Breaking News-(BN) Vegetable Oil Demand to Rise This Year on Price Drop, HGCA Says

By Rudy Ruitenberg
Feb. 4 (Bloomberg) -- Global demand for vegetable oils will rise this season as increased production curbs prices, the U.K.’s Home-Grown Cereals Authority said.
Palm-oil stocks are expected to increase 500,000 metric tons at the end of the crop year, while stocks of rapeseed and sunflower oil are likely to be “large” following record harvests, the organization said in a report on its Web site.
Lower prices are boosting consumption, while “very low”
palm oil prices and high stock levels are likely to buoy biodiesel production in Asia, the HGCA said. Population growth will also lift demand, the group said.
“Cheaper prices, better supply seem to outweigh the recession when it comes to demand,” HGCA said. “The very large palm oil stocks are one of the main reasons why vegetable oil prices have fallen so sharply.”
The outlook for soy-oil stocks is less clear after Argentina, the world’s largest exporter of the vegetable oil, suffered the worst drought in 60 years, the organization said.
Concern about supplies has supported soy-oil prices, HGCA said.
Rapeseed oil continues to trade at a premium to palm oil because of demand from the European Union biodiesel industry, even as the world rapeseed crop was “much larger this season,”
the organization said.