A Multi Client Analysis and Outlook. Global Vegetable Oil & Biodiesel Feedstocks: New Challenges Ahead. September 2009

Transcription

1 A Multi Client Analysis and Outlook Global Vegetable Oil & Biodiesel Feedstocks: New Challenges Ahead September 2009

2 Table of Contents 1. EXECUTIVE SUMMARY Potential for Palm Oil Production Growth Transition from Trans Fat Oils in Food Corn Oil Recovery in Dry Mill Ethanol Facilities Growing Use of Animal Fats for Biodiesel Alternative Feedstocks and Technologies for Biodiesel Vegetable Oil and Animal Fat Price Situation and Outlook Price Forecasts for Vegetable Oils Price Forecasts for Animal Fats Challenges Ahead for the US Biodiesel Industry Global Biodiesel Vegetable Oil Demand Outlook Ten-Year Global Supply and Demand Outlook for Vegetable Protein and Oils INTRODUCTION IMPACT OF GLOBAL RECESSION AND THE OBAMA ADMINISTRATION Economic Outlook Implications of the Economic Outlook on Vegetable Oil Consumption The Obama Administration and Its Impact on Biofuels and Investment POTENTIAL FOR PALM OIL PRODUCTION EXPANSION Global Palm Oil Production and Trade Potential for Palm Oil Production Growth in Malaysia and Indonesia Production Overview Potential for Area Expansion Potential for Yield Improvement Potential for Palm Oil Production Growth Potential to Expand Palm Oil Production in Other Parts of the World Impact of Environmental Standards Palm oil for Biodiesel Roundtable on Sustainable Palm Oil...46 i

3 5. ALTERNATIVE FEEDSTOCKS AND TECHNOLOGIES FOR BIODIESEL Camelina Product Lifecycle Case Studies: Profiles of Companies Developing Camelina Strengths and Limitations of Camelina Potential Impact on Conventional Vegetable Oils and Regional Perspectives Jatropha Product Lifecycle Case Studies: Profiles of Companies Developing Jatropha Strengths and Limitations of Jatropha Potential Impact on Conventional Vegetable Oils and Regional Perspectives Algae Product Lifecycle Case Studies: Profiles of Companies Developing Algae Strengths and Limitations of Algae Potential Impact on Conventional Vegetable Oils and Regional Perspectives Implications and Conclusions GROWING USE OF ANIMAL FATS FOR BIODIESEL: MARKET PERSPECTIVE Animal Fats Production Outlook Future Use of Animal Fats for Biodiesel Animal Fat Availability for Biodiesel Production Implications TRANS FAT IN FOOD AND CORN OIL RECOVERY IN DRY MILL ETHANOL FACILITIES Trans Fat in Food Corn Oil Recovery Corn Fractionation Corn Oil Extraction Corn Oil Recovery Outlook CHALLENGES AHEAD FOR THE US BIODIESEL INDUSTRY US Biodiesel Industry Trends...84 ii

4 Supply and Demand Feedstock Trends: More Use of Animal Fats and Other Oils New Challenges and Opportunities New Policy Changes Meeting the One-Billion-Gallon Mandate Feedstock Availability Biodiesel Distribution Industry Overcapacity and the Case for Industry Consolidation and Restructuring Long Term Forecast VEGETABLE OIL AND ANIMAL FAT PRICES AND RISK MANAGEMENT Price Forecast for Biodiesel Feedstocks Price Forecasts for Vegetable Oils Price Forecasts for Animal Fats and Yellow Grease Managing Risk Managing Inputs Managing Outputs GLOBAL BIODIESEL OUTLOOK Ten Year Global Biodiesel Vegetable Oil Demand Outlook EU Biodiesel Sector Biofuel Renewable Policy Environment Structure and Trends Biodiesel Demand Outlook Brazilian Biodiesel Market Policy Biodiesel and Vegetable Oil Demand Argentina Biodiesel Market Policy Biodiesel and Vegetable Oil Demand Indonesia Biodiesel Market Policy Malaysia Biodiesel Market Policy iii

