Copyright by Malaysian Palm Oil Council 2015mpoc.org.my/upload/Paper_2 _An_Overview_of... · 50,000 100,000 150,000 200,000 250,000 (‘000 MT) Oils & Fats Production Oils & Fats

Copyright by Malaysian Palm Oil Council 2015


PRESENTATION OUTLINE

THE GLOBAL OILS AND FATS SCENARIO

CONTRIBUTION OF MALAYSIAN PALM OIL

EGYPT OILS & FATS SCENARIO

AFFORDABILITY & SUSTAINABILITY

MARKET CHALLENGES & OPPORTUNITIES

BEYOND 2015

CONCLUSIONS



Global Oils and Fats Production 1990-2015(F)

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Oils & Fats Production Oils & Fats Consumption Source: Oil World & MPOB



GLOBAL OILS & FATS PRODUCTION & CONSUMPTION Y-O-Y CHANGE 1991 – 2015F (‘000 MT)

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Oils & Fats Production Oils & Fats Consumption Source : Oil World


Average Annual Growth in World Vegetable Oil Production (1990 – 2015F)

Source: Oil World

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2015(F)

Palm Oil Production Soybean Oil Production Sunflower Oil Production Rapeseed Oil Production

Average Annual Growth (1990 – 2015(F) Palm Oil (7.03%) Rapeseed Oil (5.2) Soybean Oil (4.6%) Sunflower Oil (4.4%)


Oils and Fats Production (1990 – 2015F)

1990 Production : 80.89 million MT

2015(F) Production : 204 million MT Source: Oil World

Rapeseed oil 10.09%

Soybean oil 19.90%

Palm oil 13.62%

Sunflower oil 9.73%

Others 46.67%

Palm Oil 31%

Soybean Oil 23%

Rapeseed Oil 13%

Sunflower Oil 8%

Other Oils 25%


Growth in population and income and low per caput consumption level will stimulate demand Against a backdrop of lack of arable land and reduced supply from competing soft oils, palm oil reliability in supply gives it the added

advantage Food and industrial demand will see an increased application in the production of food and non food (oleo chemicals/bio diesel),

especially in countries such China, India, Japan, EU and America

1990 Exports : 23.27 million MT

2015(F) Exports :81 million MT

OILS AND FATS EXPORTS (1990 – 2015F)

Source: Oil World

Soybean oil 14.15%

Sunflower oil

9.13%

Palm oil 36.22%

Rapeseed oil

6.93%

Others 33.57%

Palm Oil, 58.08%

Soybean Oil, 13.44%

Rapeseed Oil, 5.06%

Sunflower Oil, 9.21%

Other Oils, 14.22%


OILS & FATS PRODUCTION VS CONSUMPTION 1990 – 2050 (F)

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Oils & Fats Production Oils & Fats Consumption Linear (Oils & Fats Production) Expon. (Oils & Fats Consumption)

Source : Oil World


OILS & FATS PRODUCTION 1990 2014 ('000 MT) (%) ('000 MT) (%) Palm oil 11,013 13.62 59,189 29.63 Soybean oil 16,096 19.90 45,072 22.56 Sunflower oil 7,869 9.73 16,312 8.17 Rapeseed oil 8,160 10.09 27,163 13.60 Subtotal 43,138 53.33 147,736 73.96 Cottonseed Oil 3,782 4.68 4,910 2.46 Groundnut Oil 3,897 4.82 3,930 1.97 Sesame Oil 612 0.76 872 0.44 Corn Oil 1,477 1.83 2,998 1.50 Olive Oil 1,855 2.29 2,940 1.47 Palmkernel Oil 1,450 1.79 6,521 3.26 Coconut Oil 3,387 4.19 3,071 1.54 Butterfat 6,499 8.03 7,742 3.88 Lard 5,509 6.81 8,425 4.22 Fish Oil 1,378 1.70 912 0.46 Linseed Oil 653 0.81 619 0.31 Castor Oil 437 0.54 650 0.33 Tallow /Grease 6,812 8.42 8,424 4.22 Subtotal 37,748 46.67 52,014 26.04 Total 80,886 100.00 199,750 100.00


