DEMAND SCENARIOS Palm Oil Consumption Growth Major Consuming Countries Iran s Consumption Trend

Transcription

1 1 By: Msuhaili MPOC

2 DEMAND SCENARIOS Palm Oil Consumption Growth Major Consuming Countries Iran s Consumption Trend MARKET TRENDS AND DRIVERS Palm oil price discount advantage High Productivity: A Favourable Factor for Palm Oil Advantages of Palm oil in blended cooking oil Demand of palm oil in Biofuels sector Palm Oil attributes and advantages THE ROAD AHEAD - 1 st Quarter 2014 Palm Oil Price Outlook 2

3 3

4 World s Oils & Fats Key Consuming Countries 12 years comparison - Slight difference in consumption percentage shares of key consuming countries at 1-3%. OTHERS, 48.5, 43% Year 2000 CHINA, 17.5, 16% EUROPE, 19.6, 18% USA, 14.2, 13% INDIA, 11.7, 10% OTHERS, 79.8, 44% Year 2012 EUROPE, 29.1, 16% CHINA, 34.2 Mil, 19% USA, 17.4, 10% INDIA, 18.8, 11% * Country, Mil. Tonnes, % share 4 Source: Oil World

5 World s Major Consumed Oils 12 years comparison - Higher increase in the consumption of Palm Oil & Palm Kernel share at 10% compared to other key oils. (Soybean +1%, Rapeseed 0% & Sunflower oils - 1%) Year 2012 Year 2000 Palm Oil & Palm Kernel Oil, 23.34, 21% Other Oils, 44.30, 25% Sunflower oil, 14.14, 8% Palm Oil & Palm Kernel Oil, 55.95, 31% Other Oils, 39.29, 35% Soybean Oil, 24.99, 22% Rapeseed oil, 23.69, 13% Soybean Oil, 41.44, 23% 5 Sunflower oil, 9.47, 9% Rapeseed oil, 14.55, 13% * Country, Mil. Tonnes, % share Source: Oil World

6 Higher growth of palm oil consumption at CAGR of 7.03 % compared to other main vegetable oils 60,000 50,000 40,000 30,000 20,000 10, '000 Tonnes 2012 World's Consumption - 4 main Vegetable Oils CAGR Palm Oil 7.03% Rapeseed Oil 3.82% Soybean Oil 3.97% Sunflower Oil 3.13% Palm oil Rapeseed oil Soybean oil Sunflower oil 6 Source: Oil World

7 Major Countries Palm Oil Consumption Trend Consumed 19% of World s Oils and Fats Consumed 11% of World s Oils and Fats Palm Oil is at an uptrend in all of these countries Consumed 13% of World s Oils and Fats Consumed 16% of World s Oils and Fats 7 Source: Oil World

8 China s Consumption trend - Explanation of the growth for each country Great demand for animal feed drives higher soybean crushing in China to produce meal, and use the oil for human consumption. China is the biggest world consumer of soybean meal. Consumed 26% of the total soybean meal in the world (2012). 8 High production of soybean oil from the crushing of soybean in order to produce the meal, supported the intake of soybean oil for local consumption. Palm oil consumption increased by 276% and soybean oil by 264% for the period of Consumption of soybean meal in uptrend from 30 Mil. (2008) to 46 Mil. Tonnes 53% Increase. Source: Oil World

9 India s Consumption trend - Explanation of the growth for each country Increase in per capita consumption of edible oils and the uptrend very obvious starting The per capita consumption is increasing as the country has consistently grown by 8% GDP for the last 10 years. (Caput 2006 = 11.81Kg, 2012= 14.94, world average Caput = 26 Kg) Zero import duty on crude edible oil and very nominal duty on refined oils have favoured the imports of edible oil especially palm oil as the most competitive commodity. Govt. schemes like mid- day meals, subsidized oil supply to poor families. This boosted the demand for edible oils especially palm oil due to its price advantage. Palm oil consumption increased by 109% and soybean oil by 64% for the period of Source: Oil World

10 USA s Consumption trend -Explanation of the growth for each country USA, as one of the largest producers of soybean and protect their soybean industry. 2012, USA produces around 82 Mil. MT of soybean (31% world production) and 9.2 Mil MT of soybean oil (22% world production). Palm oil consumption increased by 559% and soybean oil by 10% for the period of The increase in demand of palm oil was attributed largely to food industry, due to their efforts to significantly reduce or eliminate trans fatty acids in their food service and consumer products. 10 Source: Oil World

11 Europe s Consumption trend - Explanation of the growth for each country The scenario is about the same as USA where Europe is the biggest producer of rapeseed and mostly use the rapeseed products for domestic consumption. Big increase in the consumption of oils and fats is due to the emergence of Biodiesel industry EU produced 9.5 Mil MT of Biodiesel (40% of world production) 63% of feedstock used for Biodiesel production is Rapeseed. Palm oil consumption increased by 162% and rapeseed oil by 126% for the period of Source: Oil World

