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OILS & FATS INTERNATIONAL JANUARY 2024 ▪ VOL 40 NO 1
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CONTENTS
IN THIS ISSUE – JANUARY 2024
FEATURES
OFI reports on some of the latest projects, technology and process news and developments around the world
Port of Rotterdam
20
31
A unique European hub The Port of Rotterdam is Europe’s market leader in vegetable oil handling and is home to major refiners, storage terminal operators and biofuel producers
NEWS & EVENTS
Driving for efficiency Applying new technologies to existing processes can save edible oil manufacturers energy and costs
Photo: Adobe Stock
OILS & FATS INTERNATIONAL
Sustainability
32
RT2023 report Nearly 5M ha of land globally is now planted to sustainable palm oil
Palm Oil
Comment
Rendering
Photo: Adobe Stock
2
Higher CPO prices forecast Palm oil is facing a long-term fall in production while flattening vegetable oil supply, declining stocks and El Niño effects will lead to rising CPO prices
Plant & Technology
28
Ukraine/Russia News Photo: Adobe Stock
23
Global round-up of news
Targeting ultra-processed foods
33
Tallow sales set to rise Sales of tallow are forecast to increase due to growing demand from the renewable diesel, oleochemical, feed and personal care sectors
4
Agreement on war risk insurance
News
6
Milei expected to usher in Argentine crop reforms
Biofuels News
10
Eni and Saipem sign deal to develop bio-refineries
Renewable News
12
Sasol launches biosurfactant brands
Transport News
14
Suez Canal detour for US grain
Biotech News
15 TOGETHER. TOWARDS EUROPEAN MARKET LEADERSHIP Koole Terminals is a leading and independent storage, processing, and logistics company, enabling business growth through integrated and innovative service offerings for large-volume products. Driving the energy transition forward for a sustainable future by supporting its world-class customers. With 21 strategically located terminals in Europe and a total volume of 5,387,000 CBM, Koole reflects the diversity of its customers’ needs.
Diary of Events 21 TERMINALS IN 7 EUROPEAN COUNTRIES WITH A TOTAL STORAGE CAPACITY OF 5,387,000 CBM CREATING A SUSTAINABLE FUTURETOGETHER
16
International events listing
International Market Review
17
Mixed 2024 supply outlook
Statistics
36 www.ofimagazine.com
China approves 51 new GM corn and soyabean crops
World statistical data OFI – JANUARY 2024
1
EDITOR'S COMMENT
OILS & FATS INTERNATIONAL
VOL 40 NO 1 JANUARY 2024
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Targeting ultraprocessed foods After years of campaigning by civil society groups, a new law targeting ultra-processed foods has come into force in Colombia. The 10% tax on ultra-processed foods is the most ambitious public health measure in Latin America, and even worldwide, according to health policy experts. It took effect in November – along with a 10% tax on sugary drinks – and rises to 15% this year and 20% in 2025 (see p8). “In countries like Colombia with high rates of obesity and diabetes, it’s critical to shift diets away from ultra-processed products,” says US-based non-profit organisation Global Health Advocacy Incubator (GHAI), which defines ultra-processed foods as industrially-manufactured ready-to-heat and eat foods, with low nutritional value and high levels of sugar, sweeteners, sodium, fat, trans fat and other additives. Critics of the new policy say that the new tax – along with front-of-package labels which came into force in June on foods high in sugar, fat and salt – will hit low-income sections of the population, who disproportionately eat more ultra-processed food. The key question is whether the new tax will work. Across the world, various taxes on sugary drinks and fat have been introduced. And in a Journal of Public Health article, ‘Why fat taxes won’t make us thin’, the authors write that taxes on foods are not a simple fix for complex public health issues. They say taxes would need to be at least 20% to have a meaningful impact on health outcomes. In developed countries, the consumption response to changes in prices is relatively low because food comprises only a relatively small proportion of household spending. However, low-income populations are more sensitive to price changes because they spend relatively more on foods. The availability of substitute and complementary foods, as well as individual habits and preferences, are also critical factors. On the supply side, the food industry may reduce the impact of a tax by lowering the profit margin of the product being taxed, or spread the cost of the taxed food onto other products. In addition, food processers may reformulate products that may change the quality (and possibly healthiness) of processed foods by using alternative ingredients. Whatever the results, there is no denying the need to address public health issues in Colombia, and around the world. Writing in Great Italian Food Trade, journalist Marta Strinati says almost a quarter of deaths each year in Colombia are caused by cardiovascular diseases related to excess salt in the diet; while over a third of deaths among those under 70 can be attributed to diabetes related to excess salt and sugar intake. Colombia’s Health Ministry has estimated that in 2021, 56.4% of Colombians were overweight or obese. The new tax in Colombia could spark similar schemes throughout Latin America, says Beatriz Champagne, executive director of Latin American advocacy group Coalition for Americas’ Health. “Every time a country puts forward a new strategy such as this in our region, it becomes a model,” she said in a British Medical Journal article. Colombia certainly presents a unique opportunity to assess what impact a tax on ultra-processed foods will have. Serena Lim, serenalim@quartzltd.com
2 OFI – JANUARY 2024
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UKRAINE/RUSSIA NEWS
An agreement has been reached between Ukraine and the UK on a special mechanism for discounts on war risk insurance for exports through Ukraine’s new Black Sea grain corridor, Reuters reported on 17 November. The new grain corridor had helped transport almost 4.4M tonnes of cargo – including 3.2M tonnes of grain – since it was set up in August, according to Ukrainian officials. The new route runs along Ukraine’s southwest Black Sea coast in Romanian waters and towards Turkey. Ukraine launched the 'humanitarian corridor' for ships travelling to African and Asian markets after Russia’s 17 July withdrawal from the United Nations-brokered Black Sea Grain Initiative (BSGI), which had been set up in July 2022 to allow for food and fertiliser exports from three Ukrainian Black Sea ports, Reuters wrote. Ukrainian Prime Minister Denys Shmyhal was quoted as saying on 14 November that the special mechanism to allow war risk insurance discounts
IN BRIEF RUSSIA: Agriculture minister Dmitry Patrushev said on 17 November that Moscow had begun free shipments of grain totalling up to 200,000 tonnes to six African countries, Reuters reported on the same day. Patrushev said that ships headed for Burkina Faso and Somalia had left Russian ports with additional shipments to Eritrea, Zimbabwe, Mali and the Central African Republic to follow. Russian President Vladimir Putin had promised to deliver free grain to the six countries at a summit with African leaders in July. 4 OFI – JANUARY 2024
Photo: Adobe Stock
Agreement on war insurance
involved 14 insurance firms. “It will make it possible to make a discount on the cost of insurance against military risks for exporters of all products from Ukraine. This will make the Black Sea corridor more accessible to a wider range of exporters,” Shmyhal said during a government meeting, a video of which was posted on the Telegram messaging platform. Ukraine said war risk insurance remained one of the critical issues for securing the safety of the route as Russia continued to target it, dropping mines close to the path, Reuters wrote.
Insurance premiums had risen sharply following a Russian attack on a Liberia-flagged civilian vessel entering a port in the Odessa region in early November, killing a Ukrainian pilot and injuring four crew members, the report said. It had been the first fatal strike involving a commercial ship for months. According to Ukrainian officials quoted in the Reuters report, the corridor continued working despite all the dangers, but brokers had reported a rise in freight prices. Meanwhile, a Russian drone attack on 6 December on the Izmail port district on the
Danube had killed a driver, and damaged a storage building, an elevator and trucks, Reuters reported Odessa regional governor Oleh Kiper as saying. Ukraine’s Danube ports had become an important outlet for the country’s grain and oilseed since Russia withdrew from the BSGI, with Moscow launching waves of drone attacks on the ports in August and September. The latest attack was the first since 21 November. Ukraine’s grain exports have continued to fall significantly, with 13.4M tonnes exported as of the start of December 2023, compared with 18.3M tonnes at the same point in 2022, according to data from the agriculture ministry reported by World Grain. Ukrainian officials expected a harvest of 79M tonnes of grain and oilseeds in 2023/24 with an exportable surplus of 50M tonnes, the 4 December report said. Prior to Russia’s invasion of Ukraine in February 2022, Ukraine shipped 9% of global wheat, 15% of maize and 44% of sunflower oil exports.
Bulgaria reaches deal on imports Ukraine has reached an agreement on export procedures for its corn, rapeseed, sunflowerseed and wheat exports to Bulgaria, according to a 5 December AgriCensus report. Bulgaria had banned imports of the four commodities from Ukraine after the European Commission decided in September not to extend its temporary prohibition on Ukrainian imports of wheat, corn, rapeseed and sunflowerseed into Bulgaria, Hungary, Poland, Romania and Slovakia to protect domestic farmers. Under the new agreement between Ukraine and Bulgaria, exports would be allowed but bilateral consultations with the importing country would need to be held, the report said. “The Bulgarian government lifted the restrictions and supported our action plan for the verification and approval of the export of certain types of agricultural goods,” Ukraine’s
Agriculture Minister Mykola Solskyi was quoted as saying. Ukraine’s agriculture ministry was quoted as saying that it expected to start receiving requests to import Ukrainian grains and oilseeds into Bulgaria. However, trade sources in the region had warned that there was still a lack of clarity on how the process would work, AgriCensus wrote. “In theory, [export] is permitted as of the first of December, but in practice, no one knows what documents are needed and how it can happen,” one Bulgaria-based trader told AgriCensus. Bulgarian vegetable oil producers had been calling for full liberalisation of sunflowerseed imports from Ukraine, in the face of a 24% fall in the country's 2023/24 sunflowerseed harvest, estimated at 1.6M tonnes.
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NEWS LATIN AMERICA: Farmers registered with the Roundtable on Sustainable Palm Oil (RSPO) in Latin America have produced 2M tonnes of certified sustainable palm oil (CSPO), a third of total palm oil production in the region, the RSPO announced on 16 October. The volume reflected the consolidated efforts of certified growers and producers in Brazil, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Panama and Peru, covering a total of 656,000ha of certified land. Of all palm oil producing regions, Latin America had achieved the highest level of RSPO certification and remained the world’s fastest growing region in terms of certification, the RSPO said. ASIA: Bursa Malaysia Derivatives Bhd and Chinese derivatives exchange Dalian Commodity Exchange (DCE) signed a deal on 2 November for Bursa Malaysia to use the settlement price of DCE Soybean Oil Futures to calculate the cash settlement price of Bursa Malaysia's new DCE Soybean Oil Futures Contract (FSOY), due to be launched in first quarter 2024. The agreement marked the first product collaboration between a Chinese derivatives exchange and an Asian exchange based outside of China, the firms said. The companies said the underlying asset of the FSOY contract would mirror the DCE Soybean Oil Futures.
Milei expected to usher in Argentine crop reforms Leading players in Argentina’s agricultural sector believe that Javier Milei’s victory in the country’s presidential election on 19 November will lead to reforms that will bolster crop production and exports, AgriCensus reported on 20 November. Milei had pledged to make radical changes to promote growth including closing the central bank, dollarisation, spending cuts, privatisation and leaving the Mercosur – South America’s Common Market, the report said. Although Argentina is one of the world’s top exporters of beef, corn, soyabeans and wheat, it has been facing triple-digit inflation, with grain and livestock producers calling for tax cuts and a halt to caps they claim are holding back exports, according to a 20 November Reuters report. Milei’s election could boost local farmers’ spending and increase grain prices, Argentine biotech firm Bioceres CEO Federico Trucco was
quoted as saying in another Reuters report on 21 November. “If … there is only one exchange rate and [Milei] removes export taxation, that equates for a third of the international price," Trucco said. "You might have a scenario in Argentina where the price of grain might double in real dollars for farmers.” The Argentine peso had been in decline for some time and foreign exchange reserves had been low, prompting the government to introduce multiple exchange rates and capital controls, which had proven problematic for exporters, AgriCensus wrote. “If devaluation occurs, producers will triple their earnings, which may have an impact on wheat and barley sales, which are practically frozen, and also on soyabean and corn sales if producers have enough product to sell,” analyst Javier Preciado Patiño told AgriCensus.
Small decrease in EU certified palm oil use
Photo: Adobe Stock
IN BRIEF
Certified sustainable palm oil (CSPO) use in the EU fell by 1% in 2022 compared to the previous year, according to an annual survey by EU vegetable oil and protein meal industry FEDIOL, announced on 13 November. Total EU CSPO volumes reached 1.9M tonnes in 2022
– a 0.5% decrease compared with 2021 – representing a 64% share in total palm oil volumes. FEDIOL members refined a total volume of 3.03M tonnes of palm oil in 2022, a 7.4% fall against 2021 volumes, and a continuation of the downward trend seen since 2017, the
organisation said. Most CSPO was traded under a segregated chain of custody (physically separated), while there had been a steady fall in mass balance (when there is no physical separation of CSPO but the proportion of certified product is accounted for in the final product). “Concerning PKO, the monitoring figures show that total PKO refined by FEDIOL members in 2022 amounted to 343,000 tonnes, a slight 1% drop from 2021, while total certified sustainable PKO volumes faced a more sizeable decrease of 5% over the same period,” FEDIOL said. Traceability to mills for palm oil and PKO reached 98% and 100% respectively.
