6 March, 2002 (Oil World Flash) - The EU-15 sharply raised imports of 17oils and fats from third countries in Jan/Dec 2001 while exports to thirdcountries declined significantly. The 15 countries raised imports fromnon-EU countries to a record 5.5 Mn T, up 0.6 Mn T or 12% from the yearbefore. During the same period, EU exports to third countries declined by0.25 Mn T to only 2.45 Mn T, a 5-year low. This sharp increase in netimports is due to several factors. It can be expected that net importrequirements continue to rise this year, at least until July, since thefollowing factors generally remain in place:

Domestic production of 17 oils & fats dropped by 0.2 Mn T to 15.3 Mn T inJan/Dec 2001. This was caused by a shortfall in sunseed supplies, whichtrimmed sun oil production by 0.2 Mn T. In addition, rape oil productiondeclined by 0.3 Mn T. Rapeseed crushings fell sharply since manyprocessors shifted to soybeans due to better margins. However, theresulting boost in soybean oil output of 0.3 Mn T in calendar year 2001could offset the decline in sun and rape oil only partly.

The usage of animal fats in feed manufacturing was restricted or fullyprohibited in many EU countries. This triggered higher demand forvegetable oils as a substitute. Palm oil was the major beneficiary ofrising demand from feed producers mainly due to its price competitiveness.The EU member countries boosted palm oil imports to a record 0.8 Mn T inOct/Dec 2001, up from 0.6 Mn T a year earlier. This brought imports inJan/Dec 2001 to a record 2.98 Mn T, implying a sharp increase of 0.57 Mn Tfrom the year before. In fact, the growth in EU net import requirementslifted palm oil imports from 1.74 Mn T in Jan/Dec 1995 by an average 0.2Mn T annually until 2001.