International prices of oilseed products exhibited diverging trends during
most of the 1997/98 season, with average prices of oilseeds and cakes and meals
falling (by about 8 percent for oilseeds and 13 percent for cakes and meals)
and those of oils and fats rising sharply (by 15 percent) over the previous
season. The increase in average annual prices of oils and fats is expected to
come to a halt, as the closing stocks-to-use ratio for oils and fats for the
1998/99 season is forecast to rise, albeit only slightly compared to that of
the previous season. The main reason for this is another record global production
of oilseeds foreseen for 1998/99, which is also likely to exert further downward
pressure on the prices of cakes and meals.
Global production of the seven major oilcrops (see table next
page) in 1998/99 is forecast at 305 million tons, a new record after the 301
million tons reached in 1997/98. The expected rise in output would be mainly
on account of the increases in sunflower, rapeseed and groundnut crops which
would more than offset reduced production of cottonseed and soybeans. The increase
of sunflower production is expected largely in Argentina and the USA, that of
rapeseed in Canada and the EC and that of groundnut in China. The decline foreseen
in the cottonseed crop (about 8 percent) is concentrated in the United States
and some Asian countries, while the fall in global soybean production (by about
2 million tons) would be mainly due to the expected contraction in crops in
Argentina, Brazil and China.
Based on the above crop estimates, world production of edible/soap oils
and fats in 1998/99 is forecast to surpass last season’s level by some
3-4 percent, reaching some 108 million tons. The expansion in total output would
mainly be on account of the increases in the production of sunflower and rapeseed
oil together with a recovery in palm oil output.
| FAO indices of international market prices | Average international market prices | |||||
| Edible/soap fats and oils | Oilcakes and meals | Soybean | Soybean oil | Palm oil | Soybean cake | |
| October/September | (. . . 1990-92=100 . . .) | (. . . . . . . US$/tonne . . . . . .) | ||||
| 1993/94 | 128 | 93 | 259 | 582 | 452 | 202 |
| 1994/95 | 154 | 94 | 247 | 641 | 645 | 184 |
| 1995/96 | 140 | 128 | 303 | 574 | 544 | 257 |
| 1996/97 - Oct.-March | 136 | 134 | 301 | 527 | 560 | 282 |
| - April-Sept. | 134 | 132 | 295 | 546 | 530 | 275 |
| 1997/98 - Oct.-March | 151 | 130 | 277 | 638 | 605 | 238 |
| - April-Sept. | 159 | 103 | 236 | 631 | 678 | 155 |
| 1998/99 - Oct.-Dec. | 155 | 98 | 231 | 613 | 685 | 159 |
SOURCE: FAO
Soft oils are estimated to account for 55 percent of the global output of edible/soap oils and fats (45 percent of which will be soybean oil), palm oil for 17 percent, lauric oils for 5 percent, and marine oils, animal and other fats and oils for the rest. As a consequence of the rise in output, global supplies of edible/soap oils and fats in 1998/99 are expected to be higher than in 1997/98 despite a lower stock level at the beginning of the 1998/99 season.
| 1996/97 | 1997/98 | 1998/99 f'cast |
|
| (. . . . . . million tonnes . . . . . .) | |||
| Soybeans | 133.6 | 157.9 | 156.9 |
| Cottonseed | 38.2 | 38.5 | 35.2 |
| Groundnuts | 30.0 | 30.0 | 31.6 |
| Sunflowerseed | 29.9 | 29.8 | 33.0 |
| Rapeseed | 31.8 | 34.4 | 37.9 |
| Palm kernels | 5.4 | 5.3 | 5.7 |
| Copra | 5.4 | 4.9 | 4.8 |
| Total | 274.3 | 300.8 | 305.3 |
SOURCE: FAO
Note: The split years bring together northern hemisphere annual crops harvested in the latter part of the first year shown, with southern hemisphere annual crops harvested in the early part of the second year shown. For tree crops, which are produced throughout the year, calendar year production for the second year shown is used.
World production of cakes and meals expressed in protein equivalent
is foreseen to increase to nearly 75 million tons, rising over 2 percent above
the bumper level of 1997/98. The increases in output would mainly be on account
of rapeseed and sunflowerseed as well as fishmeal, while world production of
soybean meal is likely to stagnate. Global supplies of meals and cakes in 1998/99
are also expected to be above the previous season’s level, given the recovery
in the volume of stocks at the beginning of the season.