Cargill stops supplying conventional palm oil in US operations Global agribusiness giant Cargill announced on 12 October that it would stop offering conventional palm oil as part of its US operations to reflect increasing consumer and customer demand for more sustainably-sourced ingredients. 6 OFI – JANUARY 2024
From January, all customers buying palm oil from one of Cargill’s US refineries could be assured they were purchasing Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil, sourced from either mass balance or segregated supply chains, Cargill said.
It said it had invested US$200M in a new palm oil refinery in Lampung, Indonesia which sourced palm oil directly from Cargill-owned plantations and mills, and selected third-party mills which were compliant with its policy on sustainability. www.ofimagazine.com
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NEWS
Competition hitting Chinese crushers Increased competition among Chinese crushing companies is hitting profitability and leaving half of production capacity idled due to poor margins, representatives of two leading Chinese crushing companies were quoted as saying at a forum in Dalian, AgriCensus wrote on 2 November. “China’s soyabean crushing industry is seeing intense competition, with the annual [crush] capacity reaching between 190M tonnes and 200M tonnes,” Li Feng, assistant director of a business unit at leading Chinese crushing company Yihai Kerry,
was quoted as saying at the forum on 2 November. However, the actual crushed volume was only around 95M tonnes, or around half of that capacity, he added. Meanwhile, increasing competition among crushing companies had driven up prices for imported soyabeans, while cutting prices for finished products such as soyabean oil and soyabean meal. China’s crushing capacity was highly concentrated in a handful of players, with the top 10 crushers accounting for roughly 80% of overall crush volume, Feng said.
Luo Yonggen, the chairman of leading soyabean crusher Jiusan Group, said Chinese crushing companies – including state-owned, private and foreign firms – had been expanding capacity, with daily capacity reaching 482,000 tonnes as of September, with volumes expected to increase to 500,000 tonnes this year. “But with the expansion of capacity, the utilisation rate has been lower than 60% in the last three years, meaning around 40% of that capacity has been wasted,” he was quoted as saying.
Canada's export of rapeseed to USA hits record Canada exported 3M tonnes of rapeseed oil in the 2022/23 marketing year (MY) with a record volume of 2.6M tonnes imported by the USA, according to the US Department of Agriculture (USDA)'s Foreign Agricultural Service November 'Oilseeds: World Markets and Trade' report. Following the US Environmental Protection Agency’s decision in December to approve rapeseed oil for the Renewable Fuel Standard programme, industrial use of rapeseed oil in the USA more than doubled in the (August-July) 2022/23 MY, the report said. The USA was also expected to import record volumes of rapeseed oil in 2023/24, with 3M tonnes for industrial consumption, driven by renewable diesel demand. Overall, Canada’s total rapeseed oil exports were lower than in previous years, with the most notable drop to China, which recorded a 5% market share for Canadian rapeseed exports in 2022/23 against 35% in 2020/21. Since 2021/22, China had replaced Canadian rapeseed oil mainly with imports from Russia and Belarus, the report said. Meanwhile, the USDA raised its 2023/24 forecast for global oilseed production by 2M tonnes to 661M tonnes due to larger production of Russian rapeseed and soyabean crops, Ukrainian soyabean and sunflowerseed crops, and US soyabean crops. www.ofimagazine.com
OFI – JANUARY 2024
7
NEWS ITALY: Parliament voted to ban the production, sale or import of cultivated meat, defined as synthetic foods produced from animal cells without killing the animal, BBC wrote on 17 November. Producers would also be barred from using meat-related words on labels to describe plant-based protein. Cultivated meat had only been approved for human consumption in Singapore and the USA, the BBC wrote. In Europe, lab-grown meat was considered a 'novel food', requiring a safety assessment by the European Food Safety Authority and authorisation by members states and the European Commission. WORLD: Global agribusiness giant Archer Daniels Midland (ADM) is rethinking its US$300M plan to expand production of alternative proteins due to decreasing interest in plantbased foods, Food Dive quoted CEO Juan Luciano as saying during an earnings call on 24 October. ADM announced plans last year to expand its alternative protein production in Decatur, Food Dive wrote. However, slowing sales were showing the market for plant-based meats could be reaching a tipping point. Higher prices compared to traditional meats, and ongoing perceptions regarding taste and value continued to be obstacles for the category, the report said.
FDA proposes US ban on brominated vegetable oil The US Food and Drug Administration (FDA) has proposed introducing a nationwide ban on the use of brominated vegetable oil (BVO) as an additive in food, CNN reported on 3 November. Already banned in Europe and Japan, the FDA’s proposal followed a ban introduced in California – the first US state to ban the additive – in October under the California Food Safety Act. BVO is used to keep citrus flavouring from floating to the top of some soft drinks. “The agency concluded that the intended use of BVO in food is no longer considered safe after the results of studies conducted in collaboration with the National Institutes of Health,” FDA dep-
uty commissioner for human foods James Jones said. The results showed bio-accumulation of bromine and toxic effects on the thyroid – which played a key role in regulating blood pressure, body temperature, heart rate, metabolism and the reaction of the body to other hormones. Jones said few beverages in the USA contained BVO after the FDA determined that it was no longer ‘Generally Recognised as Safe’ in 1970 and began overseeing its use under food additive regulations. The proposed ban was open for comment until 17 January and a final decision would be made following a review process, CNN wrote.
Colombia to tax ultra-processed foods
Photo: Adobe Stock
IN BRIEF
A new law targeting ultra-processed foods and sugary drinks to curb obesity and address other health issues came into force in Colombia in November, Health Policy Watch wrote on 14 November. Ultra-processed foods were defined as industrially
manufactured ready-to-eat foods with high added sugars, salt and saturated fats, such as crisps, chocolate, sausages, cereals, jams and sauces. A 10% tax came into force, rising to 15% this year and 20% in 2025, but some traditional foods like salchichón sausage
were exempt, The Guardian wrote on 10 November. Mandatory warnings on foods with a high content of sugar, salt and fat also came into force earlier in June 2023. “Countries worldwide have been implementing health taxes but few have extended them to processed foods,” Franco Sassi, international health policy and economics professor at London’s Imperial College Business School, was quoted as saying. Health Policy Watch wrote that 22.4% of Colombian women were overweight or obese. The average Colombian consumed 12g/day of salt and almost a third of adults in the country had high blood pressure, according to The Guardian report.
COFCO signs 'deforestation free' soyabean deal with Brazil China’s largest food and agricultural company COFCO International and milk product producer Modern Farming Group have signed a ‘deforestation free’ soyabean supply agreement with top soya producer Brazil, Reuters reported on 8 November. The US$30M deal was China’s first soyabean order under a “deforestation- and 8 OFI – JANUARY 2024
conversion-free (DCF) clause”, according to a statement by the World Economic Forum’s Tropical Forest Alliance (TFA). The agreement was part of a drive to curb commodity export-driven deforestation in global soyabean, beef, palm oil and pulp and paper markets, the report said. “This purchase order for DCF soyabeans
is a milestone and sends a positive market signal from China to the global commodity market,” TFA executive director Jack Hurd was quoted as saying in the statement. China, which buys oilseeds, grains and meats from leading suppliers including Brazil and the USA, is an import destination for a range of agricultural commodities. www.ofimagazine.com
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BIOFUEL NEWS USA: Global commodity price reporting agency Argus has launched daily prices for renewable diesel in California, adding to its range of renewable diesel prices covering Asia, Europe and the US west coast. The four new Argus prices for California were assessed by collecting bids, offers and transactions at Kinder Morgan’s Los Angeles and San Francisco pipeline gathering systems from a range of market participants, the company said on 14 November. Priced for at least 5,000 barrel batches shipping any time during a named month, Argus said differentials were assessed against Nymex ultra-low sulphur diesel (ULSD) futures and California Air Resources Board ULSD, plus costs charged to the diesel fuel position holder at the terminal. Argus said the renewable diesel market had grown exponentially in the past few years and, at the time of the report, was responsible for 54% of all Californian diesel consumption in the second quarter of 2023. “To operate efficiently, the market needs clear and accurate pricing, based on real transactions and other indications of buying and selling interest.”
Eni and Saipem sign deal to develop bio-refineries tional petroleum refineries, with Saipem providing support. The plants process vegetable oils, used cooking oil (UCO), animal fats and waste feedstocks, such as agro-food industry residues, to produce HVO and SAF. Eni said it planned to expand its bio-refining capacity from 1.65M tonnes/year currently to over 5M tonnes/year by 2030. On its website, Eni said it was looking at converting its Livorono facility into a bio-refinery, capable of processing 500,000 tonnes/year of biomass; as well as buiding a new bio-refinery in Pengerang, Malaysia. It also operates the St Bernard Renewables bio-refinery in Louisiana, USA, in partnership with PBF Energy.
Italian multinational oil and gas company Eni Spa has signed an agreement with energy and infrastructure engineering leader Saipem Spa to potentially build new bio-refineries to produce hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF). “The agreement involves the application of Eni’s proprietary Ecofining technology for the development of new bio-refineries and the conversion of traditional refineries,” Eni said on 6 November. Eni currently operates two bio-refineries – a 400,000 tonnes/year HVO plant in Venice, Porto Marghera, launched in 2014; and a 750,000 tonnes/year plant in Gela, Sicily, opened in 2019. Both plants were converted from tradi-
US SAF industry behind on 2030 target Photo: Adobe Stock
IN BRIEF
US production of sustainable aviation fuel (SAF) is behind the 11.35bn litres (3bn gallons)/year by 2030 target set by US President Joe Biden, according to analysts quoted in a 1 November report by Reuters. The 11.35bn litres target set by Biden in 2021 was a steep jump from current production of 59.8M litres (15.9M gallons)/year reported by US government data, according
to S&P Global Commodity Insights. US SAF production would only total 7.9bn litres (2.1bn gallons)/year by 2030, S&P added. According to the US Energy Department, alternative production from battery technologies and hydrogen are not expected to contribute substantially to reducing aviation emissions until after 2050. S&P Global Commodity Insights’ Corey Lavinsky said airlines could currently choose not to use SAF because of its higher price compared with traditional jet fuel. US jet fuel prices were around US$2.85/gallon at the time of the S&P report, against SAF prices of around US$6.69/gallon, according to data from commodities and energy pricing agency Argus Media. SAF currently made up only 0.1% of the total US jet fuel pool, Reuters wrote.
China’s biodiesel and HVO exports surge in 2023 Chinese exports of used cooking oil (UCO)-based biodiesel and hydro-treated vegetable oil (HVO) exports are surging, according to the China: Biofuels Annual report published on 19 October by the US Department of Agriculture (USDA) Foreign Agricultural Service Global Agricultural Information Network. From January to May 2023, China’s biodiesel exports rose 70% year-on-year, with the vast majority shipped to the Netherlands and Belgium, the report said. Exports in 2023 were expected to total 2.95bn
litres including 1.32bn litres of HVO, compared with 2.054bn litres including 900M litres of HVO in 2022, Biodiesel magazine wrote on 9 October. Biodiesel producers had a relatively stable production capacity of 3.7bn litres/year and, by the end of 2023, China was expected to have 48 biodiesel plants in operation, up from 46 plants with a combined production of 3.5bn litres the previous year. Export-orientated HVO plants saw notable expansion in the last two years, with an expected combined capacity of 3bn
10 OFI – JANUARY 2024
litres by the end of 2023 and an additional 1.2bn litres/year of capacity planned. “The renewable diesel industry is almost entirely export-orientated thanks to policy incentives and product demand in Europe,” the report said. Approximately 1.815M tonnes of UCO was expected to be used to produce biodiesel in 2023, up from 1.42M tonnes in 2022. UCO was also used to produce HVO, with 1.31M tonnes expected to be consumed in 2023, up from 880,000 tonnes in 2022.
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RENEWABLE NEWS
Sasol launches biosurfactant brands Leading surfactants producer Sasol Chemicals has launched a range of biosurfactants for the personal and home care sectors. The first two products launched would be Carinex and Livinex, the business unit of South African chemical and energy firm Sasol Ltd said on 23 October. Carinex would target the personal care market, while Livinex would be aimed at the home care, technical, institutional and industrial cleaning sectors.
JAPAN: Sumitomo Chemical announced on 25 October that it had started building an ethanol-to-propylene pilot facility at its Chiba Works (Sodegaura) site. Construction was expected to be completed by the first half of 2025 and Sumitomo said it would use data from the pilot plant to scale up its process. Sumitomo said it was aiming to start commercial production, as well as licensing of its technology to other companies by the early 2030s. Currently produced mainly by cracking fossil fuel products, such as naphtha, propylene is classified as an upstream petrochemical, while ethanol can be produced from biomass, such as sugarcane and corn. USA: Materials science company Dow has launched a new biodegradable surfactant made from recycled carbon materials for a range of home care applications. Dow’s EcoSense 2470 surfactant is made using LanzaTech’s CarbonSmart bio-recycling technology which works in the same way as the brewing process: proprietary bacteria consume carbon-rich pollution from industrial facilities, such as steelmaking plants, and converts it into ethanol.
UK biotech start-up Holiferm to develop sophorolipids, a fermentation-derived biosurfactant, as an alternative to traditional surfactants. Using Holiferm’s proprietary technology, Sasol said its sophorolipids were produced from natural palm-free oils and/or sugars. “We can now offer our customers mass produced, high performing and more sustainable solutions,” Sasol Chemicals senior vice president Eric Stouder said.
