KUALA LUMPUR: Global consumption of palm oil will fall this season for the first time on record as a coronavirus-led recession slashes demand for edible oils and fats, leading industry analyst Thomas Mielke said on Monday.
In an online seminar, Mielke said palm oil usage in the 2019-2020 season starting in October could slip by 2.2 million tonnes, or around 3%, from the last season.
“This is unprecedented and compares with a global consumption boost by 8 million tonnes last season,” Mielke, the executive director of Oil World said.
Growing demand for the cheap and widely used vegetable oil has eased this year as lockdowns around the world to stem the spread of the virus shuttered restaurants and restricted travel.
Palm oil exports from Malaysia, the world’s second-largest palm producer, surged over 50% in early June from the previous month as countries started to relax restrictions.
However, top analysts cautioned that overall demand this year will remain poor and will only pick up next season.
“The lingering effect of the Covid-19 crisis will curtail disposable income, limiting expenses for food especially in developing countries,” Mielke said.
Consumption of palm biodiesel has also suffered due to a demand slump, said James Fry, chairman of consultancy LMC International. Falling fuel prices makes palm oil a less attractive option as biodiesel feedstock.
The Malaysian Palm Oil Board estimated at the seminar that the country’s 2020 palm oil closing stocks will rise 14.4% from the previous year to 2.3 million tonnes.
Fry, however, projected that Malaysian palm oil stocks will surge to over 3 million tonnes, with coronavirus having little impact on production.
The Malaysian Palm Oil Council forecast palm oil prices to trade at an average of RM2,337 per tonne this year. – June 22, 2020, Reuters
