Production trade of palm oil

The global oil market is dominated by four crops: soybean , palm oil,sunflower seed and rapesees. In 2005, global oil production reached 139 million tons, an increase of 9 million tons from the previous year. The global oil demand in the late 1970s was about 51 million tons, which has nearly doubled. In oils and fats, vegetable oil accounts for 82% of the total oil, and the rest consists of butter,land,tallow and fish oil. Although the total oil production has been increasing in recent years, the production of animal fats has remained basically unchanged. The increase in oil production is mainly due to vegetable oils. Among all vegetable oils, palm oil has seen the most significant growth in the past decade.

Palm oil production has experienced rapid growth in recent years, and the increase in production is due to the increase in cultivated land area and the increase in production. Before 1989, the global palm oil production was less than 10 million tons, and before 1997, the output only increased slightly, from 10 million tons to 20 million tons. Since 1998, global palm oil production has grown dramatically with the rapid increase in palm oil production in Southeast Asia. By 2006, global palm oil production had exceeded 35 million tons, equivalent to seven times the output of the 1950s. The expansion of industrial use of edible palm oil and palm oil has driven the rapid increase in palm oil production. The low price of other oil products and the rapid development of the world and parts of the economy have set a peak in palm oil consumption, which has promoted The palm plantation industry in Southeast Asia is booming. In 2015/2016, the total output of palm oil was 65.5 million tons; it accounted for 35% of the total global oil production, ranking first; followed by soybean oil, with a total output of 53.82 million tons; accounting for 29%; Seed oil; total production is 26.5 million tons; accounting for 14% of global oil production.

About 20 countries in the world are producing palm oil. The main producing countries are Malaysia,Indonesia and Nigeria . The total output of these three countries accounts for 88% of the world’s total palm oil production.

Southeast Asian countries are tropical rainforest or tropical monsoon climates , with high temperatures throughout the year, but rich in rain, suitable for large-scale planting of oil palm, Malaysia and Indonesia are the world’s two major palm oil producers. Over the past decade or so, palm oil production in Malaysia and Indonesia has continued to grow steadily, with palm oil produced in these two Southeast Asian countries accounting for more than 86% of the world’s total palm oil production.

1. Malaysian palm oil production

Malaysia is the world’s largest palm oil producer with palm oil production close to 45% of world production. The planting area of ​​palm trees in Malaysia accounts for about one-third of the country’s cultivated land, reaching 2.5 million hectares. In 1985, Malaysia’s palm oil production was basically around 5 million tons. In 2005, Malaysia’s palm oil production reached a record 15.2 million tons, and production increased threefold in 20 years. The harvest area has increased significantly. In 2006, Malaysian palm oil production was also maintained at around 15 million tons.

2. Indonesian palm oil production

In 2005,Indonesia’s palm oil production accounted for 41% of global palm oil production .As Malaysia’s agricultural land for palm trees grows less and less,the growth in palm oil production has shifted to Indonesia. In the past decade or so, Indonesian palm oil production has also increased by nearly three times. In 1997, Malaysian palm oil production was 3.6 million tons higher than Indonesia’s production, but the gap is gradually narrowing. By 2006, Indonesia’s palm oil production has surpassed that of Malaysia. Due to the climate impact, palm oil yields in Malaysia have declined, while Indonesian palm trees have entered a prosperous period, yields have increased, and plantations have been further expanded. Overall, Indonesian palm oil production has more growth potential.

In the world of oil trade, palm oil usually leads soybean oil and is a leader in the export market. In the 1960s, palm oil was not prominent in the world oil trade. The main trade oils at that time were soybean oil and animal fats. By 1993, the situation had changed a lot. The proportion of palm oil trade in global oil trade increased from 10% in 1970 to 20% in 1977, and reached 30% in 1985. In 1997, the world’s total palm oil production was 17.41 million tons, while exports reached 11.346 million tons. As of 2006, palm oil trade accounted for more than 50% of the world’s total oil trade.

Malaysia is the world’s leading producer and exporter of palm oil, with 90% of its palm oil production being exported. Only a small amount of palm oil exported from Malaysia is unrefined crude palm oil. Before 1985, Malaysia almost controlled the entire palm oil export market. In 1986, Malaysia’s production of crude palm oil was 4.54 million tons, accounting for 60% of the world’s palm oil production in the same year. Exported palm oil accounted for 68% of the world’s palm oil exports. In 1996, Malaysia’s palm oil production was 8.86 million tons, accounting for 53% of the world’s total production, and the export volume was 7.325 million tons, accounting for 64% of the world’s total exports. With the increasing share of Indonesian palm oil exports in recent years, Malaysian palm oil exports have fallen to around half of the world. In 2005, global palm oil exports reached 26.3 million tons, of which Malaysian palm oil exports reached 13.45 million tons, accounting for 49%, and Indonesian palm oil exports were 10.3 million tons, accounting for 39%.