BASF expands EO and derivatives capacity
Photo: BASF
IN BRIEF
Both products were fully biodegradable and could act as detergents, dispersants, emulsifiers, foaming agents or wetting agents in daily personal care products, such as shampoos and conditioners, as well as detergents, degreasers and other products in cleaning and technical applications, said Sasol. The development of the new products followed the formation of a partnership last March between Sasol Chemicals and
German chemical and biotech giant BASF has expanded production capacities for ethylene oxide (EO) and its derivatives at its Verbund site in Antwerp, Belgium (above). Involving an investment of more than €500M (US$528M), the expansion
would add 400,000 tonnes/ year to BASF´s production capacity for the products and was BASF’s second worldscale EO plant, the company said on 16 October. As well as producing EO, which is used to produce alcohol ethoxylates surfactants via
ethoxylation of natural or petrochemical fatty alcohols, the complex included capacity for purified EO. It also included additional capacities for alkoxylates, which were derivatives of EO and used in a wide range of applications such as in the detergent and cleaning sectors, and the automotive and construction industries. The company said the investment would support increasing customer demand for alkoxylates in the home care and industrial & institutional industries as well as for industrial applications. “The investment underlines the importance of our [Verbund] site for the BASFgroup,” said Jan Remeysen, CEO of BASF Antwerp.
First responsible sourcing report from BASF German chemical and biotech giant BASF has published its first responsible sourcing report for its Care Chemicals division, extending its focus beyond certified sustainable palm and palm kernel oil (PKO) to coconut oil, castor oil and other biobased active-ingredients, it said on 16 November. The company purchased 1.2M of renewable raw materials in 2022. It sourced only Roundtable on Sustainable Palm Oil (RSPO)-certified sustainable palm and PKO last year and could trace almost 97% of its total oil palm exposure of 375,500 tonnes back to oil mill level. The company said it sourced 76.2% of its traceable palm oil raw material from 10 provinces in Indonesia and Malaysia, in total matching 88% of its traceable raw material supply. In
12 OFI – JANUARY 2024
addition, it had again achieved full traceability for certified sustainable PKO originating from 400 RSPO-certified oil mills. As part of its work in the coconut oil sector, BASF said 4,100 smallholder coconut farmers had been trained in Good Agricultural and Farm Management Practices. And as part of its Project Pragati castor oil partnership with Arkema, Jayant Agro-Organics, and international civil society organization Solidaridad, over 6,000ha of castor farming was carried out in accordance with the Sustainable Castor Caring for Environmental and Social Standards code and 50,000 certified castor seeds produced. BASF’s Care Chemicals division manufactures products for personal care, home care, industrial & institutional cleaning, and technical applications.
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TRANSPORT NEWS
Suez Canal detour for US grain US grain exporters are being forced to detour through the Suez Canal due to unprecedented low water levels at the Panama Canal, Freight Waves reported on 9 November. The canal is the typical route for grain cargoes out of the US Gulf to China and Asia, Eagle Bulk CEO Gary Vogel was quoted as saying during a conference call on 3 November. “We’re now routing our ships through the Suez, which adds about 10 days and is slightly more expensive in terms of canal dues.” According to ship position data from MarineTraffic quoted in the Freight Waves report, there has been a major shift away from the Panama route, with the majority of dry bulk vessels loaded with US cargoes now opting for the Suez Canal. World Grain wrote on 3 November that the low water levels had led the Panama Canal Authority (ACP) to introduce further limits on daily vessel transits, which would reach a low of 18 vessels/day
IN BRIEF MEDITERRANEAN: On 2 November, commodity price reporting agency Argus launched a new Mediterranean marine biodiesel price for B24, a blend of 24% used cooking oil methyl ester (UCOME) and 76% very-low sulphur fuel oil. Published daily on a delivered-on-board (dob) basis for the ports of Algeciras and Gibraltar, the new price was based on physical spot market information including deals, bids and offers. It joined Argus’ other marine biodiesel price assessments including blends containing UCOME and EU Renewable Energy Directive Annex IX part A ‘advanced’ biodiesel feedstocks.
Asia
Europe
North America u u
Africa
South America
next February: • From 3-6 November: 25 • From 7-30 November: 24 • From 1-31 December: 22 • From 1-31 January 2024: 20 • From 1 February 2024 until further notice: 18 “Further adjustments in the daily number of transits will be announced depending on the rainfall in the canal watershed and level of Gatun Lake,” the ACP added. Gatun Lake is the water source for the canal and its level is 7% below the prior
five-year average for October, according to a US Department of Agriculture Grain Transportation Report. The increased importance of the Suez Canal to US agriculture had raised another concern due to the current conflict in Israel, Freight Waves wrote. The Suez Canal had been shut due to military action involving Israel twice before, in 1956 and 1967-1975. Any restrictions to Suez transits due to an escalation of the Israel-Hamas war would increase
the re-routing of US agribulk exports, and even longer voyages via the Cape of Good Hope, the report said. According to World Grain, vessels carrying 36.18M tonnes of grain – including corn, soyabeans, rice, sorghum, barley and wheat – transited the Panama canal from the Atlantic Ocean to the Pacific Ocean, and 2.2M tonnes was shipped from the Pacific to the Atlantic. Grain was the second leading commodity – after petroleum – transported via the canal.
Mississippi rates fall despite low water Barge rates on the Mississippi river are dropping despite water levels remaining low and ongoing restrictions on movements, FreightWaves reported on 20 October. “Normally, restrictions cause spot rates to increase, as was observed in third quarter 2022,” according to the US Department of Agriculture (USDA)’s weekly grain transportation report published on 19 October. “However, this year, except for the last few weeks, spot rates have neared the prior fiveyear average because of low demand from slow export sales.” Grain shipments were being diverted to rail and to storage with farmers hoping river levels would rebound in a few months, said Mike Steenhoek, executive director of the Soy Transportation Coalition, whose members are highly dependent upon the Mississippi to move their products to market. Overseas demand for soyabeans and corn had been slow this year, with farmers gravi-
14 OFI – JANUARY 2024
tating to the domestic market and soyabeans being processed and sold into the livestock or biofuels markets, Steenhoek added. Meanwhile, there was little sign of improvement in water levels at the key measuring point in Memphis, Tennessee, where the level had dropped to minus 11ft (3.35m), at the time of the FreightWaves report. American Commercial Barge Lines (ACBL) – a key barge operator on the Mississippi had introduced further restrictions, reducing loading drafts by 28% northbound and 24% southbound between the US Gulf and Cairo, Illinois – where the Ohio River joins the Mississippi – and Vicksburg, Mississippi, south of Memphis. ACBL also said it was restricting tow sizes to five barges across, which was a 17% to 38% reduction in capacity. There was some prospect that the situation would improve, with water levels on the Mississippi at St Louis rising about 2ft (0.6M) between 4-20 October, FreightWaves wrote. www.ofimagazine.com
SOLUTIONS FOR SUSTAINABILITY, PROCESSING & TRADE 9-11 September 2024, Rotterdam, the Netherlands www.ofimagazine.com/ofi-international-2024
BIOTECH NEWS
China’s National Crop Variety Approval Committee has preliminarily approved 14 new genetically modified (GM) soyabean and 37 new GM corn varieties, Agri Pulse reported on 25 October. “Once finalised, listed GM corn and soyabean varieties will be eligible for planting in approved areas, bringing (China) closer to full commercial cultivation of GM corn and soyabeans,” according to a 24 October report by the Beijing office of the United States Department of Agriculture (USDA)’s Foreign Agricultural Service (FAS). “However, for the foreseeable future, the varieties are likely to only be planted in (Chinese) approved pilot programmes ... which will limit the scale of planting in 2024.” It was not clear if the new approvals would lead to significant new business for international seed companies, according to industry sources quoted by Agri Pulse. “Ag biotechnology is still on China’s negative list for foreign domestic investment, meaning foreign countries cannot produce seeds or even license seed technology for use on Chinese farms,” one unnamed seed industry representative was quoted as saying. China had two separate approval processes, including one for international traits and the other for exclusively Chinese companies producing seeds for domestic production, Agri Pulse wrote. The two approval pathways did not intersect,
Photo: Adobe Stock
China approves 51 new GM corn and soya crops
except for agricultural science firm Syngenta, owned by Chinese state-owned enterprise ChemChina. Of the 51 newly approved varieties, four were produced by the China National Seed Group, a unit of Syngenta. Meanwhile, biotech varieties from international companies including BASF, Bayer and Corteva, were being assessed by China’s National Agriculture Biosafety Committee for approval. Five varieties were waiting for final approval after being on hold for between three and eight years, Agri Pulse wrote. In October, China issued its final approval for a canola variety which BASF had submitted in 2017, the report said.
EC approves glyphosate for 10 more years The European Commission (EC) announced on Individual EU countries would remain respon16 November that it would renew approval of sible for authorising plant protection products containing glyphosate, which had been widely glyphosate for 10 years, based on European safety assessments and subject to new condiused for decades by farmers. Calyxt applicasays seedless hemp offered improved and carcinogenic quality tions and restrictions, such as maximum Although found to be yields probably tion rates, Reuters reported on the same date. to humans by the World Health Organization’s EU approval had been due to expire on 15 cancer research agency in 2015, agencies such December and because a “qualified majority” of as the US Environmental Protection Agency, member states had not supported or blocked European Food Agency and European Chemicals approval, the EC had approved the chemical, Agency had classified glyphosate as non-caracting under EU rules, Reuters wrote. cinogenic, Reuters said.
IN BRIEF USA: The US Department of Agriculture (USDA) has confirmed that hemp grown using genetic engineering (GE) does not pose a risk to crops, Business of Cannabis reported on 5 October. The USDA’s Animal and Plant Health Inspection Service (APHIS) had conducted a review of a GE plant produced by Growing Together Research, the report said. The company had requested the review to ensure the plant, which had been genetically engineered to reduce its tetrahydrocannabinol (THC) and cannabichromene (CBC) levels, complied with regulations. Under the Plant Protection Act of 2000, the USDA had the authority to oversee the “detection, control, eradication, suppression, prevention or retardation of the spread of plant pests to protect agriculture, the environment, and the economy of the United States”. The review’s aim was to evaluate if the modified plant posed an increased plant pest risk compared to non-GE hemp, Business of Cannabis wrote. APHIS stated: “This modified hemp is unlikely to pose an increased plant pest risk compared to other cultivated hemp. As a result, it is not subject to regulation under 7 CFR part 340. "From a plant pest risk perspective, this hemp may be safely grown and bred in the United States.”
