pots: malaysia myanmar palm oil trade seminar...
TRANSCRIPT
POTS: Malaysia–Myanmar Palm Oil Trade Seminar 2013
Palm, the leader of vegetable oil complex
Pawan Kumar
Director
Food & Agribusiness Research and Advisory
Rabobank International
2
Table of contents
Sections
1 Rising vegetable oil demand-palm leading the way
2 A closer look on palm oil
3 Palm oil trade and consumption growth
4 Key drivers propelling the growth
5 Myanmar: Palm serving the vegetable oil demand
6 Conclusion
Rising vegetable oil demand-palm leading the way 1
4
World population has almost doubled from 1950 to 2012 and it is forecast to grow further
Growing population equals to more mouths to feed …
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1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
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Rest of World China India
World population, 1950 – 2050E World population grew at a CAGR of 1.7% between 1950 and 2012.
The world’s two most populous countries, China and India, grew at a CAGR of 1.5% and 2.0% respectively during the same period.
Source: UN Population Division, 2013
5
Growing population and urbanization have led to increase in consumption of vegetable oil
As a result, consumption for vegetable oil is also increasing over the years
Global consumption of key vegetable oils
CAGR = 5%
Total global consumption of vegetable oils has increased at a CAGR of 5.0% between 1992/93 and 2012/13.
As of 2012/13, palm oil is the most consumed vegetable oil, occupying 33% of total market share. It is expected to increase to 38% by 2019/20.
Palm oil has shown the most resilient growth of 7.7% per annum over the same period.
Source: USDA, 2013
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1992/1993 2002/2003 2012/2013 2019/20
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Olive Oil
Coconut Oil
Cottonseed Oil
Peanut Oil
Sunflower Oil
Rapeseed Oil
Soybean Oil
Palm Oil
6
So how exactly is vegetable oil being consumed?
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1992/93 2002/03 2012/13
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Feed Use
Industrial Use
Food Use
Breakdown of vegetable oil use, 2012/13
Food production and usage accounts for up to 76% of total vegetable oil consumed in 2012/13
Vegetable oils are predominantly used for food production and cooking, and food use has grown at a CAGR of 4.2% between 1992/93 and 2012/13.
Industrial registered the greatest growth, with a CAGR of 10% during the same period.
Source: USDA, 2013
CAGR = 4.2 %
CAGR = 10 %
7
Global vegetable production is matching consumption closely on a yearly basis
Can the world produce enough vegetable oil to satisfy demand?
World production of vegetable oils has grown at a CAGR of 5% between 1992/93 and 2012/13.
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120
140
160
180
1992/93 2002/03 2012/13
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Consumption Supply
Global vegetable oil demand and supply curves, 2012/13
Source: USDA, 2013
CAGR (Supply) = 5%
8
Supply of palm oil has grown at an average of 7.7% per annum over the past two decades
Palm oil leads the pack in global vegetable oil production …
Besides palm oil, production of soybean oil and rapeseed oil has grown at an annual rate of 4.7% and 5.5% respectively during the same period.
Global production of key vegetable oils (indexed), 2012/13
Source: USDA, 2013
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1
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3
4
5
1992/93 2002/03 2012/13
(In
dex:
19
92
/9
3 =
1)
Others
Sunflower Oil
Rapeseed Oil
Soybean Oil
Palm Oil
9
Palm oil’s production market share has increased significantly from 22% to 35% over the past two decades
… and palm oil has overtaken soybean oil to become the top producing vegetable oil
Total volume of palm oil produced grew from 13 million tonnes in 1992/93 to about 55 million tonnes in 2012/13.
