Canola: Competing in the
World Food Oil Market
Carl Hausmann
President and CEO
Bunge North America
A Brief History
• 1818: Founded in Amsterdam by
Johann Peter Bunge
• 1884: Bunge y Born established in
Argentina by grandson, Ernest Bunge.
• 1905: Bunge y Born expanded into
Brazil.
• 1923: Bunge North American Grain
Corporation founded in New York City to
trade raw agricultural commodities.
Recent History
• 1993: Professional management brought in to focus
on core businesses
• 1997: Acquisition of Ceval, expansion of fertilizer in
Brazil
• 2000: Bunge Global Markets
formed
• 2001: Initial Public Offering
• 2002: Acquisition of Cereol,
including Central Soya and
CanAmera Foods
A Growing Company
1997
2004
Volume (MM tons)
24
109
Net Sales (MM$)
$7,484
$25,168
$83
$469
Private
NYSE Listed
12
32
Origin processor
Integrated from farm
to end customers
Net Income (MM$)
Ownership
Global Scope
(countries)
Focus
Growth through Acquisition
•Acquisition
of Cereol
36
Bunge Oilseed Processing
Europe
•Acquisition
of La Plata Cereal
•New US
plant
•Acquisition
of Ceval
•Brazil capacity
expansion
20
17
14
Million tons
Argentina
15
Brazil
15
North
America
8
1997
1998
1999
2000
2001
2002
2003
Bunge Operating Companies
Decentralized and Integrated
•
•
•
•
Bunge Global Markets
Bunge Europe
Bunge Argentina
Bunge Brazil
– Bunge Alimentos
– Bunge Fertilizantes
• Bunge North America
…with superior geographic balance
and reach…
Future consumption
growth
No.1 in key
producing
regions
No.1 in
soybean meal
imports
No.1 in imports of
soybean products
500+ production & industrial facilities
25,000 employees
…capturing value though our
vertically integrated chain…
Bunge is growing
and changing
World Oil markets are
also growing and
changing…
World Oil Supply Growth
MMT
140
4%
120
100
ear
y
r
e
p
h
t
w
gro
133
109
89
80
60
40
20
0
1999/00
2004/05
2009/10
World Oil Supply Growth
CAGR
2000-2010
Palm
7.63%
S. American Soy
6.21%
All others
1.46%
Total Veg Oil
4.14%
World Soybean Oil Supply
40000
35000
30000
25000
World
w/o N. Amer.
N. Amer.
20000
15000
10000
5000
0
1999/00
2004/05
2009/10
World Rapeseed Oil Supply
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
World
Canada
1999/00
2004/05
2009/2010
Supply & Demand Trends
• Europe
• North America
EU 15 Oil Production
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Rapeseed
Sun
Soybean
Total
1999/00
2004/05
2009/10
EU 15 Oil Imports
7000
6500
6000
5500
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Rapeseed
Sun
Soybean
Palm
Total
1999/00
2004/05
2009/2010
EU 15 Oil Exports
2500
2300
2100
1900
1700
1500
1300
1100
900
700
500
300
100
-100
Rapeseed
Sun
Soybean
Palm
Total
1999/00
2004/05
2009/10
EU 15 Oil Consumption
16000
14000
12000
Biodiesel
Food
Feed & Tech
Total
10000
8000
6000
4000
2000
0
1999/00 2004/05 2009/10
EU 15 Supply & Demand
• Demand driven by biodiesel
• Demand less impacted by:
– Trans fat issue
– GMO
• Supply driven by:
– Palm Imports
– Rapeseed Production
Supply & Demand Trends
• Europe
• North America
Canadian Oil Production
2500
2000
CAGR
Canola
Soybean
Other*
Total
1500
1000
500
0
1999/00
2004/05
2009/10
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
2.87%
2.46%
U.S. Oil Production
12000
10000
CAGR
8000
Canola
Soybean
Other*
Total
6000
4000
2000
0
1999/00
2004/05
2009/10
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
5.97%
1.07%
(.07%)
0.95%
Mexican Oil Production
1600
1400
1200
Canola
Soybean
Other*
Total
1000
800
600
400
200
0
1999/00
2004/05
2009/10
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
CAGR
1.45%
North American Consumption
18000
16000
14000
CAGR
12000
10000
8000
6000
4000
2000
0
U.S.
Canada
Mexico
Total
1999/00
2004/05
2009/10
1.41%
1.95%
3.59%
2.13%
North American S & D
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1999/00
2004/05
Supply
Demand
2009/10
North
America
moves from
small surplus
position to an
oil deficit of
approximately
1.4 mmt.
North American S & D
18000
Supply
growing at
1.2% CAGR,
demand
growing at
2.13% CAGR.
16000
14000
12000
10000
8000
6000
4000
2000
0
1999/00
2004/05
Supply
Demand
2009/10
North American S & D
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1999/00
2004/05
Supply
Demand
2009/10
Oil deficit of 1.4
mmt expect to
be met by an
increase of palm
imports into
Mexico based
on price and
imports into the
U.S. based on
trans mitigation.
North American S & D
18000
No increase
in biodiesel
production
factored in to
supply deficit
projection.
16000
14000
12000
10000
8000
6000
4000
2000
0
1999/00
2004/05
Supply
Demand
2009/10
Supply & Demand Influencers
• Biodiesel
• Trans Fat Mitigation
Biodiesel
Technology
• 5% blends are approved by all European car
manufacturers
– Has a positive balance on air quality
– Functional use as lubricity enhancement
Adoption
• EU consumption expected to grow to 4 mmt/yr
– Usage represents less than 2% diesel substitution
• Brazil considering 5% mandate
• U.S. poised to adopt 5-8 billion gallon mandate (ethanol,
biodiesel, biomass)
Biodiesel
Supply
• 1 mmt of crude oil
1% as diesel consumption in U.S.
• World demand for veg oil pushing production
• Annual global edible oil production = 100 mmt
– Daily global petroleum consumption = 10 mmt
– 10 day energy supply?
Supply & Demand Influencers
• Biodiesel
• Trans Fat Mitigation
Trans Fat/Hydro Oils
Market
• North America vegetable oil consumption ~14 mmt
• Amount of oil hydrogenated ~3.5 mmt
Issues
•
•
•
•
Will there be a reduction in hydrogenated oil?
How big a reduction?
What oils will substitute for hydrogenated oil?
Will there be a reduction in veg oil consumption?
Supply of Trans Alternatives
• High oleic canola
– Estimated production – 1.7 million acres in 2005
(all providers)
• Low linolenic soybean
– 2007 production estimated at 1.3 billion pounds
(all providers)
Canola’s Role
• Trend favors canola
– Healthy Oil Attributes
– Oil Content
• Growth Opportunity
– Global Markets
– North American Demand
Summary
• North American oil markets are becoming a big
niche market
– South American soy and palm are becoming the
principal internationally traded oils to China, India,
Pakistan, Iran, etc.
• More canola and soy available in North America
for processing market sends pricing signal to add
crush
– What will be the competitive response?
Summary
• Biodiesel and Trans are outside forces that will
impact North American oil markets
– Do you know the outcome?
• Specialty oils through genetic modification is
current trend to address health issues
– What is the impact on commodity oils?
Our ability to understand
consumer trends will be key