5 10.7 Other Countries with Biofuels Mandates Canada China Colombia India New Zealand Paraguay Philippine Taiwan Thailand Uruguay South Korea TEN-YEAR GLOBAL SUPPLY AND DEMAND OUTLOOK FOR VEGETABLE PROTEIN AND OILS World Vegetable Oil Fundamentals World Meal Use and Trade World Oilseed Production World Vegetable Oil Production and Use Outlook Findings APPENDIX The 2007 Renewable Fuel Standard: Implications for Biodiesel iv

6 List of Exhibits Exhibit 1: Potential for Palm Oil Production Growth in Malaysia and Indonesia...2 Exhibit 2: US Demand of Animal Fats and Grease (2008)...5 Exhibit 3: Average Oil Yields under Normal Conditions...6 Exhibit 4: Petroleum and Soybean Oil Price Outlook...9 Exhibit 5: Outlook for US Vegetable Oil Premiums to Soybean Oil...10 Exhibit 5:: US Vegetable Oil Price Outlook...11 Exhibit 5: US Soybean Oil and Animal Fat Price Outlook...12 Exhibit 7: Biodiesel Capacity and Utilization...13 Exhibit 8: Biodiesel Margin Index vs. Industry Capacity (2009) *...16 Exhibit 9: Baseline 10-Year Biodiesel Production Outlook by Feedstock...17 Exhibit 10: Biodiesel Demand Outlook All Feedstocks; tmt, calendar year...19 Exhibit 11: Ten-Year World Vegetable Oil and Biofuel Use...21 Exhibit 12: Overview of US Post World War II Recessions...24 Exhibit 13: USDA, World Agricultural Outlook Board, Global Real GDP Growth Assumptions by Region...26 Exhibit 14: US Per Capita Edible Oil Usage (Excluding biodiesel usage)...27 Exhibit 15: Per Capita Edible Oil Consumption in Select Countries (Excluding biodiesel usage)...28 Exhibit 16: Sources of Dietary Food Consumption...28 Exhibit 17: GHG Emissions Reduction...30 Exhibit 18: Global Palm Oil Production and Net Trade...32 Exhibit 19: Historical Palm Oil Expansion...33 Exhibit 20: Contribution to Oil Palm Area Expansion...34 Exhibit 21: Malaysian Palm Oil Supply and Demand...35 Exhibit 22: Malaysian Palm Oil Supply and Demand...35 Exhibit 23: Oil Palm Production in Malaysia and Indonesia...36 Exhibit 24: Oil Palm Plantation Ownership...37 Exhibit 25: Top 10 Listed Palm Oil Plantations...37 Exhibit 26: Areas Under Industrial Crops...39 Exhibit 27: Palm Oil Yields in Indonesia and Malaysia...40 Exhibit 28: 2008 Palm Oil Yields and Potential for Improvement...41 Exhibit 29: Potential for Palm Oil Production Growth in Malaysia and Indonesia...43 Exhibit 30: Palm Oil Production Outside Malaysia and Indonesia...44 Exhibit 31: Palm Oil Yields Outside Malaysia and Indonesia...44 v

7 Exhibit 32: Scale of Jatropha Projects...51 Exhibit 33: Average Oil Yields under Normal Conditions...63 Exhibit 34: US Production of Fats and Oils (2008/09)...65 Exhibit 35: Production Outlook of Animal Fats and Grease...66 Exhibit 36: Fats and Oils Usage for Biodiesel Production...67 Exhibit 37: Feedstock Used for Biodiesel Production (2008)...68 Exhibit 38: US Demand of Animal Fats and Grease (2008)...71 Exhibit 39: US Canola & Palm Oil Non-biodiesel Domestic Use...75 Exhibit 40: US Vegetable Oil Consumption by Hydrogenation...76 Exhibit 41: US Soybean Oil Consumption...76 Exhibit 42: Crude Corn Oil Production (Jan-Dec 2008)...78 Exhibit 43: Crude Corn Oil Recovery Assuming Fractionation Processes Become an Industry Standard...81 Exhibit 44: Corn Oil Recovery Outlook Potential...82 Exhibit 45: US Biodiesel Industry Structure...83 Exhibit 46: US Biodiesel Production and Margins...84 Exhibit 47: Biodiesel Capacity and Utilization...85 Exhibit 48: US Biodiesel Net Exports...86 Exhibit 49: US Biodiesel Exports by Country...86 Exhibit 50: Fats & Oils Used in Methyl Ester (Biodiesel) Production...88 Exhibit 51: Animal Fats Used in Methyl Ester (Biodiesel)...89 Exhibit 52: Animal Fats Price Discount Relative to Soy Oil...89 Exhibit 53: GHG and Volume Equivalent under RFS Exhibit 54: GHG Emissions Displacements...92 Exhibit 55: California LCFS Schedule...96 Exhibit 56: State Driven Biodiesel Demand Exhibit 57: Distribution of Biodiesel Stations and Diesel Demand Exhibit 58: Biodiesel Margin Index vs. Industry Capacity (2009) Exhibit 59: Biodiesel Margin Index vs. Facility Capacity (2009) Exhibit 60: Distribution of Biodiesel Plants by Margin Index Rank (2009) Exhibit 61: Biodiesel Plants Margin Index by State (2009) Exhibit 62: Baseline 10-Year Biodiesel Production Outlook by Feedstock Exhibit 63: Petroleum and Soybean Oil Price Outlook Exhibit 64: Outlook for US Vegetable Oil Premiums to Soybean Oil vi

