OFI May 2022 by Quartz Business Media

OILS & FATS INTERNATIONAL MAY 2022 ▪ VOL 38 NO 4

UKRAINE/ RUSSIA Oil shortage takes hold

PROCESSING Towards green hydrogen

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CONTENTS

OILS & FATS INTERNATIONAL

IN THIS ISSUE – MAY 2022 Commodity prices

FEATURES

NEWS & EVENTS

Record highs in 2022 Vegetable oil prices have hit record highs in 2022 but may fall later this year due to decreasing demand

Ukraine/Russia

Oil shortage takes hold Russia’s invasion of Ukraine has caused sunflower oil prices to spike and forced importers to turn to alternatives such as palm and soya oils

Comeback for palm?

Ukraine/Russia News

While the world-leading New Zealand dairy sector was hit by the COVID-19 outbreak, export sales have returned close to pre-pandemic levels, with positive growth ahead

Stocks high but large fall in spring sunflower area

News

Plant & Equipment

Indonesia bans palm and cooking oil exports

Biofuel News

Towards green hydrogen Lack of reliable supply is driving edible oil refiners and other end users towards on-site hydrogen production, with green hydrogen emerging as a competitive option

Comment

Strong export demand

Photo: Evonik Catalysts

Photo: Adobe Stock

Processing & Technology

Photo: Adobe Stock

New Zealand Butter

Focus on global projects OFI reports on some of the latest projects, technology and process news and developments around the world

TotalEnergies starts up SAF production in France

Renewable News

BASF and Henkel to replace fossil feedstocks

Transport News

COFCO secures 25-year lease on Santos terminal

Biotech News

Bayer settles Roundup claims ahead of trial

Diary of Events

International events listing

Statistics

www.ofimagazine.com

Contents May 2022.indd 1

World statistical data

OFI – MAY 2022

03/05/2022 09:26:09

EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 38 NO 4 MAY 2022

EDITORIAL: Editor: Serena Lim serenalim@quartzltd.com +44 (0)1737 855066 Assistant Editor: Gill Langham gilllangham@quartzltd.com +44 (0)1737 855157 SALES: Sales Manager: Mark Winthrop-Wallace markww@quartzltd.com +44 (0)1737 855114 Sales Consultant: Anita Revis anitarevis@quartzltd.com +44 (0)1737 855068 PRODUCTION: Production Editor: Carol Baird carolbaird@quartzltd.com CORPORATE: Managing Director: Tony Crinion tonycrinion@quartzltd.com +44 (0)1737 855164 SUBSCRIPTIONS: Jack Homewood subscriptions@quartzltd.com +44 (0)1737 855028 Subscriptions, Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK © 2022, Quartz Business Media ISSN 0267-8853 WWW.OFIMAGAZINE.COM

A member of FOSFA Oils & Fats International (USPS No: 020-747) is published eight times/year by Quartz Business Media Ltd and distributed in the USA by DSW, 75 Aberdeen Road, Emigsville PA 17318-0437. Periodicals postage paid at Emigsville, PA. POSTMASTER: Send address changes to Oils & Fats c/o PO Box 437, Emigsville, PA 17318-0437 Published by Quartz Business Media Ltd Quartz House, 20 Clarendon Road, Redhill, Surrey RH1 1QX, UK oilsandfats@quartzltd.com +44 (0)1737 855000 Printed by Pensord Press, Gwent, Wales

Comeback for palm? With no end in sight in the Russia-Ukraine war, the world and our own oils and fats market are getting to grips with the impact of this tragic conflict between the two sunflower oil giants. Outside of the suffering and death of people in Ukraine, there are now everyday examples of what a shortage of sunflower oil might mean. In the UK, several supermarkets including Iceland, Waitrose and Morrisons are rationing sunflower oil to one or two bottles per customer, with an accompanying price rise. There have also been reports that half of the country’s 10,000 fish and chip shops could go out of business due to expensive deep frying oil and a 35% tariff on Russian fish imports. With the vast majority of the UK’s sunflower oil sourced from Ukraine and Russia – which together account for around 80% of global sunflower oil exports – industry sources have predicted they could run out in a matter of weeks. Some food companies will be turning to palm and soyabean oil as alternatives, to the fear of environmentalists, who have blamed both for deforestation in Southeast Asia and the Amazon, respectively. In the UK, Iceland – which removed palm oil from its own label brands in 2018 – is temporarily returning to using palm oil (see page 7). The alternative would be “simply to clear our freezers and shelves of a wide range of staples”, Iceland managing director Richard Walker says. Specifically in frying and snack food production, manufacturers could switch to palm olein if supplies of high oleic sunflower oil are curtailed or become too expensive. While regular sunflower oil is relatively high in polyunsaturated (PUFA) linoleic acid, which makes it unsuitable for commercial frying since it oxidises rapidly, high oleic sunflower oil has a lower PUFA content but nearly 80% monounsaturated oleic acid, ideal for high temperature frying. “So strangely, while the Russia-Ukraine conflict has spun the world into turmoil, negatively impacted petroleum, gas and even sunflower oil supply chains, the solution for the edible oil sector may lie in a reverse to the old ways through adoption of various palm oil/palm olein applications,” Dr Kalyana Sundram, a consultant for the Council of Palm Oil Producing Countries, wrote in a 7 March blog. “Market forces, particularly in the Asia and Middle East regions, are already signalling this makeover.” In Europe, which is heavily dependant on Ukrainian sunflower oil imports but also drafting a deforestation regulation, it remains to be seen how long its stocks of sunflower oil and reputation concerns can hold out. For exporters of both grain and oilseeds in Ukraine, the most pressing issue is getting their stocks out. With the 24 February invasion cutting off access to the country’s Black Sea and Azov Sea ports, most flow is now going via rail or the Danube River ports of Reni and Izmail. There are some 1.25M tonnes of grains and oilseeds stranded on 57 blocked ships in Ukrainian ports that may be at risk of spoilage, farm minister Mykoa Solskyi has said (see p4). And while rail shipments are improving, they are still only at half their potential. The war in Ukraine needs to end for the people in Ukraine and for the sake of global food security. However, how this can be achieved is still uncertain.

