POINTERS: US Palm Oil Market and Opportunities

By: Mr. Benjamin J. Perez

2012 – Present Global Agri-Trade Corporation Rancho Dominguez, CA

Direct of Sales (2012- Present)

Overseeing food sales division.
Responsible for overall national sales plans, supervising regional sales managers.
Coordinate and engages with logistics and sourcing teams to execute product flow and inventory for USA
Assists regional quality assurance managers on product quality and product development.
Guiding thecompanies sustainability efforts across all market channels.

National Account Manager (2012- 2018)

Developed national sales strategy for the company’s commodity food oil division. Emphasis on palm and coconut oil and their derivatives.
Pioneered company educational seminar series working with foreign government agencies to promote industry knowledge on palm oil and sustainability.
Initiated and developed market and product initiative for two additional lines to company portfolio; dry fats and retail product lines.
Lead team working with global distribution client for oils and fats.
Pioneered brand with a national distribution partner drove company brand from 1 to 9 different sales markets.

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The USA Palm Oil Market has grown considerably since the early 2000’s. With the US roughly 5% of the world’s 7.9 billion people, and consumption at 20% of the world’s energies; it is easy to see why the USA remains an attractive marketplace. Palm oil had a relatively quiet entry into US but has since seen a rise with regulation being an initial primary driver on demand for palm oil products. With New York City banning the use of artificial trans fats in 2008 and California becoming the 1st state following suit in 2010; many consumer-packaged groups were leading the trend of elimination of trans fats in their formulations. Trans fats had been in a majority of packaged processed foods by way of partially hydrogenated fats and oils. The final death knell was the US Food and Drug Administration (FDA) announcement that partially hydrogenated fats were no longer Generally Recognized as Safe (GRAS). FDA implemented a 3-year window by 2018 to accomplish such a task. With GRAS status removed, and palm oil being economically enticing and bountiful it became the most ideal solution for most formulators. Palm oil can be found in most packaged foods; such as margarines, baked goods, cookies, cakes, muffins, cereals, confectioneries, creamers, spreads and nut butters, personal care products and fry and cooking oils.

US Oils and Fats consumption is around 24 million MT in 2019 with imports of palm oil taking up 6 percentage points of the total. Soybean leading the way at 43% of total consumption. Of the imported oils; palm oil comprising of the second largest of all imported oils at 1.5 Million MT.

Recent trends in the market are focused on sustainability amongst the rallying charges of NGO’s and consumer advocacy groups. Emerging trends in natural food and beverage have been drawn to palm oil’s natural benefits and stability. We see more and more entries for usage in analog and substitute meat products. Of course, all has impacted by the equalizer of covid-19. US being the center of the highest infection and death-rate has been felt throughout the country. Economies came to a crawl in industries as foodservice, hospitality, and travel. Global pandemic has had severe implications on trade imbalance and have created huge rise in commodity pricing indexes as well pressure on demand for global freight. As the increase in vaccinations distribution and less stringent lock-downs are lifted, a return to more prosperous market shall trend forward.

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Questions & Answers (4) :

WONG YQ

3 years ago

What's your opinion comparison of the product SBO and Green Sustainable product PO acceptable within American in USA ? Is it GMO will be more common in the market or the public still preferable on non-GMO SBO ?

Benjamin J Perez:
Hello Wong YQ thank you for your time and question. It comes down to availability vs preference. Soy being the dominant bean oil in USA is heavy with GMO crops and in turn it is more common in the market. The preference for NON-GMO like most things are upstream driven by consumers and it continues to rise along with sustainably sourced ingredient labeled products. Consumer push for many years has been for more transparency on how and where their food comes come from and if it is ethically produced. Palm oil has the natural advantage of not needing yet GMO because of the abundance of palm and it being a perennial crop. Ask anyone in the market this year about NON GMO canola or soy and you will most likely hear the stress in their voice regarding its availability which circles back to the preference. Sustainability tends to always be associated with palm oil. This is due to targeted attacks from NGO’s and other organizations whom are focused on raising change in the market. The effect is that in the USA market Palm oil is mostly associated with it either being a sustainable product, or needing to be sustainable. RSPO continues to address these attacks and for the most part does a very good in educating the public on its mission.
3 years ago

Peng Kong Law

3 years ago

It is interesting to note from your presentation that import of palm oil from South America is a mere 1.2%. My questions:- 1) Is it because South America produces quite a lot of palm oil but consumed within the countries of production.So has only small amount to sell outside? 2) Do you envisage that oil palm growing will escalate and possibly boom in South America by 2050 as the demand for palm oil in the world grows and South America is in a good position on sustainability and logistics advantage? 3) if not, why not? Thanks

Benjamin J Perez:
Dear Peng Kong Law, Thank you for your time and question. Yes South America does produce a fair amount of palm and is more widely consumed in country. Export was more favored previously towards EU due to EU Renewable Energy policies, but since the band and early phase out this will reduce the market for them. This will move the prospecting to other countries, USA being one of them. Palm oil will grow in South America with its current focus on improving technologies on yield and land cultivation.
3 years ago

Nur Sophia

3 years ago

On palm oil imports, it started to grow rapidly from 1990. What has changed in US edible oil sector that lead to such a high growth rate in US palm oil imports from 1990? The other question is that US RBD palm oil import is as large as RBD palm olein. The RBD palm olein which is mainly use for cooking and frying would have cover most of your country’s cooking and frying needs. The issue is that where is the usage of the large amount of RBD palm oil which US imported. Another question: Would you be able to assess the competitiveness of South American palm oil supply? They are small player now because the production is small currently. But in terms of price, delivery etc. etc. How do you Americans rate them compared to the big boys in South East Asia?

George Teh

3 years ago

What is your assessment of the prospect/risk of US joining hands with the EU to weaponize international palm oil trade to protect domestic edible oil indusry (e.g., 3-MCPDE level for refined vegetable oil) or to protect fossil fuel industry (e.g., Renewable Energy Directive II)?

Benjamin J Perez:
Dear George The, Thank you for your time and question. Frankly I am concerned. Trump Administration policy took a very protectionist view on trade after its willingness to walk away from the Trans-Pacific Partnership and it begs the question if the recent US Custom ban on two Malaysian Palm oil entities is only the beginning of further weaponizing tactics . Yes there is a new administration and the current proposed policies are in some ways polar opposite yet I believe it has emboldened some industries to take hardline approach to trade where in the past they might not have done as such. When it comes to fossil fuels, my personal assessment is that the USA will do whatever it can to maintain energy independence.
3 years ago