Bayer ordered to pay US$1.5bn but appeals recent verdicts A Missouri court has ordered German chemical giant Bayer to pay US$1.56bn to three claimants who alleged the company’s glyphosate-based Roundup weedkiller had caused their non-Hodgkin lymphoma cancer, Reuters reported on 19 November. Bayer was fond liable for claims of negligence, design defects and failing to warn plaintiffs of the potential dangers of using www.ofimagazine.com
Roundup, Reuters wrote. The case was the fourth consecutive court decision against Bayer after the company had been found not liable to claims in nine previous trials, the report said. Bayer has faced a series of court cases since its 2018 acquisition of US agrochemicals company Monsanto, which owned Roundup. In a statement, Bayer said it had strong
grounds to get the recent verdicts overturned on appeal. Bayer had settled most Roundup claims against it in 2020 for up to US$10.9bn but around 50,000 Roundup-related cases remained pending, Reuters wrote. The company had been unsuccessful in its appeal to the US Supreme Court to challenge plaintiffs’ ability to sue under state law. OFI – JANUARY 2024
15
DIARY OF EVENTS 22-23 January 2024 Fuels of the Future - 21st International Conference on Renewable Mobility City Cube, Messe Berlin, Germany https://www.fuels-of-the-future.com/en
35th Palm & Lauric Oils Price Outlook Conference & Exhibition 2024/2025
11-14 February 2024 International Symposium – Microbial Lipids Graz, Austria www.dgfett.de/meetings/aktuell/ 12-14 February 2024 Sustainable Aviation Future – MENA Address Hotel Dubai Mall, UAE www.safcongressmena.com 27-28 February 2024 Black Sea Grain Europe Corinthia Hotel, Prague, Czech Republic https://ukragroconsult.com/en/ conference/black-sea-grain-2024 4-6 March 2024 POC2024 Shangri-La Hotel, Kuala Lumpur, Malaysia www.pocmalaysia.com 17-18 April 2024 European Algae Industry Summit London, UK www.wplgroup.com/aci/wp-content/ uploads/sites/2/2023/08/EuropeanAlgae-Industry-Summit-Agenda.pdf 18 April 2024
Be part of the annual global gathering of the palm and edible oils industry professionals at the 35th Palm and Lauric Oils Price Outlook Conference & Exhibition (POC2024) organised by Bursa Malaysia Derivatives. This event will be held from 4-6 March 2024 at the Shangri-la Hotel, Kuala Lumpur, Malaysia. POC2024 provides valuable networking opportunities and a platform for its participants to deliberate on topics surrounding the supply and demand of major edible oils, get updates on latest price forecasts and discuss trade possibilities. Many of the world’s leading corporations in the edible oils industry have chosen to become a POC sponsor. With a strong track record of attracting participants from all across the globe, partnering with Bursa Malaysia gives companies ample opportunity to expand their reach to potential clients. Bursa Malaysia Derivatives is a wholly owned subsidiary of Bursa Malaysia Berhad, which provides, operates and maintains a futures and options exchange. The exchange offers the most liquid and successful Crude Palm Oil Futures (FCPO) contract in the world, consolidating Malaysia’s position as the global centre for palm oil price discovery. For POC2024 sponsorship opportunity and other enquiries, please contact: Bursa Malaysia Derivatives Berhad E-mail: poc@bursamalaysia.com Website: www.pocmalaysia.com 21-23 May
2-4 October 2024
Sustainable Aviation Futures Congress Hotel Okura Amsterdam, the Netherlands www.safcongress.com
Sustainable Aviation Futures North America Congress Marriott Marquis, Houston, USA www.safcongressna.com
12-13 June 2024
Black Sea Grain Kyiv Intercontinental Hotel, Kyiv, Ukraine https://ukragroconsult.com/en/black-seagrain-kyiv
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25-27 April 2024
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Oils & Fats Expo Bangladesh 2024 International Convention City Basundhara (ICCB), Kuril, Dhaka Bangladesh www.oilfatbd.com/
22nd EFPRA Congress Anantara Grand Hotel Krasnapolsky Amsterdam, the Netherlands https://efpra.eu/events
28 April-1 May 2024
International Symposium on Lipid Oxidation and Fatty Acids Bologna, Italy https://eurofedlipid.org/5th-internationalsymposium-on-lipid-oxidation-andantioxidants
2024 AOCS Annual Meeting & Expo + Sustainable Protein Forum Montréal, Québec, Canada www.aocs.org/attend-meeting 9-10 May 2024 14th ICIS World Surfactants Conference Hyatt Regency, Jersey City New Jersey, USA https://events.icis.com/website/8544/ 16 OFI – JANUARY 2024
8-10 July 2024
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22-23 October 2024 Oil and Fats International Congress (OFIC) 2024 (+ Online) Kuala Lumpur, Malaysia https://mosta.org.my/events/ofic-2024 22-26 October 2024 2024 North American Renderers Association Annual Convention Ritz Carlton Bacara, Santa Barbara, California, USA https://nara.org/about-us/events 5-7 November 2024 Sustainable Aviation Futures APAC Congress Singapore www.safcongressapac.com
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INTERNATIONAL MARKET REVIEW
Mixed 2024 supply outlook
Supply jitters in some major sectors have lifted oilseed and product prices off the two/three-year lows many re-visited in third quarter 2023. Disappointing yields for US soyabean farmers (who had already cut sown area) have been followed by weather issues in Latin America at planting time, although some late rains may be helping. Sellers have also been concerned that a strong El Niño weather effect may exaggerate seasonally lower Asian palm oil production. Against these factors, some bearish restraints have to be respected. Top of the list was Brazil’s resounding success with its early 2023 soyabean crop, enabling it to not only offset a weak Argentine harvest but grab ever more export market share from the once dominant USA. Markets have also had to take note of larger than expected sunflower and rapeseed production in the Black Sea region and Europe, offsetting lower Canadian canola output. In all, the market should expect another season of quite vigorous growth in world total vegetable oil supplies, but possibly matched or exceeded by a consumption response to prices almost halved from their 2021 peaks. The current forecast for total world vegetable oil supply in the 2023/24 season (beginning 1 October) is around 223.5M tonnes compared with last year’s 217.2M tonnes, a 2.9% rise. This is down from the previous season’s 4.5% rise but still a far better performance than the preceding two seasons, when output was static at around 207-208M tonnes. Growth in the new marketing year www.ofimagazine.com
Graph: John Buckley
The size of the Latin America soyabean crop and the extent to which El Niño will affect palm oil production will be key factors in global vegetable oil production and costs in the upcoming season, along with competition from the biofuels sector and the ongoing Russia-Ukraine war John Buckley Figure 1: World palm oil production (million tonnes) should be led by production of soya (up by 2.9M tonnes or 4.8%) and palm oil (+1.9M tonnes or 2.4%), with smaller contributions from sunflower and canola oils.
Fluctuations in palm oil
While down overall, prices of many key oilseed items have recently been in a state of flux. Palm oil, especially, has been subject to frequent fluctuations amid shifting signals from the demand side. These have included stock build-up at origin as well as some key import markets, not least top importer India, where cheaper soft oils were for a time reducing palm oil purchases, only to resurge as price dynamics partially reversed. Concerns were also building about third-largest palm oil importer China’s demand as its economic slowdown threatened to slow its broader commodity import needs. In third quarter 2023, benchmark Bursa Malaysia crude palm oil (CPO) futures traded well under US$700/tonne at one point, hitting its cheapest in dollar terms since October 2020. Pressure also came from seasonally peaking Asian production and strong Indonesian exports. While Bursa palm oil prices have shown some recovery in recent months, there have been constant setbacks, not only from rising stocks. Values were dented by Indonesia announcing it would not, as earlier thought, force export trade through a new palm oil futures exchange. Against that, Indonesian exports began to ease off seasonally and
the government confirmed controls would continue on exports through a link to domestic sales. Palm oil also came under more competition from plentiful sunflower oil offers. Restraint was also demanded by India’s October edible oil imports falling to a 16-month low and reports that Chinese forward buying had slowed. On the price supportive side, some analysts forecast world palm oil output might drop this year after an El Niño winter. Attempts have been made more recently to hoist palm oil prices but the going has been erratic after Malaysian officials estimated stocks rising for the sixth month to a four-year high of 2.45M tonnes as supply growth out-paced exports. Some analysts still think CPO production could grow this year if El Niño does not curb Indonesia’s contribution. Local palm oil body GAPKI recently forecast a 5% rise in the country’s 2023 production. Malaysian prospects could also benefit from an influx of plantation workers and a larger area reaching maturity. The Malaysian Palm Oil Board expects 19M tonnes of production this year against last year’s 18.45M tonnes (see Figure 1, above).
Erratic soyabean market
In mid-October, Chicago Board of Trade (CBOT) soyabean futures hit their lowest point since December 2021 at US$12.51/ bushel but the market has rallied back into the upper US$13 level since. The u US benchmark has been reacting to the OFI – JANUARY 2024
17
u shifting fortunes of the coming Brazilian crop. Back in July, respected local analyst Safras e Mercado saw Brazilian soyabean production potentially reaching as much as 171.5M tonnes against 2022/23’s record 158M tonnes. Even the lowest forecasts were far above the previous three-year range of just 128.5-139.5M tonnes. The market was also waiting for a revival in soyabean demand in China, where crush margins were depressed by poor hog production profits and weak meal prices in the first half of 2023. Chinese crush and imports have picked up since but, until recently, most of the benefit has gone to Brazilian exporters using their record 2022/2023 crop to slash prices below US levels. In the USA, hot dry weather in the Midwest has cut yield estimates to a recent low of 49.9 bushel/acre, from initial hopes of 52 bushel/acre, denying an expected crop bounce from 2022/23’s low 116M. The US Department of Agriculture (USDA) recently said the US 2023 crop is unlikely to much exceed 112M tonnes. At the same time, US soyabean crushing has been running at record high levels. For the 2023/24 marketing year, the USDA sees this rising almost 4% to 62.6M tonnes. The strength of demand for US soyabean oil is shown by its stocks declining recently to their lowest level since December 2014. For the end of the 2023/24 season, the USDA projects stocks at just 715,300 tonnes, compared with 2022/23’s starting level of over 900,000 tonnes, as a 3% rise in output is overtaken by rising consumption, chiefly from biofuels. Meanwhile, US soyabean prices have recently been at their strongest since 2016 against rival corn, boosted by a surprise drop in 2023 US soyabean output. The recent forward soyabean-corn ratio of 2.7:1 could mean a much larger soyabean planted area in [northern hemisphere] spring 2024. Futures meanwhile suggest 2024 prices of soyabeans rising by some 16%, but soya oil easing by about 5.6%.
Canola stocks help feed crush
Prices of rapeseed and its products have trended lower in the second half of 2023 as ample carryover stocks left from the record 2022/23 crop helped feed crushing from 2023’s smaller than expected harvest. On the Winnipeg Commodities Exchange, nearby prices were recently under C$700/tonne against more than C$870/tonne in early 2023. Recent estimates for the 2023/24 global canola crop have been around 85.6M tonnes, lower than early hopes for something closer to 2022/23’s huge 88.8M tonnes, although this still remains 18 OFI – JANUARY 2024
Figure 2: World rapeseed and sunflowerseed crops (million tonnes) easily the second largest harvest ever. Among key supply factors, top producer Canada saw dry weather denting hopes of a 2023/24 harvest larger than the previous year’s 18.7M tonnes. Recent official estimates range around 18.3M tonnes. Canadian canola disposal might be summed up as strong domestic crush amid lower seed exports, along with booming oil exports. Agriculture and Agri-Food Canada (AAFC) recently raised its 2023/24 canola crush forecast to 10M tonnes, projected exports at 7.7M tonnes (against 2022/23’s figure of 7.94 tonnes), and raised its seasonal average price forecast from C$790 to C$815 (compared with 2022/23’s price of C$857). The Canola Council of Canada, meanwhile, sees demand for canola oil staying strong on constant growth in crush capacity (forecast to rise 60% by 2025 from the current 11.1M tonnes), fuelled by rising US demand for renewable diesel. Some analysts even suggest US demand could eventually use Canada’s entire output of rapeseed oil. Across the border, the USDA forecast a record 2023/24 US canola crop of 1.82M tonnes. World 2023/24 rapeseed output has been affected by a reversal in former fastest-growing supplier Australia, where plentiful rain has helped boost production to two successive record seasons – in 2022/23 reaching almost 8.3M tonnes compared with the more normal 3-5M tonnes range. In 2023/24, it has been a different story, with yields dropping from 2.12 tonnes/ha to just 1.46 tonnes/ha, cutting output to just over 5M tonnes. Fortunately, the EU’s 2023/24 supply
Graph: John Buckley
INTERNATIONAL MARKET REVIEW has continued to improve, with output expected to exceed just over 20M tonnes, better than 2022/23’s 19.6M tonnes. While EU imports are seen declining by up to 1M tonnes, stocks can be drawn down this season to maintain crush at around the high 25M tonnes mark reached in 2022/23. Top EU rapeseed producer France had disappointing yields this season but farmers there are reportedly keen to keep expanding planted area in response to the risk of crop setbacks in Ukraine, leading to record rapeseed prices for a time in 2022. Interestingly, Ukraine’s crop actually rose to 4M tonnes from 2022/23’s 3.5M tonnes while Russia’s eased from 4.3M to 4M tonnes. Russia recently said it would extend a ban on rapeseed exports until at least March 2024.
Higher sunflowerseed output
Key sunflower producer Ukraine is expected to increase output this season by nearly 19% or about 2.3M tonnes to 14.5M tonnes. That is still well under its 2021/22 high of 17.5M tonnes, but encouraging after farmers sowed more than thought and received favourable weather to boost yields. Russia has also grown more sunflowerseed, its 2023/24 crop is projected to rise 7% to 17.5M tonnes. Europe’s 2023/24 crop also enjoyed good yields, expected to rise 16.2% to 10.65M tonnes. These gains have helped world sunflower output nudge 57M tonnes in 2023/24, a rise of 8.8%. This would imply a larger rise in world sunflower oil output. However, total sunflowerseed supply has shown only a small increase after starting stocks were drawn down to meet crushing demand following 2022/23’s smaller Ukrainian crop. Bulk sunflower oil prices in US$ terms have recently edged back towards earlier near-three-year lows, partly reflecting big importing countries like India – which piled into sunflower oil when the price fell steeply earlier in 2023 – turning back to cheaper palm oil.
Conclusion
Key supply factors influencing oil costs in the next few months will include the size of the Latin American soyabean crop and the extent to which El Niño might restrain palm oil production. On the consumption side, the past year’s drop in prices should result in global demand for food oils growing by at least as much as new supply. Competition from the biodiesel/renewable sector remains a potential disruptor, as does the continuing Russia-Ukraine war. ● John Buckley is OFI’s market correspondent www.ofimagazine.com
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PORT OF ROTTERDAM
A unique European hub The Port of Rotterdam, sitting on the western coast of the Netherlands, is Europe’s largest seaport and, indeed, one of the largest in the world. Until 2004, the port could boast of being the world’s busiest port when calculated by the tonnage of annual cargo throughput. Although some ultra-large Asian seaports have since dethroned Rotterdam in that regard, the port remains one of the most significant in the world — particularly in terms of vegetable oil shipments. The Port of Rotterdam is the market leader in Europe in this sector, offering vegetable oil producers, refiners and distributors many advantages. Wellconnected to both the largest origin and destination regions of vegetable oils through multiple means of transport, major vegetable oil refiners and biofuel producers call Rotterdam their home. “This cluster of production facilities has a need for efficient supply chains and has attracted a large number of specialised suppliers, surveyors, service companies, and storage partners. It has become unique on a global scale,” says Charlotte Kooyman, director of sales at storage terminal operator Vopak Vlaardingen. Despite its leading status in Europe as a vegetable oil hub, the Port of Rotterdam is still constantly seeking to improve its operations, provide new opportunities to vegetable oil operators, and manage the global geopolitical uncertainties that have emerged in recent years. 20 OFI – JANUARY 2024
The Port of Rotterdam is Europe’s market leader in vegetable oil handling and is home to major refiners, storage terminal operators and biofuel producers Ile Kauppila Centuries-old history
The Port of Rotterdam’s origins date back nearly 800 years to the mid-13th century when the first dam was built at the mouth of the river Rotte (hence the name Rotterdam, “the dam on Rotte”). Already in its earliest iteration, the Port of Rotterdam proved a convenient location for waterborne shipments, with goods moving from seafaring ships to smaller riverboats for transfer into the heart of Medieval Europe. Both the city and port at Rotterdam expanded over the centuries, with the next significant milestone coming in 1864 when the construction of the Nieuwe Waterweg (‘New Waterway’) canal began. This canal, also called the Caland Canal after its designer, expanded the port west from the city centre and gave it access to a deeper harbour that enabled oceanfaring vessels to berth at the port. Following the devastation of World War II, the Port of Rotterdam received significant updates, including the construction of the Botlek area. The year 1969 saw the reclamation of the Maasvlakte from the sea, an enormous man-made extension of the Europoort area. The latest large milestone was the privatisation of the Rotterdam Port Authority in 2004.
