Global Vegetable Oil Outlook: Weather and Biodiesel Mandate to Dictate Availability
The global vegetable oil market is facing challenges due to severe weather conditions in South America and the fluctuation of biodiesel mandates in Brazil, which could impact crop production and availability, as per latest Beroe research.
Brazil is likely to bring a biodiesel admixture of 15 percent by March 2023, paving way for higher soybean crushing. While most of the major edible oil supplies are forecasted to be sufficient, compared with MY 2021-2022, MY 2022-2023 (October-September) is projected to witness a global vegetable oil supply of 210 million tons versus 202 million tons in the previous year. The palm oil production is projected to witness a surge to 80 million tons in MY 2022-2023, while the soy oil production is projected at 62 million tons.
The global vegetable oil market outlook for 2023 is impacted by various factors such as weather and biodiesel mandate. The severe moisture stress in parts of Brazil and Argentina due to La Niña is likely to impact the soy crop output which is expected to be harvested in early 2023. The EU Rapeseed oil demand as a feedstock for biodiesel and the extent to which Brazil imposes the Biodiesel mandate (with soy oil as a feedstock) are key to the availability of surplus veg oils for consumption. Brazil is likely to bring a biodiesel admixture of 15 percent by March 2023, paving way for higher soybean crushing. The market outlook for prices also fluctuate depending on the vegetable oil and the impact of these factors on them.
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