2024 Trends and Predictions – End Jan 2024

As we get to the end of January 2024, we’ve started a new year with a number of challenges.

Shipping

The attacks by Iranian-backed Houthi militants on vessels have made travel through the Red Sea and Suez Canal hazardous.

The safety of the crew is the top priority for shipping lines. Until a safe passage can be assured, many vessels are re-routing around South Africa and the Cape of Good Hope when travelling between Europe and the Middle East/East Africa and Asia.

The presence of international naval vessels from the US and 13 of its coalition partners has not stopped attacks by militants who use drones that cost 100 times less than the missiles used against them.

Almost all lines of Red Sea Freight remain diverting, so 80-day voyages, container shortages, and vessel shortages.

Also, we are seeing some lines not prepared to ship into Israel, causing challenges for some.

Freight is now hovering around $6,000 for 40ft FCL to Europe.

Global Trade

According to the World Bank, the global economy is expected to slow down for the third consecutive year in 2024. This is due to high interest rates, persistent inflation, slumping trade, and a weakened China.

The World Bank predicts that the world economy will only grow by 2.4% this year, which is down from 2.6% in 2023, 3% in 2022, and 6.2% in 2021. The latter growth rate reflected the robust recovery from the pandemic recession of 2020.

Global tensions that have arisen mainly from Israel’s war with Hamas and the conflict in Ukraine pose a risk of even weaker growth.

Additionally, World Bank officials are worried that poor countries with high levels of debt may not be able to make necessary investments to fight climate change and poverty.

Edible Oils

Industry reports suggest that palm oil prices are expected to weaken in 2024, which could be indicative of a potential decrease in production or supply.

Stricter anti-deforestation rules aimed at curbing deforestation, like the EU’s new law, could limit the expansion of palm oil plantations, potentially impacting production.

However, the full impact remains uncertain. Some existing plantations may increase yields to compensate, and the effectiveness of enforcement varies regionally. 

The El Nino weather phenomenon is anticipated to result in drier conditions across Southeast Asia, particularly in Indonesia and Malaysia, the two largest palm oil producers. This is expected to negatively impact palm oil cultivation and yields, potentially leading to a decrease in production.

A potential increase in global demand for biodiesel could also put pressure on supplies.

The blending of edible oils for biofuels in planes and cars is a growing trend, with a focus on sustainability and reducing carbon emissions. Here are the key points from the provided sources:

The aviation sector is increasingly using biofuel blends, such as Sustainable Aviation Fuel (SAF), made from vegetable oils and animal fats to reduce environmental impact. For instance, Airbus has stated that all its planes can fly with a blend of up to 50% SAF.

Biofuels, including those derived from edible oils, are also being used in cars. Biodiesel, which can be produced from animal fats and cooking oils, is being utilised as a diesel additive to reduce pollutants from vehicles.

Retail volume demand may also start to pick up even though it has been falling for some time.

⁠If the war in Russia continues, will companies with production facilities in Russia move production elsewhere, causing production upheaval?

The edible oil market is currently experiencing a surge in prices due to higher crude oil costs and concerns about shortages.

This is particularly evident in Spain, where there are olive oil shortages.

Spain is the largest olive oil producer in the world, accounting for 70% of the European Union’s consumption and 45% of the world’s consumption.

The lack of rainfall in olive-producing areas across Spain significantly impacts the quantity of oil produced and its prices, which have increased by more than 70% in 2023 after a sharp rise in 2022.

Philippines Update

Franklin Baker’s Davao site, which is their largest, is currently closed due to engineering works that have overrun their original timeline.

This closure may cause delays and shortages to their Q1 and potentially Q2 shipments, with larger clients kicking in contingency plans to overbuy anything nearby.

El Nino weather is still affecting crops throughout South East Asia and the Philippines, causing some shortages in supply.

Overall, 2024 is shaping up to be as volatile as the past 3 to 4 years, with no consistency or levelling out of markets.

As always, we advise you to get your order done sooner rather than later. And plan to even order slightly in advance to ensure on-time deliveries.