PALM OIL : Leveraging Its Availability to Meet Future Demand

Full text

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PALM OIL :

Leveraging Its Availability to Meet

Future Demand

by

Ramli Abdullah

Malaysian Palm Oil Board

For

POINTERS

Palm Oil Internet Seminar

23 February 2015

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st

March 2015

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Introduction

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Palm oil is the largest produced oil

3 0 10,000 20,000 30,000 40,000 50,000 60,000 Pal m Oi l Palm Kernel Oil Soy abean Oil C ott onseed Oil Gro und nut Oil Sunfl ow er Oil R apeseed Oil C orn Oil Coc onu t Oi l Ol iv e Oil C as tor Oil Ses am e Oil Lins eed Oil But ter T allow F is h Oil Lard ‘00 0 T on nes 2013 2014 In 2005, PO represented 24.1% of O&F prodn (34.0 Mn T) while SBO represented = 23.8% (33.6 Mn T) In 2014, PO share increased to 29.8% of O&F prodn (59.6 Mn T) while SBO declined to 22.5% (45.1 Mn T)

Source: Oil World

Within the 17 oils and fats complex, palm oil

dominates

world

production,

trade,

consumption and stock sectors

.

Oils and Fats Prodn (Mn T)

2005 2014 Growth (%) 141.1 200.2 4.0%

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4 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 0.41 0.51 0.75 3.84 Oil Yield (T/ha/ Year)

This is because of its highest productivity…

• PO - the most efficient oilseed crop in the world. • One hectare of oil palm

plantation is able to

produce up to ten times more oil than other leading oilseed crops.

• Productivity of other oilseeds < 1 T/ha/Yr

• The most efficient oil palm producers may achieve yields as high as 8 T of oil /ha/Yr

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5 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

Palm Oil Palm

Kernel Oil Soyabean Oil Sunflower Oil Rapeseed Oil Coconut Oil Tallow

‘000 T

Import 2013 Export 2013 Import 2014 Export 2014

The premier position

of PO is due to its

Versatility

Can be used

in many food

and non-food

applications

Techno-economic

advantages

Palm oil is also the largest traded oil

•PO import = 26.7 Mn T (52.4% of total O&F import) in 2005 & increased to 43.3 Mn T (56.8%) in 2014. •Export of PO = 26.5 Mn T (51.8%) & had also increased to 43.7 Mn T (56.9%)

•Import and export of SBO registered a slight increase in traded volume but a decrease in share

Source: Oil World

Oils & Fats (Mn T) Import 2005 (%) 2014 (%) CAGR PO 26.7(52.4) 43.3 (56.8) 5.5 SBO 9.5(18.7) 9.9 (13.0) 0.4 Total 51.0 76.3 4.6

Oils & Fats (Mn T) Export 2005 (%) 2014 (%) CAGR PO 26.5(51.8) 43.7 (56.9) 5.7 SBO 9.8(19.1) 9.8 (12.8) 0.02 Total 51.2 76.7 4.6

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Highest consump. of

PO is due to its

Cheaper price

Good nutritional

attributes

And palm oil is also the largest consumed oil

PO consumption

increased

in

volume and share

from 2005 to 2014

Also

recorded

higher growth rate

than SBO

Source: Oil World 0 10000 20000 30000 40000 50000 60000 Palm Oil Palm Kernel Oil Soy abean Oil C ot tons eed Oil Groundnut Oil Sunfl ow er Oil R apeseed Oil C orn Oil C oc onut Oil Oliv e Oil C as tor Oil Ses am e Oil Lins eed Oil But ter T allow F is h Oil Lard ‘000 T

Oils and Fats Disap (Mn T) 2005 (%) 2014 (%) Growth (%) O&F 139.3 199.9 4.1% PO 33.7 (24.2) 59.1 (29.6) 6.5 SBO 32.7 (23.5) 45.5 (22.8) 3.7

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Stocks of most O&F

increased

In

total,

O&F

increased at 5.5%

PO recorded higher

growth rate than

that of SBO stocks

This explains why

palm oil generally

becomes one of the

cheapest oils in the

market.

‘000 T

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0 2,000 4,000 6,000 8,000 10,000 12,000 Palm Oil Pal m Ker nel Oil Soy abe an Oi l C ot tons eed Oil Groundnut Oil Sunfl ow er Oil Rapes eed Oil C orn Oil C oc onut Oil Oliv e Oil C as tor Oil Sesam e Oil Lins eed Oil But ter T allow F is h Oil Lard 2013 2014

E. Stocks (Mn T):

2005 2014 CAGR

O & F 16.35 26.5 5.5% PO 5.29 10.61 8.1% SBO 3.4 4.0 1.9%

Palm oil recorded the highest level of stocks

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8 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 20.00 USD per T

CPO PKO SBO SFO RSO CNO Tallow

Very

competitive

prices

Volatile and

instable

Volatility

= 51%

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Short-term trend of prices

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Very

competitive

prices

Distinction

between lauric

oil prices and

other oils and

fats prices

Lauric oil prices tend to diverge away from the other oils and fats 0 200 400 600 800 1000 1200 1400 1600

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

2013 2014

USD / T

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Palm Oil

Availability

What is its future

supply and can it

assist in meeting

future demand of

oils and fats?

