Palm Oil Market Outlook within the Americas Region

The Americas region is one of the major consumers as well as producers of oils and fats in the world.  Major oils consume in this region are mainly soybean oil, canola oil and palm oil. Palm oil is the largest imported oil into the region, accounting for approximately 30% of total oils and fats import. For many years, Indonesia and Malaysia have been the main palm oil suppliers into the Americas region.

According to the statistics published by MPOB, for January-November 2020, total Malaysian palm oil import by the Americas region is recorded at 561,560 MT, declining by 6.2%. RBD palm olein was the main product imported by this region followed by RBD palm oil and RBD palm stearin. The decline is largely attributed to lower Malaysian palm oil import by the biggest buyer in the region, the United States (US), which accounts for 88% of Malaysian palm oil import by the whole region.

For decades, the US has dominated the Americas regional oils and fats market, followed by Canada, Colombia and Brazil. The US total palm oil import accounted for approximately 80% of volumetric share in the region due to its high consumption and exports of oils and fats. Malaysian palm oil import by the US in Jan-Nov 2020 amounted to 494,306 MT, decreasing by 3.1% compared to the same period in 2019.

Opportunities for palm oil exist in US food manufacturing sectors. Demographic growth and changing lifestyles offer a wide range of opportunities for food processing industry to enter the US market. Restaurants have been an integral part of American daily life prior to the coronavirus outbreak (COVID-19). According to USDA, food accounted for 12.9% of American household expenditures in 2018. With food and beverage sales hitting an all-time high of approximately 800 billion USD in 2017, the US is the leading contributor to the global restaurant market.

While visits to full-service restaurants in the US decreased by almost 50% during the pandemic, quick-service restaurants were not as badly affected. Small eateries and leading full-service restaurant franchises such as Applebee’s have increased their internet footprint in view of this situation and have launched delivery systems to keep afloat.

The food delivery and takeaway industry is currently booming, a development that will likely continue for years to come and reshape US restaurant operations. Demand for vegetable oil from packed food and other food processing industries is expected to proliferate vegetable oils development in the coming years. Growing usage of palm oil in oleochemical segment is expected to further support the growth.

In Latin America, the country with the largest palm oil consumption from the region is Colombia followed by Brazil and Mexico. Palm oil is an integral component of the biodiesel industry in Colombia, which is mandated by law to account for 10% of the total automotive fuel sold in the country. Domestic demand for food-processing ingredients and higher-quality confectionery products are rising in the country. As a result of rising incomes, higher involvement of women in the labour force and more demands on a household’s time, the restaurant and food service sector is projected to grow, resulting in higher oils and fats consumption.

Palm oil demand in Brazil is expected to be supported by increasing intake from food and beverage, personal care and cosmetics and detergent. Due to an increasing older population with higher disposable income demanding cuisines from food service restaurants, more food service outlets are entering Brazil. In addition, the busy lifestyle of the country’s workers is giving rise to takeaways and on-the-go food service, along with developments in home delivery, leading to innovations in the food service market’s distribution channels. Brazilian customers are increasingly looking for value for money products that are natural when choosing their beauty and personal care products.

Going forward, the demand for palm oil in the Americas region is expected to grow further supported by higher demand from food industry, oleochemicals development and biodiesel industry.

Prepared by: Nur Adibah Mohd Razali

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