91ÉçÇø

91ÉçÇø forecasts the domestic price of fats and oils to rise 1.1% during 2026-27, to reach 243.2 index points. This will be driven by factors including higher input costs across the manufacturing chain. Conflicts in the Middle East have driven up fuel, packaging and freight costs in 2025-26, and further escalation would pose an upside risk to producer prices at the manufacturing stage. Per capita fat consumption in Australia is projected to rise in the current year, increasing downstream domestic demand. According to the Australian Bureau of Agricultural and Resource Economics and Sciences' June 2026 report, domestic canola production is expected to plunge 19.5% in 2026-27 to 6.2 million tonnes due to a dry seasonal outlook and emerging El Ni?o risk. Robust biodiesel demand, driven by mandates, will likely push up canola prices and animal fat components, supporting domestic prices for fats and oils.Global supply chain disruptions and the Russia-Ukraine conflict, which weighed on oilseed production in Ukraine, contributed to the price volatility over the past few years. The domestic price of fats and oils 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. Downstream consumer demand at the retail level has also increased over the past five years.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 2026-27. 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, pushing food manufacturers to focus their product innovation in these areas to capture demand. These products typically require greater levels of processing and command higher prices, putting upward pressure on domestic price of fats and oils. 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 share of oil and fat exports has jumped from 0.4% in 2019-20 to 18.0% in 2023-24, before easing to 7.4% in 2024-25. China's proportion of exports has soared from 1.8% in 2019-20 to 7.4% in 2024-25, while Malaysia's share of exports soared from 0.7% to 11.1% over the same period. Overall, 91ÉçÇø forecasts that the domestic price of fats and oils will grow at a compound annual rate of 2.9% over the five years through 2026-27.