Oil Situation and Outlook

Oil, Soybean

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

Oct 2015

Taiwan

USDA Official

New post

USDA Official

New post

USDA Official

New post

Crush

1,925

1,925

1,970

1,900

0

2,000

Beginning Stocks

1

1

12

12

0

12

Production

355

355

362

350

0

365

MY Imports

3

3

0

3

0

3

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

359

359

374

365

0

380

MY Exports

7

7

15

12

0

20

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

16

16

17

17

0

18

Food Use Dom. Cons.

324

324

325

324

0

324

Feed Waste Dom. Cons.

0

0

0

0

0

0

Total Dom. Cons.

340

340

342

341

0

342

Ending Stocks

12

12

17

12

0

18

Total Distribution

359

359

374

365

0

380

1000 MT, PERCENT

General

Taiwan's demand for soybean oil is primarily met by local crushing of imported soybeans with limited soybean oil trade. Domestic consumption (cooking oils and industrial uses) largely meets production, with minimal soybean oil exported.

Over the past year, there have been a number of scandals in Taiwan, focused on locally produced cooking oils, including soy oil. Additionally, local consumer groups have raised concerns about GE safety and trans-fats. As a result, Taiwan's total "other", i.e. non-soy vegetable oil consumption estimate for MY2013/14 increased significantly, by 86 TMT or 39% increase from the previous year. The increase of imports of other non-soy vegetable oils lowered demand for soy oil which had an estimated 50% share. Soybean oil market share may continue to slip due to additional labeling requirements for trans fats and GE-origin products.

Total soybean oil imports in MY2013/14 remained at 3 TMT, while exports of locally crushed oil, mainly to Japan or within the region, totaled 7 TMT, with a 19 TMT decrease from a year earlier. The decrease was likely because of Taiwan's widely publicized cooking oil scandals, a result of which many foreign trading partners questioned Taiwan-origin products. Taiwan will likely try to reclaim lost export markets in neighboring countries to balance surplus domestic crushed soybean oil in the forecast year.

Impact of Food Safety Scandals

A variety of local cooking oil scandals may have dampened consumer demand for Taiwan produced soybean oil, domestically and abroad. In October 2013, a domestic vegetable oil manufacturer was discovered to have been blending lower-quality, cheaper vegetable oils, such as cottonseed and soybean, but marketing the product as higher-end olive oil. The involved oil crusher was sentenced to 30 years in jail and the operation was forced to close. For blended vegetable oil products, labels are now to include each ingredient with the highest content oil on the top and so on. Blended oils are only allowed to include the specific name – i.e. olive oil – of an input when that input accounts for more than 50% of total volume. For instance "Olive Blended Oil" must contain at least 50% of olive oil.

Changes for Import Declarations

Following the September 2014 tainted lard scandal, fats and oils imports are required to clear Customs under separate HS codes, separate from feed use. Thereafter importers are required to declare to Customs whether the goods are for "fit for human consumption" or for industry or feed use. While lard and tallow exports may already be accompanied by suitable language on the USDA export certificate, Taiwan has also indicated it will accept an FDA Certificate of Free Sale for U.S. shipment of fats and oils.

Trans-Fat and GE Labeling Requirements

Trans fat and GE labeling requirements may dampen soy oil's competitiveness relative to other vegetable cooking oils. Under the auspices of increased attention to food safety and consumer health, Taiwan authorities frequently amend food production and food safety related regulations. New regulations specifically target labeling of trans fats will be effective July 1, 2015. All food products are required to include a trans fat content label, with a 0.3% labeling threshold. Only food products containing less than one gram of fat and oil per 100 grams are exempt. Taiwan crushers plan to lower oil refining temperatures or use higher quality raw material (fewer split beans) to control soybean oil quality. Still, Taiwan crushers report technique to blend soybean oil with other vegetable oils to bottle "blended oil" with, allegedly, higher health benefits.

Highly processed products, such as soybean oil which contains no detectable DNA or protein residues, will be required to be label GE, according to WTO notification G/TBT/N/TPKM/168 Rev. 1 on March 17, 2015 on "Guidelines for Labeling of Packaged Foods Containing Genetically Modified Food Material". The new requirement might further depress soy oil market share of total vegetable oils.

