Global Oilseed Production: Trends, Drivers, Competition Prof. Dr. Folkhard Isermeyer Thünen Institute, Braunschweig, Germany Folkhard Isermeyer October 2015
Content 1 Production Acreage Production 2 Trade and Consumption World trade Use for food, feed, fuel 3 Commodity Prices Food and feed Impact of bioenergy 4 Future Competitiveness Yield ratios Price ratios page 2 Folkhard Isermeyer
71/73 81/83 91/93 01/03 11/13 71/73 81/83 91/93 01/03 11/13 71/73 81/83 91/93 01/03 11/13 71/73 81/83 91/93 01/03 11/13 71/73 81/83 91/93 01/03 11/13 71/73 81/83 91/93 01/03 11/13 Million ha World Acreage of Different Crops, 1971/73 2011/13 Grains Oil Crops Pulses Roots & Tubers Sugar Crops Vegetable, Fruits, Nuts Others -52% Millet -25% Sorghum -15% Barley Rice Corn -32% +21% +53% Others Cocos Olives +6% +71% +164% Others Peas Beans +32% -2% +30% Others Maniok Potatoes +37% +71% -4% Sugarbeet -39% Sugarcane +136% Nuts +277% Fruits +90% Vegetable +145% 800 Wheat +1% Palm Oil +426% Groundnnut +24% 800 700 600 Sunflowers 176% Rapeseed +285% Cotton +1% 700 600 500 Soybeans +223% 500 400 400 300 300 200 200 100 100 0 0 Numbers in the legend = percent change of acreage between 1971/73 and 2011/13 Source: FAOSTAT, own calculations page 3 Folkhard Isermeyer
million tonnes (Mt) World production of plant oil, 1963-2013 180 160 140 120 100 80 60 40 20 Other Maize oil Olive oil, virgin Coconut oil (copra) Cottonseed oil Groundnut oil Sunflower oil Rapeseed oil Soybean oil Palm & kernel oil G4 : 87 % 0 1963 1973 1983 1993 2003 2013 Source: FAOSTAT, own calculations. page 4 Folkhard Isermeyer
Plant Oil Production, by Country, 1993 and 2013 (only countries with > 1 Mt in 2013) Canada Russia USA EU Ukraine China 2013 1993 2013 1993 Rapeseed oil Soybean oil Colombia Brazil Nigeria India Thailand Malaysia Indonesia 2013 1993 Sunflower oil 2013 1993 palm & palm kernel oil Argentina Rest of the world Canada: Rapeseed oil 2013: 2,8 Mt Source: FAOSTAT, own calculations. page 5 Folkhard Isermeyer
Production of Oil Crops, by country, 1993 and 2013 (only countries with > 1 Mt in 2013) Canada Russia EU USA Ukraine China 2013 1993 2013 1993 2013 1993 2013 1993 rapeseed soybeans Sunflower seed palm & palm kernel oil Canada rapeseed 2013: 18 Mt Brazil Bolivia Paraguay Argentina Rest of the world India Indonesia Malaysia Australia Source: FAOSTAT, own calculations. page 6 Folkhard Isermeyer
million ha World acreage of major oil crops, 1991 2013 (million ha) 120 100 80 60 40 rapeseed soybeans sunflower seed palm oil 20 0 Source: FAOSTAT, own calculations. page 7 Folkhard Isermeyer
1991/95 = 100 World production of Major Oil Crops, 1991 2013 (1991/95 = 100) 450 400 350 300 250 200 150 100 50 0 rapeseed soybeans sunflower seed palm oil Source: FAOSTAT, own calculations. page 8 Folkhard Isermeyer
Content 1 Production Acreage Production 2 Trade and Consumption World trade Use for food, feed, fuel 3 Commodity Prices Food and feed Impact of bioenergy 4 Future Competitiveness Yield ratios Price ratios page 9 Folkhard Isermeyer
Seed, Oil, Cake: Net Exports or Net Imports, 2010 (only trade volumes > 1 Mt / country) Canada EU China USA Ukraine Japan Iran rapeseed and mustardseed net exp cake net exp oil net exp seed net imp seed net imp oil net imp cake soybean Mexico Paraguay Brazil India Thailand Indonesia Vietnam Malaysia sunflower Argentina palm and palm kernel Rest of the world Canada rapessed (seed, oil, cake): 12 Mt Source: FAOSTAT, own calculations page 10 Folkhard Isermeyer
Use of oil crops for food, feed, other purposes (World, Mt, 2001 and 2011) rapeseed soybean sunflower palm and palm kernel rapeseed soybean sunflower palm and palm kernel rapeseed soybean Food Feed other 2001 01-11 2001 01-11 2001 01-11 2001 01-11 change from 2001 to 2011 Mio. t %! 3 30 6 21 2 30 6 58! 15 66 61 48 6 53 2 63! 8 183 11 180 sunflower palm and palm kernel 0 20 40 60 80 100 120 140 160 180 200 page 11 Folkhard Isermeyer Mt 2 130 19 136 Source: FAOSTAT, own calculations
Content 1 Production Acreage Production 2 Trade and Consumption World trade Use for food, feed, fuel 3 Commodity Prices Food and feed Impact of bioenergy 4 Future Competitiveness Yield ratios Price ratios page 12 Folkhard Isermeyer