Palm Oil 35%
Soybean Oil 27%
Rapeseed Oil
15%
Sunflower Oil 9%
Palm Kernel
Oil 4%
Cottonseed Oil 3%
Peanut Oil 3%
Coconut Oil 2% Olive Oil
2%
Palm Oil 22%
Soybean Oil 29%
Rapeseed Oil 14%
Sunflower Oil 12%
Palm Kernel Oil 3%
Cottonseed Oil 6%
Peanut Oil 6%
Coconut Oil 5%
Olive Oil 3%
Source: USDA, 2013
Production market share breakdown, 1992/93 Production market share breakdown, 2012/13
10
Palm oil accounts for 32% of food use in 2012/13
On demand side, palm oil is widely used in food …
Source: USDA, 2013
Market share breakdown, 1992/93 Market share breakdown, 2012/13
Palm Oil 18%
Soybean Oil 32%
Rapeseed Oil 15%
Sunflower Oil 14%
Peanut Oil 7%
Cottonseed Oil 6%
Olive Oil 3%
Coconut Oil 3%
Palm Kernel Oil 1%
Palm Oil 32%
Soybean Oil 29%
Rapeseed Oil 14%
Sunflower Oil 11%
Peanut Oil 4%
Cottonseed Oil 4%
Olive Oil 2%
Coconut Oil 2% Palm Kernel Oil
1%
Palm oil used in food has increased at a CAGR of 7.3% over the two decades.
11
Palm oil accounts for 38% of industrial use in 2012/13
… and industrial production as well
Market share breakdown, 1992/93 Market share breakdown, 2012/13
Source: USDA, 2013
Palm Oil 40%
Soybean Oil 10%
Rapeseed Oil 9%
Palm Kernel Oil
18%
Coconut Oil 16%
Sunflower Oil 4%
Cottonseed Oil 2%
Olive Oil 1%
PEanut Oil <1%
Palm Oil 38%
Soybean Oil 22%
Rapeseed Oil 20%
Palm Kernel 13%
Coconut Oil 5%
Sunflower Oil 2%
Cottonseed Oil 1%
Olive Oil <1% Peanut Oil
<1%
Palm oil market share has decreased, while soybean took over the lead position for industrial production.
A closer look on palm oil 2
13
First, let’s see where palm oil is produced …
Indonesia and Malaysia account for
87% of total palm oil produced
West Africa and Latin America
contribute only 10%
Source: USDA, 2013
14
Indonesia is the leading producer of palm oil with a market share of 52% in 2012/13
Indonesia has displayed strong performance with an annual growth rate of 11.5% between 1992/93 and 2012/13, while Malaysia lagged behind with 5%.
World palm oil production, 2012/13
Indonesia overtook Malaysia as the top palm oil producer from 2005/06 onwards
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60
1992/93 2002/03 2012/13
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Rest of World Malaysia Indonesia
CAGR (Malaysia) = 5%
Source: USDA, 2013
CAGR (Indonesia) = 11.5%
CAGR (Global) = 7.7%
15
Oil palm planted area in Indonesia and Malaysia has grown tremendously over the years
0%
5%
10%
15%
20%
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1975
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Planted area (LHS) YOY % change (RHS)
Total planted area in Indonesia increased by about 240,000 hectares per year between 1975 and 2012, while that in Malaysia grew by 120,000 hectares per annum during the same period.
Indonesia and Malaysia oil palm plantation, 1975 - 2012
Source: MPOB, Directorate General of Estate, Indonesia, 2013
Governmental push and increasing global palm oil consumption led to the growth of oil palm plantation
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Sumatra Kalimantan Papua Sulawesi Java P. Malaysia Sabah Sarawak
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Potentially suitable area
Plantation Area
But how much longer can this expansion last?
Additional land available for new oil palm plantation, 2012
Indonesia has about 15 million hectares of land available for new planting, while Malaysia only has about 0.5 million hectares left
Source: IPOC, MPOB, Directorate General of Estate, Indonesia, Rabobank estimate, 2012
17
Shortage for suitable plantation area in Asia has pushed planters to consider Africa and Latin America
Source: USDA, 2013
Gradual increase in production in Latin America, but slow to pick up in Africa over the past two decades.
Challenges in Africa include employee training, developing seed varieties and managing cultures.
