The Americas region is one of the major consumers as well as producers of oils and fats in the world. The major oils consume in this region are soybean, canola as and palm oil. United States, Canada, Mexico and Brazil are the top four consumers of oils and fats in this region.
In 2019, food applications accounted for the highest market share of approximately 70% in the North America vegetable oils market. Higher adoption of vegetable oil in food preparation, due to their high functionality, is propelling their usage across the food applications segment. In terms of volumes, palm oil is the largest oil imported into the region, accounting for approximately 30% of total imports of oils and fats.
For many years, Indonesia and Malaysia have been the main palm oil suppliers to the Americas Region. Despite the availability of palm oil from the South and Central America, these two countries remained the preferred suppliers of palm oil, mainly due to the price competitiveness of the exports and the provision of product quality and sustainability.
The COVID-19 pandemic, spreading throughout North and Latin America since March 2020, has disrupted the oils and fats supply chains and along with it palm oil imports into the region.
According to the statistics published by the Malaysian Palm Oil Board (MPOB), from Jan-June 2020, total Malaysian palm oil exports to the Americas region were recorded at 330,976 MT. This volume represents a decline of 63,005 MT or 16% compared to the total volume of 393,981 MT recorded during the same period of 2019.
Malaysian Palm Oil Exports to The Americas, Jan-June 2020 (MT)
|No.||Country||Jan–June 2020||Jan-June 2019||Diff (MT)|
Source: MPOB Statistics and MPOC Internal Market Analysis
For decades, the United States has dominated the regional market for oils and fats, accounting for approximately 80% of volumetric share in the North America vegetable oils market in 2019. This is due to its high consumption and exports of oils and fats. The country is also one of the world’s largest producers of soybean oil. According to the Oil World, last year the U.S. produced 10.94 Mn T of soybean oil. Despite a large domestic production, the U.S. is a net importer of oils and fats. In 2019, U.S. total oils and fats imports amounted to 5.24 Mn T. Palm oil imports constitute 30.1 percent of the total imports.
U.S. Palm Oil Imports (1000 MT)
The U.S. is also the largest importer of palm oil in the Americas region. Based on the statistics published by the U.S. Census Bureau analyzed by World City, during the first six months of 2020 palm oil imports by the U.S. increased 14.24 percent from $462.84 million to $528.75 million compared to the same period in 2019. The top three exporters of palm oil to the U.S. were Indonesia, Malaysia and Colombia. Palm oil imports from Malaysia constitute 35 percent of the total palm oil imports during the first six months in 2020. Palm oil imports from Indonesia constitute 61 percent of the total imports. Competitive palm oil prices during the review period and the functional applications of palm oil in the food sectors are two of the key factors in sustaining palm oil demand and consumption in the U.S.
The U.S. has also established itself as the most important market destination for Malaysian palm oil in the Americas region. Malaysia’s palm oil export to the United States during the first half of 2020 amounted to 294,297 MT which represents 88.9 percent of the total palm oil exports to the Americas region. The top three products imported by the U.S. are RBD palm olein, RBD palm stearin and RBD palm oil, which constitute about 87 percent of the total imports.
Malaysian Palm Oil Exports to the United States (By Product)
|Product||Jan-June 2020||Jan-June 2019||Diff (MT)||Diff (%)|
Source: MPOB Statistics and MPOC Market analysis
Since it was first detected, the COVID-19 pandemic has spread and created massive chaos across the U.S., disrupting daily lives, supply chains, and weakening the economy. The country now has the highest number of confirmed cases in the world with thousands of new infections reported daily. The directive and preventive measures put in place by the Federal and the various state governments which include travel restrictions, social distancing and stay-at-home orders have affected the food industry and the HORECA industry, among other sectors of the economy due to lower consumer demand, which in turns affected the demand for oils and fats, including palm oil.
Palm oil exports from Malaysia to the U.S. already showed a decrease of 15.3 percent or 53,140 MT during the review period of Jan-June 2020 compared to the same period of Jan-June last year, which amounted to 347,437 MT.
It is a daunting task to make an accurate assessment on the demand trend for palm oil in the U.S. during this constantly changing and precarious pandemic landscape in the U.S. Palm oil demand potential is also closely tied to the price movement and the availability of supplies of other competing commodities.
States and local governments in the U.S. are working hard in achieving the flattening of the pandemic curve. The aggressive preventive measures put in place by various states is slowly showing positive results, giving hope to the road of slow recovery. Hopefully with this new development, the oils and fats market, including palm oil, will also see the recovery of demand and consumption in the U.S.
The Washington Post reported in March that the U.S. Senate approved a $2 trillion stimulus package specially formulated to jump-start the economy reeling from the coronavirus pandemic. The package injected a huge financial aid into the ailing economy and support those affected by the closures and disruption of daily activity by COVID-19 which has also disrupted the oils and fats demand and supply in the U.S.
Palm oil prices have also fallen during the ongoing global coronavirus uncertainty period. This scenario may also stimulate palm oil market demand in the U.S. With the support of competitive palm oil prices coupled with strong demand from the food sector post-COVID19, the demand for palm oil in the U.S. in the last quarter of 2020 is expected to improve.
Looking forward, with the eradication of the COVID pandemic, the demand for soybean oil, canola oil, and palm oil from bakery, foodservice, and other food processing sector is expected to support the demand growth of vegetable oils in the U.S.
Sources: U.S. Census Bureau, World City, Oil World, Index Mundi, Washington Post, MPOB Statistics, MPOC Market Analysis
*Disclaimer: This document has been prepared based on information from sources believed to be reliable but we do not make any representations as to its accuracy. This document is for information only and opinion expressed may be subject to change without notice and we will not accept any responsibility and shall not be held responsible for any loss or damage arising from or in respect of any use or misuse or reliance on the contents. We reserve our right to delete or edit any information on this site at any time at our absolute discretion without giving any prior notice.