World’s Growing Dependence on Palm Oil Will Boost Demand Further in the Future (Consumption)

Source: Oil World

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Palm Oil - % of Oils & Fats Consumed Other Oils - % of Oils & Fats Consumed


Palm oil is by far the most important oil worldwide It is expected that world PO imports to rise by 1 million MT and usage by 3 million MT in 2015 India has increased its palm oil imports and China is likely to raise imports of palm oil in 2015

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Palm oil Soybean, Rapeseed & Sunflower Oil

EXPORTS OF 4 MAJOR OILS 2010 - 2015

Source : Oil World


Source : USDA

SHARE OF GLOBAL VEGETABLE OIL FOR FOOD USE

Palm oil share in food use has grown from 32.5% in 2013 and will exceed 34% by 2016 while soybean oil share will drop from 37.5% to 35%

These two oils now account for nearly two thirds of food oil consumption

Significant declines in rapeseed, sunflowerseed and cottonseed production are limiting supplies of these oils and encouraging a switch to palm oil due to its competitive price


GLOBAL OILS AND FATS SCENARIO The overall global production of oils and fats in 2014 was just

over 200 million MT while consumption was at 199.7 million MT

Production grew by almost 28 million MT or 16% since 2010

Oils and fats production in 2015 is forecast to reach almost 205 million MT.

Consumption is forecast to increase to 203 million MT, mainly from the food sector

There will also be demand from biodiesel producers as the current attractive price of vegetable oils will stimulate consumption



Malaysian Palm Oil Contribution To Global Oils & Fats

In 1990, Malaysian palm oil contributed to just 7.5% of global oils and fats production

This has gradually increased and reached a high of 11.08% in 2008

This year Malaysian palm oil is expected to contribute 9.87% to global oils and fats production

7.53%

9.87%

0.00%

2.50%

5.00%

7.50%

10.00%

12.50%

15.00%

17.50%

20.00%

22.50%

25.00%

27.50% 1

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(F)

Malaysian Palm Oil Production Soybean Oil

Rapeseed Oil Sunflower Oil


TOP IMPORTING COUNTRIES OF MALAYSIAN PALM OIL-

BY DESTINATION : JANUARY – OCTOBER 2015

No. Country Jan – Oct 2015 (MT)

Jan – Oct 2014 (MT)

Change (Vol.) (MT)

Change (%)

Jan – Dec 2014 (MT)

1 India 2,961,357 2,602,818 358,539 13.78 3,229,965

2 China 2,125,135 2,241,283 (116,148) (5.18) 2,839,283

3 Netherlands 1,178,943 1,301,032 (122,089) (9.38) 1,598,221

4 Pakistan 602,206 701,311 (99,105) (14.13) 812,191

4 USA 588,988 663,847 (74,859) (11.28) 783,105

6 Vietnam 525,997 488,578 37,419 7.66 604,193

7 Philippines 515,471 413,923 101,548 24.53 493,742

8 Japan 446,848 428,683 18,165 4.24 513,483

9 South Korea 332,309 317,919 14,390 4.53 374,091

10 Singapore 330,485 406,426 (75,941) (18.69) 481,455

18 EGYPT 186,929 293,591 (106,662) (36.33) 349,172

Source : MPOB


0

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1.5

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3.5

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4.5

Soyabean Sunflower Rapeseed Palm Oil

Kernel Oil Seed Oil

HIGH LAND PRODUCTIVITY OF OIL PALM YIELD

PALM OIL VS OTHER OILSEEDS

Productivity of oil palm is: • 11x more than soyabean • 10x more than sunflower • 7x more than rapeseed

* Includes palm kernel oil

Source: * FAO ** Oil World *** MPOB

Crop

t/h

a

0.59 0.36

3.68

0.42


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1975 1980 1985 1990 1995 2000 2005 2010 2015(F)

Planted Area ('000 Hectares) Production ('000 MT)

