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The demand for CPO is largely a function of
the demand for edible oils. CPO and soya oil
are used in the production of nearly 40 % of
edible oils. Positive population growth and a
rise in per capita income would support a positive
outlook for edible oil demand. Production of
the commodity stands at 23-24 million tons (over
20% of the global vegetable oil), with Malaysia
and Indonesia producing the lion's share- 11-12
and 8-9 million tons respectively.
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While the production has been
growing at the rate of 7%, its consumption
has been growing slightly faster at 7.15%.
Acreage under the plantation has been growing
at the fastest rate of 6.47%, substantially
higher than its arch rival/competitor soybean
(3.36%). Oil World, one of the leading forecasters
who prepares a forecast supply and demand in
the edible oils industry, forecasts a growth
of 1.7 %, 2.9% and 4.5% in demand respectively
in 2004, 2005 and 2006.
As CPO and soya oil are product substitutes with
price being a major factor determining consumption
preference, developments in the soya oil market
should not be disregarded. Currently, CPO accounts
for approximately 23.3% of global edible oil
production while soya oil accounts for 19.3%.
As the production of soya oil appears to be relatively
flat in the near future, any increase in the
global demand for edible oil is expected to be
met by palm oil.
With a share of over 54% (18 million tons), palm
oil dominates the global vegetable oil export
trade. Currently, the major consumers of palm
oil are China, Europe, India, and Pakistan. India
is the largest buyer of Malaysian CPO while the
Netherlands, China and India account for the
majority of Indonesian CPO exported.
To know more about investing in Commodities contact
: commodities@motilaloswal.com
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