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Apac driving demand for global vegetable oils market

By RJ Whitehead , 09-Nov-2012

A combination of factors is expected to drive demand growth in the vegetable oils market over the next few years, with demand from the food sector being led by a number of emerging economies, most prominently in the Asia-Pacific region.

Supported by rising living standards and population growth, China emerged as one of the most powerful contenders in the market, single handedly influencing world trade in vegetable oils. 

However, the increasing demand for vegetable oils from both food and industrial end-markets is creating supply constraints. Together with several other factors, such as volatile weather conditions, this is promoting industry consolidation. The rising demand for vegetable oils is also resulting in enormous deforestation across tropical areas for accommodating large-scale farmlands.

Palm oil wins out from recession

The recession has seriously affected the growth patterns of vegetable oil consumption in developing countries. Lower-priced palm oil has witnessed an increase in share some developed countries; however, vegetable oil prices increased last year primarily due to the steep decline in vegetable oil stocks worldwide in the wake of reviving global economic conditions. Surging food oil prices left consumers particularly in developing and lesser developed countries looking towards governments for intervention and protection.

Increasingly health conscious consumer markets are gravitating towards healthy oils, such as canola and olive oils. Competition in the lucrative zero-trans-fat oil is heating up as food manufacturers race to comply with governing guidelines to reduce hydrogenated oil content in foodstuffs, and oil vendors vie to tap the premium prices commanded by these fat-free oils over conventional cooking oils. 

GM ruling changes the game

Flavored oils and sprays are gaining preference among sophisticated and time-pressured consumers. Oil extracted from genetically modified oil seeds is under immense threat, given the European Union’s landmark decision to impose strict GMO labelling requirements. 

The preference among EU consumers for oils produced using sustainable production processes is also growing, and restaurants and food processors are also showing concern for environmental safety and are testing their waste streams to develop healthy ways of discarding used cooking oil.

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