Canola: Competing in theWorld Food Oil Market
Carl HausmannPresident 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 andCanAmera Foods
A Growing Company
1997 2004
Volume (MM tons) 24 109
Net Sales (MM$) $7,484 $25,168
Net Income (MM$) $83 $469
Ownership Private NYSE Listed
Global Scope(countries)
12 32
Focus Origin processor Integrated from farm to end customers
Growth through Acquisition
Bunge Oilseed Processing
Mil
lion
to
ns
1997 1998 1999 2000 2001
8
1415
20
•Acquisition of Ceval
•Acquisition of La Plata Cereal
•New US plant
2002
15BrazilBrazil
ArgentinaArgentina
2003
36
•Brazil capacity expansion
•Acquisition of Cereol
17
North America
Europe
Bunge Operating Companies
• Bunge Global Markets• Bunge Europe• Bunge Argentina• Bunge Brazil
– Bunge Alimentos– Bunge Fertilizantes
• Bunge North America
Decentralized and Integrated
…with superior geographic balance and reach…
Future consumption growthNo.1 in key
producing regions
No.1 in imports of soybean products
No.1 in soybean meal
imports
Future consumption growthNo.1 in key
producing regions
No.1 in imports of soybean products
No.1 in soybean meal
imports
500+ production & industrial facilities25,000 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
0
20
40
60
80
100
120
140
1999/00 2004/05 2009/10
4% growth per yearMMT
89
109
133
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
0
5000
10000
15000
20000
25000
30000
35000
40000
1999/00 2004/05 2009/10
World
w/o N. Amer.
N. Amer.
World Rapeseed Oil Supply
02000400060008000
100001200014000160001800020000
1999/00 2004/05 2009/2010
World
Canada
Supply & Demand Trends
• Europe
• North America
EU 15 Oil Production
0100020003000400050006000700080009000
10000
1999/00 2004/05 2009/10
Rapeseed
Sun
Soybean
Total
EU 15 Oil Imports
0500
1000150020002500300035004000450050005500600065007000
1999/00 2004/05 2009/2010
Rapeseed
Sun
Soybean
Palm
Total
EU 15 Oil Exports
-100100300500700900
11001300150017001900210023002500
1999/00 2004/05 2009/10
Rapeseed
Sun
Soybean
Palm
Total
EU 15 Oil Consumption
0
2000
4000
6000
8000
10000
12000
14000
16000
1999/00 2004/05 2009/10
Biodiesel
Food
Feed & Tech
Total
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
0
500
1000
1500
2000
2500
1999/00 2004/05 2009/10
Canola
Soybean
Other*
Total
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
2.87%
2.46%
CAGR
U.S. Oil Production
0
2000
4000
6000
8000
10000
12000
1999/00 2004/05 2009/10
Canola
Soybean
Other*
Total
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
5.97%
1.07%
(.07%)
0.95%
CAGR
Mexican Oil Production
0
200
400
600
800
1000
1200
1400
1600
1999/00 2004/05 2009/10
Canola
Soybean
Other*
Total
* Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel
1.45%
CAGR
North American Consumption
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1999/00 2004/05 2009/10
U.S.
Canada
Mexico
Total
1.41%
1.95%
3.59%
2.13%
CAGR
North American S & D
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1999/00 2004/05 2009/10
Supply Demand
North America moves from small surplus position to an oil deficit of approximately1.4 mmt.
North American S & D
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1999/00 2004/05 2009/10
Supply Demand
Supply growing at 1.2% CAGR, demand growing at 2.13% CAGR.
North American S & D
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1999/00 2004/05 2009/10
Supply Demand
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
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1999/00 2004/05 2009/10
Supply Demand
No increase in biodiesel production factored in to supply deficit projection.
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
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