Brazil has a suitable climate but high cost of labour and sustainability pressures will remain as the largest challenges
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1992/93 2002/03 2012/13
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Colombia
Ecuador
Honduras
Brazil
Costa Rica
Others
Latin America’s palm oil production
Africa’s palm oil production
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2.5
1992/93 2002/03 2012/13
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Nigeria
Ivory Coast
Cameroon
Congo (Kinshasa) Ghana
Others
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Sustainability issues are important; Expansion growth challenged due to labor, underdeveloped infrastructure & complex social issues
Source: USDA, 2013
VS
Production of palm oil to feed the world population
Unmanaged cultivation of oil palm leading to ecological and social problems
19
… however, improving yields can potentially boost global supply of palm oil
Palm oil yields in Indonesia and Malaysia, 2012
Indonesia’s oil yield has been increasing at a CAGR of 3.6% between 2007 and 2012, matching up to that of Malaysia’s
Source: MPOB, Directorate General of Estate, Indonesia, 2012
Best management practices and technical intervention play a crucial role in yield improvements
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Indonesia
Palm oil trade and consumption growth 3
21
Palm oil consumption continue to rise
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India
Indonesia
China
EU-27
Malaysia
Pakistan
Thailand
Others
Global consumption of palm oil, 2012/13
Global consumption increased by more than three-fold over the past 20 years, with India and China fueling the demand
Global consumption of palm oil increased by a CAGR of 7.8% between 1992/93 and 2012/13.
India and China, the top two consumers of palm oil, have increased their demand by a CAGR of 31.6% and 11.6% respectively during the same period.
Source: USDA, 2013
10-year CAGR = 8.6%
10-year CAGR = 7.0%
22
Palm oil has a wide range of applications drives the consumption growth
Food use remains as a key application of palm oil while industrial use has grown at a CAGR of 10% over the past two decades
Palm oil used in food grew at a CAGR of 7.3% during the past two decades. About 72% of palm oil consumption is used in food production in 2012/13. Demand for palm oil is increasing as it appeals to manufacturers who seek cheaper and healthier alternative fats.
Food uses Industrial uses
Soap & Shampoo
Detergents Energy Generation
Cooking Oil Savory Snacks
Margarines Ice Cream
23
Palm oil accounts for 63% of total vegetable oil traded in 2012/13, a huge jump from a decade ago
Exports have grown tremendously over the years…
Vegetable oil trade breakdown, 2002/03 Vegetable oil trade breakdown, 2012/13
Source: USDA, 2013
Export of rapeseed oil has grown the fastest at a CAGR of 15.3% between 2002/03 and 2012/13, but it only occupies 6% of total market share.
Palm oil shows resilient growth, with a CAGR of 7.6% during the same period, making it the top vegetable oil being exported.
Palm Oil 55% Soybean Oil
24%
Sunflower Oil 6%
Rapeseed Oil 3%
Palm Kernel Oil 4%
Coconut Oil 5%
Olive Oil 1%
Peanut Oil <1% Cottonseed Oil
<1%
Palm Oil 63%
Soybean Oil 13%
Sunflower Oil 9%
Rapeseed Oil 6%
Palm Kernel Oil 4%
Coconut Oil 3%
Olive Oil 1%
Peanut Oil <1% Cottonseed Oil
<1%
24
..with more than 70% of total production being traded…
Source: USDA, 2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Palm Oil Soybean Oil
Rapeseed Oil Others
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70
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Palm Oil Soybean Oil
Sunflower oil Rapeseed oil
Others
Vegetable oil trade breakdown, 20012/13 Share of production traded, 2012/13
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Palm oil’s export value grew at a CAGR of 18% over the past decade, the highest among other agri commodities
…and trade value among top agricultural commodities
Source: USDA, 2013
Trade value of key commodities , 2012/13
0%
4%
8%
12%
16%
20%
0
10
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30
40
50
60
Soybean Wheat Palm Oil Sugar Corn Coffee Cotton
US
D (
bil
lio
ns)
2002/03 2012/13 10-year CAGR
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Consumption landscape has also changed over the years …
India has overtaken Indonesia as the top palm oil consuming country, while China grows to become the third largest consumer
India <1%
Indonesia 15%
China 6%
EU-27 12%
Malaysia 11%
Pakistan 8%
Thailand 2%
Others 47%
India 16%
Indonesia 15%
China 12%
EU-27 10%
Malaysia 6%
Pakistan 4%
Thailand 3%
Others 35%
Source: USDA, 2013
Consumption share breakdown, 1992/93 Consumption share breakdown, 2012/13
27 Source: USDA, 2013
…India and China have witnessed tremendous growth in palm oil consumption over the years…
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Food Use
Industrial Use
India’s palm oil consumption
China’s palm oil consumption
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1992/93 2002/03 2012/13
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Food Use
Industrial Use
Palm oil consumption in both India and China are mainly for food use. Palm oil used in food has grown at a CAGR of 31.3% and 9.2% for India and China respectively, between 1992/93 and 2012/13. China saw a gradual increase in palm oil consumption for industrial purposes in the late 1990s and early 2000s.