@oilsandfatsint

Oils & Fats International

Serena Lim – serenalim@quartzltd.com 2 OFI – MAY 2022

Comment May 2022.indd 1

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27/04/2022 09:03:27

UKRAINE/RUSSIA NEWS SOWING: As of 27 April, farmers had planted 19,000ha of rapeseed, accounting for 57% of the expected area, AgriCensus reported the country's agriculture ministry as saying. Sunflower sowing was complete on 1.1Mha or 16.6% of the planned area, while soya planting had advanced to 101,700ha or 8% of the 2021 planted area. In total, 3.6M ha of oilseeds and cereals had been sown, amounting to around 25% of the forecast for spring crops, the report said. Minister of agrarian policy and food, Mykola Solsky, had said some land would not be sown due to unexploded bombs, mines and debris in the ground. PORTS: More than 1M tonnes of grains and oilseeds stranded on blocked ships in Ukrainian ports may be at risk of spoilage, World Grain reported on 18 April. “There are currently 57 vessels with 1.25M tonnes of grain and oilseeds" at Ukraine's ports, farm minister Mykoa Solskyi said, with most captains unsure if there were any problems with their retention period. RUSSIA: The deputy chairman of Russia’s security council, Dmitry Medvedev, warned that Moscow “will only be supplying food and agriculture products to our 'friends'", Reuters reported on 1 April. "Fortunately, we have plenty of them, and they are not in Europe or North America...” Meanwhile, in a bid to protect its domestic market, exports quotas of 1.5M tonnes and 700,000 tonnes had been set for Russian sunflower oil and meal respectively from 15 April to 31 August, AgriCensus reported on 31 March. A temporary ban on sunflower and rapeseed was also be in effect from 1 to 31 April. 4 OFI – MAY 2022

General News May 2022.indd 2

Stocks high but large fall in spring sunflower area Sun

Projected oilseed production in Ukraine, 2022 (optimistic, pessimistic and average)

Source: UkrAgro Consult

IN BRIEF

A considerable fall in Ukraine’s sunflowerseed area this spring, along with lower yields due to a lack of inputs such as fertiliser, will result in a crop harvest of around 10M tonnes for the 2022/23 season, UkrAgroConsult’s ‘Black Sea Grain – Conflicting Supply and Demand’ webinar heard on 6 April. Sergei Feofilov, director general of the Ukrainian consulting agency, told the webinar that the country’s suflowerseed region was situated in the eastern, northern and southern parts of the country where military activity was very high, following Russia’s invasion of Ukraine on 24 February. He stressed that it was very difficult to make accurate forecasts but based on the situation as of 6 April, the 2022/23 sunflowerseed harvest was likely to total around 10M tonnes, against a record 16.5M tonnes in 2021/22. However, Ukraine was now holding a record 6.5-7M tonnes of sunflowerseed stocks because the overwhelming majority of crushers had ceased operations and there were limited export routes out of the country, with sea ports blocked. Total sunflowerseed supply by the start of the 2022/23 season in September could, therefore,

end up at an average level of 15-16M tonnes. Feofilov said lack of fuel was the most critical factor for farmers, along with low fertiliser supply. Farmers were also short of the revenue they normally gained from selling their grain and oilseed stocks in February/March to buy inputs. Feofilov estimated that around 44,000ha of sunflowerseed, 11,000ha of rapeseed and 12,000ha of soyabeans would be sown this spring, resulting in 10.5M tonnes of sunflowerseed, 2.9M tonnes of soyabeans and 2.9M tonnes of rapeseed. In terms of export logistics, Feofilov said midand small-sized exporters were the most promising partners as they could switch more quickly to rail and truck alternatives. In 2020/21, Ukraine was the top global exporter of sunflower oil, accounting for 47% of exports, followed by Russia (29%), and Argentina, the EU and Turkey (around 6-7% each). From 96% of Ukraine’s grain, oilseeds and vegetable oil normally being exported by sea, the situation had now changed to 70% by rail and 30% via the only two ports currently operating – Reni and Izmail on the Danube River. However, Feofilov said the capacity of the two Danube ports was small compared with the major ports of Odessa and Mykolayiv on the Black Sea and Mariupol on the Sea of Azov. Other possible routes for grain, oilseed and vegetable oil exports were via railway to the ports of Gdynia and Gdansk in Poland and Constanta Port in Romania. Feofilov said it was important to increase exports as domestic stocks were unusually high, which could create a problem if exports remained blocked and new crops arrived in July for storage.

Rail transport half of potential capacity Rail transport of grains in Ukraine increased in April but still only reached 55% of potential capability, AgriCensus reported from the Kyiv-based Trend and Hedge Club online grains meeting on 20 April. Up to 320,000 tonnes of grains were exported by rail between 1-19 April, Valerii Tkachov, Ukrainian railways deputy director, commercial department, told the webinar. This compared with 415,000 tonnes exported during March. At full capacity, Ukraine’s rail system could handle around 3,422 carriages/day. With each carriage moving around 65 tonnes, that meant the service could deliver around 222,000 tonnes/day. Of the total running stock, around 731 wagons could handle grain, giving a maximum capacity of just under 50,000 tonnes/day or around 1.5M tonnes/month, Tkachov said.

However, only 55% of the total rail capacity was currently being used, with grains comprising 39% of that figure. Difficulties were arising on the European side of the border as there were only four to five terminals that offered smooth logistics, AgriCensus wrote. These were Izov-Grubeshiv (on the Polish border), Vadul-Siret-Dornesti and Dyakovo-Halmeu (Romanian border) and Mohyliv-Podilskyi-Velchynets (Moldovan border). Carriages were queuing, with some reporting delays of over 20 days. There was also a huge deficit of available carriages on the EU side, and different widths on Ukrainian and European rail tracks, Tkachov said. Road freight export remained very small as most operators did not have the required licences and trucks did not meet EU standards, he added. www.ofimagazine.com

04/05/2022 12:25:07

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NEWS

Indonesia bans palm and cooking oil exports Indonesia will ban all cooking oil exports and their raw materials, including palm oil, effective from 28 April, President Joko Widodo announced on 22 April. Widodo said he wanted to ensure the availability of food products at home after global food inflation soared to a record high following Russia's invasion of major crop producer Ukraine, Reuters wrote. "I will monitor and evaluate the implementation of this policy so availability of cooking oil in the domestic market becomes abundant and affordable," he said. Indonesia is the world's top palm oil

exporter and accounts for more than half of global palm oil supply. AgriCensus said the shock measure had been introduced against a backdrop of mounting civil unrest as the cost of living had surged domestically, amid reports that Widodo was considering extending his term as the country's president. The government had placed new responsibilities on exporters to guarantee domestic supply when exporting, and introduced new reference prices, but the measures had produced mixed results, with accusations of corruption (see story below).

The shock announcement would hurt top palm oil consumers such as India, Atul Chaturvedi, president of Indian Solvent Extractors Association of India (SEA) said. AgriCensus wrote that palm oil prices would be bullish with export availability limited, to the advantage of other suppliers such as Malaysia, Colombia, Papua New Guinea and Thailand. Alternative vegetable oil prices spiked in response to the announcement, with soyabean oil rising 4.5% to a record high of U$83.21/pound on the Chicago Board of Trade, Reuters wrote on 23 April.