The port today
Today, the Port of Rotterdam is one of the world’s largest seaports and certainly the largest in Europe. In its latest 2022 annual report, the Port of Rotterdam reported a total cargo throughput of nearly 467.4M tonnes. Although the total was marginally lower than 2021’s, the decrease in throughput did not translate to a financial loss, as the port’s revenues rose by 6.9% to €825.7M. In this overall picture, vegetable oils, animal fats and biofuels play a significant role. Ronald Backers, senior business analyst, bulk; and Kesih van den Berg-Dominicus, senior business manager, bulk cargo and shipping, from the Port of Rotterdam told Oils & Fats International (OFI) that the Port of Rotterdam is the European market leader in these segments. “Our total annual vegetable oil throughput stands at 8-9M tonnes/year and that’s by seagoing vessel volumes only. We see more coming in now via barges and trains as well,” said Backers and van der Berg-Dominicus. Seaborne cargo is the port’s bread and butter and the Port of Rotterdam is unique when it comes to its ability to process large seagoing vegetable oil cargoes through an efficient process chain. “There are both storage terminals www.ofimagazine.com
and production facilities at the Port of Rotterdam. Most incoming seagoing vessels are parcel tankers, which discharge at several locations. It’s also possible to load or discharge directly into barges or into another seagoing vessel, like a coaster,” explained Backers and van der Berg-Dominicus. “The Port of Rotterdam owns 31 berths, as well, for use in between operations at terminals or for ship-to-ship operations. They are complementary to the services at the terminals and reduce waiting and idle time, but also avoid unnecessary shifting, which reduces emissions. There is no other port in the world that has these kinds of facilities on such a large scale.” These berths can accommodate small coasters and other vessels up to 400m in length with a draft up to 22.5m. For large parcel tankers and container vessels transporting vegetable oils and related products, Rotterdam’s infrastructure has practically no limits and can accommodate vessels of all sizes. “Some of the terminals also have direct pipeline connections to production facilities. Everything is to optimise the chain,” add Backers and van der Berg-Dominicus. In case infrastructure for certain shipments does not exist, the Port of Rotterdam works together with terminals and refineries to respond to new developments and market situations. The port and firms invest together to build new jetties, quays and other infrastructure to ensure efficient operations. In addition to first-class infrastructure and easy access to refiners, the Port of Rotterdam’s location is another important key to its success as a vegetable oils hub. It can receive and deliver shipments all over the world including Southeast Asia’s vegetable oil-producing regions in Indonesia, Malaysia, the Philippines and more, in addition to Central and South America and Europe, Due to these transport links, Rotterdam’s vegetable oil throughput includes virtually all kinds of vegetable oils, from rapeseed, sunflower, and soyabean oil to tropical palm and coconut oils and waste oil products, such as used cooking oil (UCO).
Vegetable oil refiners
General refining and processing operations at the port include vegetable oil bleaching, deodorisation, filtration and blending. Several major vegetable oil refiners have located their facilities at the Port of Rotterdam to make use of the port’s transport links and infrastructure. AAK/MaasRefinery: Sweden’s AAK acquired MaasRefinery in 2019. The www.ofimagazine.com
PORT OF ROTTERDAM AAK/MaasRefinery plant, established in 2009, specialises in toll refining of various vegetable oils and fats. With an annual output capacity of 40,000 tonnes, the facility supplies both conventional and organic oils and fats to the food industry segment. Cargill: The Cargill Refined Oils Europe plant, one of the largest in Europe, is located in the Rotterdam/Botlek area and has been active since 1984. The facility produces various edible oils for food and beverage applications, including pure rapeseed, sunflower, soya and olive oil products and various product blends. Cargill also supplies oils and derivative ingredients, such as lecithin, to the personal care product segment. Another significant part of Cargill’s Rotterdam operation is the Provimi animal feed brand, which the company acquired in 2011. Neste/Bunge Loders Croklaan: Neste agreed to acquire Bunge Loders Croklaan’s vegetable oil refinery – consisting of a pretreatment facility, tank farm and jetties – in 2010 for €258M. The sales agreement was phased and the facility has kept producing ingredients for Bunge’s food and nutrition customers. However, the Neste/Bunge facility, with an existing pipeline connection to Neste’s adjacent biofuels refinery, is scheduled to begin servicing Neste exclusively by 2024. Sime Darby/Unimills: The Unimills facility at the Port of Rotterdam was renamed Sime Darby Oils Zwijndrecht in 2019, but the name change did not affect its operations. The company’s oil refining factory carries out fractionation, hydrogenation, interesterification and other processes to produce margarine, shortening and other oils and fats for the food segment. It also produces lecithin, colourings, antioxidants, paraffin substitutes and animal feed. Olenex: Olenex was launched in 2012 as a joint venture between ADM and Wilmar. The Rotterdam facility in the area of Vondelingenplaat is primarily a tropical oil processing plant, refining palm, palm kernel, and coconut oils. In addition to delivering oils and fats to the food and beverage industry, Olenex produces stearin, olein and animal feed products. The location also includes a product development centre and a packaging facility. Wilmar: In addition to the edible oils facility it transferred to the Olenex venture, Wilmar operates the Wilmar Oleochemicals plant in the Rozenburg area of the Port
of Rotterdam. This facility, operational since 2014, is focused on producing fatty alcohols. According to Wilmar, the refinery supplies its products primarily to the home and personal care sectors to be used in detergents and other adjacent products.
Storage terminal operators
Put together, all the storage terminal operators at the Port of Rotterdam have a combined 31M m3 worth of liquid bulk storage capacity. However, not all of them are equipped to handle vegetable oils and animal and fats. Rotterdam’s vegetable oils storage capacity comes primarily from two players – Koole and Vopak. The Port of Rotterdam says they provide roughly 1.2M m3 of edible oils and fats storage capacity. Until recently, both operated two vegetable oil-capable terminals at the Port of Rotterdam. Koole Maastank: The Koole Maastank terminal, located in the Botlek area near the ex-Vopak Botlek facility, is capable of handling vegetable oils, fats, oleochemicals, base oils, and biofuel. The terminal has 22 mild steel and 61 stainless steel tanks ranging in size from 70 to 2,400m3, for a total combined capacity of 87,000m3. There are 17 loading/unloading points, two jetties and 7 weighbridges at Koole Maastank, alongside 60 heating bays. The facility can receive shipments by tanker vessel, barge, tank truck, ISO tank container and flexibag. Koole Maastank is located near the Cargill and Viterra plants. Koole Pernis: Koole Pernis, in the Vondelingenplaat area near Olenex, can receive and store vegetable oils and fats, oleochemicals, base oils, waxes, biodiesel, and easy chemicals. Its 654,000m3 capacity is split between 210,000m3 of stainless steel and 465,000m3 of mild steel tanks, ranging in size between 150-16,400m3. For access, the terminal has three berths for seagoing vessels and eight for barges; 18 truck loading stations; and two railway loading stations with locomotives. Services offered at Koole Pernis include steam and hot water heating, air mixing, blending, weighing, nitrogen blanketing, and customs service. The facility also offers kosher and halal storage. Vopak Vlaardingen: Upon its opening in 1929, Vopak Vlaardingen (pictured, p22) was one of the first large-scale vegetable oil terminals in the world. In addition to vegetable oils and animal fats, the terminal can handle oleochemicals, fatty acid methyl ester (FAME), biofuel feedstocks and base oils. Vopak Vlaardingen’s 620,250m3 u capacity – consisting of 310 carbon and OFI – JANUARY 2024
21
PORT OF ROTTERDAM
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The future at Rotterdam
u stainless steel tanks ranging in size from 250 to 6,240m3 – is split roughly evenly between these five product groups. The terminal features three berths for seagoing vessels and 10 for barges, while also providing access by truck, rail, ISO tank container and flexibag. Vopak offers blending, heating, weighing, nitrogen blanketing, and kosher and halal storage at Vlaardingen. Vopak also operated an 895,750m3 terminal in the Botlek area near Olenex, Viterra and Koole Maastank, which was primarily a chemicals facility but also had some vegetable oil and biofuel storage capacity across its 196 mild, carbon and stainless steel tanks. However, Vopak sold this storage terminal, alongside two others, to British infrastructure investor Infracapital on 1 December 2023, for €407M. OFI was unable to confirm by the time of publication who would be operating the terminal moving forward. In addition to these vegetable oil storage terminals, the Port of Rotterdam houses multiple terminals that are capable of receiving and storing vegetable oil-derived biofuels, such as biodiesel. These operators include HES, Rubis and Standic, among others.
Biofuel manufacturers
The final vegetable oil-related category at the Port of Rotterdam includes multiple biofuel producers. These manufacturers operate some of the largest biofuel production facilities in Europe, and more capacity is slated to become available in the coming years. Alco Energy: Alco Energy claims to operate Europe’s largest biorefinery. The Alco plant turns corn into 650M litres/year of ethanol, 22 OFI – JANUARY 2024
with by-products of the process including dried distillers grains with solubles (DDGS) sold as animal feed and electricity. Alco Energy is also planning to start producing corn oil from its feedstock. Neste: Finnish Neste has operated a refinery in the Maasvlakte area since 2011. With a total output capacity of 1.4M tonnes of Neste MY biodiesel, sustainable aviation fuel (SAF), and renewable plastics, Neste says its Rotterdam facility is the largest renewable products producer in Europe. The company is currently planning a significant €1.9bn expansion of the plant, which is set to increase its total capacity by 1.3M tonnes to 2.7M tonnes (1.2M tonnes of which is dedicated to aviation fuels), by 2026. Shell: Although not yet operational, Shell is constructing a significant, 820,000 tonne biofuel facility at the Shell Energy and Chemicals Park in the Pernis area of the Port of Rotterdam. Announced in 2021, the refinery aims to process UCO, waste animal fat, and other industrial and agricultural waste streams into SAF and renewable diesel, supplemented by vegetable oils, including rapeseed oil. Originally slated for 2024, the Shell facility is now projected to begin production by 2025. Viterra: The Viterra Botlek facility produces biodiesel mainly from rapeseed oil arriving at the Port of Rotterdam from European producers. The company did not disclose its annual production capacity, but stated that Viterra Botlek is among Europe’s larger biodiesel producers. In addition to biodiesel, Viterra Botlek produces refined glycerine with 99.5% purity for multiple applications, including food, feed, medical, cosmetic and technical segments.
The oils and fats market has faced unprecedented volatility in recent years, which have also had an impact on the Port of Rotterdam. The most signficant event has been the ongoing conflict in Ukraine, one of Europe’s largest oilseed producers. Backers and van der Berg-Dominicus say the port has seen fewer oilseed and oil shipments coming in from Ukraine, but the situation is slowly rectifying itself with improving rail connections and operations. In addition, they note that product flows have shifted toward other regions to make up for the loss of product from Ukraine, and that the port is constantly observing the global situation to make appropriate strategic changes. “We look at our own assets and infrastructure and try to adapt as much as possible to make sure the port can be used in the most efficient way,” say Backers and van der Berg-Dominicus. “In this way, we can reduce idle times and unnecessary shifts, thus reducing emissions.” On the topic of emission reductions, the Port of Rotterdam has embarked on an ambitious decarbonisation programme. Through various strategies, the port aims to lower its carbon emissions by 75% by 2025 and by 90% by 2030 when compared to 2019 levels. These efforts include switching to biofuels for both vessels and vehicle traffic and building CO2 capture facilities. By 2050, the port hopes to be entirely carbon neutral. Looking towards the future, Backers and van der Berg-Dominicus believe vegetable oil and adjacent shipments at the Port of Rotterdam are poised to increase. The port is seeing an increase in demand for biofuels and renewable diesel, which is projected to lead to an increase in storage and production facilities in Rotterdam. As such, Backers and van der Berg-Dominicus expect shipment volumes of both vegetable oils and biofuels to grow. “At the same time, with these products, you see changes in regulations as well. As a port, we are closely monitoring how this affects logistical operations, and we are in close contact with all stakeholders to see how we can adjust or maybe expand our infrastructure to optimise our operations. “As we said, we are continuously adapting to changes in the markets, different product flows, and different products, such as more waste-based products. It’s an ongoing business challenge and we need to be on top of things all the time,” Backers and van der Berg-Dominicus conclude. ● Ile Kauppila is a former assistant editor of Oils & Fats International www.ofimagazine.com
PALM OIL
Flattening vegetable oil supply, declining stocks, and the impact of El Niño will lead to higher crude palm oil prices (CPO) this year, according to market experts speaking at the International Palm Oil Congress and Exhibition (PIPOC) on 7-9 November. “World palm oil supplies are currently sufficiently large but today’s bearish market sentiment in vegetable oils is
temporary,” Oil World CEO Thomas Mielke said. The palm oil market had seen big price swings in the past three years between US$530/tonne in May 2020 to US$1,900/tonne in March 2022. “I would not be surprised if there is even more volatility in coming years.” Mielke said that the world had seen strong demand growth for oils and fats in the past 20 years for food, energy and oleochemicals, with average annual growth in the 10 years ending 2003/04 at 4.1M tonnes; 7.1M tonnes ending 2013/2014; and 5.6M tonnes in 2023/24, despite the COVID pandemic. “The challenge for the years ahead is producing sufficient supplies of good quality and at reasonable prices in a sustainable way.”
