20/10/2011 (ICIS) - After bottoming out in September, the global fats and oils market is expected to see another upward price cycle in 2012, led by projected lower production volumes and increased consumption of biofuels, an industry consultant said on Wednesday.

“World fats and oils supplies are sufficiently ample until December 2011. Expect soybean oil export from South America to be reduced because of higher domestic consumption for biofuels," said Thomas Mielke, director of Germany-based agriculture consulting firm ISTA Mielke.

"[And] palm oil production in Malaysia will also slow down next year, as palm trees need to recover after high production in the current season,” he said at the 8th ICIS World Oleochemicals Conference.

Growing global dependence on palm oil for food use will rise in the next several years, which will strain feedstock use for oleochemicals and biofuels, Mielke said.

About 76m–77m tonnes of palm oil will be required in 2020, compared with 45.5m tonnes seen in 2010, he added.

“This means an annual average palm oil output growth of 3.1m tonnes will be needed worldwide. Indonesia has to bear that increase in consumption demand, as Malaysia palm oil production is already strained,” said Mielke.

As of 2010, biofuels already accounted for 12% of the global fats and oils consumption, at 171.6m tonnes. Chemicals account for 4%, or 7.7m tonnes, of global fats and oils’ use.

Mielke noted that global production of agricultural crops has to rise in order to sufficiently increase supply for food, biofuels, oleochemicals and other uses.

The two-day oleochemicals conference ends on Thursday.