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Canola: Competing in the World Food Oil Market

Canola: Competing in the World Food Oil Market. Carl Hausmann President and CEO Bunge North America. 1818: Founded in Amsterdam by Johann Peter Bunge 1884 : Bunge y Born established in Argentina by grandson, Ernest Bunge. A Brief History. 1905 : Bunge y Born expanded into Brazil.

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Canola: Competing in the World Food Oil Market

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  1. Canola: Competing in the World Food Oil Market Carl HausmannPresident and CEOBunge North America

  2. 1818: Founded in Amsterdam by Johann Peter Bunge 1884: Bunge y Born established in Argentina by grandson, Ernest Bunge. A Brief History • 1905: Bunge y Born expanded into Brazil. • 1923: Bunge North American Grain Corporation founded in New York City to trade raw agricultural commodities.

  3. 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 Recent History

  4. A Growing Company

  5. Growth through Acquisition

  6. Bunge Global Markets Bunge Europe Bunge Argentina Bunge Brazil Bunge Alimentos Bunge Fertilizantes Bunge North America Bunge Operating Companies Decentralized and Integrated

  7. …with superior geographic balance and reach… 500+ production & industrial facilities 25,000 employees

  8. …capturing value though our vertically integrated chain…

  9. Bunge is growing and changing

  10. World Oil markets are also growing and changing…

  11. World Oil Supply Growth

  12. World Oil Supply Growth

  13. World Soybean Oil Supply

  14. World Rapeseed Oil Supply

  15. Supply & Demand Trends • Europe • North America

  16. EU 15 Oil Production

  17. EU 15 Oil Imports

  18. EU 15 Oil Exports

  19. EU 15 Oil Consumption

  20. EU 15 Supply & Demand • Demand driven by biodiesel • Demand less impacted by: • Trans fat issue • GMO • Supply driven by: • Palm Imports • Rapeseed Production

  21. Supply & Demand Trends • Europe • North America

  22. Canadian Oil Production CAGR 2.87% 2.46% * Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel

  23. U.S. Oil Production CAGR 5.97% 1.07% (.07%) 0.95% * Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel

  24. Mexican Oil Production CAGR 1.45% * Sun, Cottonseed, Olive, Groundnut, Corn, Palm, Coconut, Palm Kernel

  25. North American Consumption CAGR 1.41% 1.95% 3.59% 2.13%

  26. North American S & D North America moves from small surplus position to an oil deficit of approximately 1.4 mmt.

  27. North American S & D Supply growing at 1.2% CAGR, demand growing at 2.13% CAGR.

  28. North American S & D 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.

  29. North American S & D No increase in biodiesel production factored in to supply deficit projection.

  30. Supply & Demand Influencers • Biodiesel • Trans Fat Mitigation

  31. 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)

  32. 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?

  33. Supply & Demand Influencers • Biodiesel • Trans Fat Mitigation

  34. 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?

  35. 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)

  36. Canola’s Role • Trend favors canola • Healthy Oil Attributes • Oil Content • Growth Opportunity • Global Markets • North American Demand

  37. 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?

  38. 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 willbe key

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