OVERVIEW OF MALAYSIAN PALM OIL INDUSTRY

In 1975, total area planted with oil palm in Malaysia was 640,000 Ha which produced 1.26 million MT of palm oil

In 2015, planted area is 5.4 million Ha but production will reach 20.3 million MT

Land area for oil palm increased by only 8 times but production increased by almost 17 times


MALAYSIA & INDONESIA CPO PRODUCTION 1980 - 2014

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35000

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Indonesia Malaysia

Source : Oilworld & MPOB


CPO PRICE AGAINST MONTHLY STOCKS IN MALAYSIA

Source : MPOB

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Malaysian Palm Oil Exports

1975 -2015 (F)

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1975 1980 1985 1990 1995 2000 2005 2010 2015(F)

Export ('000 MT) Source: MPOB


Palm Oil – Export Growth 2001- 2014

Export of Malaysian palm oil has increased by almost 70% since 2001 The main product exported, RBD palm olein, comprises

almost 50% of palm products from Malaysia In 2014, total export earnings was RM61.36 billion

PO contributed the highest export earnings with RM45.27

billion or 73.7% out of total RM61.36 billion, followed by oleochemicals RM9.29 billion (15.1%), PKO RM3.41 billion (5.5%) and finished products RM1.35 billion (2.2%).


Palm Oil in The Global Oils and Fats Market

Palm oil is being increasingly used for non-food purposes. In 2000 when production was 24.3 million MT, 3.5 million MT (15%) was used for industrial purposes. In 2014 production rose to almost 60 million MT and 16 million MT (25%) was used for industrial purposes.

When palm biodiesel becomes a widely traded commodity, the

proportion used for industrial purposes will rise even further Without the large volume of palm oil from Malaysia, there would be a

major problem in meeting world demand for vegetable oil.


EGYPT OILS AND

FATS SCENARIO


• Domestic production is insufficient to meet Egypt’s demand from the rising population, therefore Egypt heavily relied on import.

• 80% of consumption gap is filled with import of semi refined & crude oil.

Egypt Oils & Fats Still Strong Reliance on Imports

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Population Consumption Production Imports

Source : Oil World


Egypt Oils and Fats Consumption On The Increase

Egypt’s consumption of oils and fats in 2015 is likely to exceed 2.1 million MT, which represents a compound average 3.95% growth over the past 15 years. The growth in consumption can only be satisfied through imports as per capita use is poised to reach 25 kg in 2016.

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Total O&F Production Total O&F Consumption Total O&F Import Source : Oil World

Large deficit between production and consumption is likely to continue thus Egypt has to depend on imports to fulfil requirements


Egypt – Types of Major Oils Consumed Palm oil is the most

consumed oil in Egypt and has increased by 60% since 2000

The only exceptions were in 2011 and 2012 when consumption of soybean oil and sunflower oil exceeded palm oil due to narrowing price discount

However, there has always been an inverses correlation of the consumption between soybean and sunflower oils

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Palm oil Sunflower oil Soybean oil Butter fat Source : Oil World

Palm Oil

Soybean Oil

Sunflower Oil

Butter fat


Malaysian Palm Products Exported to Egypt

Malaysian Palm Products Jan-Dec 2014 ( Tonnes)

Palm Oil 349,172

Palm Kernel Oil 55,625

Oleochemicals 32,231

Finished Products 3,772

Total (Volume) 440,800

Total Sales Value RM1.2 Billion

Source : MPOB


Top 10 Malaysian Palm Products Exported to Egypt

4,848

4,877

5,675

6,863

19,948

27,869

28,118

35,085

80,331

196,228

- 50,000 100,000 150,000 200,000 250,000

RBD KERNEL STEARIN (PKO)

PALM FATTY ACID DISTILLATE (PO)

PURIFIED / REFINED / DISTILL GLYCERINE / GRD GLYCERINE (OC)

HRBD PALM KERNEL STEARIN (PKO)

SOAP NOODLES / STOCK / BLEND (OC)

RBD KERNEL OLEIN (PKO)

