Palm oil emergency, Sharpfokus66
Iceland ad
The tiny U.K. supermarket chain, Iceland are (sort of) back in the news. They took a months old Greenpeace anti palm oil video & turned it into their Christmas Ad (?!) by adding their name on the end. Iceland claims to be removing palm oil from their products to save orangutans. Here’s why that’s unlikely to be true.
Edible oil
Supply
First, their claim to be replacing palm oil with another oil is unlikely to be true. That’s because there just isn’t enough of other oils to change to. The edible oil market will be very very tight in 2019 because supply growth is so slow. None of the edible oils expect palm oil is growing faster than demand:
Demand
Demand is growing over 3% & all the other oils are growing supply less than 3%. Only palm oil is managing 4%. But even with palm oil growth, total new edible oil supply will be only 4.6m tons bigger than 2018. Demand is expected to grow by 6.9m tons. The only choice is to use up inventories.
Shortage
This means there will be a shortage of edible oil. What’s worrying is there is no end to this. None of the edible oils including palm oil is growing their planted area faster than 3%. Therefore the growth in supply will continue to be less than demand in the future too. Can you do without edible oil?
Palm oil
Growth
What’s now clear when we look back is that for most of the last few decades none of the other oil has ever consistently grown faster than demand. This was masked by the tremendous growth of palm oil which supplied the market by growing double digits from the 1990s up to the early 2000s.
Slowdown
But palm oil new planting continued to slow down. There are lots of screaming headlines, but even in nominal terms, palm oil plantings in the 2000s were only slightly higher than the 1990s & much less in terms of growth. This has slowed down supply growth to low single digits & as planting keeps slowing, supply will dwindle further.
Inquisition.
Supply growth has been affected by costs, low oil prices & the anti palm oil inquisition mob. A common number they use is a football field of forest lost every 25 seconds. Do the math & that‘s 1.2m hectares a year. Meanwhile real data shows instead between 100-300k hectares planted & private company planting close to 0. Pus it’s illegal to plant in forest,
Orangutans
1998
The second problem for Iceland in addition to not being able to switch edible oils is the orangutans themselves. Specifically how the population of orangutans has been doing while palm oil has expanded. If we go back to 1997/8 when the expansion of palm oil took off & shifted to Borneo, the estimated population was 27/28,000 individuals.
2018
Fast forward 20 years to 2017.... The first thing is according to the previous reports, orangutans should now be extinct. They’re not. Second, the estimated population is now... wait for it... 100,000. Yes 100k! So the estimated orangutan population has quadrupled during the great palm oil expansion.
Lies damn lies
This is great news, right? Apparently not. Iceland claims the number of orangutans has halved & is still on its way to extinction; because the orangutan scientists say so. But a closer look at the studies showing this reveals the numbers are created not through biological evidence but statistical analysis. Lies, damn lies & statistics.
Emergency
2019 is going to be an embarrassing year for Iceland. First there’s an edible oil shortage. Switching from one to another is not possible. Second this shortage is set to get worse as Palm oil slows down further. Third orangutan numbers are inconveniently thriving. Lastly & most inconvenient, its palm oil companies who are protecting orangutans, not Iceland. Follow our project here.
Given their trouble with math I wouldn’t invest in Iceland. But I do invest in Palm oil.
Have a profitable week!
Sebastian
The tiny U.K. supermarket chain, Iceland are (sort of) back in the news. They took a months old Greenpeace anti palm oil video & turned it into their Christmas Ad (?!) by adding their name on the end. Iceland claims to be removing palm oil from their products to save orangutans. Here’s why that’s unlikely to be true.
Edible oil
Supply
First, their claim to be replacing palm oil with another oil is unlikely to be true. That’s because there just isn’t enough of other oils to change to. The edible oil market will be very very tight in 2019 because supply growth is so slow. None of the edible oils expect palm oil is growing faster than demand:
Demand
Demand is growing over 3% & all the other oils are growing supply less than 3%. Only palm oil is managing 4%. But even with palm oil growth, total new edible oil supply will be only 4.6m tons bigger than 2018. Demand is expected to grow by 6.9m tons. The only choice is to use up inventories.
Shortage
This means there will be a shortage of edible oil. What’s worrying is there is no end to this. None of the edible oils including palm oil is growing their planted area faster than 3%. Therefore the growth in supply will continue to be less than demand in the future too. Can you do without edible oil?
Palm oil
Growth
What’s now clear when we look back is that for most of the last few decades none of the other oil has ever consistently grown faster than demand. This was masked by the tremendous growth of palm oil which supplied the market by growing double digits from the 1990s up to the early 2000s.
Slowdown
But palm oil new planting continued to slow down. There are lots of screaming headlines, but even in nominal terms, palm oil plantings in the 2000s were only slightly higher than the 1990s & much less in terms of growth. This has slowed down supply growth to low single digits & as planting keeps slowing, supply will dwindle further.
Inquisition.
Supply growth has been affected by costs, low oil prices & the anti palm oil inquisition mob. A common number they use is a football field of forest lost every 25 seconds. Do the math & that‘s 1.2m hectares a year. Meanwhile real data shows instead between 100-300k hectares planted & private company planting close to 0. Pus it’s illegal to plant in forest,
Orangutans
1998
The second problem for Iceland in addition to not being able to switch edible oils is the orangutans themselves. Specifically how the population of orangutans has been doing while palm oil has expanded. If we go back to 1997/8 when the expansion of palm oil took off & shifted to Borneo, the estimated population was 27/28,000 individuals.
2018
Fast forward 20 years to 2017.... The first thing is according to the previous reports, orangutans should now be extinct. They’re not. Second, the estimated population is now... wait for it... 100,000. Yes 100k! So the estimated orangutan population has quadrupled during the great palm oil expansion.
Lies damn lies
This is great news, right? Apparently not. Iceland claims the number of orangutans has halved & is still on its way to extinction; because the orangutan scientists say so. But a closer look at the studies showing this reveals the numbers are created not through biological evidence but statistical analysis. Lies, damn lies & statistics.
Emergency
2019 is going to be an embarrassing year for Iceland. First there’s an edible oil shortage. Switching from one to another is not possible. Second this shortage is set to get worse as Palm oil slows down further. Third orangutan numbers are inconveniently thriving. Lastly & most inconvenient, its palm oil companies who are protecting orangutans, not Iceland. Follow our project here.
Given their trouble with math I wouldn’t invest in Iceland. But I do invest in Palm oil.
Have a profitable week!
Sebastian