The 88% share of the world’s palm oil export market is firmly controlled by the two major producing countries. In addition, Nigeria, Ivory Coast, Papua New Guinea, Singapore, Colombia and other countries and regions also produce and export a certain amount of palm oil.

In recent years, the proportion of animal oil consumption in global oils and fats has fallen sharply, from 24% in the late 1980s to 17%. Driven by world population growth and per capita consumption growth, vegetable oils are consumed every year. 4% speed increase. The proportion of regional oil consumption is tilted towards developed countries. Seventy-five percent of the world’s population is concentrated in Asia and Africa, but Europe and the Americas, which account for a small proportion of the world’s population, consume 40% of the total amount of oil. With economic development, the growth potential of oil and fat in developing countries is higher than that of developed countries.

In 2001, global palm oil consumption was 24 million tons. Since 1995, palm oil consumption has increased dramatically. By 2005, global palm oil consumption reached more than 33 million tons, and 5-year consumption growth reached 38%. . In general, palm oil consumption is mainly concentrated in Asian countries, and the EU has also increased palm oil imports to offset the shortage of rapeseed oil supply due to increased demand in the biofuel industry. The major consumers of palm oil are India, the EU-25, China, Indonesia, Malaysia and Pakistan, which account for 60% of total consumption. As a major consumer, China accounts for 14% of global palm oil consumption and India accounts for 11%. In recent years, China’s palm oil consumption has increased most obviously. In 2001, China’s domestic palm oil consumption just exceeded 2 million tons. By 2005, consumption more than doubled to 4.36 million tons.

In the past 20 years, the international palm oil price fluctuated relatively, which is similar to the price trend of vegetable oil such as soybean oil. The lowest price of Malaysian crude palm oil futures appeared in 1986, when global oilseed production, especially the US soybean harvest, led to the suppression of all vegetable oil prices, including soybean oil, and the staged lows of palm oil prices. With several bad climates around the world, including El Nino and La Nina , which have affected the production of global vegetable oil, palm oil has seen several large-scale rises, including in 1988 and 1994, prices have basically risen. It is rising from 800RM (RM)/ton to 1400-1600RM/ton. In 1999, due to the continuous disaster weather, oilseed production was reduced, vegetable oil supply was tight, and demand had an unprecedented growth. The expansion of production was difficult to follow the growth of demand, resulting in palm oil prices reaching a historic high of 2,600 RM / ton. At the end of April 2007, the Malaysian Bursa Malaysia palm oil price was around 2,200 RM/ton.

There are many trading companies in the spot market of China’s palm oil, and the circulation is developed. Guangzhou, Zhangjiagang and Tianjin are the main importers of palm oil and thus radiate to the surrounding areas. Palm oil has both edible and chemical uses, and there are many consumer companies.

China’s palm oil mainly relies on imports. North China (outside Tianjin and Shandong), East China (Zhangjiagang, Taixing, Ningbo and other surrounding areas of Shanghai), South China (Huangpu, Shenzhen and Xiamen and other areas around Guangzhou) are the main import and processing of palm oil in China. In the sales area, palm oil imports accounted for 92% of the country’s total imports, of which 24% in North China, 34% in East China, and 34% in South China. From the point of view of import ports, Tianjin Port, Zhangjiagang and Huangpu Port accounted for 67% of the country’s total imports. In addition, Qingdao, Shenzhen and Xiamen also imported a large amount of palm oil, accounting for about 5% of the country’s total imports. .

There are thousands of palm oil processing (refining, fractionation, reconciliation) companies in China, and the main palm oil processing enterprises such as Yihai Grain and Oil Industry Co., Ltd. and Tianjin Longwei Grain and Oil Industry Co., Ltd. are basically distributed in the surrounding areas of major import ports. In 2006, the import and export data of the customs, there were more than 50 large-scale oil and fat enterprises that imported palm oil in the same year, and the import volume accounted for about 60% of the total import volume. The oil companies that directly imported usually refine and fractionate most of the palm oil. Then enter the trade field, a small part enters the circulation field through the middlemen.

There are nearly 10,000 palm oil trading companies in China, among which large trading companies import directly from abroad, and then enter the country and then distribute through a large number of small and medium-sized distributors. In 2006, there were more than 80 trading companies that started importing palm oil, and imports accounted for about 34% of total imports. These trading companies generally do not have a dedicated storage warehouse, usually renting storage tanks from oil companies or storage companies.

The surrounding areas of Tianjin, Shanghai and Guangzhou are not only the main import and trade distribution centers for palm oil in China, but also large palm oil processing enterprises are mainly concentrated in these areas, with sufficient palm oil processing and storage capacity.