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2005 versus 2014 Supply and Demand

of Oils & Fats

11 (150,000) (100,000) (50, 000) 0 50, 000 100, 000 150,000 200,000 250,000 O.S, 26,670 Prodn, 200,246 Import, 76,268 Export, 76,728 Disap., 199,916 E.S, 26,540 O.S, -14785 Prodn, -141091 Import, -50961 Export, -51170 Disap., -139319 E.S, -16348 ‘000 Tonnes S upply a nd Dem a nd Fac to rs 2005 2014 From 2005 to 2014:

Availability of oils and fats

• Annual growth of prodn = 3.97%

Demand for oils and fats

• Annual growth of

disappearance of oils and fats = 4.09%

Therefore, demand increased at faster rate of growth than that of prodn

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Annual Growth of O&F Supply and

Demand:

2005 to 2014 (%)

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Prodn Disap. Export Import

Oils and Fats 3.97 4.09 4.6 4.6 PO 6.49 6.45 5.70 5.51 SBO 3.35 3.73 0.02 0.4 SFO 5.77 5.85 11.34 11.33 RSO 5.74 5.83 12.55 12.74

• O&F increased at 3.97% for prodn, 4.09% for disappearance, 4.6% for export and 4.6% for import annually during 2005 to 2014.

• PO recorded the highest growth rates in production (6.49%) and disappearance (6.45%) during the period. It also recorded highest volumes in these two years

• SFO and RSO recorded highest growth rates for export/imports. However, in term of volumes, PO was the one with the largest traded volumes against other O&F.

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Palm oil will continue to lead in the future prodn

of oils and fats because of its high productivity.

Due to this, PO is always readily available in the

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2015 to 2020 CPO Prodn by Malaysia and

Indonesia

The annual growth of CPO prodn by :

 Malaysia = 1.98% (20.09 Mn T in 2015 to 22.16 Mn T in 2020)

 Indonesia = 7.22% (33.39 Mn T in 2015 to 47.31 Mn T in 2020)

Total prodn by both countries is expected to increase by 5.37%

from 53.48 Mn T in 2015 to 69.47 Mn T in 2020

14 17.5 18 18.5 19 19.5 20 20.5 21 21.5 22 22.5 0 5 10 15 20 25 30 35 40 45 50 2013 2014 2015 2016 2017 2018 2019 2020 MALAYSIAN CPO PRODN (MN T) INDONESIAN CPO PRODN (MN T) YEAR

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Palm oil consumption is expected to increase in

term of volume and share from 2015 to 2020

15 26.00 27.00 28.00 29.00 30.00 31.00 32.00 33.00 34.00 0 50 100 150 200 250 2013 2014 2015 2016 2017 2018 2019 2020 P a lm Oi l Con s umpt ion S har e (% ) P O a nd O&F Con s umpt ion (Mn T) YEAR Palm oil consumption share O&F consumption Palm oil consumption

Future consumption of palm oil

against O&F

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Similar to its availability, PO will continue

to lead in the future consumption of oils

and fats because of the increase in

world

population,

its

nutritional

attributes, techno-economic advantages

and its versatility.

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Year Consumption (Mn T) Consumption (Kg) Per capita 1980 56.8 12.8 1990 80.5 15.3 2000 113.4 18.7 2010 171.7 24.9 2014 199.9 27.6 2020 228.3 28.1

 World popn will continue to increase, expecting to be abt 7.6 billion people in 2020

 At the same time, consumption of PO and O&F are also expected to move in the same direction

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18 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2010 2014 2050 China India US Indonesia Brazil

The ten countries with the largest population in the

world are China, India, United States, Indonesia,

Brazil, Pakistan, Bangladesh, Nigeria, Russia and

Japan.

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Comparing

Supply of Palm

Oil with

Demand of

Oils and Fats

in future

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Performance of PO Availability in

future

 PO prodn by Malaysia and Indonesia is expected to continue increasing, growing at the rate of 5.37% annually from 2015 to 2020.

 Consequently, share of Malaysian and Indonesian PO prodn from world PO prodn will be raised also from 83.69% to 93.75%

 Future availability of PO will also increase by providing 29.87% and 30.79% of world prodn of O&F in 2015 and 2020 respectively.

Prodn (Mn T) and Share (%) 2015 2020 Annual Growth (%)

(i) Malaysian & Indonesian PO Prodn 53.48 69.47 5.37

(ii) World PO Prodn 63.90 74.10 3.68

(iii) World O&F Prodn 213.9 240.7 3.16

(iv) Share of (i) from (iii) 25.00 28.86 -

(v) Share of (i) from (ii) 83.69 93.75 -

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Performance of O&F Demand in

future

PO consumption is expected to continue increasing at the rate of

4.78% annually from 2015 to 2020.

Consequently, share of world PO consumption from the world O&F

consumption will also increase from 206.39 to 228.34 MN T or at a

rate of 2.04%

Future consumption of O&F can be partly met by the supply of PO

since the share of PO consumption is expected to increase fro

28.79% to 32.86% in 2015 and 2020 respectively.

Cons (Mn T) and Share (%) 2015 2020 Annual Growth (%)

(i) World PO Cons 59.43 75.04 4.78

(ii) World O&F Cons 206.39 228.34 2.04

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Conclusion

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PO will continue its domination in future from

2015 to 2020 since it will to continue to uphold

its significant contributing factors such as

highest productivity, price competitiveness, and

techno-economic advantages over the others.

PO is the most dominant oil among all other

O&F. It has dominated in the past the global

O&F’s

prodn, consumption, and trading sectors.

PO will continue to be produced mainly by

Malaysia and Indonesia. Both countries are

expected to produce about 53.48 and 69.47 Mn

T in 2015 and 2020 respectively

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The increase in total consumption of O&F will

be partly due to the continuous intake of PO.

PO will continue to be the major oil to feed the

world

As world population is expected to increase,

hence, total consumption of O&F will probably

increase too. China, India, United States,

Indonesia, Brazil, Pakistan, Bangladesh,

Nigeria, Russia and Japan will be the top ten

countries with the largest population in the

world.

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