Nusa Dua, Bali – Growing concerns due to uncertain global supply of palm oil have encouraged importing countries to prepare anticipative steps of seeking the alternatives of palm oil. As a result, analysts have predicted that the importing countries’ dependence on palm oil next year will significantly decrease.
Such supply concern is mainly triggered by the plan of Indonesian government to increase the production of biodiesel and the increase of palm oil price, which is driven up, by among others, by export levy.
Ryan Chen, Director of China CNF Business, Oils & Oil Seeds at Cargil Investments (China), said that there is a market tendency in China to switch from palm oil to other vegetable oils.
“Currently, in Chinese domestic market consumers can find other vegetable oils, especially soybean. Their prices are potential to get lower. I think in terms of prices, the era of palm oil as the cheapest vegetable oil has ended,” Ryan Chen said during the second day of the 20th Indonesian Palm Oil Conference and 2025 Price Outlook (IPOC 2024) at Bali International Convention Center, The Westin Resort, Nusa Dua, Bali, on Friday (8/11/2024).
According to him this year the demand for vegetable oils in China will be stagnant, after seeing an increase in 2023. China’s demand for palm oil (olein and stearin) is projected to decrease by around 30% this year due to several factors, mainly prices.
The share of palm oil in the total demand of vegetable oils is projected to decrease by 12.8% this year, as compared to 17.5% in 2023. The import of olein this year is projected to drop to 2.3 million metric tons, as compared to 4.2 million metric ton in 2023. In 2025 the import of olein will be stagnant at around 2.3 million tons – 2,4 million metric tons.
In Indian and Pakistan market, the demand was projected to rise, but there is a fear of possible supply decrease from Indonesia and export levy that is potential to lift prices.
BV Mehta, Executive Director of The Solvent Extractors’ Association in India, said that the demand for vegetable oils will continually rise, but domestic production could not fully fulfil the total demand. The domestic consumption in India reached around 30 million metric tons, but only around 13 million tons can be fulfilled with the local production.
“Pakistan will still depend on import of vegetable oils, but biodiesel policies in Indonesia have caused a fear of shortage of palm oil supply,” said Abdul Rasheed Jan Mohammad, CEO, Westbury Group of Pakistan.
Meanwhile, Alponsus Inyang, President of the National Palm Produce Association of Nigeria (NPPAN) said there have been opportunities of investmetns and trading of vegetable oils in Africa. “We invite all investors to invest in Nigeria and trading of vegetable oils as demand for vegetable oils in Africa has been continually rising. (*)
