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Japan Palm Oil Consumption Unaffected By Quake

This is written by Dow Jones Newswires journalist Lim Shie-Lynn.

A leading exporter of palm oil-based products to Japan said Wednesday that the country’s consumption of the cooking oil remains steady for now, despite the devastating earthquake and tsunami on March 11, but demand could potentially increase in the longer term.

“Demand is still steady for now, although the short supply of electricity may prompt many Japanese companies to reduce production hours and disrupt supply chains,” Tsutomu Usui, chief executive of Intercontinental Specialty Fats Sdn Bhd told Dow Jones Newswires.

Looking beyond the potential near-term demand disruptions, however, palm oil may account for a larger share of Japan’s edible oil consumption due to an increasing appetite for food that is free of trans fats, Tsutomu said.

Japan’s dominant power supplier, Tokyo Electric Power Co, introduced rolling blackouts that may last until late April after it lost around 40% of its generating capacity. The March 11 disaster disabled cooling systems at its Fukushima Daiichi power plant, shutting the plants down and triggering a nuclear crisis.

ISF, 80%-owned by the Tokyo-listed Nisshin Oillio Group Ltd and 20%-owned by edible oil firm Lam Soon, is a major producer of premium specialty food fats and oils, exporting around 40,000 tons to Japan last year. The country is the sixth-largest market for Malaysian palm oil, buying close to 600,000 metric tons last year.

Japan consumes around 2.3 million-2.5 million tons of vegetable oils include soyoil, rapeseed oil and palm oil. “The future of palm oil is very bright (in Japan). It is still the cheapest oil available and the move by food manufacturers to remove trans fats will boost imports,” he said.

Seven & I Holdings Co, a major Japanese retail conglomerate, decided in December 2010 to stop selling food products containing trans fats “as much as possible and hoped to eliminate them altogether from the shelves,” Kyodo News reported, citing company sources. The group, which controls 7-Eleven convenience stores, Ito-Yokado supermarkets, Sogo and Seibu department stores, joined other major companies such as McDonald’s Holdings Co (Japan) Ltd to reduce offerings of food items containing trans fats.

The move came after Japan’s Consumer Affairs Agency (CAA) asked food manufacturers to voluntarily label the trans fat content of their product earlier this year. While CAA didn’t impose a ban on products with trans fats, Japanese food makers said trans fats labeling may be considered mandatory in the longer term.

Trans fats are created in liquid vegetable oils that have been undergone a chemical process called partial hydrogenation.

Palm oil, a key ingredient in consumer products ranging from instant noodles and cooking oils to margarine and ice cream, is an alternative to oils that have been treated to increase the shelf-life of food products, as it is naturally stable even at room temperatures. Palm oil is higher in the saturated fats is believed to contribute to various health problems than many rival vegetable oils, but trans fats have been found to pose far greater risks to consumers’ health.

Now that regulators and consumer agencies have started to publicize the risks, palm oil is gaining an advantage over rival oils that have been partially hydrogenated to improve stability.

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