CRUDE PALM OLEIN (PO)

RBD PALM OIL (PO)

RBD PALM STEARIN (PO)

RBD PALM OLEIN (PO)

Volume Jan-Dec 2014 (MT)

Source : MPOB


Egypt – Palm Oil Scenario ('000 MT) Consumption Export Import MPO MPO %

2005 623.1 81.0 774.1 605.5 78.22%

2006 539.0 70.0 611.0 257.0 42.06%

2007 570.0 60.0 90.0 180.0 30.51%

2008 496.0 80.0 630.0 299.0 47.46%

2009 591.5 154.5 710.0 370.0 52.11%

2010 594.8 170.3 800.0 347.0 43.38%

2011 525.0 155.0 720.0 258.0 35.83%

2012 558.4 142.3 690.7 312.8 45.29%

2013 612.6 125.0 772.6 308.4 39.92%

2014 695.5 139.9 880.5 350.4 39.80%

Source : Oil World / MPOB


Palm Oil Applications In Egypt During the 2009-2014 period, the sales of

oils and fats were growing at 12.3% CAGR, where consumer expenditure on oils and fats reached EGP 10.48 billion (US$1.37 billion) in 2014.

Palm oil is used, to a large extent, as cooking oil, the manufacturing of ghee, in baked productions and confectionery.

44% of the total palm oil imports are utilized in industrial frying, hotel, restaurant and catering while 36% are used in the manufacturing of vegetable ghee and shortening etc (MPOC Cairo).


Competitive Pricing Pricing is a major factor in consumers’ selection of cooking oils

and fats. As price is the key purchasing factor for lower income citizens,

palm oil has the competitive advantage over other oils and fats. Consumer acceptance will slowly increase as they realize the

cheaper price offered by palm olein blended cooking oil. Also, brands do not play a role in the purchasing. Vegetable ghee will retain the biggest share of ghee sales as

animal ghee is expensive.

Egypt – Oils and Fats Scenario


Food Preference In pace with urbanization, the busy and modern lifestyle has

affected the food habits and food preference. The large youth population are accepting more westernized

snacks and they are switching over to fast food and processed food. This change of eating habits has boosted the growth of food

industries that used palm oil as one of the major ingredients.

Egypt – Oils and Fats Scenario


Egypt – Oils and Fats Balance ('000 T) 2010 2011 2012 2013 2014 2015F

Opening Stock 217 260 370 434 489 497

Production 414 473 479 432 460 465

Import 1,658 1,842 1,809 1,852 1,912 1,903

Export 307 356 319 257 301 299

Consumption 1,722 1,849 1,905 1,972 2,063 2,111

Ending Stock 260 370 434 489 497 455

Stock Usage Ratio

12.81% 16.78% 19.51% 21.94% 21.02% 18.88%

Source : Oil World



96.80

673.80

770.60

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Dif

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T)

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/MT)

Diff Palm Oil Soybean Oil Source : Oil World

Average Difference

SBO vs CPO Prices (1980 – 2015, US$/MT)


PRICE ADVANTAGE OF PALM OIL

Price relationships among the various oils are also impacting purchasing decisions Premiums for rapeseed, sunflower

and cottonseed oils have increased in recent months reflecting tighter supplies As a consequence, price-sensitive

buyers are switching to palm oil as a more affordable and viable alternative oil Palm oil remains the most

competitively priced oil and is reflected though its discount to soybean oil and other major oils


MAJOR OILSEED PLANTED AREAS AND PRODUCTION

Oil Palm Is The Most Efficient, Effective And Highest Yielding Among All Vegetable

Oils Produced

Since 2004, land for palm oil cultivation grew by only 6.88 million hectares compared to soybean cultivation which increased by 24.67 million hectares while land for rapeseed oil cultivation increased by 10.72 million hectares

In terms of production, palm oil increased by 28 million MT compared to soybean oil which increased by 14.38 million MT while rapeseed oil increased by 8 million MT

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THE IMPORTANCE OF PALM OIL AS A

