Suomen Rehu expands position in Finnish vegetable oil market

Related tags Biodiesel Soybean

Finnish vegetable oil maker Suomen Rehu strengthens market
synergies buying a majority stake in rapeseed and soy oil firm
Mildola Oy, writes Lindsey Partos.

A subsidiary of Finnish food and agricultural group Lännen Tehtaat, Suomen Rehu paid €3.9 million to increase its slice of Mildola Oy from 17.5 per cent before the deal to 82.5 per cent.

A significant buyer of Finnish rapeseed, Mildola pulled in sales of €41 million last year. The new mother group Lännen Tehtaat achieved a turnover of €473.8 million in 2004, down from €492 million in 2003.

As Mildola's single largest customer, the takeover deal should bring significant economies of scale for Suomen Rehu "as a buyer of rapeseed cake and soya bean meal, both by-products from Mildola's food manufacturing process".

Lännen Tehtaat predicts the acquisition will boost the group's annual net turnover by more than €20 million, although no "essential effect"​ is expected for 2005 profit.

Rape seed, palm oil and soybean are all experiencing strong market growth as food makers continue to turn away from animal fats in favour of vegetable alternatives.

By 2008 analysts Business Communications Company predict these key vegetable edible oils will account for 69.9 per cent of the US market alone.

Today, soybean and palm oil combined account for over half of all oil consumed in the world.

After tight crops in 2003, soy oil has come in at 35 million tons for 2004, offering some relief to prices, that in 2003, hit 15 year highs. Today, soy oil is selling for about $470 (€359) a ton.

The third largest vegetable oil crop, rape seed oil, reached 15 million tons and is currently trading at about $666 (€509) a ton.

"Rape oil prices have been rising on the back of increasing demand from food and biodiesel industries, despite record global supplies,"​ Josh Dadd, an economist at the UK Home Grown Cereals Authority (HGCA), recently told FoodNavigator.com.

The fourth largest vegetable oil crop, sunflower seed oil, reflects a similar picture to rape see oil, with prices becoming bullish on a tighter balance sheet. For 2004, world production reached 10 million tons. Prices are currently trading at around the $690 (€527) mark.

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