EDITOR'S COMMENT
OILS & FATS INTERNATIONAL
VOL 37 NO 3 MARCH/ APRIL 2020
EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com CORPORATE: Managing Director: Tony Crinion tonycrinion@quartzltd.com +44 (0)1737 855164 SUBSCRIPTIONS: Elizabeth Barford subscriptions@quartzltd.com +44 (0)1737 855028 Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK © 2020, Quartz Business Media ISSN 0267-8853 WWW.OFIMAGAZINE.COM
A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000 Printed by Pensord Press, Gwent, Wales
Viral impact Since the novel coronavirus (Covid-19) first emerged in China in December, its spread and impact on all aspects of our lives have grown dramatically. Lock-downs in cities, the grounding of flights, overwhelmed health systems, panic buying in supermarkets, cancelled events, restaurants and businesses having to shut down and, of course, the actual toll on health. As of 18 March, Worldometers reported 203,612 Covid-19 cases globally and 8,229 deaths, an exponential rise from just 580 cases and 17 deaths on 22 January. The actual number of cases will be higher as some countries, like the UK and USA, are barely testing for the virus. No one knows when the pandemic will peak – some scientists suggest transmission rates will drop as we head into the Northern Hemisphere spring and summer but may rise again in winter 2020-21. And the more measures countries take to flatten the infection curve, the more they are steepening their recession curve. The oils and fats market has seen prices plummet due to fears of a fall in demand (see p4). “The closest parallel to the current epidemic is the SARS outbreak 17 years ago, which had a much more limited geographical spread,” says industry expert James Fry, chairman of LMC International. “Inevitably, there were distinct repercussions for world trade in oils. However, the surprise back then was that the slowdown in oils imports into China and in the exports of palm oil from South East Asia to the whole of Asia occurred just after the epidemic had stopped infecting more people. Presumably shipments booked earlier continued to flow, but port stocks in importing countries accumulated, and imports were then scaled back afterwards. “Something similar seems to be happening now with Covid-19. Exports have, generally speaking, continued to flow but stocks at import ports have increased, which means that we can expect a slowdown in trade volumes very soon, and continue for some time to come.” Godrej International director Dorab Mistry says the vegetable oil market has been hit by a triple whammy of factors rarely seen before. “In the second half of 2019, the Indian economy slowed down and affected Indian buying, along with other major markets like Pakistan and North Africa. Then comes Covid-19 which hits Chinese buying and slows down every other market. And finally comes the Saudi-Russian feud which depresses crude oil prices.” Without the Indonesian B30 biodiesel blending mandate, crude palm oil prices would be in the US$400-500 FOB range, he says. “Looking forward, the Covid-19 impact on demand is a developing situation. The stock market meltdown, the weakness of emerging market currencies and the generally anaemic economies of major markets give us a deadly cocktail.” Mistry says world demand for edible oils for food this year may grow by only 1.5M tonnes against a normal growth of 3M tonnes. Our market, along with all others, faces a rocky ride ahead.
@oilsandfatsint
Oils & Fats International
2 OFI – MARCH/APRIL 2020
Comment.indd 1
Serena Lim – serenalim@quartzltd.com www.ofimagazine.com
19/03/2020 10:47:40
