PARIS- Consultancy Strategie Grains on Monday cut its forecast of vegetable oil demand in the European Union this season as a lockdown to slow the spread of the coronavirus forced consumers to forego restaurants and drive less, it said.
Vegetable oil prices plummeted in the past month following collapse in crude oil prices and a slowdown in the global economy due to containment measures. Such restrictions have cut car use, reducing consumption of diesel fuel including biodiesel that uses vegetable oil.
Strategie Grains now sees EU vegetable oil demand in the current 2019/20 (July/June) season at 24.2 million tonnes, down from 24.5 million estimated in February. For next season, it cut its forecast to 24.45 million tonnes down from a projected 24.8 million seen last month.
"Demand for vegetable oils in the food sector has been hit by massive declines in the level of out-of-home dining. The latter uses more vegetable oils compared with food preparation in the home, especially fast food outlets," it said in a report.
EU vegetable oil consumption to produce biodiesel, mainly with rapeseed oil and palm oil, was now expected at 9.19 million tonnes this season, down from 9.41 million tonnes forecast last month and 9.53 million in 2018/19.
Strategie Grains expects fuel consumption to fall by 12% between mid-March and mid-May.
U.S. crude briefly dropped below $20 and Brent hit its lowest level in 18 years, on heightened fears that the global coronavirus shutdown could last for months and demand for fuel could decline further.
However, Strategie Grains prices estimated that vegetable oil prices had no further decrease potential, except for soybean oil, which could be pressured by a global slump.
The prices of other oils could even rise slightly over the next few months, it said.
(Reporting by Sybille de La Hamaide, editing by Ed Osmond) ((Sybille.deLaHamaide@thomsonreuters.com; +331 4949 5145;))