SUSTAINABLE SOURCE

Palm oil is the most produced and consumed edible oil in the global market

Palm oil is the most inherently sustainable of all oilseed crops in the world

Planted on only 0.3% of the world’s agricultural lands and yet producing 30% of global supply of edible oils, palm oil has assumed market leadership in the world’s edible oil market


Palm Oil and the Global Oils & Fats Requirement

• According to recent reports, global human population will grow to over 9 billion by 2050, and the Food and Agriculture Organization of the United Nations(FAO) estimates the world will have to produce about 60 to 70 percent more food in the next 35 years, while the Organisation for Economic Co-operation and Development (OECD) states that the world will need 20 percent more food by 2020.

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Oils & Fats Production Oils & Fats Consumption

http://www.oecd.org/














POPULATION GROWTH DRIVES PREFERENCE FOR PALM OIL AS FOOD,

AVOIDING MORE LAND CONVERSION TO OTHER OIL SEED CROPS

Year Population (billion)

2025 7.9

2040 8.5

2080 9.1

Projected Additional Palm oil to be supplied by Malaysia (m MT) 2.7 5.3 7.7

Estimated Additional land needed for palm oil cultivation in Malaysia (m ha)

0.7 1.4 2.1

Additional land needed to cultivate Rapeseed to offset this oil palm cultivation (m ha)

4.5 9.0 13.4

Additional land needed to cultivate Sunflower to offset oil palm cultivation (m ha)

5.7 11.3 17.0

Additional land needed to cultivate Soybean to offset oil palm cultivation (m ha)

7.2 14.4 21.6

• 7-11 times more land needed if other oil crops were to substitute Malaysian palm oil to meet future demand. • 21.6 m ha of land needed for soybean cultivation in 2080 is equivalent to 2/3 of land area of Malaysia.


THE IMPORTANCE OF PALM OIL

Alleviating Poverty through Wealth Creation Palm oil provides developing nations and the poor a path out of poverty.

Expanding efficient and sustainable palm oil Plantations provides people to improve their standard of living

Sustainable Development Sustainable development of palm oil plantations and growth of the palm oil

industry in Malaysia has been achieved through consultation and collaboration with industry, growers, government and the wider community

Climate and the Environment

Palm Oil is a highly efficient, high yielding source of food and fuel. While palm oil plantations are an efficient way of producing fossil fuel alternatives and capturing carbon from the atmosphere.


MSPO Malaysian Sustainable Palm Oil

Contains 4 Malaysian Standards (MS)

Produced following ISO Standards protocol involving stakeholder consultation

Adoption is voluntary

Alternative to other palm oil sustainability systems e.g. RSPO, ISCC

Launched in 2015

Setting up of MPOCC to implement MSPO


Palm oil is a primary source of food Palm oil is source of oils and fats for

food

Very small amount ( 1.4 %) used for biofuel

Oils & fats is important part of human diet

WHO recommends 30% of energy requirements (calories) of human beings to be obtained from oils & fats

Equivalent to 20-24 kg of oils & fats per capita per year


Palm Oil – The Ultimate Sustainable Oil Distribution of Agricultural Area Agric emission is

15% of global emission. Oil Palm emission is 0.0195% of global emission, but Oil palm is likely to be CO2 remover. Fossil fuel emission of 33 billion tonnes of CO2 accounts for 50% of annual global emission


PALM OIL AS THE LEADER IN AFFORDABILITY AND

SUSTAINABILITY

• The global oils and fats output in 2015 is forecast to increase by more than 3 million MT

• Palm oil alone is expected to contribute 1.8 million MT or 37.5% of this growth

• Palm oil is one of the most traded agriculture commodities in the world.