12 Iran s Palm Oil Consumption Trend vs. Other Veg. Oils For the period year , percentage increase: Palm Oil = 78.8% Rapeseed Oil = 92.7% Soybean Oil = % Sunflower Oil = 43.6% 12 Source: Oil World

13 Per capita consumption of oils and fats in Iran is on the uptrend over the years IRAN: Oils & Fats Consump.on vs Popula.on '000 Tonnes Popula.on in Million ConsumpQon Oil & Fats PopulaQon Linear (ConsumpQon Oil & Fats) Population: 1995 (62.28 mil), 2012 (77.2 mil). CAGR 1.19% Consumption: 1995 (0.88 MT), 2012 (1.83 MT). CAGR 4.08% CAPUT: 1995 (14.25Kg ), 2012 (23.70Kg). CAGR 2.87%. 13 Source: Oil World, MPOC

14 Palm oil covers most of the increase seen in Oils & fats consumption. IRAN: Consump.on Chart '000 Tonnes Palm Oil Oils & Fats Linear (Oils & Fats) y = x y = x Palm Oil share at 7.5% in 1995 to 37.5% in Source: Oil World, MPOC

15 Local production of Oils and Fats in Iran only covers around 27-30% of consumption. The rest of it needs to be imported and Palm oil share is at around 45% in IRAN Oils & Fats: Consump.on vs Produc.on '000 Tonnes 2,000 1,800 1,600 1,400 1,200 1, ConsumpQon ,076 1,185 1,191 1,259 1,369 1,439 1,586 1,589 1,649 1,699 1,682 1,707 1,737 1,778 ProducQon P/C raqo P/C Ra.o 15 Source: Oil World, MPOC

16 16

17 Palm Oil price is mostly at a discount compared to other vegetable oils - making it the most competitive vegetable oil. 2,000 1,800 1,600 1,400 Vegetable Oils price trend USD / Tonne 1,200 1, Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Soybean- Oil Sunflower- Oil Rapeseed- Oil Crude Palm- Oil 17 Source: Oil World

18 Palm oil is priced lower because More productive at 10 times higher yield compared to other oils Perennial crop which sustains up to 25 years Hence cost of production is much lower 4.73 Average Oil Yield Tonne / Ha / Year Soybean Sunflower Rapeseed Oil Palm 18 Source: Oil World

19 Increasing usage of blended palm cooking oil due to its attributes and cost saving. Using of palm olein (IV56), palm olein (IV58) and palm olein (IV60) in preparing cooking/frying oil blend leads to: Increasing oxidative stability of prepared oils blends significantly. The oxidative stability increased as palm olein fractions used increased, as the pure palm olein fractions used were found to have oxidative stability 5.5 times (Egyptian Organization of Standardization and Quality - EOS) as compared to sunflower oil and soybean oil used in preparing subsidized oil blends. Pure palm olein (IV56), palm olein (IV58) and palm super olein (IV60) were found to have high values regarding to: Oxidative stability Vitamin E content Smoke point Flash point Fire point as compared to sunflower oil and soybean oil (EOS). 19

20 Cost savings in blended palm cooking oil Study of Blended Palm Cooking Oil in Egypt Working group consist of: Food Industries Holding Company (FIHC) General Authority of Supply Commodity (GASC)- Ministry of Supply and Internal Trade Egyptian Organization of Standardization and Quality (EOS) Malaysian Palm Oil Board (MPOB) Malaysian Palm Oil Council (MPOC) The working group was established to study using palm oil derivatives (palm olein IV 56 & 58 and palm super olein IV 60) in preparing edible oil blends for cooking and frying purposes according to the Egyptian standards 2142/2005. From the study, it is found that palm olein and palm super olein are useful for their relative advantages regarding their high oxidative stability, good cooking and frying quality as well as its competitive price when compared with that of sunflower oil and soybean oil. 20

21 Study of Blended Palm Cooking Oil in Egypt 2012 Based on the study conducted by the working group, recommends the best and suitable percentage at which palm olein fractions that can be safely used in preparing clear liquid cooking/frying oil blend without occurrence of any turbidity or solidification during winter months (5 degree Celsius) in Egypt are as follows: Palm Olein (IV56) at 5% + Soft oil (Soybean oil or Sunflower oil) Palm Olein (IV58) at 10% + Soft oil (Soybean oil or Sunflower oil) Palm Olein (IV60) at 15% + Soft oil (Soybean oil or Sunflower oil) Palm Olein (IV56, IV58, IV60) + Blended Soft Oil (Soybean Oil 25% + Sunflower Oil 75%) More ratio of palm olein can be used during the summer. 21