Ivory Coast exporters have been rejecting more than half of drought-affected cocoa beans due to poor quality, Reuters reported on 15 March. The November to March dry season in the world’s top cocoa producer had been hotter and dryer than usual this year, with lack of rain still affecting many parts of the country, Lack of moisture caused cocoa beans to become small and acidic. With the dry weather causing damage to the last stage of the October to March main crop, some farmers feared it could also impact the upcoming midcrop, which ran from April to September, the report said.

IN BRIEF FRANCE: French vegetable oil and biodiesel group Avril said on 13 April that it plans to expand its sunflowerseed crushing capacity to become more independent in sunflower oil and meal. "In processing more than 1M tonnes of sunflowerseeds, over 50% of France's production of sunflower will be valorised by our group,” the company said when announcing its 2021 results. “Our project will also contribute to the expansion of this crop, which is expected to increase in surface area by 900,000 ha or 30% compared to 2021.” 6 OFI – MAY 2022

General News May 2022.indd 3

Photo: Pixabay

Exporters reject drought-affected cocoa beans

Cocoa beans can become small and acidic due to lack of moisture

Of the 11 exporters and grinders that Reuters interviewed at the main ports of Abidjan and San Pedro, some

said they had turned down more than half the beans received since January. “Cocoa of this quality is not

exportable. We are refusing on average 50% of deliveries because of this,” an exporter from a European company based in San Pedro said. In some shipments, beans have arrived with a free fatty acid (FFA) content of 5% or 6%, far above the standard of 1.75% accepted for international exports, according to the commercial director of an Abidjan export company. Beans were also smaller and lower in cocoa butter content, Reuters wrote, Exporters and grinders both said they expected poor cocoa bean quality to persist for the first two to three months of the mid-crop.

Four charged in cooking oil conspiracy An Indonesian trade official and three palm oil executives have been charged in connection with a cooking oil shortage conspiracy, Mongabay reported on 19 April. The suspects allegedly conspired to secure export permits to sell crude palm oil (CPO) at record high prices internationally, contrary to a domestic market obligation, the report said. The Indonesian government had imposed a domestic market obligation policy (DMO) in February due to a cooking oil shortage, mandating companies to allocate 20% of their CPO for domestic use and imposing a domestic price obligation (DPO) which capped the CPO selling price. The Attorney General’s Office (AGO) announced on 19 April that it had charged Indrasari Wisnu Wardhana, the director-general of foreign trade at the Ministry of Trade, for issuing CPO

export permits to four companies: the Permata Hijau Group, Wilmar Nabati Indonesia, Multimas Nabati Asahan and Musim Mas. Prosecutors alleged that the companies failed to meet the DPO requirement but managed to secure export permits from Indrasari, allowing them to take advantage of record high prices on the international market. The companies also allegedly sold CPO on the domestic market at prices higher than those set by the government. Executives from the four companies, including Wilmar Nabati Indonesia commissioner Master Parulian Tumanggor, were also charged. In response, the Wilmar Group stated it would support the law enforcement process, Tempo reported on 20 April. The company also claimed that it had complied with all applicable regulations related to palm oil exports. www.ofimagazine.com

04/05/2022 12:25:14

NEWS

Food producers reversing palm oil ban A sunflower oil shortage resulting from Russia's invasion of Ukraine is forcing food producers to reverse their ban on palm oil, Edge Markets reported on 29 March. Together, Ukraine and Russia account for around 70% of the world’s sunflower oil exports and food manufacturers warned that supplies could run out due to crops being trapped, the Daily Telegraph wrote. UK supermarket Iceland, for example, had been forced to reverse its ban on palm oil in all its own-brand products. The chain would start selling a limited range of own-label

products containing palm oil from June, a reversal of the ban it introduced in 2018 in a stand against tropical deforestation, the newspaper reported on 28 March. Iceland managing director Richard Walker said the move was a temporary measure and it would only use certified sustainable palm oil as an ingredient. “Now that it [sunflower oil] has suddenly become unaffordable, or totally unobtainable, we are working closely with our suppliers to find alternatives,” he added. POLITICO news service reported on 14

April that several food companies operating in the EU were also changing recipes with a leading multinational saying that both palm and soyabean oils were "the most obvious" replacements for sunflower oil. "While the Russia-Ukraine conflict has spun the world into more turmoil ... the solution for the edible oil sector may lie in a reverse to the old ways through the adoption of various palm oil/palm olein ... applications," writes the Council of Palm Oil Production Countries.

Alfa Laval to acquire Desmet Swedish fluid handling, centrifugal and heat transfer company Alfa Laval has signed an agreement to acquire edible oil and biofuel technology supplier Desmet, part of the Desmet Ballestra Group, the companies announced on 31 March. The unit would operate as a stand-alone entity within Alfa Laval’s Food & Water Division, and strengthen Alfa Laval’s position in the markets for edible oils, biofuels, and plant and animal-based proteins for food and feed, the firms said. “It will add know-how and expertise to accelerate future innovations within food, feed and biofuels – and strengthen our ability to support the transformation towards renewable fuels,” Alfa Laval president and CEO Tom Erixon said. Headquartered in Brussels, Belgium, Desmet has around 1,000 employees in Europe, India, Latin America, North America and Southeast Asia. Last year, the business had a turnover of €300M (US$330M). The operational units and brands of Rosedowns and Stolz are included in the transaction, expected to close during the second quarter of this year, subject to customary conditions, according to the companies. The Desmet Ballestra Group is currently owned by Financière DSBG, and ultimately controlled by European specialist financier Kartesia and US investment firm Farallon Capital. Alfa Laval specialises in heat transfer, centrifugal separation and fluid handling systems, and is active in the energy, marine, and food & water sectors. www.ofimagazine.com

