Oils, Fats Output Won't Keep Up With Demand, Oil World Says Feb. 27 (Bloomberg) -- The growth in supply of oils and fats derived from crops such as soy and palms won't be enough to keep pace with accelerating demand, Thomas Mielke, an economist at Oil World research publication said.
Stocks of the world's 17 main oils and fats will be 14.6 million metric tons by the end of the year, representing 10.2 percent of world consumption, he said in an interview Feb. 24 in Kuala Lumpur, while attending a conference. That compares with stocks of 14.5 million tons at the end of 2005, representing 10.7 percent of demand, Mielke said.
``Stocks are tightening every month, he said. ``There is a supply-demand deficit that is slowly worsening and the real impact is still to come.
Demand for oils and fats, used for cooking and fuel, is rising with economic growth, led by China and India, the two most populous countries with more than 2.3 billion people to feed. China and India are the world's fastest-and second-fastest growing major economies.
High crude oil prices are also prompting governments to seek green alternatives, such as ethanol made from corn and sugar and bio-diesel made from rapeseed and palm oils, competing with demand for food.
``We cannot solve energy problems with oils and fats, Mielke said. ``If you look at five-year accumulative demand trends starting 1981, there has been an alarming acceleration in demand for the world's 17 major oils and fats. There's going to be more and more competition for new acreage from grains and sugar for oilseeds.''
Most Consumed Oil
Soy oil is the world's most consumed oil. It is exported mainly by the U.S., Brazil and Argentina as oil or oilseed.
Palm oil is the world's most traded vegetable oil. Production is dominated by Malaysia and Indonesia. China, India and Pakistan are the main export markets for the tropical oil.
Palm oil for May 2006 delivery rose 25 ringgit, or 1.7 percent, to 1,492 ringgit a metric ton on the Malaysian Derivatives Exchange on Feb. 24.
Mielke forecast the contract would trade between 1,420 ringgit and 1,550 ringgit up to May, during the low oilseed production cycle globally, and rise to a range of 1,450 ringgit to 1,600 ringgit between June and December, when food and energy demand increases.
Oil World will release details of Mielke's forecasts on Feb. 27.
