08/06/2011 (Bloomberg) - Demand for vegetable oils and fats in the European Union will drop for the first time in 22 years as usage for biodiesel slides, researcher Oil World said.

EU demand for 17 oils and fats in the marketing season started in October will drop 400,000 metric tons to 30.4 million tons, the researcher estimated today in a report. Rapeseed oil and palm oil consumption will experience “by far” the biggest reductions, it said.

“This is mainly caused by reduced consumption of oils and fats for biofuels, primarily in the January to March 2011 quarter, when vegetable oil prices were unusually high and commanded record premiums relative to fossil fuels,” Oil World said in the report.

Rapeseed oil usage is estimated to fall to 9.74 million tons in the current season, down from 9.96 million tons the previous season. Demand for palm oil is forecast to slide to 5.1 million tons, down from 5.78 million tons the previous season, according to Oil World.

Biodiesel output will remain stagnant in Europe at 9.3 million tons in 2011. Production of the fuel may decline in the January to September period, the researcher said.