1. Around Tianjin. The import, processing and inventory capacity of palm oil in Tianjin is very good. The major oil companies have a processing capacity of about 4,500 tons/day and nearly 400,000 tons of tank capacity. The sales area of ​​palm oil in the region is Beijing, Tianjin, Hebei, northern Henan, eastern Shandong, most of Shanxi, Inner Mongolia, Northeast, Gansu and Shaanxi. In order to obtain lower logistics costs, palm oil processing enterprises are basically built near the port. Large ships are convenient to park. The transportation is mainly through railways and highways. The conditions are convenient and it is an important distribution center for domestic palm oil.

2. The surrounding area of ​​Shanghai. The major oil companies in the surrounding areas of Shanghai have a refining capacity of about 2,500 tons/day and a capacity of nearly 600,000 tons. The processing capacity of the processing enterprises is about 200,000 tons, and the storage capacity of the warehouse is about 400,000 tons. The sales area of ​​palm oil in the region is Shanghai, Zhejiang, Anhui, Hubei, Hunan, Jiangxi, Chongqing, Sichuan, Henan and parts of Shaanxi. Palm oil processing enterprises in the region have chosen the Lingang industrial development model, mainly in Zhangjiagang, Taixing, Ningbo and other regions. Most of the ports can dock 30,000 to 50,000 tons of freighters. The sales to Henan and Shaanxi mainly through the railway, the sales to other provinces mainly rely on the Yangtze River waterway, through the way of water transport, with a good palm oil distribution function.

3. The surrounding area of ​​Guangzhou. The palm oil production capacity and tank capacity in the surrounding areas of Guangzhou are also sufficient. The major oil companies have a refining capacity of about 3,000 tons/day and a tank capacity of more than 400,000 tons. These tank contents are basically distributed in processing enterprises. The sales area of ​​palm oil in the region is Guangdong, Fujian, Jiangxi, Hunan, Guangxi, Sichuan, Yunnan and Guizhou. Palm oil processing enterprises are mainly concentrated in Guangzhou-Dongguan-Shenzhen along the Pearl River estuary, and most of the ports can dock 30,000-50,000 tons of freighters. Among them, palm oil sales in Guangdong and Fujian provinces are mainly water transport, and have certain radiation power in southern Hunan and eastern Guangxi. The sales to the rest of the region are mainly railway and road transportation, and the palm oil distribution function is strong.

Palm oil can be used for both food consumption and industrial consumption. Statistics from traders show that the consumption of palm oil in China is mainly food consumption, of which 24 degree refined palm oil is the main variety, occupying a market share of 60. %the above.

1. The consumption structure of vegetable oil in China

If the market share of each oil product is measured, with 2001 as the watershed, the consumption structure of the vegetable oil before and after it has changed significantly. Before 2001, the share of various vegetable oils in total consumption was not significant. In 2001, the market share was from rape to oil, soybean oil, peanut oil, palm oil, cottonseed oil and small variety oil. After 2001, the share of soybean oil and palm oil consumption increased significantly, while the share of rapeseed oil, peanut oil and cottonseed oil decreased. By 2013/2014, the market share was from large to small, followed by: soybean oil, rapeseed oil, Palm oil, peanut oil, other oils, cottonseed oil. The consumption of palm oil has continued to increase. In 2006/2007, the consumption of palm oil has reached 4 million tons. In 2013/2014, the consumption of palm oil has reached 4.7 million tons.

2. Industrial consumption of palm oil

Since China does not implement quota management for palm oil above 44 degrees, this has greatly promoted the import of palm oil above 44 degrees in China in recent years, and the industrial consumption of palm oil has also increased rapidly. In 2002, palm oil industry consumption was 350,000 tons, and in 2004 it was 1.2 million tons. In 2002-2004, industrial consumption increased by an average of 420,000 tons. The industrial consumption of palm oil in China is expected to be 1.4 million tons in 2005, an increase of 200,000 tons from 2004.

3. Palm oil consumer companies

From the perspective of consumer companies, there are currently thousands of palm oil consumer enterprises in China. If they count small enterprises, the number is more than 5,000, mainly distributed in the fields of catering, food processing and chemical industry. Representative enterprises have instant noodle production enterprises. Such as Uniform Food Group, Dingxin Group, etc., chemical companies such as Guangzhou Procter & Gamble Co., Ltd., Nais Yiyang Co., Ltd., etc. Most consumer companies usually do not import directly, mainly by middlemen. There were about 30 directly imported consumer companies in 2006, and imports accounted for about 2% of total imports. According to incomplete statistics, on the whole, the proportion of imported palm oil used for commercial circulation is about 80%, and the proportion directly entering terminal consumption, processing trade, and goods in bonded warehouses is about 20%.

4. Seasonal consumption of palm oil in China

Because palm oil has a relatively high melting point, its consumption has a certain seasonality, and the consumption in summer is relatively large and the winter is small. The seasonality of consumption is directly reflected in the seasonality of imports. From the situation in 2004-2006, the import volume in January and February is relatively small, about 160-290,000 tons, and imports from June to September are large. August 2004, June 2005 and August 2006 were the months with the largest imports in the year, reaching 410,000 tons, 500,000 tons and 670 tons respectively.