General News May 2022.indd 4

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NEWS EUROPE: EU farmers will increase their sowing of corn, sunflowers and protein crops resulting in a very good 2022 harvest for cereals and oilseeds, according to a 5 April report by the European Commission (EC), reported by World Grain. EU oilseed production was projected to grow by 6.5% to 30.2M tonnes this marketing year, and to increase to 32.2M tonnes in 2022/23, with the latter including 11.2M tonnes of sunflowerseeds. SAUDI ARABIA: The Saudi Agricultural and Livestock Investment Company (SALIC) has acquired a 35.4% stake in Olam Group subsidiary, Olam Agri Holdings. SALIC – a subsidiary of the Public Investment Fund (PIF) of Saudi Arabia – said on 29 March that it expected the US$1.24bn transaction to be completed this year, subject to approval from the relevant international authorities. SALIC Group CEO Sulaiman Al Rumaih said the partnership with Olam Agri aimed to support SALIC’s mission to achieve food security for the Kingdom of Saudi Arabia through investments in both domestic and international opportunities. Olam Agri specialises in the processing and trading of animal feed, grains, oilseeds and rice and is active in more than 30 countries. MALAYSIA: The Malaysian Palm Oil Board (MPOB) is reviewing the sustainability standards within the Malaysian Sustainable Palm Oil (MSPO) certification scheme to align it with stricter international schemes, the Malaysian Reserve reported on 29 March. As of 28 February, about 95% of all the country’s oil palm oil planted area had been MSPO-certified, the MPOB said. 8 OFI – MAY 2022

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Cargill halts purchases of palm oil from Sime Darby Global agribusiness giant Cargill has suspended palm oil purchases from Malaysia’s Sime Darby Plantation due to concerns over the use of forced labour, Bloomberg News wrote on 18 April. Sime Darby said that since 25 February, Cargill had suspended all new sourcing of palm oil and derivative products from the company. It did not give a reason for the halt but said that it was in talks with Cargill, according to the report. In late January, US Customs and Borders Protection said it would seize Sime Darby’s palm oil and related goods as it had sufficient information to determine that the company’s products were made using convicts, forced or indentured labour, the report said.

Cargill was not available for comment at the time of publication, Bloomberg News wrote. Italian confectionery giant Ferrero has also stopped sourcing palm oil from Sime Darby over concerns on the use of forced labour, according to a Reuters report on 15 April, “On 6 April, we requested all our direct suppliers to stop supplying Ferrero with palm oil and palm kernel oil sourced indirectly from Sime Darby until further notice," Ferrero told Reuters. Leading chocolate manufacturer Hershey and US food giant General Mills had also halted palm oil purchases from Sime Darby, Reuters wrote. Sime Darby said Ferrero, Hershey and General Mills were not customers.

Unilever pilots blockchain system for palm oil

Photo: Adobe Stock

IN BRIEF

Unilever says blockchain technology allows it to increase traceability and transparency in its palm oil supply chain

Unilever said on 21 March that it had launched a pilot blockchain system to increase

traceability and transparency in its global palm oil supply chain. The consumer goods

giant said it had applied the GreenToken by SAP system to source more than 188,000 tonnes of palm oil fruit in Indonesia. The system had enabled Golden Agri-Resources and other Unilever suppliers to create tokens that mirrored the material flow of palm oil throughout the supply chain and captured the specific attributes linked to the oil’s origin. “With GreenToken, we want to bring the same traceability and transparency to bulk raw materials that you get from scanning a bar or QR code on any consumer product,” GreenToken by SAP general manager Nitin Jain said.

China's soyabean imports to hit record China's soyabean imports are forecast to hit a record 104M tonnes in 2022/23 due to increased feed demand and high prices of protein-rich substitutes, according to a US Department of Agriculture (USDA) forecast. The USDA 17 March forecast also predicted that China’s 2022/23 oilseed consumption would reach 166.7M tonnes, up from an estimated 163.5M tonnes in the previous year. "Greater sow and hog inventories following the African Swine Flu (ASF) outbreak in 2018, combined with high poultry production capacity and steadily increasing ruminant and aquaculture production, are expected to boost feed

demand in 2022/23, pushing soyabean imports to a record 100M tonnes," the USDA wrote. The rise in soyabean imports was also expected to be supported by higher soya meal usage in animal feed linked to higher prices of substitute products, AgriCensus wrote on 18 March. Soyabean crushing volumes were expected to increase in 2022/23 to 98.5M tonnes but plants would remain under-utilised. The USDA forecast oilseed production to rise slightly to 62.4M tonnes in 2022/23 from an estimated 61M tonnes in 2021/22 on expected higher subsidy rates for soyabeans and stronger prices and demand for other oilseeds. www.ofimagazine.com

04/05/2022 12:25:24

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BIOFUEL NEWS ITALY: Italian oil and gas firm Eni has pushed back its target to double hydro-treated vegetable oil (HVO) production capacity to 2M tonnes/year by one year to 2025 but expected capacity to grow at a much faster pace after that, Argus Media reported on 18 March. Speaking at Eni’s 2022-25 strategy day, chief executive Claudio Descalzi said the firm’s HVO production capacity would increase to up to 6M tonnes/year by around 2035, which compared with a previous target of 5M tonnes/year by 2050. Eni currently runs a 650,000 tonnes/year HVO unit in Gela, Sicily, and a 350,000 tonnes/year plant in Venice. USA: Global infrastructure consulting company AECOM announced on 23 March that it was partnering with renewable fuel technology firm Genifuel to produce sustainable aviation fuel (SAF) from algae and wastewater solids. AECOM said its Algae Harvesting Hydro-nucleation Flotation Technology removed harmful algal blooms, cyanotoxins, nutrients and carbon from water, allowing recovered algae to be converted into commercial products such as biofuel.

TotalEnergies starts up SAF production in France Global energy company TotalEnergies announced on 3 March that it had started production of sustainable aviation fuel (SAF) at its new platform in Normandy, France. The company said the new site complemented its bio-refinery at La Mède in Bouches-du-Rhône and its Oudalle plant in Seine-Maritime, and would enable it to meet customer demand and respond to French legislation calling for aircraft to use at least 1% SAF from the start of this year. “We are responding to strong demand from the aviation industry to reduce its carbon footprint,” said TotalEnergies president of refining and chemicals Bernard Pinatel. “This commitment is fully aligned with the company’s climate ambition to get to net zero emissions by 2050.” One of TotalEnergies refining & chemicals’

six integrated platforms worldwide, the new Normandy facility comprises a refinery, a petrochemicals facility and a polymer production site. The plant converts around 12M tonnes/year of crude oil into around 200 commonly-used products, including diesel, gasoline, kerosene, lubricants, oils and SAF. The refinery’s output also provides the petrochemicals facility and polymers units with feedstock to produce plastic pellets that are used to make a range of products. TotalEnergies said it would also start producing SAF at its Grandpuits zero-crude platform, southeast of Paris, from 2024. All of the SAF, which was destined for French airports, would be produced from waste and residue – including used cooking oil – sourced from the circular economy

Vibra moves to sell palm oil-based SAF Brazilian fuel distributor Vibra Energia (Vibra) has extended its existing partnership with biofuel producer Brasil Biofuels (BBF) to move into producing and selling palm oil-based sustainable aviation fuel (SAF), BBF announced on 13 April. BBF said Vibra had agreed to sell SAF produced at its Manaus biorefinery, adding that it would also be investing an additional US$43M in the venture, which would use palm oil sourced from the Amazon location of Roraima, Brazil’s northernmost state. The new venture would be based in the city of São João da Baliza and was due to become operational in 2025. The plant would have a capacity of up to 250M litres/year of “green diesel” and 280M litres/year of SAF, BBF said. The partnership between Vibra and BBF was set to last for five years and could be renewed after that, BBF said.

