Edible oil shortage ahead?

29 January 1999

Edible oil shortage ahead?

A WORLD shortage of oilseeds and tropical oils will mean steep price rises in the commodities, according to forecasts from the Economist Intelligence Unit (EIU).

The EIUs latest report on the market says that global oil stocks remain low, and a rise in soya oil stocks will not offset an fall in palm oil supplies.

Edible oil supplies are predicted to fall short of consumption by 368,000 tonnes for the year ending September 1999, thereby pushing up prices.

The EIU expects world production of edible oils – including soya oil, crude palm oil, sunflower seed oil and rapeseed oil – to rise 3% in the year to September.

That would take output to 62.7 million tonnes, but production could be lower than expected because of poorer prospects for palm and rapeseed.

Palm oil prices, which averaged around $673 a tonne (£409/t) last year, are expected to reach $725/t this year.

Rapeseed prices are expected to hit $670/t, against $529/t in 1998.

Stocks of lauric oils – which include coconut oil and palm kernel oil – are expected to drop by more than 20% this year.

The fall is expected to push prices up from $685/t in 1998 to $809 this year.

Among other commodities, the EIU predicts that tea will fall to $1.66/kg (£1/kg) this year, against $2.01/kg in 1998.

Rice prices are forecast to remain stable at around $300/t and cocoa prices are also expected to remain largely unchanged.

Coffee prices are predicted to take a fall because of large stocks and a huge harvest from Brazil.

• Financial Times 29/01/99 page 26