The increase will be driven mainly by stronger demand in the European Union, China, the United States and India, it said. "Together these four ... will probably account for at least 60 percent of the growth in world demand," Oil World said.
Vegetable oil demand in China and India is boosted exclusively by population and income growth and related changes in diets.
In the EU and to a smaller extent in the US, the driving force behind the accelerating demand is the expanding use of vegetable oils as fuel for transportation and for production of heat and electricity, it said.
Soaring crude oil prices have made biofuels produced of rape, soy and palm oil even more attractive in the EU, where tax incentives has already encouraged green fuels expansion.
Oil World forecast global production of 8 main vegetable oils to increase by 6.1 million tonnes in 2005/06, with 71 percent of the rise covered by seed oils output and 29 percent by palm oil.
World stocks rose by as much as 1.7 million tonnes in the last two seasons, with the stock/usage ratio increasing to 10.6 percent in 2004/05 from 9.9 percent in 2002/03, it said.