Thomas Mielke of Oil World says the sudden commodity market downturn and tough credit markets have sent signals to oilseed producers to cut back.
According to Mielke, they listened.
He said world oilseed production will increase by only 1.85 million tonnes this year, compared to a 4.8 million tonne increase in 2008.
“It is still an increase in production, but it is the smallest in many years,” said Mielke, whose German publication provides vegetable oil industry analysis.
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“Production will not meet demand in 2009. That is good for prices, bullish.”
Mielke, who made a presentation Jan. 14 to the Saskatchewan Crop Development Commission during Crop Production Week in Saskatoon, thinks the low for world vegetable oil prices occurred in December.
“The tight supplies may become tighter in 2009,” he said, referring to drought in South America.
“Not only is there drought down there, but they put one-third less fertilizer in the ground for their crops. That reduction means that even if rains come the production cannot be as high as it was.”
While he doesn’t expect prices to soon reach 2008 highs again, producers and crushers can expect prices that are higher than what’s now available.