US-$/t World Prices of Plant Oil ( G4 ) and Crude Oil US-$/t, 1990 8/2015 1600 1400 1200 Sunflower > Rapeseed > Soybean > Palm Crude oil = bottom line 1000 800 600 Palm oil Soybean oil Sunflower oil Rapeseed oil Crude oil 400 200 0 End of year-prices; 2015 end of August Sunflower oil: US Export Price Soybean oil: Chicago Futures, first contract forward Palm oil: Malaysia Futures, first contract forward Rapeseed oil: Crude, fob Rotterdam Crude Oil: Dubai fob, conversion: 7.3 bbl/mt Source: World Bank (Pink Sheet), IMF/quandl. page 13 Folkhard Isermeyer
US-$/t World Prices of Protein Feed Fish meal, Soybean meal, Rapeseed meal, US-$/t, 1990 2014 2000 1800 1600 1400 - Fishmeal prices show strongest increase - Rapeseed meal constantly 2/3 of soybean meal 1200 1000 800 600 400 fish meal soybean meal rapeseed meal 200 0 page 14 Folkhard Isermeyer Source: World Bank (Pink Sheet), Canola Council of Canada, own calculations.
Outlook for World Population and Food Demand Last 40 years, next 40 years (FAO estimates for grain and meat) bn. people bn. tonnes bn. tonnes 1968 1968 1968 1970 1970 1970 1972 1972 1972 1974 1974 1974 1976 1976 1976 1978 1978 1978 1980 1980 1980 1982 1982 1982 1984 1984 1984 1986 1986 1986 1988 1988 1988 1990 1990 1990 1992 1992 1992 1994 1994 1994 1996 1996 1996 1998 1998 1998 2000 2000 2000 2002 2002 2002 2004 2004 2004 2006 2006 2006 2008 2008 2008 2010 2010 2010 2012 2012 2012 2014 2014 2014 2016 2016 2016 2018 2018 2018 2020 2020 2020 2022 2022 2022 2024 2024 2024 2026 2026 2026 2028 2028 2028 2030 2030 2030 2032 2032 2032 2034 2034 2034 2036 2036 2036 2038 2038 2038 2040 2040 2040 2042 2042 2042 2044 2044 2044 2046 2046 2046 2048 2048 2048 World Population 10 8 6 4 2 0 World Grain Production 4 3 +117 % 2 1 0 World Meat Production 0,5 0,4 0,3 0,2 0,1 0,0 +191 % Source: FAO, own presentation. page 15 10/2015 Folkhard Isermeyer Global Oilseed Production: Trends, Drivers, Competition
Biofuels: Policy-driven expansion, but slowdown Ethanol and Biodiesel, world production, 2000-2014 1,000 barrel/day 2500 2000 1500 1000 500 0 - Biofuel boom between 2000 and 2010 - Was policy-driven (subsidies, admix-quotas), not market-driven - Has triggered difficult policy debates (world food, ILUC) Chances for market-driven bioenergy boom? Biodiesel ROW Biodiesel Europe Ethanol ROW Ethanol Brazil Ethanol USA 2013: Provisional 2014: Forecast page 16 Folkhard Isermeyer Sources: EIA U.S. Energy Information Administration, RFA Renewable Fuels Association, USA, OECD, Statistic Technology, own calculations
Can we expect market-driven expansion of biofuels? (First attempt to quantify a bushel-barrel-correlation for corn) Global energy consumption: 500 bn. GJ Supplying 1 % via biofuels would need 50 million ha Biofuel segment will remain small compared to total world energy demand Yes, rising prices for fossil fuels would pull all agricultural commodity prices upward page 17 10/2015 Folkhard Isermeyer Global Oilseed Production: Trends, Drivers, Competition
Decline of crude oil extraction is in sight Projection Share of non-conventional crude oil - Very heavy oils - Oil sands - Oil shale Total crude oil Conventional crude oil Crude oil supply will reach upper limit rather soon Theoretically, this could speed up market demand for biofuels page 18 Folkhard Isermeyer Source: Gehrling, BGR, 2004
but there are other fossil energy sources, with potential impact on agricultural commodity prices The fossil fuel story (in short): page 19 Folkhard Isermeyer Crude oil production will soon reach maximum In 100 years, it will be much lower than today, with world energy consumption still growing However, coal can fill the gap, ressources are sufficient for 1.000 years, and liquid fuels can be made from coal (break even at 50 $/barrel) The fossil fuel era may last for a long time, with low prices But: >50% of GHG emissions caused by fossil fuels; persistence of fossil fuel era climate desaster A global, legally binding & really effective GHG emission treaty is needed however, little chances