Photo: Adobe Stock

IN BRIEF

BBF is producing palm oil-based SAF at its Manaus biorefinery in Amazonas state

US renewable diesel production to overtake biodiesel US renewable diesel supply will exceed that of biodiesel in the near term, according to latest forecasts by the US Energy Information Administration (EIA). In its Annual Energy Outlook 2022, the EIA projects renewable diesel supply to increase to 130,000 barrels/day this year and 145,000 barrels/day in 2050, reflecting a “significant increase in renewable diesel production capacity” in the near term. The EIA projected that the production of renewable diesel would increase due to its compatibility with existing distribution 10 OFI – MAY 2022

Biofuel news May 2022.indd 2

infrastructure and engines, higher state and federal targets for renewable fuel production, incentives from tax credits, and the conversion of existing petroleum refineries into renewable diesel refineries. Targets and incentives contributing to renewable diesel’s growth include the US Renewable Fuel Standard, California’s Low-Carbon Fuel Standard and the US biomass-based diesel blender credit, which allows taxpayers to claim a credit of US$1.00/gallon when the required amount of biodiesel or renewable diesel is blended

with petroleum diesel for sale or use in a trade or business. In its 24 March report, the EIA said policies, rather than market demand, were driving the adoption of biomass-based diesel. “As renewable diesel and biodiesel compete for the same feedstocks, some of the projected growth in renewable diesel production displaces biodiesel production. We project these two fuels will remain a relatively small part of the larger diesel market, accounting for less than 8% of US diesel production in 2050,” the organisation said. www.ofimagazine.com

04/05/2022 10:08:40

RENEWABLE NEWS

BASF and Henkel to replace fossil feedstocks German chemical giant BASF and chemical and consumer goods company Henkel announced on 31 March a joint commitment to replace fossil carbon feedstock with renewable sources for most products. The pledge covers Henkel’s European Laundry & Home Care and Beauty Care businesses over the next four years and followed a successful pilot involving Henkel’s cleaning and detergent brand Love Nature last year. By using BASF’s certified biomass

AUSTRALIA: The global search for alternatives to Ukrainian sunflower oil has led to a significant increase in demand for Australian-grown high oleic safflower oil, ABC News reported on 23 March. Australian bio-lubricant developer GO Resources said that enquiries from European buyers about the company’s safflower crop had significantly increased due to the conflict in Ukraine. The Melbourne-based company has bred safflower varieties using genetic modification to have ‘super high’ levels of oleic acid, ranging from 92%-95%. Company research and development lead David Hudson said high oleic oils contained large amounts of monounsaturated fatty acids and had a range of specialist uses, from food to pharmaceutical and high-end industrial lubricants. GO Resources was focused on using safflower oil to develop bio-based industrial formulations of lubricants and transformer oils, he said. According to ABC News, Australian farmers will grow up to 12,000ha of safflower this season across several states, with West Australian farmers sowing about 3,000ha, marking the first commercial safflower crop to be grown in that region. 12 OFI – MAY 2022

Renewable news May 2022.indd 2

As a result, Henkel’s core brands like Persil, Pril, Fa and Schauma would have a reduced carbon footprint, avoiding around 200,000 tonnes of CO2 emissions in total. In the biomass balance approach, renewable resources such as bio-naphtha or bio-methane derived from organic waste, crops or vegetable oils, are used as feedstocks in the initial steps of chemical production. The bio-based feedstock amount is then allocated to specific products sold.

BASF castor facility now certified German chemical and biotech giant BASF’s castor product facility in Düsseldorf-Holthausen has gained certification under the SuCCESS (Sustainable Castor Caring for Environmental & Social Standards) Code. The company said on 24 March that it had now started supplying sustainable castor ingredients to the personal care industry. BASF launched the Pragati castor project in May 2016 with speciality chemicals company Arkema, oleochemical firm Jayant Agro-Organics and the international civil society organisation Solidaridad to improve working conditions, create awareness for sustainable farming and increase yields on castor farms. To date, more than 5,800 smallholders and over 13,300ha of land had been certified for sustainable castor cultivation, the company said. Designed by multiple partners and stakeholders to ensure the Pragati project’s

Photo: Getty Images

IN BRIEF

balance approach, around 110,000 tonnes/ year of fossil-based ingredients would be substituted with renewable carbon sources, the companies said. “We intend to continuously enhance our processes, products and use of raw materials for a resource-efficient, carbon-neutral future,” Henkel CEO Carsten Knobel said. “Integrating BASF’s biomass balance approach into our supply chain as an early-mover is a… step in that direction.”

BASF has now started supplying its first sustainable castor ingredients to the personal care market

objective, the SuCCESS code comprises 11 principles of ownership and provides smallholders with on-field support for monitoring and compliance with 41 mandatory and 25 non-mandatory control points. Only SuCCESS-certified members of the Sustainable Castor Association (SCA) could claim to supply sustainable castor products, BASF said.

Pragati is the Hindi word for progress. BASF’s Care Chemicals division offers a range of ingredients for personal care, home care, industrial and institutional cleaning, and technical applications. Its product portfolio includes surfactants, emulsifiers, polymers, emollients, chelating agents, cosmetic active ingredients and UV filters.