22 Cost analysis of Blended Palm Cooking Oil Egypt 2012 Blending (USD/Tonne) Year 2012 Cost Saving 0f SBO (100%) - (A) 1227 SBO (95%) + IV56 (5%) 1219 SBO (90%) + IV58 (10%) 1213 SBO (85%) + IV60 (15%) 1210 USD 17 per tonne Compared to (A) SFO (100%) (B) 1263 SFO (95%) + IV56 (5%) 1253 USD 10 per tonne SFO (90%) + IV58 (10%) 1254 Compared to (B) SFO (85%) + IV60 (15%) 1255 SFO (75%) + SBO (25%) ('C) 1254 SFO (71.25%) + SBO (23.75%) + IV56 (5%) 1244 SFO (67.50%) + SBO (22.50%) + IV58 (10%) 1237 SFO (63.75%) + SBO (21.25%) + IV60 (15%) 1233 USD 21 per tonne Compared to ('C) IV56 (100%) 1062 USD 165 per tonne Compared to (A) IV58 (100%) 1087 USD 140 per tonne Compared to (A) IV60 (100%) 1112 USD 115 per tonne Compared to (A) 22 Source: MPOC

23 Increase demand of palm oil for Biofuels sector Feedstock Use for Biodiesel Production (Mn T) 2013E Soya Oil Palm Oil Rapeseed Oil Sunflower Oil Coconut oil Tallow Used cooking oil Other oils & fats Total Source: Oil World

24 Increase / uptrend usage of Biofuels 24 Source: Oil World

25 Other attributes and advantages of palm oil that drive the demand upward Palm oil has been used as the best replacement for traditional hydrogenated seed oils such as soybean oil and canola. Palm oil is rich in natural chemical compounds which are important for health and nutrition. It is a natural source of Carotenoids & Vitamin E as well as supplying fatty acids and other important fat- soluble micronutrients. It also supplies an abundance of calories that gives us much- needed energy for our daily life Palm oil possesses excellent cooking properties. It is more stable for deep frying compared to other vegetable oils Imparts in foods and baked goods superior taste, texture, and quality. And has many more functionality in the food and non- food applications. 25

26 26

27 Palm Oil price trend Moving upward in the last quarter 2013 Daily FCPOc3 price movement Resistance level at RM 2,670 Support level at RM 2, /8/ /8/ /9/2012 9/10/ /10/ /11/ /12/2012 9/1/2013 4/2/ /2/ /3/ /4/2013 2/5/ /5/ /6/2013 5/7/ /7/ /8/ /9/2013 2/10/ /10/ /11/2013 6/12/ /12/ Source: Bursa Malaysia, MPOC

28 price trend of crude palm oil (CPO) and Brent oil has passed the zero premium level and starting to create the same trend as recorded in the last quarter of palm oil price will gain its momentum and build a bullish surge in the first quarter of this year Source: Oil World, MPOC

29 Palm Oil Price Trend Other factors to monitor Soya oil for biodiesel production appears to be flagging in the US and Argentina. US biodiesel output is likely to decline owing to the expiration of the blenders' credit. Production in Argentina will be affected by poor biodiesel export prospects bringing further surplus of oils supplies in the market. Demand typically softens during the winter as buyers cut back purchases of the tropical oil. As a normal trend of palm oil production in Malaysia during the 1 st quarter of 2014 is expected to decline and only will recover in the following quarter. A huge drop in production was seen in December 2013, where only 1.67 million tonnes of palm oil was produced, a drop of about 200 thousand tonnes from the previous month. 29

30 First quarter 2014 palm oil price forecast Based on the trend given, CPO prices are expected to increase again by the end of first quarter this year. The average price of CPO in March 2014 could reach higher than the second half 2013 resistant level of RM2,670 with a potential to reach RM2,750. The details of my forecast can be found in MPOC s FORTUNE magazine for February publication 30

31 31

32 Conclusions At the beginning of this presentation, we have seen that palm oil consumption growth has been recorded at an upward trend globally. This trends was seen in key consuming countries including Iran, which surpasses the growth of other vegetable oils. palm oil demand is to grow further on account of the increase usage in the food and non- food industries, expanding population, removal of trans fat from many consumer products and a change for healthier food choices by the consumers. Palm oil is now the most consumed and vital oil to meet the global demand for oils and fats. 32

33 Conclusions Palm oil has provided a new alternative for food and non- food applications due to its positive products attributes and also its cost advantage as shown in the formulation of blended palm cooking oil. The challenge now is to strike a good partnership to tap on the business potential and opportunities with the Malaysian palm oil industry allowing for an exciting and dynamic period of continuous strong demand globally Hence, don t miss this opportunity to strike for a viable partnership with the in Malaysian Palm oil industry. 33

34 34