10-year CAGR = 12.3% 10-year CAGR = 9.8%
10-year CAGR = 60%
10-year CAGR = 6.3%
10-year CAGR = 7.8%
28 Source: USDA, 2013
…Likewise, MENA and Sub-Saharan Africa have also shown strong growth…
Middle East & North Africa (MENA)’s palm oil consumption
Sub-Saharan Africa’s palm oil consumption
Palm oil is heavily used for food in both MENA and Sub-Saharan Africa. Oil consumption for food in MENA and Sub-Saharan Africa has grown at a CAGR of 5.4% and 5.0% respectively.
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Food Use
Industrial Use
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Millio
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Food Use
Industrial Use
10-year CAGR = 4.3%
10-year CAGR = 5.2%
29 Source: USDA, 2013
North America’s consumption increased sharply after 2000s, while EU has grown gradually
North America’s palm oil consumption
EU’s palm oil consumption
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1992/93 2002/03 2012/13
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Food Use
Industrial Use
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Food Use
Industrial Use
10-year CAGR = 22%
10-year CAGR = 7.8%
10-year CAGR = 17.9%
10-year CAGR = 3.0%
Key drivers propelling the growth 4
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Palm Oil (M'sia) Soybean Oil (CBOT) Rapeseed Oil (Rotterdam)
Palm oil is the cheapest among all vegetable oils…
Indonesia and Malaysia oil palm plantation, 1975 - 2012
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Soybean Sesame Sunflower Peanut Rapeseed Coconut Oil Palm
To
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Estimated yield of various oilseed crops
Source: Rabobank estimate, 2012
…due to biological yield advantage
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Demand continues to rise from emerging economies
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2011/12 2012/13 2013/14(f)
Selected countries’ palm oil imports, 2012/13
Source: USDA, Bloomberg, 2013
More than 50% of the imports are in developing Asian economies
Palm oil imports CAGR (last 5 years)
Source: USDA, 2013
0%
2%
4%
6%
8%
10%
12%
14%
16%
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Food services (number of outlets) Top two players in food services industry Global food services grew at a CAGR of 3.5% between 2007 and 2012, and is expected to grow at 2.8% in the next 5 years. This growth is highly driven by Asian consumers. China’s food services grew at a CAGR of 7.1% during 2007-12, making it the largest player. It is forecast to grow at 4.8% during 2013-17, leading the global increase.
Source: Euromonitor, 2013 Source: Euromonitor, 2013
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World Asia Pacific
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China India
Besides home consumption, food services is a major driver of palm oil consumption
Emerging markets in Asia drive palm oil consumption with increasing food services outlets
35
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World Asia Pacific
World noodles consumption Consumption in China and India Global noodle consumption grew at a CAGR of 3.4% between 2007 and 2012, and is expected to grow at 3.6% in the next 5 years. This growth is highly driven by Asian consumers. China’s noodle consumptions grew at a CAGR of 4.1% during 2007-12, making it the largest consuming nation. It is forecast to grow at 3.6% during 2013-17, leading the global increase. India’s consumption increase at a CAGR of 16.5% during 2007-12, and expects to grow further at a CAGR of 16% during 2013-17.
Source: Euromonitor, 2013 Source: Euromonitor, 2013
Noodle consumption also fuels demand for palm oil …
Likewise, Asia is the largest consumer of noodles among the world
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China India
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World snack & savories consumption Consumption in China and India Global snacks consumption grew at a CAGR of 2.9% between 2007 and 2012, and is expected to grow at 3.7% in the next 5 years. This growth is driven by EU. Nonetheless, Asia forms a major driving force. China’s snacks consumptions grew at a CAGR of 6.5% during 2007-12, making it the largest consuming nation. It is forecast to increase further at a CAGR of 9.0% during 2013-17. India’s consumption grew at a CAGR of 22% during 2007-12, and forecast to grow at 14% during 2013-17.