Despite relatively high prices, total utilization of edible and
soap fats and oils is forecast to continue to expand in 1998/99, albeit
at a slower pace (about 2 percent compared to 4 percent during the preceding
season), to reach 107 million tons. The economic crisis affecting some countries
since 1997 is not expected to alter per caput consumption of oils and fats notably.
With respect to the composition of global consumption, the share of sunflower,
rapeseed and palm oils is likely to increase slightly.
Global utilization of cakes and meals is forecast to increase further
in 1998/99 although less marked than in the previous season, reaching more than
74 million tons in protein equivalent. The bulk of the increase is expected
to occur in Asia, particularly China, despite a slow-down in the expansion of
the consumption of meat (as a more income-sensitive, high-value added product)
in the region. Moderate growth in utilization is anticipated in the EC and the
USA, fueled by increases in meat production. As to the different meals, a strong
rise in soybean meal consumption, as well as in cake of rapeseed, is likely,
while global consumption of other vegetable cakes and meals is anticipated to
change little and utilization of fishmeal is expected to recover slightly after
falling in response to reduced production in 1997/98.
Based on the above supply and demand forecasts for the 1998/99 season, stocks
of oils and fats at the end of the season are likely to recover slightly
from last season's level as the level of utilization is expected to remain below
that of production. A slight recovery in the stock-to-utilization ratio is also
expected by the end of 1998/99. As a result, prices for oils and fats could
come under downward pressure as the season progresses, although they are likely
to remain at relatively high levels compared to the early-1990s.
Stocks of cakes and meals could also expand as a result of global production
exceeding utilization, with the stock-to-utilization ratio edging further upwards.
This in turn could lead to a further fall in the prices of these products to
levels at or below those of the early-1990s.
As in 1997/98, an increase in world trade in oilcrop-based products
is expected in 1998/99 as a result of a further strengthening in global
import demand for these commodities. A continued sharp expansion in imports
of oilseed-based products is expected in China, due mainly to weather related
production difficulties, which could further widen the domestic demand gap for
oilseeds, oils and meals. The country’s net imports of oils and fats as
well as cakes and meals are estimated to increase from 4.5 and 3.7 million tons
respectively in 1997/98 to 5.7 and 4.5 million tons respectively this season.
Total imports of oils and fats are not expected to change substantially in other
major importing countries. The anticipated slow-down in global oilmeal demand
is unlikely to lead to reduced import volumes of cakes and meals in the major
importing regions.
Total exports of oils and fats in 1998/99 are estimated to reach more
than 44 million tons, rising some 1.9 percent above last season's level. Following
the customary pattern, the main suppliers of oils would be Argentina, Brazil
and the United Sates for soybeans, sunflowerseed and their oils, Indonesia and
Malaysia for palm and palmkernel oil; the Philippines for copra and coconut
oil; and Canada for rapeseed and its oil. The shares of soybean oil and palm
oil in total shipments of oils and fats are estimated at 30 percent and 27 percent
respectively, followed by sunflower seed oil (11 percent), rapeseed oil (9 percent),
and coconut oil (3.5 percent). Total exports in 1998/99 of cakes and meals are
likely to exceed 37 million tons of protein equivalent, increasing by more than
3.3 percent compared to the 4 percent achieved during the previous season. The
share of soybean meal in the world exports is estimated to fall slightly from
79 percent to 77 percent, while the shares of the cakes of sunflowerseed and
rapeseed, as well as fishmeal, are expected to increase due to increased export
availability.
On balance, while the driving force in the oilcrop economy prior to the 1997/98
season was the demand for oilcakes and meals, market developments during the
1997/98 season were influenced more by supply and demand factors underlying
the oils and fats markets. Weather related problems reduced palm and coconut
oil production and, combined with the continued expansion of demand, reversed
the decline in the average prices of all oils and fats. The ensuing crush for
oil, which was made possible by abundant supplies of oil bearing seeds, has
slowed the increase in the prices of oils and fats since the beginning of the
1998/99 season. This situation, coupled with relatively weak grain markets,
created an oversupply of cakes and meals, which is continuing to exert downward
pressure on their prices. Although the oilseed crops in the southern hemisphere
countries are still to be harvested, a notable recovery of prices will probably
not occur during the rest of the 1998/99 season.