Vegetable oils market in the Americas region is likely to gain momentum from a rise in the demand for healthy edible oil. Growing processed food industry in the region coupled with growth of the food service industry is further expected to aid the market growth of vegetable oils including palm oil. Palm oil import by the region in 2019 was led by the United States (US) at 1.6 million MT. Other than the US, five most potential markets for Malaysian palm oil within the Americas region are as follows:
|Country||Oils & Fats Import in 2019 (MT)||Total Palm Oil Import in 2019 (MT)||M’sian Palm Oil Import in 2019 (MT)|
Sources: Oil World, MPOB
1) Mexico is a net importer of oils and fats. Domestic productions of soybean and rapeseed oils are insufficient to meet domestic consumption of oils and fats. Mexico has a relatively strong food processing industry, growing at a rate of almost four percent, and with a market value of almost $135 billion, which supports the demand growth of oils and fats including palm oil.
Mexico imports large quantity of palm oil. In 2019, Mexico’s import of palm oil constituted 41% of the total oils and fats imports. Guatemala and Costa Rica were the two major suppliers of palm oil to Mexico, mainly due to its proximity to the country. Total export of palm oil to Mexico from Guatemala and Costa Rica were recorded at 305,000 MT in 2019, an increase of 13% compared to the export volume recorded during the same time in 2018.
Mexico ranked as the second largest Malaysian palm oil export destination in the Americas region in 2019, after the United States. Other than palm oil, Mexico also imported palmitic, lauric and stearic acids from Malaysia which represented about 5.7% of Mexico’s total palm oil import in 2019.
The proximity of Guatemala and Costa Rica to Mexico, cross-cultural awareness and strong bilateral relationships between the countries, clearly provides these two palm oil suppliers with the logistics and freight costs advantages.
Mexican consumers are price sensitive. The current low prices of Malaysian palm oil could provide the advantage in expanding palm oil export potential to Mexico. It is important for Malaysian palm oil exporters to find an experienced and professional importer or distributor as local partner. Distributors or importers will help with issues related to regulations, procedures, labeling, and customs clearance.
2) Colombia’s palm oil production in 2019 is at 1.7 million MT where 45% of the produced palm oil is mainly exported to EU, Brazil and Mexico. Despite being a palm oil producer, Colombia still has to import oils and fats mainly palm oil from Ecuador and soybean oil from Bolivia and US. Malaysian palm oil export to the country ranked the third highest within the Americas region in 2019 comprising mainly of RBD palm oil (83%) followed by PFAD (17%).
Colombia is a net importer of many food ingredients and trade opportunities are abound (USDA). The country’s growing consumption for palm oil comes from domestic demand for higher quality confectionary products. Restaurant and food service sectors are also expected to expand as a consequence of growing incomes, resulting in a stronger incentive to dine out of home and higher demand for food services, leading to higher palm oil intake.
3) Brazil is a leading oilseed producer in the world. Edible oil and meal are the major products obtained from the crushing of oilseeds. The residue extracted from oilseeds is used as an animal feed, whereas, the extract is used in various food products for human consumption.
In 2019 Brazil produced about 470,000 MT of palm oil which constitute roughly 4% of the total oils and fats production in 2019. The production of palm oil is growing marginally over the past three years. Brazil was Malaysia’s sixth largest export destination in the Americas region in 2019. Palm oil export to Brazil mainly consists of RBD palm oil and RBD palm olein.
According to the report published by Grandview Research, Brazil palm oil market size was estimated at USD 738.2 million in 2018 and is projected to register a CAGR of 13.6 % from 2019 to 2025. Significant rise in consumption owing to its cheaper prices coupled with rising awareness regarding its health benefits are anticipated to drive the market growth. CPO is witnessing a high demand in the industry owing to its rising use as an edible oil in food applications. PKO emerged as the second largest segment on account of its rising use in cosmetics, confectionery fats, and detergents.
In Brazil, palm oil is considered as an economical alternative to other edible oils such as the ones sourced from soybean and sunflower and has high acceptance among food processors, thus is expected to boost the segment growth.
Brazil huge food industry is a boost to edible oil demand potential including palm oil. USDA reported that the food processing industry in 2019 was valued at R$699 billion (US$177 billion), an increase of roughly 7% compared to the previous year. The sector is comprised of over 36,100 companies in which the vast majority are small and medium sized industries.
4) Canada is the producer of canola oil which is being exported mainly to US and China. About 77% of the domestically produced canola oil is being exported leaving only 23% for local consumption. To fill the gap, Canada has to rely on import where palm oil is the most imported oil in 2019.
Overall, Canada is the fifth largest importer of Malaysian palm oil within the Americas region, after US, Mexico, Colombia and Haiti. Other than palm oil, Canada also imported Malaysian palm products including palm-based oleo (48,037 MT), finished products (5,759 MT), palm kernel oil (515 MT) and other products (97 MT). In Canada, oils and fats are subjected to labelling requirements under Food and Drugs Act (FDA) and Food and Drug Regulations (FDR) (Govt of Canada). Prepackaged foods sold in Canada must also follow specific requirements of the Safe Food for Canadian Act (SFCA) and the Safe Food for Canadians Regulations (SFCR). For any palm oil and palm kernel oil that is used as part of ingredients in cooking oil, vegetable oil or shortening, the oil must be specifically named in the ingredient list. A Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) was signed between Malaysia, Canada and 9 other countries but is yet to enter into force (MITI). CPTPP member countries include Japan, Canada, Mexico, Singapore, New Zealand, Brunei, Chile, Malaysia and Peru. Exporters and investors of both countries will be able to enjoy direct market access and preferential tariff rates with its implementation.
5) Palm oil is the most imported oil in Haiti in 2019. Malaysian palm oil imported by Haiti in 2019 is at 11,271 MT, increasing by 14.1% as compared to 2018, where 70% of it consists of RBD palm olein followed by crude oil at 24%.
Palm oil and soybean oil are the most popular edible oils in the Haitian market where price influences consumer preferences. Palm oil is the most cost effective oil in the market, used mainly for deep frying.
More than 50% of Haitian edible oil market is dominated by HUHSA, a long-established firm with an extensive distribution of networks. The company can effectively reach central points throughout the provinces and distribute outside of Port-au-Prince, the main port in Haiti. This large player is capable of purchasing tankers of oil at optimal price to be redistributed to provincial cities where rural distributors can purchase directly from them, giving them a major advantage over competitors price.
- Govt of Canada. https://www.inspection.gc.ca/food-label-requirements/labelling/industry/fats-and-oils/eng/1392751693435/1392751782638?chap=0
- MITI. https://fta.miti.gov.my/index.php/pages/view/71
- Malaysian Palm Oil Board (MPOB) Jan-Dec Exports to the Americas
- USDA GAIN report 31 March 2020. Food Processing Ingredients in Colombia.
- USDA GAIN report March 2020 Brazil-Food Processing
- United States Department of Agriculture report, April 2020
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