Supply and demand in the global oilseeds market is expected to tighten due to reduced production, according to the latest forecasts by the Food and Agriculture Organization (FAO) of the United Nations (UN) on 11 June.
The FAO’s Food Outlook report assesses global supply and demand for major food commodities, including oilseeds and derived products.
In the 2019/20 season, oilseed production had declined from the previous season’s record and prices for oilseeds and derived products had retreated despite initial gains.
A modest year-on-year contraction in global oils and fats production was forecast to 235.4M tonnes, down 2.3% from the record level in 2018/19.
Marked declines in soyabean, rapeseed and, to a lesser extent, copra, cottonseed, olive and fish oils, were expected to outweigh gains in palm, sunflowerseed and groundnut oils output. Global output of palm oil was forecast to rise fractionally.
Growth in the consumption of oils and fats was forecast to stall in 2019/20 while the full impact of the Covid-19 pandemic on demand remained uncertain.
Demand from the biofuel sector was also expected to drop partly due to temporary lockdowns to contain the spread of Covid-19.
Global stocks of oilseeds were forecast to drop to multi-year lows and, after steady growth for the past couple of decades, international trade in oils and fats was predicted to contract slightly in 2019/20, totalling 131.1M tonnes.
On the import side, sluggish demand was expected to affect purchases by the EU and India while imports by China were expected to rise.
For exports, lower shipments from Indonesia, Malaysia and Argentina were forecast to outweigh sales increases by Brazil, the USA and, to a lesser extent, Ukraine and the Russian Federation.
Early forecasts for 2020/21 suggested that supplies could remain tight relative to demand but there could be a rebound in global oilseed output in 2020/21, possibly to a new record, due to a modest expansion in total plantings.
With regard to individual crops, global soyabean and rapeseed production could see a marked recovery from the current season’s reduced level, while production of sunflowerseed and palm kernel could climb to near record, if not record levels.
The anticipated rise in global soyabean production rested on expectations of trend yields and a rebound in plantings in the USA, according to the report.
In Brazil, a further expansion in area sown could result in another record output while, in Argentina, production gains would be mainly due to a recovery in yields. China’s output could also expand, as plantings increased further amid continued crop support measures.
Global production of rapeseed, meanwhile, was projected to rebound moderately.
For sunflowerseeds, slight production drops in Ukraine and the Russian Federation amid a return to average yield levels could be more than offset by higher plantings in Argentina and China.
While forecasting that demand for oils and fats could again exceed production, the FAO added that the outlook remained uncertain, notably due to the evolvement of the Covid-19 pandemic and its impact on crop production and demand.
Other external factors that could impact the oilseeds sector included the economic performance of individual countries and the implementation of the US-China ‘Phase One’ trade agreement and national policies regarding mandatory biodiesel consumption.
The FAO is a specialised UN agency that leads international efforts to defeat hunger and improve nutrition and food security.