• The price of palm oil compared to other major oils over the years is proof that palm oil is indeed the leader in affordable oils and fats



FAO Definition

Food security exists when all people, at all times

Have physical and economic access to sufficient, safe and nutritious food

To meet their dietary needs and food preferences

Enabling them to lead active and healthy life styles

FOOD SECURITY



WORLD POPULATION (OVERALL)

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WORLD POPULATION ASIA AFRICA EUROPE LATIN AMERICA & CARIBEAN NORTH AMERICA OCEANIA

Source : United Nation, Population Division, Department of Economics and Social Affairs


Top 20 Most Populous Countries

Source : United Nations, Department of Economic and Social Affairs, Population Division


A Need To Feed Growing Population

Source : UNDP Report 2015, Oil World


Nearly all of the population growth will occur in developing countries. Sub-Saharan Africa's population is expected to grow the fastest (up 108 %; 910 million people), and East and South East Asia's the slowest (up 11 %; 228 million people).

Growth in World Population/Food Security

http://www.fao.org/infographics/pdf/FAO-infographic-SOFI-2012-en.pdf


World Map Showing The Developed And

Developing Countries


Rising food prices - Makes food beyond the reach of poor people

Poor supply and distribution network - Makes food scarce in some

locations

War and pestilence – Causes total disruption in supply chain

Climate change

Water shortage

Use of food for new non-food purposes

Severe outbreaks of pests & diseases

Growing affluence


NGOS / ENVIRONMENTAL PRESSURE

These groups are sometimes government

sponsored or funded by entities that are threatened

by the presence of better, more viable vegetable oils

and fats products.

They have become anti-growth agents to prevent

developing countries from expanding their

agricultural production via “no deforestation”

ideology.

The real culprits with devastating deforestation

records are the countries where these green NGOs

are coming from, UK(11%), France(29%) , US(33%)

and Australia(19%) compared to Malaysia (56%

forest).

• Non Tariff Barriers, Policies emerging, proposed or imposed either by developed nations or activist groups that issue misrepresented statements under the misguided concern for the protection of the environment.

• Impose export controls such as:

Bans Embargoes Quotas and taxes Enforce unfair certifications

which distort or mislead the consumers and disrupt the growth of vegetable oils, its production and supply potential


CONSEQUENCE OF BOYCOTT

World population growth, improved standards of living

and biofuel mandates mean that demand for vegetable oil

is bound to increase significantly. Any deliberate move

to reduce palm oil production thus inevitably implies a

shift in production towards lower yielding and more

expensive substitutes, resulting in:

Increases in land and resources requirements

Higher food prices and consumer items

Undermining sustainable palm oil sources

Delaying economic development in many countries


SUSTAINABLE AND AFFORDABLE

PALM OIL MEETS ALL CRITERIA

Palm oil is grown on the least amount of land

compared to other oilseeds

It is the highest yielding oilseed crop in the world

Palm oil plantations contributes to reducing GHG by

acting as a natural carbon sink

No other source of vegetable oil than palm oil can

actually spare more land and deliver more accessible,

abundant and affordable calories to people worldwide.

In a sense, palm oil is always discriminated against as

it is the only edible oil which certification is imposed.

Other oils do not have to meet this criteria


What to expect in 2016


Demand for oils & fats is set to rise and could exceed 205 million MT in 2016 Of all the oils, palm oil is poised to be the leader in meeting this

demand need as it is the most efficiently produced oil Palm oil will maintain as the leader in global oils and fats as it is

an attractive long term commodity for producers and consumers In 2016, the growth in production is set to continue but the gap in

production between palm oil and other oils is set to widen further Higher yield projections increasing stepwise from 4MT/ha to

almost 12MT/ha will make palm the oilseed crop of choice in many countries aspiring for greater food (oils) security

What to expect in 2016



Conclusions

Palm oil is without doubt the ultimate edible oil when it comes to affordability, sustainability and economic development Palm oil prices have consistently remained lower than the prices

of other major vegetable oils Palm oil is expected to continue if not grow in its role of meeting

global oils and fats demand Palm oil production respects and adopts the 3Ps principles of

sustainability – People, Planet and Profit.

is the best time to buy palm oil which is

currently trading at an attractive discount to

other edible oils


THANK YOU

Follow me on Twitter www.twitter.com/yusofbasiron Visit Our Website : www.mpoc.org.my

Documents

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