Growing Dependence on Palm Oil in World Trade and Consumption Plenary Lecture at the Malaysia Russia Palm Oil Trade Fair & Seminar (POTS) there somebody in Moscow to pick on me 16 Sept up tomorrow 2013 at the airport Thomas Mielke, Executive Director of ISTA Mielke, Oil World, Global Market Research on Oilseeds, Oils and Meals, E-mail <Thomas.Mielke@oilworld.de>
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The Outline of my Presentation Introductory statements on how palm oil is linked to all oilseeds and oils The dynamics of world supply & demand of oils & fats (edible & ined.) Biodiesel production has fallen short of expectations Success Story: there somebody Russia has to turned pick me into up tomorrow a net exporter at of vegetable oils the airport Outstanding growth in world palm oil and palmkernel oil production Consumers worldwide are getting more dependent on palm oil, owing to insufficient supply growth of other oils & fats Price Outlook
In past 25 years world oilseed production more than doubled (strong oil and meal demand) On rising acreage and yields About half of the acreage increased came from grains. But this shift will slow down. Agricultural land has become a limiting factor worldwide, but big potential in Russia + Brazil Land values more than doubled in the past 6-8 years 500 460 420 380 340 300 260 220 180 10 Oilseeds: World Area and Production Production (Mn T) Area (Mn ha) 140 88/89 91/92 94/95 97/98 00/01 04/05 07/08 10/11 13/14
Significant improvement in production in most countries expected in 2013/14 Biggest increases in Argentina, Brazil and the C.I.S. India: Much higher oilseed output in 2013/14; slowdown of veg. oil import requirements; prices declined in advance Major exception is China, boosting import requirements 10 Oilseeds: Estimated Production Change in 2013/14 6 5 4 3 2 1 0-1 -2 EU Annual Change from 2012/13 ( in Mn T) C.I.S. Can USA Arg Bra India Australia China
CHINA: Rapidly rising import requirements Mainly of soybeans, but also of rapeseed and many other agricultural commodities Following a stagnation of oilseed imports (at the expense of stocks in 12/13), big jump in imports by 8-9 Mn T is likely in 2013/14 70 CHINA: Imports of Oilseeds and Oils & Fats Mn T 60 Oilseeds 50 40 30 20 Oils & Fats 10 0 92/93 95/96 98/99 01/02 04/05 07/08 10/11 13/14
In Russia production of sunflowerseed trebling in the past 15 years On account of : - higher acreage - improved yields Sun oil exports seen at 1.4 Mn T in 2013/14 10 9 8 7 6 5 4 3 2 1 RUSSIA: Sunflowerseed Production & Area Production (Mn T) Harvested area (Mn ha) 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
Russian oilseed production has increased from around 4 Mn T to 12 Mn T this year. - Sunflowerseed 9.0 Mn T - Soybeans 1.5 Mn - Rapeseed 1.4 Mn - Linseed 0.4 Mn Production potential seen at 15 Mn T within the next few years 14 12 10 8 6 4 2 0 RUSSIA: Production of Oilseeds (Mn T) 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
In Russia domestic production of oils & fats is now exceeding consumption. Russia has turned from a net importer into a net exporter of oils and fats Still, palm oil imports has continued to increase and reached a record 730 Thd T in 2012/13. More growth potential ahead. Russia: 17 Oils & Fats Output & Consumption (Mn T) 5,5 5 4,5 4 3,5 3 2,5 2 1,5 Consumption Output 1 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14 O c t o b e r / S e p t e m b e r