Figure 1: Palm oil production, 1981-2023 (million tonnes) www.ofimagazine.com
Mielke said palm oil was the backbone of the global oils and fats industry, with top producers Indonesia and Malaysia supplying 53M tonnes or 54% of world vegetable oil exports in 2022/23 on only 6% of world vegetable oil area (see Figure 1, below) In calendar year 2023, Indonesia and Malaysia were likely to export 30.5M tonnes and 17M tonnes of oils and fats (mainly palm oil) respectively, accounting for 32% and 18% of world exports (see Figure 2, following page). “But we forecast lower palm oil exports in 2024 and also in 2025.” Mielke said palm oil production had fallen significantly below trends since 2019 with an alarming decline in average yields. Annual palm oil growth was likely to slow to only an optimistic 1.7M tonnes/ year in the 10 years to 2030, due to: • Lack of replantings (an estimated 30% of oil palms in Malaysia were 19 years old or older) • A slowing down on new plantings due to moratoriums leading to just 300,000ha in new plantings worldwide • Insufficient supplies of high quality seedlings and planting • Sustainability and certification schemes • Shortage of workers • Rising production costs • Management issues Source: Oil World
Palm oil is facing a long-term fall in production growth while flattening vegetable oil supply, declining stocks and the effects of El Niño will lead to rising CPO prices this year Serena Lim
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Higher CPO prices forecast
He compared oil palm plantings with Brazil, which had increased soyabean plantings by 6M ha in the past three years, which was more than the current area planted to oil palm in Malaysia. He said consumers had been lucky that u OFI – JANUARY 2024
23
PALM OIL
Source: Oil World
Figure 2: Major exporters of 17 main oils and fats (million tonnes)
u the negative palm oil growth trend had been offset by unusually large increases in sunflowerseed and rapeseed production in 2023, which was unlikely to continue. The growth in world production of sunflower and rapeseed oils was estimated to slow from 5.5M tonnes in 2022/23 to only 0.7M tonnes in 2023/24; while year-on-year growth in palm oil production in 2023/24 would be the smallest in four years at 0.2-0.3M tonnes (see Figure 3, left). World soyabean production was forecast to rise by 25M tonnes to a new high of 394M tonnes in 2023/24 but there were weather risks with the outlook in Brazil deteriorating due to severe drought in northern and eastern areas. Total growth in world production of oils and fats would slow to 4.2M tonnes in 2023/2024 and stocks would decline in 2024, while there would be further growth worldwide for food and biofuels. “If we put everything together, we are moving into a production deficit for vegetable oils, stocks will decline and prices will rise.” When prices would rise was a question of market sentiment. “January-March will be a tight quarter and prices will change around then, rising by around US$100/ tonne [between November 2023-April 2024]” from the current undervalued US$810/tonne fob.” (see Figure 4, left).
Figure 3: World production of four main vegetable oils (million tonnes)
Source: Oil World
Figure 4: monthly prices of crude palm oil (US$/tonne)
Source: Oil World
El Niño
24 OFI – JANUARY 2024
Ivy Ng Lee Fang, head of Malaysia research and regional head of agribusiness research at CIMB Investment Bank Bhd, said one of the key factors to watch out for in 2024 was the current El Niño weather phenomena, which tended to bring dry weather in Malaysia, Indonesia and some parts of South America and typically led to higher CPO prices (see Figure 5, following page). El Niño occurred every three to five years, with its strongest effects felt between December to April. Current indications were that the current El Niño was not as severe as the last one in 2015/16 but as El Niño affected yields a year later, the first impact might only be seen in the second half of 2024, with no buffer from young estates or new investments. “We expect that El Niño will have a more pronounced impact on CPO prices in the second half of 2024 when current high stocks have been reduced and Indonesia’s B35 biodiesel blending mandate has gained traction.” Ng said in the first 10 months of 2023, the average CPO price fell by 23% u year-on-year to RM3,835 (US$819)/
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PALM OIL
Source: International Research Institute for Climate & Society (Ivy Ing, CIMB Investment Bank Bhd, PIPOC 2023)
Figure 5: El Niño and rainfall u tonne compared with RM5,352/tonne (US$1,144) in the same period the previous year. The fall was mainly due to the easing of acute edible oil shortages caused by the Russian-Ukraine war that began in February 2022, disrupting exports from Ukraine and leading to a ban on palm oil exports by Indonesia from 28 April-23 May 2022. “Other contributing factors to the weaker CPO price were slower global economic growth, tighter monetary policies impacting demand for edible oils in major consuming countries, bumper soyabean harvests in Brazil, and reduced usage of edible oils for biodiesel purposes due to competition from used cooking oils from China in the European markets.” Ng said the 10-month 2023 average CPO price of RM3,835 (US$819)/ tonne, was higher when compared to the historical 10-year average of RM3,620 (US$774)/tonne. She forecast that CPO prices would average RM4,100 (US$871)/ tonne in 2024 due to: • Flattish global palm oil supply with Malaysia producing 18.2M tonnes of the oil and Indonesia producing 48M tonnes. • Lower yields from ageing palm oil estates, the impact of El Niño, reduced fertiliser input in prior years, and lower productivity from new workers affecting palm oil supply in 2024. • The implementation of B35 in Indonesia and high crude oil prices (due to geopolitical risks) supporting biodiesel demand. • Likely lower oilseeds supplies.
US soyabean oil going to fuel Julian McGill, managing director of 26 OFI – JANUARY 2024
Glenauk Economics said that global vegetable oil production had grown exponentially since 1980 as the world population doubled. “The turning point came in 2019 when that exponential growth fell off and we are at around 200M tonnes.” The reason for the slowdown was limited new oil palm plantings coming into maturity, with top producer Indonesia forecast to increase output by just 0.5-1M tonnes in 2023 compared with 2022. McGill said vegetable oil demand was growing faster than meal demand, creating a co-product problem of how to sell meal. In the USA, a shortage of waste feedstocks such as used cooking oil (UCO) had led to increased reliance on soyabean oil for biodiesel and renewable diesel. “If you count all the UCO which is palm oil, the EU is using more palm oil than it’s ever used before and instant noodle producers are getting more money from UCO than from the noodles,” McGill said. He said 6M tonnes of soyabean oil in the USA was used for biodiesel and renewable diesel in 2022, with 45% of the oil in the USA now going into these sectors. This was changing the world flow of soyabean oil and meal, with the USA becoming a soyabean meal exporter. McGill said world demand for soyabean meal was not growing quickly enough to absorb the additional output, particularly once crushing recovered in Argentina, which had seen its 2022/23 soyabean production halve to around 20M tonnes due to a historic severe drought. This would lead to higher vegetable oil prices in 2024 as soyabean crush increased, with Malaysian CPO prices
expected to rise to RM4,000 (US$850)/ tonne by the end of 1st quarter 2024.
Production and consumption
Dr Sathia Varqa, co-founder of Palm Oil Analytics, noted that Malaysian consumption of palm oil had risen rapidly in 2023 to more than 3M tonnes due to increased biodiesel, oleochemicals and food use. Meanwhile, Malaysian UCO exports had risen to reach their highest ever level at 672,000 tonnes in the first 10 months of 2023 while biodiesel shipments fell by 9% as the EU increasingly phases out plantbased feedstocks. Varqa said global food prices had continued to decline in 2023 but this could change in 2024 due to trade disruptions, tight availability of new crops and concerns over export restrictions. Malaysia’s CPO production for 2024 was projected at 17.5-18M tonnes compared with 18.45M tonnes in 2022. Indonesian production was forecast at 4848.5M tonnes, the same level as in 2023. Indonesia’s B35 biodiesel blending mandate implemented nationwide in August 2023 could see an uptake of 1112M tonnes of CPO/year. Varqa said supply risks from weather, sunflower oil pricing and ongoing geopolitical tensions would be the three main swing factors in CPO in 2024. High stocks in China and India would be bearish on CPO prices in the short term, but prices could trade to a high of RM4000-4200 (US$850-US$898)/tonne in first quarter 2024. ● Serena Lim is the editor of Oils & Fats International www.ofimagazine.com
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PLANT & TECHNOLOGY
Global round-up of news LDC constructing soyabean processing facility in Ohio Photo: United Soybean Board
Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world
IN BRIEF BRAZIL: Global agribusiness giant Bunge is set to buy South Korean CJ Cheiljedang Corp’s equity stake in Brazilian soyabean crushing company CJ Selecta, according to an 11 October World Grain report. One of the largest exporters of soyabean protein concentrate in Brazil, CJ Selecta is based in Minas Gerais, has an industrial unit in Araguari, a commercial office in São Paulo and several branches throughout the country. The company was acquired by CJ CheilJedang in 2017, changing its name from Sementes Selecta to CJ Selecta. Bunge did not disclose the financial details of the transaction, but Korean media reports valued it at US$357M for a 66% stake, World Grain said. According to its report, the acquisition strengthens Bunge’s position as a leading soyabean processor in Brazil. CJ CheilJedang Corp is an international food company based in Seoul that manufactures food ingredients, frozen and chilled packaged food products, pharmaceuticals and biotechnology products. 28 OFI – JANUARY 2024
Global agribusiness giant Louis Dreyfus Company (LDC) is building a soyabean processing plant in Upper Sandusky, Ohio, USA. The facility would offer integrated crushing,
vegetable oil refining and lecithin production and packaging capabilities, LDC said on 20 October. LDC said the new plant would also provide it with an option to enter the renewable energy feedstock market to help meet growing demand for biofuels. With construction scheduled to begin early next year, the new facility would have a soyabean crushing capacity of 1.5M tonnes/ year, edible (refined, bleached, deodorised) soyabean oil production capacity of 320,000 tonnes/year and lecithin production capacity of 7,500 tonnes/year. LDC said it had recently expanded its crushing, biodiesel refining, and glycerine and lecithin production complex in Claypool, Indiana, USA, and was currently expanding its canola processing plant in Yorkton, Saskatchewan, Canada.
MENA region’s first UCO conversion to SAF
The Saudi Aramco Total Refining and Petrochemical Company (SATORP) has completed the Middle East and North Africa (MENA) region’s first conversion of used cooking oil (UCO) into sustainable aviation fuel (SAF), Biofuels International reported. Jointly owned by stateowned global petroleum firm Saudi Arabian Oil Company (Saudi Aramco) – with a 62.5% share – and the remaining
share held by global energy company TotalEnergies – SATORP produced SAF last August, which met all product quality parameters within SAF specifications, from co-processing UCO in the refinery’s low-pressure hydrodesulphurisation unit (LPHDS), the 1 November report said. After receiving International Sustainability and Carbon Certification (ISCC+) to produce SAF, the refinery at
Jubail Industrial City, Eastern Province, Saudi Arabia, would be able to meet the expected rise in SAF demand in the country, Biofuels International wrote. “This project … is part of TotalEnergies’ aim to produce 1.5M tonnes/year of SAF by 2030,” Francois Good, senior vice-president, refining and petrochemicals, Africa Middle East and Asia, at TotalEnergies, was quoted as saying.
Elian Barcelona to buy Cargill crush plant Spanish agribusiness Elian Barcelona announced on 10 October that it would acquire Cargill’s soyabean crushing plant in Moll Álvarez de la Campa, Barcelona, for an undisclosed sum. The acquisition was expected to be completed in the first quarter of next year subject to approval from the Barcelona Port Authority. Elian Barcelona said it planned to expand the capabilities of the plant – which served the Catalan, Spanish and European feed and food sectors – to produce a wider range of food and speciality feed ingredients, through concentration and
textured protein, key to supporting the delivery of farm-to-food products across European and Mediterranean markets. Viserion International CEO Aaron Wiegand said the acquisition of the strategically located plant would deepen the company’s long-term commitment to the European market. Elian Barcelona is a subsidiary of Viserion Oilseed Processing, a newly formed subsidiary of Viserion International, which is backed by a fund managed by US alternative asset management firm Pinnacle Asset Management. www.ofimagazine.com
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Shangri-La Shangri-La Hotel, Hotel, Kuala Kuala Lumpur Lumpur
PLANT & TECHNOLOGY IN BRIEF WORLD: Biotechnology company Novozymes has launched an industrial enzyme for renewable diesel feedstock pre-treatment. Building on its experience in enzymatic degumming, Novozymes said that Quara LowP could be used to process hydrotreated vegetable oil (HVO) and hydroprocessed esters and fatty acids (HEFA) feedstocks. “Our solution offers producers the flexibility to process blends of feedstocks,” Novozymes vice president of marketing, ag & industrial biosolutions Hans Ole Klingenberg said on 9 November. Quara LowP increased yield by up to 2% when compared to alkaline refining or acid degumming by targeting removal of phosphorous and metals, leaving valuable neutral oils for improved oil recovery, the company’s website said. The product also maximised bleaching clay reduction, minimised oil losses by absorption and reduced waste handling and disposal costs. In addition, Quara LowP yielded a by-product with lower viscosity containing less oil, which was easier to handle than soap stock and acid gums, Novoyzmes said. The Danish company’s focus is on the research, development and production of industrial enzymes, micro-organisms, and biopharmaceutical ingredients.