8 Exhibit 65: US Vegetable Oil Price Outlook Exhibit 66: Animal Fats Used in Biodiesel Production Exhibit 67: US Soybean Oil and Animal Fat Price Outlook Exhibit 68: Regression of Biodiesel on Soybean Oil Futures Exhibit 69: Correlation Matrix between Fat, Oil and Energy Prices Exhibit 70: Correlation between Soybean Oil and Crude Petroleum Oil Exhibit 71: Correlation Matrix between Energy Prices (May 2007 July 2009) Exhibit 72: Biofuel Drivers and Motives Exhibit 73: World Biodiesel Production Trend Exhibit 74: World Vegetable Oil Use for Biodiesel vs. Food Exhibit 75: US and EU-27 Biodiesel Capacity Utilization Exhibit 76: World Vegetable Oil Use Biodiesel Margins Exhibit 77: Biodiesel Mandate Schedule Exhibit 78: Biodiesel Demand Outlook All Feedstocks; tmt, calendar year Exhibit 79: Biodiesel Demand Outlook Vegetable Oil Only Demand; tmt, calendar year (crude oil basis) Exhibit 80: World Vegetable Oil Use for Biodiesel vs. Food ( ) Exhibit 81: EU Biodiesel Capacity Distribution Exhibit 82: Typical and Default GHG Savings Biodiesel w/o Land Use Change Exhibit 83: EU Biodiesel Supply and Demand Exhibit 84: EU Consumption and Imports Exhibit 85: 2009 Estimated Production and Capacity by Country Exhibit 86: German Biodiesel Margins Exhibit 87: Feedstocks Used for Biodiesel Exhibit 88: EU Year Biodiesel Demand Outlook Exhibit 89: Brazilian Biodiesel Supply Demand Balance Exhibit 90: Federal and State Tax Incentives for Biodiesel (Real/Liter) Exhibit 91: Brazil Biodiesel Demand Outlook Exhibit 92: Biodiesel Supply Demand Balance Exhibit 93: Argentina Biodiesel Demand Outlook Exhibit 94: Biodiesel Supply Demand Balance Exhibit 95: Biodiesel Demand Outlook Exhibit 96: Biodiesel Demand Outlook Other Countries Exhibit 97: Biodiesel Supply and Demand Balance Other Countries vii

9 Exhibit 98: World Vegetable oil production Exhibit 99: World Protein Meal Use Exhibit 100: Growth of World Protein Meal Use Exhibit 101: World Protein Meal Use by Type Exhibit 102: World Protein Trade, Net Exports Exhibit 103: World Protein Meal Production Exhibit 104: World Meal Domestic Use by Region Exhibit 105: World Oilseed Production by Type Exhibit 106: Soybean Area Growth Exhibit 107: Major Producer Soybean Yields Exhibit 108: Oilseed Production Exhibit 109: World Vegetable Oil Use Exhibit 110: Per Capita Vegetable Oil Consumption in Traditional Uses Exhibit 111: Major Oils Trade, Net Exports Exhibit 112: World Vegetable Oil Production Exhibit 113: Major Oil Domestic Use Exhibit 114: 2007 RFS Under the 2007 Energy Bill viii