Domestic price of fats and oils in Australia - Data and Analysis (1970-2032)

IBISWorld forecasts the domestic price of fats and oils to decline 4.8% during 2024-25, to reach 235.7 index points. Global supply chain disruptions and the Russia-Ukraine conflict, which is weighing on oilseed production in Ukraine, has contributed to the price volatility over the past few years. Per capita fat consumption in Australia is projected to rise in the current year, increasing downstream domestic demand. Demand for fats and oils around the world is also anticipated to grow. Despite an increase in global demand, the growth in global oilseed production, primarily fuelled by sectors like the soybean market, is expected to outpace this demand. This robust production growth is anticipated to moderate oilseed prices, easing them from the elevated prices.The pandemic initially weighed on prices of fats and oils, moderating price increases in 2019-20. However, prices surged over the two years through 2022-23. Global supply chain disruptions and inflationary pressures, coupled with the growing demand for higher priced products containing fats and oils, like pure tallow soap and organic extra virgin olive oil, have contributed to the price hikes. While demand for cooking oils and fats from the food-service sector has been severely constrained during the pandemic lockdown periods, downstream consumer demand at the retail level increased. Demand for oil and fats from the food-service has since recovered over the five-year period as businesses reopen to full capacity. This trend has partially driven growth in the domestic price of cooking oils and fats.The demand for oils and fats is steadily increasing over time due to population growth. Despite a rise in health consciousness, per capita level fat consumption is expected to rise over the five years through 2024-25. Healthier organic and unprocessed foods tend to contain a high level of healthy fats, supporting demand from health-conscious consumers. In addition, consumers have shifted from animal-based fats and oils towards plant- and seed-based products such as vegetable oils and extra-virgin olive oils. Food manufacturers have increasingly focused their product innovation in these areas, to capture demand. These products typically require greater levels of processing and command higher prices. The potential future regulatory measures to limit or prohibit industrially-produced trans fats, as highlighted in public consultations conducted by the Food Regulation Standing Committee (FRSC), will further fuel this trend.Demand for Australian fats and oils in overseas markets has increased over the past five years, pushing up the price index. Exports have risen on the back of stronger demand from Asian markets like South Korea. Notably, South Korea's oil and fat export share has jumped from 4.3% in 2018-19 to 18.0% in 2023-24 while China's proportion of export has soared from 1.8% to 7.4% over the same period. Overall, IBISWorld forecasts that the domestic price of fats and oils will grow at a compound annual rate of 5.5% over the five years through 2024-25.