Oil, Palm

2013/2014

2014/2015

2015/2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

European Union

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Planted

0

0

0

0

0

0

Area Harvested

0

0

0

0

0

0

Trees

0

0

0

0

0

0

Beginning Stocks

380

380

374

260

0

250

Production

0

0

0

0

0

0

MY Imports

6,940

6,792

7,000

6,800

0

6,800

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

7,320

7,172

7,374

7,060

0

7,050

MY Exports

155

162

155

160

0

160

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom. Cons.

3,016

2,900

3,055

2,750

0

2,700

Food Use Dom. Cons.

3,500

3,550

3,500

3,600

0

3,650

Feed Waste Dom. Cons.

275

300

285

300

0

300

Total Dom. Cons.

6,791

6,750

6,840

6,650

0

6,650

Ending Stocks

374

260

379

250

0

240

Total Distribution

7,320

7,172

7,374

7,060

0

7,050

1000 HA, 1000 TREES, 1000 MT

In 2014, imports of crude palm oil by the main buyers, the Netherlands and Germany fell by about 20 percent, in total about 1 MMT. While imports of refined palm oil by Italy and Spain increased. The surplus of refined palm oil imported by Italy and Spain was destined for the food processing industry and mainly sourced from Indonesia. Combined EU imports of palm oil stagnated in 2014. Also in 2015 and 2016, EU imports are forecast to remain at the same level as the increasing demand by the food sector will be outbalanced by the falling demand by the biodiesel sector.

During 2014, palm oil gained attractiveness as the price difference with the other vegetable oils increased. Because the supply of sunflower oil, rapeseed oil and olive oil is forecast to decrease, the price gap with palm oil is expected to sustain. This competiveness compared to the other popular food oils is forecast to further support the use by the food processing industry in 2015 and 2016. Further market penetration is, however, hindered by criticism for its rumored negative impact on human health.

EU palm oil use for industrial purposes, including for generation of power and heat, and production of biofuels, is estimated at about 2.9 MMT in 2014. For 2014, the use of palm oil for biofuel production is estimated at 1.6 MMT, an increase of 0.45 MMT compared to 2013. The use for biofuel production is expected to decline to about 1.4 MMT in 2015 and 2016. The HVO (hydrotreated vegetable oils) plant in Rotterdam has reached its full capacity, and is gradually replacing palm oil with waste fats and oils. The company's goal is to use only waste oils and fats as feedstock as from 2017. Also in Germany, the use of palm oil for biofuels is expected to be cut significantly. In 2015, the German biodiesel mandates were switched from being based on energy content to greenhouse gas (GHG) savings. Based on the GHG savings, this new scheme is anticipated to lower the use of palm oil for biodiesel production. Another factor for the lower industrial use is the low fossil fuel prices which is curtailing the use of palm oil for power and heat generation.

If palm oil is used for the production of biofuels it must be certified as sustainable as laid down on the Renewable Energy Directive (RED). The European Commission approved the RSPO program as compliant with the RED as from December 14, 2012, for a period of five years. Sustainability certification is also an important factor for further penetration in the food market. In the EU, the sectors in the Netherlands, the United Kingdom and Belgium set the goal of using only palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO) by the end of 2015. In August 2014, the production of RSPO certified palm oil reached 11.2 MMT, which is about nineteen percent of the annual global production.

Breakout of EU-28 Industrial Uses for Palm Oil in 1000 MT

MY 2013/14

MY 2014/15

MY 2015/16

Biofuels Use

1,600

1,450

1,400

Other Industrial Uses

1,300

1,300

1,300

Total Industrial Use

2,900

2,750

2,700