LDC acquires Argentine oilseed, grain elevator Global agribusiness giant Louis Dreyfus Company (LDC) has acquired a facility in the Trilí province of La Pampa, Argentina, to receive and condition grains and oilseeds, World Grain reported on 26 October. With a capacity of 1,600 tonnes in silos and 40,000 tonnes in silo bags, the plant would have the capacity to process significant volumes and different varieties of cereals and oilseeds throughout the year, LDC were quoted as saying. The plant’s connection to the Domingo Faustino Sarmiento Railway would enable shipments of local production to LDC’s agroindustrial complex in General Lagos, Santa Fe, and its deep-water port complex in Bahía Blanca, Buenos Aires, World Grain wrote. “The acquisition of this elevator represents a
strategic investment to further reinforce LDC origination activities in the country, supporting logistics from the field to the port thanks to its rail connectivity and complementarity with already existing LDC stockpiles in the provinces from La Pampa and Buenos Aires,” LDC stockpile manager for Latin America South and West, Daniel Giuliano, was quoted as saying. The acquisition was LDC’s second facility in Trilí and its 11th in Argentina, the report said. “The new plant will support LDC’s sustainable business roadmap, allowing the origination of cereals and oilseeds directly from agricultural producers in the region and guaranteeing 100% traceability … of … products,” LDC regional manager of sustainability of cereals and oilseeds María Victoria Capalbo added.
Solugen to build green chemical facility Technology company Solugen is set to build a green chemical plant next to Archer Daniels Midland (ADM)’s corn complex in Minnesota, USA. Using dextrose supplied by ADM, Solugen would scale up its current range of lower-carbon organic acids at the facility in Marshall and develop new molecules to replace existing fossil fuelbased materials, ADM said on 30 October. The firms also plan to work together on commercialising biomaterials for a range of applications including energy, water treatment, agriculture, construction materials, cleaning and personal care.
Photo: Adobe Stock
u
Solugen said its Bioforge process used computationallyengineered enzymes and metal catalysts to convert plant-derived substances into materials traditionally made from fossil fuels “The partnership with ADM will allow us to bring our
chemienzymatic process to a commercial scale,” Solugen CEO Gaurab Chakrabarti said. With on-site construction scheduled to start early this year, the initial phase of production was expected to start in the first half of 2025. “The initial phase of the project will significantly increase our manufacturing capacity, which is critical for commercialising our existing line of molecules,” Solugen CTO Sean Hunt said. “The increase in capacity will also free up our Houston operation for research and development efforts into additional molecules and market applications.”
Soyabean oil processed in fluid catalytic cracking unit Brazilian petroleum refining company Riograndense Petroleum (RPR) has successfully processed 100% soyabean oil in a fluid catalytic cracking (FCC) unit using technology from state-owned Brazilian Petroleum Corporation (Petrobras). The catalysts used in the test were from the ReNewFCC range and were produced in partnership with Fábrica Carioca de Catalisadores (FCC) – a joint venture between Petrobras and Ketjen – which produces catalysts and additives for the 30 OFI – JANUARY 2024
refining industry, RPR said on 1 November. “The Petrobras technology licensed to Riograndense will allow us to produce renewables as early as next year while continuing to serve our current product and fuel market,” RPR superintendent director Felipe Jorge said. The test followed an agreement signed in May between the three companies with a shareholding in RPR – Petrobras, Brazilian petrochemical operator Braskem and multiindustry firm Ultra.
Following a shipment of 2,000 tonnes of soyabean oil to RPR at the end of October, the industrial test started on 1 November after a maintenance stop to prepare the FCC unit to receive and process the raw material. A second test had been scheduled for June 2024, which would comprise the co-processing of mineral cargo with bio-oil (advanced non-food biomass raw material) to produce propylene, gasoline and diesel, all with renewable content, RPR said.
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PLANT & TECHNOLOGY
Driving for efficiency
According to the International Food Policy Research Institute, vegetable oil accounts for approximately 10% of today’s global average calorific food supply, second only to cereals. Demand for this most vital resource is only set to increase, along with the world’s burgeoning population. Indeed, the Food and Agriculture Organization (FAO) of the United Nations projects that by 2050, global agricultural production will need to rise by 70% to feed the world. For edible oil manufacturers, preparing for rising demand is not their only challenge. High energy prices, rising raw material costs, changes in seasonal demand, regulation and geopolitical events have all put producers’ margins at risk. Concerns about cost loom larger than ever. To survive and prosper in these challenging times, edible oil manufacturers must find new and better ways to increase efficiency in what is a complex, multistage production process.
Making energy savings
Producing edible oils is an energyintensive exercise that relies on sterilisers, presses, centrifuges, boilers and more, all of which consume a significant amount of energy. As energy prices rise, choosing energy-efficient equipment becomes vital for maintaining profitability. In particular, refining – a crucial step in ensuring the product’s purity – involves cooling towers. These are especially energy-intensive and can account for 20-40% of a plant’s total electricity consumption. Most cooling tower motors lack drives, operating constantly at top speed without adjusting to the process or environmental conditions. This results in www.ofimagazine.com
Photo: Adobe Stock
Edible oil manufacturers face numerous challenges today including high energy prices and rising raw material costs but by applying new technologies to existing production processes, they can save energy and costs, without compromising on safety, quality and compliance Brith Isaksson
unnecessary electricity consumption and limited process control. Another critical piece of equipment is the horizontal decanter, which uses centrifugal force to separate solids from liquids. Again, many facilities use motors without drives, relying on throttling for speed control, which lacks precision and poses safety risks. Pairing decanter motors with drives not only saves electricity but also provides precise control, ensuring continuous operation even during brief power losses. Additionally, drives offer smooth acceleration during high-torque start-up, with some models further enhancing safety with features like overspeed protection, safe torque off and braking options.
Variable speed drives
Significant energy savings can be achieved by pairing existing motors with variable speed drives (VSDs). VSDs actively regulate motor speed and torque, reducing energy consumption whenever the motor operates below maximum speed. This is particularly impactful, as a motor’s power consumption is proportional to the cube of its speed, meaning even a 20% reduction in speed can halve energy usage. Historically, VSD investments paid for themselves in one to two years but with high energy prices, the payback period has further shortened. VSDs also offer operators the ability to control motors precisely. For example, in pumping operations, VSDs can be adjusted
to ensure that they match the pump’s best efficiency point. Modern drives also provide real-time data on energy use and motor speed, enabling operators to maintain product quality. For example, if seeds are stored, even for a short time, they should be stored in well-ventilated warehouses with a constantly maintained low temperature and humidity. The precision control capability of VSDs helps in maintaining such exacting conditions. Another energy efficiency consideration for edible oil manufacturers is harmonic distortion. Non-linear loads from electrical equipment on the network can cause significant deviations from the expected current and voltage. This means energy is lost on the network rather than being put towards useful work. An unstable power network can also result in premature equipment failure. While drives significantly improve energy efficiency, they can introduce harmonic distortion, in common with many other types of electronic equipment. Facilities often try to overcome harmonics by over-specifying electrical equipment, such as cables and transformers, but this is expensive and unnecessary. A better solution is to address the problem at source by using ultra-low harmonic (ULH) drives.
A digital advantage
In addition to using less energy to perform the same work, modern motors and u drives also offer advantages in terms OFI – JANUARY 2024
31
SUSTAINABILITY
The global area devoted to certified sustainable palm oil production has risen from just 125,000ha in 2008 to 4.9Mha across 23 countries last year, the Roundtable on Sustainable Palm Oil (RSPO) says. Marking nearly two decades of impact at the RSPO Annual Roundtable Conference (RT2023) in 20-22 November, the RSPO said certified sustainable palm oil (CSPO) supply reached a new milestone of 15.4M tonnes last year, while RSPO Trademark licences had increased significantly to more than 1,600 licences in over 100 countries and territories, with growth seen in China, Japan and Southeast Asia. The RSPO Smallholder Support Fund (RSSF) had provided US$4.2M in funding to support 44,203 farmers in 12 countries since 2013, reflecting the importance of smallholders, who accounted for 40% of total palm oil production. In his opening remarks at RT2023, RSPO CEO Joseph D’Cruz (pictured) said: “Through nearly two decades of voluntary action, RSPO members have banded together to raise the bars of sustainability within the industry. The impact we have collectively achieved is increasingly being acknowledged by stakeholders outside u of connectivity. This enables them to interface with a facility’s network for ease of control and monitoring. When combined with programmable logic controllers (PLCs), equipment can be set to adjust itself automatically to ensure that it runs at peak performance. Operators can use data from edible oil machinery for a range of purposes, such as reviewing energy usage data to identify which systems consume the most power. They can then take action to determine the root cause – such as oversized or low-efficiency components – and address them, saving money in the long term. Meanwhile, cloud connectivity enables operators to securely maintain real-time visibility and control from any location. Rich data also enables a smarter approach to maintenance. When condition monitoring detects that a parameter – such as bearing operating temperature – has exceeded the limits set by the operator, it can send an alert 32 OFI – JANUARY 2024
Photo: RSPO
Nearly 5M ha of land devoted to sustainable palm
our industry, and we are seeing a definite shift in the sustainable palm oil narrative in our favour. There is room now for us to move beyond a standards and certification body, and develop tools that will enable the industry to demonstrate sustainability in the way that markets, regulators and customers demand today.”
New CTTS platform
The RSPO highlighted the launch of its new Certification, Trade and Traceability System (CTTS) in October to replace its PalmTrace platform. “The system ... integrates data collected at the upstream level through certification, audits and risk assessments into a secure trading platform,” the organisation said at the time of its launch. “The new platform will support RSPO members (operators and traders) in prothrough the cloud platform. This enables the operator to decide whether an immediate intervention is required or if the equipment can be run at a lower load until the next scheduled maintenance interval. Rather than experiencing unexpected downtime due to a sudden machine failure, operators can identify and address potential issues during scheduled downtime. Predictive maintenance is cheaper in terms of downtime, labour and potential waste from product contamination.
Safety first
Edible oil is subject to strict safety standards. It can be challenging for facilities to balance the need for hygiene with the rapid pace of production. However, this is possible by selecting the right drives, motors, PLCs and services. Facilities must specify appropriate equipment for the operating environment. In high-pressure and heated environments, for example,
viding information which is necessary for the due diligence statement required by the European Commission, in line with the European Union Deforestation Regulation (EUDR) by 29 December 2024.” Design of the CTTS platform was led by Singapore-based Agridence, which had already developed an integrated physical trading platform with traceability and sustainability data solutions for the natural rubber industry. Also involved in delivering the platform was Netherlands-based agrifood supply chain expert CIED, and geospatial solution provider NGIS Australia.
Evolving organisation
Formed in 2004 as a non-profit organisation with 200 members from 16 countries, the RSPO now had more than 5,700 members in over 100 countries and territories, RT2023 heard. “RSPO is evolving to meet current and forthcoming challenges by improving the auditability and implementability of our current standards and assurance systems,” said Anne Rosenbarger, co chair of the RSPO board of governors. “Following a comprehensive review of our current 2018 RSPO Principles and Criteria and 2019 RSPO Independent Smallholder Standard, a revision process is underway to produce a revised set of standards in 2024.” RSPO members include palm oil producers, processors and traders; consumer goods manufacturers; retailers; banks and investors; and environmental, nature conservation, social and developmental NGOs. ● standard components may pose a safety hazard. Fortunately, manufacturers offer equipment designed specifically for these challenging operating environments. A facility can also be made safer by ensuring equipment runs as precisely and efficiently as possible. The high reliability of modern solutions and greater automation reduce the amount of unnecessary manual intervention, reducing the risk of accidents.
Taking the long view
The edible oil industry presently faces numerous challenges which should be addressed with a holistic approach, taking into account the total cost of ownership and operational expenses, rather than solely focusing on initial expenditures. Making decisions that align with long-term viability will not only allow manufacturers to withstand the challenges of today, but also prosper in the future. ● Brith Isaksson is the Global Food and Beverage Segment Manager at ABB Motion
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RENDERING
Sales of tallow are forecast to increase due to growing demand from the renewable diesel, oleochemical, feed and personal care sectors Jens Kastner The global market for tallow, traditionally a common ingredient in the production of soaps, detergents and lubricants, is undergoing change, driven by rising consumption of meat products alongside increasing demand from the biofuels, pharmaceutical, cosmetic and feed industries. To put things into perspective, USbased market research and consulting company Grand View Research estimated the global market size for tallow was worth US$8.1bn in 2022, with the cattle/ bovine segment having the largest share at 46.8% in terms of revenue. In terms of regional variations, the Asia Pacific region held a dominant revenue share of 45.1% last year. Grand View Research predicts a global compound annual growth rate (CAGR) of 6.6% from 2023-2030.
