproportionately large impact on prices.

Weather disturbances can potentially lead to price spikes.

Additionally, South American planting is several months away and the situation could change.

Planting and crop progress in major origins such as the US, China and India has to be watched closely.

At the same time, a large inventory of crude palm oil in Malaysia (1.6 mt) as also over 2.0 mt of mustard seed in India can help rein-in a strident price rise.

Malaysian Palm Oil Board ( MPOB ) Lot 6, SS6, Jalan Perbandaran, 47301 Kelana Jaya, Selangor Darul Ehsan, MALAYSIA.
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