Source: Euromonitor, 2013 Source: Euromonitor, 2013
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World Asia Pacific
Booming demand for snacks and savories in China and India
… and snacks & savories among other institutional food usage
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China India
Myanmar: Palm serving the vegetable oil demand 5
38
Outlook is positive as GDP growth is forecast to grow above 6% in the next 5 years to come
Population and economic growth are key drivers for edible oil consumption …
Myanmar’s population (millions) Myanmar’s GDP growth rate (%) Myanmar’s population has grown at a CAGR of 2% between 2000 and 2012, and is expected continue increasing at 2% till 2017.
GDP growth rate jumped significantly from 3.6% in 2008 to 6.3% in 2012.
Source: IMF, 2013
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)
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)
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)
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)
2017(f
)
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CAGR = 2%
CAGR = 2%
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… however the GDP growth has outpaced edible oil consumption
Myanmar’s GDP > edible oil consumption
Growth in GDP and vegetable oil consumption (indexed)
Source: IMF, 2013
0
0.5
1
1.5
2
2008 2009 2010 2011 2012 2013(f) 2014(f)
GDP growth rate Vegetable oil consumption
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0
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1992/93 2002/03 2012/13
Th
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Cottonseed Oil
Sunflower Oil
Peanut Oil
Palm Oil
Myanmar’s consumption of key vegetable oils, 2012/13
CAGR = 7.1%
Total consumption of vegetable oils in Myanmar increased at a CAGR of 7.1% between 1992/93 and 2012/13.
Likewise, palm oil has also grown at a CAGR of 7.1% during the same period.
… pushing domestic vegetable oil consumption to higher levels …
Source: USDA, 2013
Palm oil is the most consumed vegetable oil in Myanmar, occupying 52% of total market share
41
Palm oil is gaining market share over the years
Consumption share, 2002/03 Consumption share, 2012/13
Palm Oil 46%
Peanut Oil 32%
Sunflower Oil
15%
Cottonseed Oil 6%
Palm Oil 51%
Peanut Oil 26%
Sunflower Oil 20%
Cottonseed Oil 3%
Palm oil has increased its market share from 46% in 2002/03 to 51% in 2012/13
Source: USDA, 2013
42
However, palm oil consumption relies solely on imports …
Key vegetable oil produced in Myanmar are cottonseed oil, sunflower oil and peanut oil
Myanmar’s key vegetable oil production, 2012/13
Source: USDA, 2013
0
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400
500
600
1992/93 2002/03 2012/13
Th
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Cottonseed Oil
Sunflower Oil
Peanut Oil
Total production of vegetable oil grew by a CAGR of 7.3% over the past two decades.
Peanut oil and sunflower oil form the bulk of the production.
Production of vegetable oil is mainly consumed domestically.
43
… due to lack of commercial production the import of palm oil is set to continue increasing going forward
Myanmar is likely to import more palm oil as economic conditions improve
Myanmar’s palm oil imports, 2012/13
Source: USDA, 2013
Import of palm oil has increased at a CAGR of 3.7% between 1992/93 and 2002/03, and it surged to a CAGR of 10.6% in the past decade.
0
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1992/93 2002/03 2012/13
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10-year CAGR = 3.7%
10-year CAGR = 10.6%
What is the domestic production potential??
Conclusion 6
45
Demand for vegetable oil will continue to rise at 2-3% for the
next 5-10 years 1
Conclusion
2 Palm oil will continue to have increasing share of global
vegetable oil consumption; 38% of total market share by 2020
3 Palm oil production expansion faces challenges ahead; land &
labour availability and yield improvements
4 Asia continues its lead position as top destination of palm oil
imports; driven by India and China
5 Positive economic outlook in Myanmar will continue to increase
palm oil demand in the next 5 years
46
Thank You
Rabobank International Singapore Branch & Rep
77 Robinson Road, #08-00
Singapore 068896
Telephone: (65) 6536 3363
Rabobank International
Pawan Kumar
Director
Food & Agribusiness Research &
Advisory
Telephone +65 6230 6722
E-mail [email protected]
“The financial link in the global food chain”™