Global Market Overview National Renderers Association 2014 Annual Convention

Kent Swisher National Renderers Association

Overview

• Production and Outlook - US • Market Overview – US • Market Overview – Global • Biofuel Review • Outlook

“Quiet Ports – Biodiesel, Cheap Palm and the Decline of North American Fat Exports” – Ryan Standard, Jacobsen

Opening Comment

• The renewable fuel industry globally is driven by government policies.

U.S. Production Fats

NRA Estimates, Render Magazine, Market Report, April 2014

U.S. Consumption Fats

NRA Estimates, Render Magazine, Market Report, April 2014

U.S. Exports Fats

NRA Estimates, Render Magazine, Market Report, April 2014

U.S. Production Proteins

NRA Estimates, Render Magazine, Market Report, April 2014

U.S. Consumption/Exports Protein

NRA Estimates, Render Magazine, Market Report, April 2014

Global Tallow Markets

NRA Estimates, Render Magazine, Market Report, April 2014

Global Tallow Markets

NRA Estimates, Render Magazine, Market Report, April 2014

U.S. Exports of Inedible Tallow

Global Trade Atlas

U.S. Exports of Yellow Grease/UCO

Source: Global Trade Atlas

Market Review - EU

Source: Global Trade Atlas

Market Review - China

Source: Global Trade Atlas

Market Review - Singapore

NRA Estimates, Render Magazine, Market Report, April 2014

Singapore – Renewable Fuel Demand

NRA Estimates, Render Magazine, Market Report, April 2014

Singapore – Renewable Fuel Demand

Singapore – Renewable Fuel Demand

According to Forbes Magazine, no one customer should exceed 20 percent of a company’s business

Renewable Fuel Market

Market Overview Global South American Soybean Oil Export Growth

Limited by Growing Biodiesel Production

USDA/FAS Oilseeds: World Markets and Trade; September, 2014

Supply/Demand U.S. Biodiesel Market

Supply/Demand U.S. Biodiesel Market

Supply/Demand U.S. Biodiesel Market

The Biodiesel/Renewable Diesel Industry is Global

Supply/Demand – Raw Materials

Supply/Demand – Raw Materials

NBB - Promotion

Why Should the Rendering Industry Care About the Renewable Diesel Industry?

Declining Export Markets

Excess Supply of Competing Products

Excess Supply of Competing Products

Excess Supply of Competing Products

Source: USDA/FAS PS&D

Palm Oil – Raw Materials

• 95% Correlation in tallow and palm oil prices January 2003 – December 2011

• 65% Correlation in tallow and palm oil prices January 2012-December 2013

Declining Export Markets

2013 Percent of Production Going to Biodiesel/Renewable Diesel

Threats – IMPORTS!

US Imports of Renewable Diesel 2009 2010 2011 2012 2013 Singapore 0.0 0.0 0.0 12.2 170.4 Argentina 1.5 0.0 0.0 0.0 123.0 EU28 0.0 0.0 5.2 18.6 115.8 Indonesia 0.0 0.0 0.0 0.0 52.4 Canada 5.5 6.9 10.8 17.8 33.0 Korea 0.0 0.0 0.0 0.0 16.8 Other 0.0 0.0 1.2 9.4 19.6 TOTAL 7.1 6.9 17.2 58.0 530.9

Million Gallons

Source: U.S. Energy Information Administration

Threats - Disease Outbreak Potential

Outlook

• Renderers can’t avoid the impact of the GLOBAL renewable diesel market on rendered products

• Over 2.5 million metric tons (5.5 billion pounds) of rendered products are utilized globally by the renewable diesel industry

• Argentina, Malaysia, Indonesia, Brazil are all rumored or are planning to increase biodiesel mandates

Outlook

• U.S. Rendered Fat Exports – 18% of Production

• U.S. Rendered Fat Use in the Oleochemical Industry – 20% of Production

• Livestock feed, pet food, and carryover account for the rest

Opening Comment

• The renewable fuel industry globally is driven by government policies.

Outlook

• “Now we see domestic consumption of biodiesel is the most significant factor if the government is really committed to the program.”

• “When this program runs smoothly, it will turn Indonesia into a major CPO consumer, thereby pushing up the global CPO price as the supply on the international market reduces.” – Fadhil Hasan, Executive Director of the Indonesian

Palm Oil Association (Gapki)

ALAPRE Meeting 2014