BASF launches surfactant based on soya German chemical and biotech giant BASF has announced the launch of a bio-based surfactant made from soya protein. A vegan product made from non-genetically modified (GM) soyabean and coconut oil, Plantapon Soy was suitable for mild skin and hair cleansing products, BASF said in a 31 March statement. “Eco-conscious consumers want to know the ingredients found in their cosmetic products, their origin and how they might affect the

environment,” said Karine Kross Maita, senior marketing manager for hair, body and oral care at BASF Personal Care Europe. Plantapon Soy was suitable for rinse-off applications – such as shampoo, body wash, liquid soap and baby cleansing products – due to its mildness, which had been proven in eye irritation and patch tests, BASF said. The product could also be used as an alternative to surfactants containing sulphate or ethylene oxide derivatives. www.ofimagazine.com

27/04/2022 09:12:00

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OFI – MAY 2022

TRANSPORT NEWS WORLD: Rising crude oil prices due to the ongoing conflict in Ukraine are driving up ocean freight rates and US barge prices, according to data by the US Department of Agriculture (USDA) reported by World Grain on 18 March. At the time of the USDA’s 17 March Grain Transportation Report, ocean freight rates for shipping bulk grains had risen for five consecutive weeks and, as of 10 March, the rate for shipping a tonne of grain from the US Gulf to Japan was US$79/tonne, a 12% increase from the start of this year, 37% more than a year ago, and 70% higher than the four-year average. The rate from the Pacific Northwest to Japan was US$44.25/tonne, a 14% increase from the start of the year, 36% more than last year and 72% more than the four-year average, according to the report The US to Europe rate was US$29.50/tonne, up 12% from the start of the year, 39% more than a year ago and 75% higher than the four-year average. The rate hike was driven by rising crude oil prices caused by the conflict in Ukraine following Russia’s invasion of the country on 24 February, according to the Transportation and Export Report by O’Neil Commodity Consulting.

COFCO secures 25-year lease on Santos terminal China’s largest food processor and manufacturer COFCO announced on 30 March that its Brazilian branch had secured a 25-year lease for a new bulk terminal in the Port of Santos. Due to be operational in 2025/2026, the STS11 terminal will expand COFCO International Brasil’s port capacity in Brazil to 14M tonnes and help expand exports from the country, according to the company. As part of the agreement, the Brazilian branch would invest in the modernisation and expansion of the terminal facilities. “The investment will provide farmers with more choices and create new opportunities for COFCO International Brasil SA to cooperate with

local industry partners and logistics companies,” the company said. COFCO – which sources, stores, processes and exports grains and oilseeds worldwide – said 60% of its grains and oilseeds originated in South America. It has facilities for storage in Brazil, Argentina, Uruguay and Paraguay; barge-loading in Paraguay; and export at Rosario port in Argentina and Santos port in Brazil. COFCO said its Brazilian branch sourced agriculture commodities from more than 7,000 farmers. The Port of Santos in São Paulo state, is one of the largest and busiest ports in Latin America and is a key export port for Brazilian soyabeans.

AGP to expand Grays Habour port facilities Leading US agribusiness cooperative Ag Processing Inc (AGP) will be carrying out a major expansion and upgrade of its export facilities at the Port of Grays Harbour (POGH) in Aberdeen, Washington. Current facilities at deepwater berths Terminal 2 and POGH’s Terminal 4 would be upgraded, AGP said on 22 March. Additional storage would also be built at Terminal 2 and a new ship loader installed at Terminal 4. AGP said the upgraded facililties – due to become operational in 2025 subject to regulatory approval – would enable it to load multiple ships up to, and including, Panamax-sized vessels. “With the expansion in US soyabean crush capacity

Photo: Shaah Shahidh, Unsplash

IN BRIEF

AGP says its expansion will allow it to load Panamax-sized vessels

driven by the demand for renewable diesel feedstock, soyabean meal production in the USA will outpace historical increases in domestic usage,” AGP CEO Chris Schaffer said. “AGP’s western US process-

ing locations fit well to supply additional protein to the growing Southeast Asian and Asian markets. The USA currently provides less than 20% of overall Southeast Asian soya meal demand.”

New grain and oilseed terminal planned for Saudi Arabia National Grain Company, a joint venture between the Saudi Agricultural and Livestock Investment Co (SALIC) and Saudi shipper Bahri, has signed an agreement to build a grains terminal in Saudi Arabia’s Yanbu Commercial Port. The 156,000 tonnes terminal would handle, store and distribute up to 3M tonnes/ year of grains, including barley, corn and soyabeans, SALIC said on 23 March. The first phase of the project would include 12 silos with 96,000 tonnes of 14 OFI – MAY 2022

Transport news May 2022.indd 2

capacity and a flat warehouse with 60,000 tonnes of capacity. Other features would include a 650m conveyor belt, unloading equipment with 800 tonnes/hour discharge capacity, and a dedicated area for loading trucks and packaging. HAIF Trading & Construction had been appointed to build the grain terminal. Saudi Arabia’s minister of environment, water and agriculture and SALIC chairman Abdulrahman Abdulmohsen Al-Fadley said

the terminal would be the first regional centre for grains in Yanbu Commercial Port. The aim of the new terminal was to accelerate the origination and discharge of grains to Saudi Arabia and enhance supply chain capabilities, he said. SALIC was established in 2009 to secure food supplies for Saudi Arabia through mass production and investments. The National Grains Company was formed in August 2020 to contribute to achieving a food security strategy. www.ofimagazine.com

04/05/2022 10:22:02

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OFI – MAY 2022

BIOTECH NEWS EU: The European Commission (EC) approved three genetically engineered (GE) crops on 31 March, according to a US Department of Agriculture Global Agricultural Information Network report on 12 April. The GE soyabean, rapeseed and cotton varieties were approved for food and feed imports for 10 years. BRAZIL: The area planted with GM sugarcane is set to nearly double in the 2022/23 season starting in April, Reuters reported on 6 April. According to Centro de Tecnologia Canavieira (CTC), new cane varieties resistant to stem-boring insects would cover 70,000ha in 2022/23, up from 37,000ha the previous year. While this was just a fraction of the 8.2M ha of planted area in Brazil, it still underscored dramatic growth in GM sugarcane, with CTC receiving the world's first approval to sell GM sugarcane five years ago, the report said. The company estimated that borers caused US$1.07bn/year in losses to Brazilian cane growers through lost productivity, lower sugar quality and insecticide costs. CTC commercial director Luiz Paes said its transgenic cane had been adopted by some 170 clients which accounted for the majority of Brazil's annual sugarcane crush, with no other companies commercially selling GM sugarcane.

Bayer settles Roundup claims ahead of trial German chemical giant Bayer reached a settlement to resolve a group of claims that its weedkiller Roundup caused cancer just before a trial was set to start in St Louis, the St Louis Post-Dispatch reported. The new agreement concerned a lawsuit first filed in 2017 that featured dozens of plaintiffs from around the USA, including St Louis resident and lead plaintiff Earl Neal, who claimed he was exposed to Roundup while working for the St Louis City Parks Department and St Louis City Forestry Department in the 1990s, the report said. Neal and other claimants alleged that their use of Roundup — at home, at work or on farms — had caused their non-Hodgkin’s lymphoma, the St Louis Post-Dispatch wrote.