Palm oil has become the most important veg. oil worldwide Palm oil production was boosted by more than 4 times in the past 20 years from 14 Mn T in 1993/94 and is estimated to reach 59 Mn T in 2013/14, Thereof: Malaysia 20 Mn and Indonesia 30 Mn T 60 55 50 45 40 35 30 25 4 Animal Fats 20 15 10 5 17 Oils & Fats: World Production (Mn T) Sun oil Palm oil 9 Other oils Soya oil Rape oil 0 91/92 93/94 95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
Rising Dependence on Palm Oil 1997/98-2012/13: Palm oil exports (blue line) almost quadrupled Exports of all 16 other Oils/ Fats + 48% In Oct/Sept 2013/14: Palm oil exports (blue line) likely to rise to 45 Mn T Combined exports of soya, sun & rapeseed oils (red) to recover to 21 Mn T 48 45 42 39 36 33 30 17 Oils & Fats World Exports in Mn T Soy, Rape, Sun Oils 4 Animal Fats Palm Oil 9 Other 27 24 21 18 15 12 9 6 3 0 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
25 17 Oils & Fats: Exports of Major Countries (Mn T) Indonesia & Malaysia have exported 43.4 20 Mn T of oils & fats in 2012/13, 15 Malaysia there somebody to pick me up tomorrow at.. thus accounting the for airport 10 58% of total world exports all oils & fats in 2012/13. 5 0 Canada U.S.A. Indonesia Ukraine Argentina 91/92 93/94 95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
The Success Story of the past 30 Years Substantial growth in world production of palm oil In 1980: 4.6 Mn T or 8% of 17 oils & fats In 1990: 11.0 Mn T or 14% In 2000: 21.9 Mn T or 19% In 2010: 46.1 Mn T or 27% (only 6% of area) there somebody to pick me up tomorrow at the airport In 2011: 50.8 Mn T or 28% (57% of exports) In 2012: 53.7 Mn T (plus 5.9 Mn T of Palmkern oil) In 2020 at least 78 Mn T of palm oil required by consumers worldwide
Growing Dominance of Palm Oil & Palmkernel Oil Worldwide World consumption of all oils & fats more than doubled in the latest 20 years to 188 Mn T in 12/13 Palm oil and Pkernel oil: annual growth rates were more than double of those of other oils & fats. 200 Mn T 150 100 World Consumption of 17 Oils & Fats palm oil + palmkernel oil 15 other oils & fats Today both oils account worldwide for : - - 33% of consumption - - 63% of exports 50 0 98/99 01/02 04/05 07/08 10/11 13/14
17 Oils & Fats: World Consumption, by Category Jan/Dec 2012 total: 183.9 Mn T World consumption of 17 oils & fats reached 183.9 Mn T in Jan/Dec 2012 Of which: Food use 133.7 Mn T Biofuels 24.3 Mn T Chemicals 17.1 Mn T 133.7 Mn (72.7%) 24.3 Mn (13.2%) 17.1 Mn (9.3%) 8.8 Mn (4.8%) Other use 8.8 Mn T Food use Chemicals Other (animal feed, etc.) Energy (biofuels)
Usage Breakdown of Individual Oils/Fats in 2012 biofuels food oleochemicals other Soya oil : 17% 77% 4% 2% Palm oil : 12% 76% 8% 4% Rape oil : 27% 67% 3% 3% Sun oil : 1% 97% 1% 1% Tallow: 18% 15% 55% 12% Coconut: 5% 50% 45% Palmk.oil : 1% 47% 50% 2% Other oils : 1% or less for biofuels
Rising needs of feed-stock for biodiesel production require additional agricultural land But the growth in biodiesel consumption has recently slowed 25 20 15 World Production of Biodiesel (Mn T) 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Supply, Demand and Price Outlook 2013/14
Energy Market Impacts: Palm oil prices (red line) traded largely sideways in the past 7 months Daily Prices of Crude Palm Oil & Brent Oil (US-$/T) 1050 Crude palm oil, cif Rott. 1000 Brent crude oil, Brent/ICE 950 Palm oil was supported 900 by the appreciating crude mineral oil prices (blue there somebody to pick me up tomorrow at 850 line) and huge demand the airport In Europe palm oil usage for energy increased by 0.8 Mn T in 2012/13 800 750 700 Sep Oct Nov Dec Ja13 Feb Mar Apr May Jun Jly Aug Sep Prices from 3 Sept 2012 until 12 Sept 2013
