December 14, 2004

 

 

Soyoil Prices Seen to Decrease on Growing Supplies

 

With supplies for a range of vegetable oils expected to increase for 2004/05 year, prices are seen to decline. The rise in supplies is due to stronger yields for peanuts, soybeans and rapeseed oil, building up global stocks to about 390.5 million tons.

 

Rapeseed, soybeans and peanuts are all experiencing strong market growth as food makers continue to turn away from animal fats in favour of vegetable alternatives.

 

These key vegetable edible oils are forecast to account for 69.9 per cent of the US market by 2008.

 

US production of major crude vegetable oils is slated to reach 8.6 million metric tons in 2008, with soybean oil accounting for nearly 87 per cent of the major vegetable oil production at 7.4 million metric tons.

 

Soybean oil - together with palm oil ¨C presently accounts for over half of all oil consumed in the world. Rapeseed also enjoys a strong share of the market. But supplies and prices in recent months have been severely impacted by a pulling of stocks from China and a dip in supplies due to poor harvests.

 

In each of the last four years, world soybean production has fallen short of consumption, forcing a draw-down of global stocks. Prices recently hit 15-year highs although they have eased in recent weeks on growing supplies.

 

The WASDE report from the US department of agriculture confirms increased availability has brought some relief to the price of soybeans.

 

Oil prices in the US are forecast at 21 to 24 cents per pound, down 0.5 cent on both ends of the range, as soybean supplies hit 460 million bushels and soybean oil production rises to 165 million pounds, based on a higher projected extraction rate.

 

Chinese soybean production will reach a record 18 million tons.

 

In Canada rapeseed production has risen by 0.7 million tons to 7.7 million tons, and US oilseed production is expected to reach 96.9 million tons.

 

Higher yields for peanuts, soy and rapeseed have helped offset lower production for sunflower seeds - reduced in the Ukraine, the EU 25, and Moldova.

 

The vegetable oil market is undergoing some pressure from the market to design trans fat free alternatives for food makers looking to slice these artery-clogging fats out of formulations.

 

Trans fatty acids (TFAs) are formed when liquid vegetable oils go through a chemical process called hydrogenation.