Bayer, which inherited the lawsuits following its 2018 purchase of global agrochemical firm Monsanto for US$63bn, denies claims that Roundup or its active ingredient glyphosate causes cancer, saying decades of independent studies have shown the product is safe for human use. Bayer did not disclose the specific terms of the settlement, according to the 7 April report, and a lawyer representing plaintiffs in the case did not respond to a request for comment. “We are pleased that the Neal case has been resolved as part of our continuing work to settle the Roundup litigation on reasonable terms,” Bayer said in a statement. Roundup is used by farmers in combination with the company’s genetically modified seeds.

India exempts genome-edited crops The Indian government has issued an order exempting specific types of genome-edited (GE) crops from the stringent regulations applied to genetically-modified (GM) crops, Business Standard reported on 30 March. The move was expected to boost further research and development into GE crops, the report said. Issued by the Ministry of Environment and Forest, the order exempts SDN1 and SDN2 genome-edited plants from Rules 7-11 of the Environment Protection Act governing the manufacture, use, import, export and storage of hazardous micro-organisms or genetically-engineered organisms or cells. “The notification will pave

Calyxt says seedless hemp offered improved yields and quality

a path for the government to approve and set out the guidelines on GE plants pending since early 2020,” South Asia Biotechnology Centre founder director Bhagirath Choudhary said.

Photo: Adobe Stock

IN BRIEF

Gene editing allows genetic material to be added, removed or altered in a particular location in a living organism's existing DNA, compared with the introduction of a new, foreign gene (GM).

ADM to expand non-GM soya processing in Germany Global agribusiness giant Archers Daniels Midland (ADM) has announced it is set to expand non-genetically modified (nonGM) soyabean processing capacity at its oilseeds facility in Mainz, Germany. The project is due for completion in the third quarter of this year, according to a 12 April statement by ADM. “Soyabeans play an increasingly im16 OFI – MAY 2022

Biotech news May 2022.indd 2

portant role in the wider food sector in Germany,” said Jaana Kleinschmit, general manager of ADM Hamburg and country manager of Germany. “We are pleased to continue to add to our ability to process non-GM soyabeans to meet growing demand across human and animal nutrition.” Rene van der Poel, general manager of

ADM Straubing, added: "With this expansion in Mainz, we are creating additional incentives for local farmers to grow more non-GM soyabeans and to incorporate soya into crop rotation farming." The expansion followed a similar investment in the company’s oilseeds processing plant in Straubing, Germany, in 2016, ADM said. www.ofimagazine.com

03/05/2022 10:20:32

DIARY OF EVENTS 17-19 May 2022

20-22 June 2022

8-9 September 2022

GrainCom22 Geneva, Switzerland www.graincomevents.com

Sustainable Aviation Futures Congress Mövenpick Hotel, Amsterdam The Netherlands www.safcongress.com

High Oleic Oils Congress 2022 Madrid, Spain http://higholeicmarket.com/hoc-2019

20-23 June 2022

4th Edition of Euro-Global Conference on Food Science and Technology (Hybrid) Paris, France www.usa-conferences.com/food

18-19 May 2022 Oleofuels 2022 Aix-en-Provence, France www.wplgroup.com/aci/event/oleofuels 23-25 May 2022 4th International Symposium on Lipid Oxidation and Antioxidants Vigo, Spain https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=11144&modus= 24-25 May 2022 6th Future of Surfactants Summit Le Meridien Barcelona, Spain www.wplgroup.com/aci/event/ surfactants-summit/ 25 May 2022 Grain and Maritime Days 2022 in Istanbul Intercontinental Istanbul Hotel, Turkey www.apk-inform.com/en/conferences/ grain_and_maritime_days_2022/about 25-28 May 2022 EFPRA Congress 2022 Vilamoura Algarve Resort, Portugal https://efpra2022algarve.com 7-8 June 2022 IGC Grains Conference 2022 (Hybrid) London, UK www.igc.int/en/conference/confhome. aspx?email=register 8-9 June 2022 World Bio Markets Hilton Diagonal Mar, Barcelona, Spain www.worldbiomarkets.com 9-10 June 2022 2nd Annual Biofuels Forum Berlin, Germany https://inventu.eu/2nd-annual-biofuelsforum/ 13-15 June 2022 3rd Biodiesel and Renewable Diesel Summit at the International Fuel Ethanol Workshop & Expo Minneapolis, USA https://few.bbiconferences.com/ Biodiesel.html www.ofimagazine.com

Diary May 2022.indd 1

20th International Sunflower Conference Novi Sad, Serbia www.isasunflower.org/news-events/ news/article/20th-internationalsunflower-conference-novi-sad-serbia1%EF%BB%BF 21-22 June 2022 Lignofuels 2022 Helsinki, Finland www.wplgroup.com/aci/event/ lignocellulosic-fuel-conference-europe/ 27-28 June 2022 MCPD Esters and Glycidyl Esters (GE) Symposium 2022 Berlin, Germany https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=11198&sp_id=2 28-29 June 2022 Sustainable Industrial Manufacturing (SIM) Brussels, Belgium https:// sustainableindustrialmanufacturing. com/europe 5-6 July 2022 13th Biofuels International Conference & Expo Brussels, Belgium https://biofuels-news.com/conference/ biofuels/biofuels_index_2022.php 20-22 July 2022 19th Global Oleochem Summit 2022 Changsha, China https://webshow.ienmore. com/?activityId=1690&languageType=1 31 July-3 August 2022 Edible Oil/Products Processing Course College Station, Texas, USA https://fatsandoilsrnd.com/ 23 August-3 September 2022 2nd World Congress on Oleo Science (WOCS 2022) (Online) https://confit.atlas.jp/guide/event/ wcos2022/top

12-13 September 2022

12-16 September 2022 oils+fats and Drinktec Messe Munich, Germany www.oils-and-fats.com/index.html 20-21 September 2022 Palmex Malaysia 2022 Kuala Lumpur, Malaysia http://asiapalmoil.com 23-28 October 2022 North American Renderers Association Annual Convention Ritz Carlton Laguna Niguel California, USA https://nara.org/about-us/events 25-27 October 2022 Palmex Indonesia 2022 Medan, Indonesia http://palmoilexpo.com 29-30 November 2022 Unconventional Ag Hyatt Regency, Minneapolis, USA https://ong.highquestevents.com/ereg/ index.php?eventid=653921& 5-7 June 2023 12th CESIO World Surfactant Congress Rome, Italy https://cesio-congress.eu/ 17-20 September 2023 Euro Fed Lipid Congress & Expo Poznań, Poland https://eurofedlipid.org/ 24-27 September 2023 16 International Rapeseed Congress Sydney, Australia www.irc2023sydney.com

For a full events list, visit: www.ofimagazine.com Information subject to change OFI – MAY 2022