Arg. soya oil prices have come under considerable pressure Daily Prices of Soya Oil & RBD Palm Olein (US-$/T) 1600 1050 and fell to the lowest level in 32 months in August 2013 reducing the premium over palm oil to US $ 100 1400 1200 1000 Soya oil, Arg.fob 900 750 600 For vegetable oils most the bearishness already discounted But much greater downward potential for oilmeal prices 800 600 400 RBD palm olein, Mal.fob Soya oil Premiums/discounts 450 300 150 200 0 0 Ja10 Jun Sep Ja11 JunSep Ja12 JunSep Ja13 Jun Sep Daily prices from 1 Jan 2010 until 12 Sep 2013-150
World stocks of palm oil reached a record 11.7 Mn T as of end-dec 2012, thereof: Malaysia 2.6 + Indonesia 4.0 Mn T With consumption picking up sharply, stocks in August had declined by 2.5 Mn T in Malaysia & Indonesia combined But palm oil stocks are now starting to rise seasonally and may recover by 2.2 Mn T from Sept until end-dec 2013 22 20 18 16 14 12 10 8 17 OILS & FATS Annual Stocks / Usage Ratios (%) Palm Oil Soya Oil Sun Oil 17 Oils/Fats 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
The annual growth in world palm oil supplies and usage were at or near record highs in 2012/13 But will be slowing down in 2013/14 Mn T 6 5 4 there somebody to pick me up tomorrow at the airport 3 2 1 PALM OIL: World Supplies & Usage Annual Growth in Mn T Supply Change Usage Change 0 05/06 07/08 09/10 11/12 13/14
Pressure in Sunseed and Oil Record or near-record crops of sunflowerseed in the 1050 European Union (8.6 Mn T) 900 and C.I.S. (19.7 Mn) this year Heavy selling pressure 750 creating price discounts there somebody to 600 pick me up tomorrow at In early Sept sunseed the airport prices below soya & rapeseed 450 Black Sea sun oil now offered at US $ 850 World sun oil output +1.6 Mn 300 150 Monthly Prices of 3 Oilseeds (in US-$/T) Soybeans, US, cif R'dm Sunseed, EU, cif Lower Rhine Rapeseed, EU, cif Hamburg '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 January 1997 until 12 September 2013
Soybean and Meal Prices Overvalued in Chicago 1450 CBOT: Daily Soybean Futures (c/bu) 470 CBOT: Daily Soya Meal Futures (US$/ST) 1400 450 1350 1300 1250 1200 1150 1100 Nov 2013 Sep Oct Nov Dec Jan13 Feb Mar Apr May Jun Jly Aug Sep Daily futures from 4 Sept 2012 until 12 Sept 2013 430 410 390 370 350 330 310 Dec 2013 SepOct Nov Dec Jan13 Feb Mar Apr May Jun Jly Aug Sep Daily futures from 4 Sept 2012 until 12 Sept 2013
In the past 6 weeks drought damaged the US soybean crop by about 2.9 Mn T US supplies will again be tight in 2013/14 (in 3rd consecutive year) Soybean Crop Trend 140 Mn T 120 100 80 U.S.A. 60 40 20 0 80/81 86/87 92/93 98/99 04/05 10/11 77/78 83/84 89/90 95/96 01/02 07/08 13/14
Growing dependence on South America - - but supply risks owing to weather, strikes, infrastructure shortages + political issues (Argentina!) Assuming normal weather, higher plantings should boost S. Amer. soybean output to a new high in early 2014 (by 8 10 Mn T) Drought in most of Argentina and in central Brazil reduced soil moisture supplies in August and the first 15 days of Sept If required rains do not arrive - - > sharply higher prices Soybean Crop Trend 140 Mn T 120 100 80 U.S.A. 60 40 20 Argentina, Brazil & Paraguay 0 80/81 86/87 92/93 98/99 04/05 10/11 77/78 83/84 89/90 95/96 01/02 07/08 13/14