Local Scandals Create Opportunity for Non-soy Vegetable Oils

Despite post-WTO accession tariff reductions for non-soy vegetable oils (such as olive oil, sunflower oil, etc.), soybean oil and palm oil are expected to retain their market leading positions because of their widespread use in hotels, restaurants and food processing sectors. On the other hand, despite the relatively high prices for non-soy vegetable oils, there is now significant growth potential due to increased health concerns about trans fats. According to fatty acids profiles and different processes to make oils, soybean oil seems to contain a higher level of trans fats among all vegetable oils.

Soybean oil holds a majority 50% market share, followed by palm oil (38%), other imported vegetable oils combined (10%) and the rest, or 2%, made by traditional Chinese oils such as sesame oil, peanut oil and tea seed oil. Traditional tea seed oil pressed directly from roasted tea seed has potential to increase due to increase health consciousness. Tea seed oil is recognized as the Chinese equivalent of olive oil with similar health benefits and oil characteristics. Still, in MY2013/14, imports of palm oil and other vegetable oils increased considerably as consumers sought alternatives to locally produced cooking oils, negatively impacted by food safety and labeling scandals.

Tariff Rates for Oilseeds and Edible Oils

HS Code

Seed/Oil

Tariff before WTO accession

Current Tariff

1201.00

Soybeans

0

0

1507

Soybean Oil

6

5

1513.21.10 & 1513.29.10

Palm Kernel Oil

1.25

0

1511

Palm Oil

2.5

0

1513.11 & 1513.19

Coconut Oil

3

0

1509 & 1510

Olive Oil

5

0

1205.00.10

Rapeseed

3.5

0

1514

Rapeseed (Canola) Oil

6

4

1515.21 & 1515.29

Corn Oil

7.5

5

1207.60.00

Safflower Seed

9

0

1512.11.20 & 1512.19.20

Safflower Oil

12.5

5

1206.00.00

Sunflower Seed

11

0

1512.11.10 & 1512.19.10

Sunflower Oil

15

5

Source: Taiwan Customs Tariff Schedule

Oil Prices, CIF Taiwan, US$/KG

Type of Edible Oil

MY 2011/12

MY 2012/13

MY 2013/14

Palm Oil (HS1511)

$1.099

$0.895

$0.872

Canola Oil (HS1514)

$1.270

$1.283

$1.037

Sunflower Oil, Crude (HS1512.1110)

$1.302

$1.300

$1.075

Soybean Oil (HS150710, Crude)

$1.357

NA

$1.030

Vegetable Oil Consumption, Estimated by Net Oil Imports & Production, TMT

Type of Edible Oil

MY 2012/13

MY 2013/14

Palm Oil (HS1511)

177.1 (imports 182.7-exports 5.6)

239.9 (imports 240.9-exports 1.0)

Coconut Oil & Palm Kernel Oil (HS1513)

9.8

9.2

Olive Oil (HS1509)

4.8

8.2

Canola Oil (HS1514)

16.0

27.9

Sunflower Oil (HS1512)

11.3

19.3

Corn and Other Veg. Oils (HS1515)

-0.6

-0.7

Total Non-Soy Oil Imports

218.4

304.2

Domestic Soybean Oil Food Use consumption

300.0

(net 273.5)

324.0

Chinese traditional oil: Peanut Oil (Domestic crush - CY)

7.0

7.0

Chinese traditional oil: Sesame Oil (domestic crush - CY)

6.0

6.0

Other Veg. Oils (domestic crush - CY)

3.3

3.3

Est. consumption/

total supply

508.2 = (218.4 + 273.5 + 16.3)

636

No Soy Oil for Biodiesel:

No soy oil is used for B100 biodiesel production. Taiwan uses recycled cooking oils for B100 biodiesel production to meet Taiwan's B2 biodiesel mandate, which was implemented in June 2010 with an estimated demand of 100 million liters of B100. Taiwan has approximately 130 million liters of local B100 biodiesel production capacity using recycled cooking oil.