Japan: Sunflower Oil Use Shrinks Big Due to Supply Shortages
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Japanese Vegetable Oil demand drives the overall Oilseed and products market in Japan. Aside from Palm stearin Oil (primarily used for power generation), Japan’s Vegetable Oil market is quite stable at approximately 2.5-2.7 MMT, of which over 60 percent is supplied by domestic crush. In MY 2021/22, the total Vegetable Oil market shrunk by 0.9 percent as the retail price of Vegetable Oils soared since spring 2021. According to the Ministry of Internal Affairs and Communications, the retail price for Vegetable Oil grew by 67 percent from March 2021 to January 2023, far above the price increase for most other staple foods (JA2023-0027). The Japanese Government has not put in place any support program for food Oil expenditures, as it has for other essentials such as wheat (JA2022-0073) or gasoline (JA2022-0109).
The Poll on Social Awareness published by the Cabinet Office on March 17, 2023, indicates inflation looms as the top concern for most survey respondents. The Public Opinion Survey on the Life of Citizen published by the Cabinet Office on January 2023 shows strong support for Government’s anti-inflation measures, which include a package to alleviate food price hikes. One such program introduces a new system to extend the life of frying Oil.
In MY 2021/22, households, wholesalers, retail stores, restaurants, and food manufacturers stockpiled Vegetable Oil products in anticipation of price hikes. Russia’s invasion of Ukraine further exacerbated the hoarding of Vegetable Oil amid fears of supply disruptions and further price hikes. Industry contacts report signs that in 2023 Oil consumption began to decline. A complete relaxation of COVID-19 entry restrictions may reverse this trend as international tourists return to Japan. The weak Japanese yen may support Oil consumption as Japan seeks to boost exports of processed food products. FAS/Tokyo forecasts the total MY 2022/23 Vegetable Oil consumption will fall in MY 2022/23 to 2.46 MMT and rebound to 2.5 MMT in MY 2023/24.
MAFF reported that domestic crush in MY 2021/22 yielded 518,849 MT of Soybean Oil and 904,056 MT of Canola Oil. FAS/Tokyo estimates that Japanese Oil crushers will produce 0.54 MMT of Soybean Oil and 0.86 MMT of Canola Oil in MY 2022/23. Assuming recovery of the Canola supply, FAS/Tokyo forecasts a decline in domestic Soybean Oil production to 0.48 MMT and an increase in Canola Oil production to 0.93 MMT.
VegOil Consumption in Japan
FAS/Tokyo estimates MY 2022/23 food use consumption for Soybean Oil to reach 0.49 MMT and for Canola Oil to decrease to 0.84 MMT. Conversely, in MY 2023/24, FAS/Tokyo forecasts food use consumption for Soybean Oil to fall to 0.45 MMT, as Canola Oil food consumption recovers to 0.88. FAS/Tokyo estimates food use consumption for Palm Oil stays low at 0.58 MMT in MY 2022/23 and rebounds to 0.59 MMT in MY 2023/24 as the food sector will continuously recover from COVID-19. Japan imported 660,000 tons in 2022/2023. According to AgFlow data, Japan imported 42,540 tons of Palm Oil from Malaysia in May-June 2023, followed by Indonesia (5,410 tons).
The highly saturated food-grade Palm stearin Oil is used when the application requires solid fat (e.g., pastry dough, chocolate, baked goods, margarine, shortening, and whip crème substitutes). Palm olein is highly resistant to oxidation and overheating and is thus used in food manufacturing of instant noodles, snacks, and frozen food. Palm olein can be further fractioned to produce Palm super olein, which is more liquid and has similar applications to Soybean and Canola Oils.
FAS/Tokyo projects Sunflower seed Oil food use consumption to shrink to 14 MMT due to supply FAS/Tokyo anticipates a partial recovery in consumption in MY 2023/24 as high-oleic Sunflower seed Oil establishes a niche market.
Other sources: USDA
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