Ample oilseed supplies ahead in 2013/14. Biggest increases in soybeans, sunflowerseed, rapeseed and palmkernels These 4 oilseeds were also the growth leaders in the past 15 years In 2013/14 world production seen rising by 21 Mn T and opening stocks up 7 Mn T, boosting world supplies by 28 Mn T - - > BEARISH! 10 OILSEEDS: World Production (Mn T) 13/14F 12/13 11/12 10/11 Avg.Change 15 Years to 12/13 Soybeans.... 280.88* 266.39* 240.64 264.91 +3.5% Cottonseed... 43.00* 45.01* 47.17 43.55 +1.8% Grdnuts,shelled 28.02* 27.55* 27.18 27.70 +2.0% Sunflowerseed 40.20* 35.46* 39.56 33.60 +2.9% Rapeseed.... 65.02* 62.83* 60.63 61.04 +4.3% Sesameseed.. 3.93* 3.74* 3.83 3.83 +2.3% Palmkernels.. 14.64* 13.97* 13.29 12.54 +7.4% Copra....... 5.46* 5.46* 5.26 4.80 +0.4% Linseed...... 2.21* 2.01* 2.12 1.82-0.8% Castorseed... 1.51* 1.41* 2.03 1.56 +1.3% Total........ 484.88* 463.82* 441.71 455.35 +3.3%
We at Oil World forecast an increase in global consumption of 17 oils & fats by 6.0 Mn T in 2013/14 17 OILS & FATS: Consumption Change (in Mn T) O c t o b e r / S e p t e m b e r 13/14 F 12/13 11/12 10/11 09/10 EU-27... +0.05 +0.17-0.33-0.87 +0.93 U.S.A.... +0.35 +0.39 +1.19 +0.90-0.13 Argentina. +0.38-0.96 +0.53 +0.55 +0.79 Brazil.... +0.40 +0.11 +0.14 +0.60 +0.89 there somebody to pick me up tomorrow at the airport China, PR +1.10 +1.15 +1.03 +1.09 +1.40 India..... +0.78 +0.93 +0.74 +0.49 +0.73 Indonesia. +0.84 +0.88 +0.91 +1.01 +0.60 Malaysia. +0.04 +0.23-0.11 +0.09-0.10 Others... +2.08 +1.79 +2.53 +2.34 +2.14 World... +6.03 +4.67 +6.64 +6.19 +7.25
World production of oils & fats is likely to rise faster than consumption in coming months, mainly on account of sun oil and palm oil. 17 OILS & FATS: Production & End'g Stocks Change From Year Ago in Mn T 10 Production Ending stocks 8 6 In Oct/Dec 2013 the excess of production over demand could lead there somebody 4 to pick me up tomorrow at to a recovery in world the airport stocks of all oils & fats by 2 2.2 2.4 Mn T. Price pressure likely, lead by sun oil and palm oil. 0-2 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 O c t o b e r / S e p t e m b e r
In Europe palm oil established a low of US $ 776 in Dec 2012, ending its price cycle after 48 months The latest low was much above those of preceding cycles. But veg.oil prices moved to a higher plateau since 2007. 1600 1400 1200 1000 800 600 400 200 Soya Oil & Palm Oil: Monthly Prices (US-$/MT) Palm oil, crude cif Rott. Soya oil, Dutch fob ex-mill 0 72 77 82 87 92 97 02 07 '13 Monthly prices from Jan 1972 until 12 Sept 2013
Concluding Statements The global dependence on palm oil will continue to rise in the years ahead owing to insufficient production of other oils & fats Palm oil has competitive advantages over other oils and fats, e.g. much higher yields and lower production costs Higher investments are necessary to raise oil palm plantings and yields to get ready there for rising somebody palm to oil pick demand me up tomorrow in the future at the airport But this has to done in a sustainable way, in line with the regulations of the Round Table of Sustainable Palm Oil (RSPO)
Thank You for Your Kind Attention! If I can be of assistance to you in the future, you are invited to contact me any time. More details and background information are given in the Oil World Weekly & Monthly Reports, which can all be obtained from the Internet. Thomas.Mielke@oilworld.de