Bavarian plant
In an organic manufacturing plant in Bavaria, Germany, the dynamics driving food and personal care-related demand for tallow are evident. At the facility, the start-up Bone Brox obtains organic beef tallow as a side product from producing premium bone broths. The broth company recommends using beef tallow as an add-on to their broths or to use the tallow as a frying oil, replacing plant-based oils. Bone Brox says that beef tallow is more www.ofimagazine.com
Photo: Adobe Stock
Tallow sales set to rise similar to the fat in the human body than plant-based oils, citing scientific studies that advocate that saturated fatty acids should no longer be avoided. “We only use tallow from organic grass-fed cattle that has more beneficial omega-3 than fatty acids, unlike more conventionally raised cattle that is fed with soyabean and corn and contains more potentially harmful omega-6 fatty acids,” Jin-Woo Bae, a co-founder of Bone Brox, tells OFI. “When using our tallow for frying, it is much more heat-stable than, for example, olive oils and can fry at high temperatures as tallow has a high smoking point. Belgian fries are a good example as they are traditionally double-fried in beef tallow, instead of plant-based frying oil.” Bone Brox obtains most of the tallow as a by-product from the skimming of fat during the production of bone broth with the organic cattle being sourced from Bavaria.
Scaling up
The company is currently preparing to scale up by also looking for cattle sources in Scandinavia and is looking into launching tallow-based skin care products which it says would be helpful for the treatment of neurodermatitis and other skin disorders. “Tallow-based cosmetics are a promising niche even though they run counter to the prevailing vegan zeitgeist,” Bae adds.
US start-up
Similarly, in the USA, start-up Bello Tallow offers a range of tallow-based personal care products designed to improve skin
cell health due to the similar make-up it has to human skin. In a note, Bello Tallow says that high quality tallow starts with the purest highest quality suet from the American Grassfed Association (AGA). Bello Tallow says that only suet is used in its tallow products, not trim fat, as “suet tallow is far more nutrient dense with higher levels of cancer-fighting CLAs [conjugated linoleic acid], oleic, palmitic and stearic acids, omega-3 fatty acid, [plus] bioavailable vitamins A, D, E, K. In addition, it’s non-greasy,” the company adds.
US tallow production
Meanwhile, the North American Renderers Association (NARA) tells OFI that it forecasts US tallow production in 2023 to be slightly lower than 2022 at 2.83M tonnes; white grease output will be down 2% at 730,000 tonnes and poultry fat up some 10%, at just over 1M tonnes. One reason for the steady production (and demand) is that rendered fats are now classed in the USA as low CI (carbon intense) raw materials by the biofuel industry, arising from the fact that they are by-products. There is expanding supply of low CI fats in the USA due to industry demand to reduce carbon emissions. This includes purchases from the oleochemical sector that regularly uses more than 50% of inedible tallow production. Biofuels also account for approximately 24% of the total use of low CI rendered animal fats in the USA. Pet food, while a growing customer of low CI fats, is starting from a low base and accounts for around 5% of use. u OFI – JANUARY 2024
33
Source: C Midgley, Global Data
RENDERING
Figure 1: Use of tallow in fatty acid production (‘000 tonnes) u
US tallow imports
The USA became a net importer of tallow in 2021 for the first time. In 2023, US imports of tallow are forecast by NARA at approximately 650,000 tonnes and used cooking oil (UCO) imports are forecast to exceed 1M tonnes. “We see demand remaining steady to strong in the next year,” Kent Swisher, president and CEO of NARA, tells Oils & Fats International. “The supply-side outlook remains stable, and we foresee a levelling out of the market as the biofuel sector matures. But we have not seen a new normal yet. The cattle cycle is a couple of years away from correcting, which will increase tallow supply. Looking at US Department of Agriculture (USDA) 10-year slaughter projections, we can project total US rendered fat production to increase by approximately 500,000 tonnes [annually] by 2031.” Swisher adds that until recently, traditional rendered fat markets have been in decline since the 1990s. The fast-food industry was once a large consumer of tallow for frying French fries (chips), but that demand shifted to seed oils in the late 1980s and early 1990s. “In the mid-90s, we exported over 60% of our tallow, but those markets have steadily declined due to trade restrictions, consumer preferences, and an oversupply of lower value lipids that have slowly replaced tallow in export markets,” Swisher explains. “For example, the USA can no longer export tallow to the European Union [EU], China, and Japan to name a few, due to trade restrictions.” 34 OFI – JANUARY 2024
Squeeze on tallow markets
The 13th ICIS World Oleochemical Conference in Prague, Czech Republic, in October 2023, presented a more valuable clue as to where the bigger picture is headed. Caroline Midgley, director of biofuels and oleochemicals at GlobalData (formerly UK-based LMC International) noted a squeeze on tallow markets. According to Midgley, tallow for fatty acid production is declining due to greater competition from renewable diesel production – a trend that is strongly driven by government policies. In the EU, for example, the third version of the renewable energy directive (RED III) mandates the replacement of fossil fuels with renewable energy in transport. Member states can choose between a 14.5% GHG (greenhouse gas) target or a 29% energy replacement target in 2030, which potentially raises demand for noncrop feedstocks such as tallow.
fuel (SAF) a new and growing source of demand for waste oils,” Midgley says. “Tallow markets are being squeezed, particularly in the USA, which has seen the output of renewable diesel surge to record levels in 2023; the USA is now a net importer of tallow.” The situation is also having a tangible impact in New Zealand, where the Meat Industry Association of New Zealand recently reported that over the last two years, local tallow exporters had increased trade with the USA, due to higher returns from growing biofuels demand. In 2022/23, New Zealand tallow exports to the USA were worth NZ$215M (US$130M), a 54% increase on the previous year. Singapore remained the next largest market with exports worth NZ$38M, with smaller volumes of exports to Malaysia and the Philippines. However, overall tallow exports were worth NZ$267M in the period, largely unchanged from the previous year.
US Renewable Fuel Standard
Rising prices
Similarly, the US Renewable Fuel Standard (RFS) is a national mandate that requires a specific volume of biomass-based diesel to be used each year. In 2023, the volume required is 2.82bn gallons (10.67bn litres), rising to 2.89bn gallons (10.93bn litres) in 2024. To the north, Canada’s Clean Fuel Regulations, for its part, has a final target for emissions cuts in 2030 of 14.7% and 15% for gasoline and diesel, respectively. “Biofuel regulations in the EU and the USA are increasing demand for waste oils which is leading to scarcity and higher prices for tallow, with sustainable aviation
A recent study by Cerulogy, a UK-based consultancy for low carbon and clean fuels, found that while it is difficult to draw any firm conclusion from the data available on the extent to which demand from the biofuel industry has caused animal fat prices to increase in relation to vegetable oil prices, it was clear that prices for both have risen significantly in real terms. “Manufacturers of pet food, animal feed and oleochemicals are paying about twice as much in real terms for Category 3 animal fats [low-risk material such as carcass parts from healthy animals, animal waste from the food industry, kitchen and www.ofimagazine.com
RENDERING dining waste and food of animal origin that is unfit for human consumption] as they were 20 years ago,” Cerulogy says. “There is great concern within the animal fat consuming industries that the ongoing renewable diesel boom will continue to push Category 3 prices higher.” However, the report also says that sales prices of Category 1 tallow (high-risk material, such as the brain and spinal cord of older cattle) are relatively low. This reflects higher handling costs for biofuel producers when transporting and processing this material after purchase. This notion of difficult handling and transportation working against the use of tallow is supported by researchers at Germany’s Agency for Renewable Raw Materials (Fachagentur Nachwachsende Rohstoffe, FNR). Sebastian Kienast, a FNR project manager for waste material recycling and usage, tells OFI that within the last eight years since FNR’s inauguration, it had not dealt with any tallow projects. The projects that were conducted sought to replace petrochemicals with biological fats as feedstocks in industrial processes to produce oils, fats, lubricants, and adhesives and other products.
“I assume that tallow is not among the potentially promising feedstocks our clients are looking at, because there won’t be enough supply of it here in Germany, and transportation and quality control would be too expensive,” Kienast says.
Reduced meat consumption
German government policies, set by a coalition in which the Greens are a partner, “are clearly aiming at the reduction of meat consumption and cattle herd sizes to reduce carbon emissions, which means domestic supply of tallow will be even lower in the future,” Kienast adds. “Of course, it is a different equation in places that have major cattle industries, such as Latin America, the USA or Australia.” The Association of the German Biofuels Industry (Verband der Deutschen Biokraftstoffindustrie, VDB) tells OFI that it expects a slow decline in the domestic supply of animal fats as meat consumption is declining – a trend seen elsewhere, for example, in the UK. Against this backdrop, an expansion of production capacities for animal fat methyl ester is not expected, at least in Germany. Although the German GHG quota requires petroleum companies to reduce
the greenhouse gas emissions of the fuels they put on the market by a specific percentage, national lawmakers have wanted to pre-empt competition for the use of the raw material and fraud through false declaration. As a result, tallow, together with UCO, is currently legally limited to a maximum of 1.9% of the energy used in the transport sector. In addition, biodiesel production from waste oils and fats is more complex than using fresh vegetable oil, VDB points out. Tallow must first be cleaned of contamination in the fat melt. The high concentrations of free fatty acids typical of waste raw materials are then removed so that they can be processed into biodiesel, together with the main components of tallow triglycerides. The tallow must also be heated throughout the production process, so that it remains liquid. Various non-governmental organisations have also carried out campaigns to calculate how huge Germany’s pig production would have to be to provide a larger proportion of the energy used in the transport sector through tallow. ● Jens Kastner is a freelance journalist
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OFI – JANUARY 2024 35
STATISTICS STATISTICAL NEWS
Mintec
Palm oil
Crude palm oil Mintec benchmark price (US$/tonne), cif Rotterdam
The Mintec Benchmark Prices (MBP) for palm oil cif Rotterdam climbed by 7.9% month-on-month to US$954.5/ tonne on 30 November 2023, while declining by 10% year-on-year. The recent uptrend in the MBP is attributable to seasonal monthly production declines in top producers, Indonesia and Malaysia, with flooding in the latter exacerbating supply concerns. According to the United States Department of Agriculture (USDA), global palm oil production for the 2023/24 marketing year is estimated to rise by 2.5% year-on-year to 79M tonnes; a 7% increase compared to the five-year average. Weather patterns, particularly the El Niño phenomenon, remain a concern for production figures in the longer term.
Coconut oil Mintec benchmark price (US$/tonne), cif Rotterdam
Mintec
Mintec
Palm kernel oil Mintec benchmark price (US$/tonne), cif Rotterdam
Mintec
Palm kernel oil
Prices of selected oils (US$/tonne) Jun 23
July 23
Aug 23 Sept 23
Oct 23
Nov 23
Soyabean
968.8 1,063.3
1,086.6 1,070.3
1,088.7
1,124.3
Crude palm
901.2
958.7
947.2
937.8
895.6
927.5
Palm olein
785.9
866.1
848.5
821.1
780.5
805.7
Coconut
993.6 1,018.1
1,074.3 1,043.0
1,013.5
1,055.9
Rapeseed
940.3 1,046.2
1,012.2
996.2
1,038.3
1,009.6
Sunflower
880.5 1,016.5
974.7
885.1
890.3
925.1
Palm kernel
915.0
941.7
986.4
938.0
887.0
940.4
Average
912.0
987.0
990.0
956.0
942.0
970.0
Index
216.0
234.0
235.0
227.0
223.0
230.0
36 OFI – JANUARY 2024
The Mintec Benchmark Prices (MBP) for palm kernel oil cif Rotterdam declined by 2.5% month-on-month and by 10.3% year-on-year to US$964.5/tonne on 30 November. The decline in the MBP is attributable to ample supply. The USDA estimates palm kernel oil production for the 2023/23 marketing year to reach 9M tonnes, a 2.7% rise on the year.
Coconut oil
The Mintec Benchmark Prices (MBP) for crude coconut oil cif Rotterdam climbed by 6.9% month-on-month to US$1,090/tonne on 30 November, a 6.8% year-on-year (y-o-y) decline. The month-on-month price increase is attributable to a decline in export supply, particularly from Indonesia, and below average rainfall in the Philippines, raising concerns for the crop. However, further price rises have been capped by ample supply and price competitiveness of close substitutes – palm oil and palm kernel oil. Market sources expect subdued demand for coconut oil to persist through December, due to good supply conditions of alternative products. According to the USDA, global coconut oil is projected to rise by 1.4% year-on-year to 3.8M tonnes in the 2023/24 season. Weather and biodiesel admixtures in the top global coconut oil producer the Philippines will be watch points for supply and prices.
Mintec provides independent insight and data to help companies make informed commercial decisions. Tel: +44 (0)1628 851313 E-mail: sales@mintecglobal.com Website: www.mintecglobal.com
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