Coal: Undesired. Solar: Bright future - but needs time. Should policy enforce biodiesel to bridge the gap? Long run: Little chances for biodiesel to find a place in the eternal fuel portfolio Medium run: Only chances, if policy makes protective provisions for biodiesel Justifications : (1) contribute to GHG policy, (2) no electromobility for trucks But: Hardly possible to achieve better GHG figures than ethanol or soy diesel Caution with praising biodiesel as climate-smart fuel and neglecting ILUC Chances for flexible bioenergy policy? (depending on world food prices) Focus on other values of oilseed (crop rotation; landscape; healthy food) page 20 Folkhard Isermeyer
Content 1 Production Acreage Production 2 Trade and Consumption World trade Use for food, feed, fuel 3 Commodity Prices Food and feed Impact of bioenergy 4 Future Competitiveness Yield ratios Price ratios page 21 Folkhard Isermeyer
Assessment of Future Competitiveness is complicated Analytical framework: Two dimensions, various determinants Commodity markets Competitors: Food: other vegetable oils Feed: other protein feedstuffs Biofuels: Other feedstock Farm level Competitors: Network for detailled analysis: Other oil & protein crops Other cash crops (e.g. grains) Fodder crops and grassland Determinants Price ratio Fatty acid composition Nutritional value of proteins Suitability for processing GHG balance Image of the product Price ratio Input needed Input prices Yield ratio Crop rotation aspects page 22 Folkhard Isermeyer
Wheat vs. Rapeseed vs. Sunflowers: World acreage and average yield, 1963-2013 1963/65 = 100 600 500 400 300 200 100 Rapeseed acreage Rapeseed yield Wheat acreage Wheat yield Sunflower seed acreage Sunflower seed yield 0 Source: FAOSTAT, own calculations page 23 Folkhard Isermeyer
dt/ha Yields, major oil plants World average, dt/ha 35 30 25 20 15 10 rapeseed soybeans sunflower seed palm oil 5 0 Source: FAOSTAT, own calculations. page 24 Folkhard Isermeyer
1991/95 = 100 Development of yields, major oil plants world average, 1991/95 = 100 180 160 140 120 100 80 60 40 20 0 rapeseed soybeans sunflower seed palm oil Source: FAOSTAT, own calculations. page 25 Folkhard Isermeyer
Development of rapeseed and soybean yields Top 5 producers and world average, since 1991 Rapeseed yields Ø 2009/13 growth since 1991/95 dt/ha dt/ha % Canada 20 7 54 China 19 6 42 India 12 3 36 Germany 38 9 30 France 34 5 15 Ø Top 5 19 6 48 Ø Top 10 19 5 43 Ø World 19 6 41 Soybean yields Ø 2009/13 growth since 1991/95 dt/ha dt/ha % USA 29 4 17 Brazil 29 8 41 Argentina 24 3 14 China 18 2 12 India 12 2 23 Ø Top 5 25 4 20 Ø Top 10 25 4 19 Ø World 24 4 20 Sunflower yields Ø 2009/13 growth since 1991/95 dt/ha dt/ha % Ukraine 17 5 41 Russia 13 3 31 Argentina 17 0 3 China 24 7 39 Romania 16 4 29 Ø Top 5 18 4 28 Ø Top 10 16 3 28 Ø World 15 3 25 page 26 Folkhard Isermeyer Source: FAOSTAT, own calculations.
Price ratio between oil and meal soybeans and rapeseed, 1990 2014 6.0 5.0 4.0 3.0? Price ratio oil/meal rapeseed soybeans 2.0 1.0 0 - Rapeseed oil price > soy oil price, but rapeseed meal is far behind - Soy meal boom soy oil = by-product pressure on oil price Focus on rapeseed meal? (breeding; segmentation of markets) page 27 Folkhard Isermeyer Source: World Bank (Pink Sheet), Canola Council of Canada, own calculations.
Summary Production: Strong expansion: (1) palm, (2) soy & rapeseed, (3) sunflower Trade: Soy and palm dominating; only Canada with significant rapeseed export Use: Strong growth in bioenergy; rapeseed particularly poor in food segment Prices: All agricultural commodities showed strong price increase after 2006 Price Outlook: Strong food & feed demand; new risks through low fossil fuel price Biodiesel: Market-driven expansion unlikely; not easy to relaunch policy support Competitiveness: Positive; EU-rapeseed could enter foreign markets, if necessary Yield Development: Palm oil > rapeseed > soybeans > sunflower seed Price Ratio: Market signals might suggest to focus more on protein than on fat page 28 Folkhard Isermeyer
Thank you very much for your attention! page 29 Folkhard Isermeyer