03/05/2022 10:37:26

Photo: Adobe Stock

UKRAINE/RUSSIA

Russia’s invasion of Ukraine has caused sunflower oil prices to spike and forced importers and manufacturers to search for alternative oils

Oil shortage takes hold Russia’s invasion of Ukraine has pushed up sunflower oil prices and created a shortage, prompting importers to turn to alternatives such as palm and soyabean oils. The invasion has also left poorer importing nations vulnerable to higher food and fuel prices Keith Nuthall and Imen Bliwa

18 OFI – MAY 2022

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The international oilseeds and related vegetable oil markets are facing major disruption through Russia’s invasion of Ukraine, with global vegetable oil prices soaring, according to the UN Food & Agriculture Organization (FAO). Its Vegetable Oil Price Index averaged 248.6 points in March, up 46.9 points (23.2%) from February, a new record high driven by higher sunflower, palm, soya and rapeseed oil prices. Sunflowerseed oil is a key problem, given Ukraine supplies 47% of sunflower oil exports worldwide, according to UK-based research firm Mintec. With Russian military forces occupying and disrupting Ukraine agricultural production and supply chains, attacking ports and blockading shipping, Ukraine sunflower oil exports and production have dwindled. And with international sanctions hitting Russia, its government has imposed an export quota of 1.5M tonnes of sunflower oil from 15 April to 31 August. It is also imposing an export quota of 700,000 tonnes of sunflower meal for the same time period and has banned sunflowerseed exports since 1 April, following a request

for this action from the Oils and Fats Union of Russia – which includes the largest sunflower oil producers – to encourage Russian planting in this growing season. Together, Ukraine and Russia deliver 60% of global sunflower oil production and more than 70% of exports, according to Mintec.

Sunflower oil prices pushed up

The war and its consequences have therefore inflated sunflower oil prices. The Russian export quota pushed European Union (EU) sunflower oil prices down 6% week-on-week to €1,973/tonne on 7 April, with traders relieved that at least some exports were guaranteed. The 7 April price was 25% under the €2,635/ tonne peak set on 10 March, two weeks after Russia invaded Ukraine. However, prices still remain high. “Trade from Ukraine remains halted due to the shutdown of ports and crushing facilities,” noted Mintec. Russian oil analysts from oilworld.ru note that trade would continue to be impeded by “continued difficulties with foreign exchange transactions against the backdrop of sanctions” and already

www.ofimagazine.com

04/05/2022 09:43:44

UKRAINE/RUSSIA high freight costs being augmented by “additional costs for shipowners when entering the Black Sea due to high insurance risks”. These inflationary pressures have been reflected far from Ukraine and Russia. For instance, the US National Sunflower Association (NSA) valued high oleic sunflower seed prices at crushing plants in North Dakota at between US$38.70– $38.75/hundredweight (cwt) on 21 April, compared with US$33.15–$33.30cwt on 24 February, the day Russian President Vladimir Putin ordered his country’s troops and tanks into Ukraine.

Photo: Adobe Stock

Search for alternatives

Sunflower oil price inflation and scarcity has disrupted markets, forcing importers and manufacturers to look for alternatives. “This has led India to pivot to alternative vegetable oils (palm oil and soyabean oil) to secure edible oil supplies ahead of Ramadan (Muslim month of fasting)” – in April for India’s 204M Muslims, for example, said Mintec. This, noted Caitlin Welsh, director, Global Food Security Programme, on 15 April, pushed up global prices of rapeseed (canola) oil, soyabean oil and palm oil to record highs.

In addition, prices for ammonia, nitrogen, nitrates, phosphates, potash and sulphates (the chemicals used to make fertilisers) have risen by 30% since January, she said. The US Department of Agriculture (USDA) has predicted that both these trends will encourage oilseed plantings in the USA, with soyabeans being, for instance, less fertiliser-intensive than wheat. The USDA announced on 31 March that producers surveyed across the USA planned to plant a record high 91M acres (36.8M ha) of soyabeans in 2022, up 4% from 2021, with the largest increases expected in Illinois and Missouri states. In addition, the USDA’s World Agricultural Supply and Demand Estimates released on 8 April predicted increased 2021/22 US soyabean exports of 2.12bn bushels, “partly offsetting lower exports from Brazil, Ukraine and Russia”. The department added that a lower Ukraine sunflowerseed crush would cause lower sunflower meal and oil supplies for major markets such as India, China, the EU, and Turkey. This would result in higher palm and rapeseed oil imports for China, higher soyabean oil imports for India, higher soyabean meal imports for Turkey,

the industry’s number 1 choice

and higher soyabean imports for the EU. FEDIOL, the EU vegetable oil and protein meal industry association, said the shortage of Ukrainian commodities on the EU market, especially sunflower oil, had by 24 March triggered market adjustments. “There have been fast reactions of downstream operators who decided to reformulate their product recipes with a view to replace sunflower oil with rapeseed oil where possible,” it said. For frying oils, sunflower oil has already been replaced by palm oil, soyabean oil and rapeseed oil. Palm oil could indeed be a key beneficiary, predicted Dr Kalyana Sundram a consultant for the Council of Palm Oil Producing Countries (CPOPC). He predicted in a blog that there could be a “return to using palm olein as the frying fat of choice in many snack food manufacturing” companies. He said: “Market forces, particularly in the Asia and Middle East regions are already signalling this makeover. “For food manufacturers, this would still be an easy switch since there is a large body of readily available data on how best to re-adopt palm olein on its own or in combination with other palm fractions for the fry and snack food industries.” u

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OFI – MAY 2022

04/05/2022 09:43:46

UKRAINE/RUSSIA

Supermarkets in the UK – which imports most of its sunflower oil from Ukraine – are rationing cooking oil due to a sunflower oil shortage

The FAO, however, is concerned that less wealthy and smaller markets may struggle to secure supplies of edible oils (along with wheat and fertiliser) “if there is a prolonged disruption in exports of wheat, fertiliser and other items from Ukraine and Russia”. It has warned that because of Russia’s invasion, “the number of undernourished people worldwide could increase by 8M people to 13M in 2022/23, with the most pronounced increases taking place in the Asia-Pacific region, followed by sub-Saharan Africa and the Middle East and North Africa (MENA).” As a result, the International Food Policy Research Institute (IFPRI) has recommended that countries continue to exempt food and fertiliser from sanctions against Russia, not to impose export bans, prevent hoarding and panic buying, and suspend biofuel mandates “to retain supplies on global markets and quell price spikes”.

Threat for Africa

Africa is a particularly sensitive zone. Mohamed Sadok Jebnoun, a Tunisian economist, noted: “The Russian-Ukrainian war started while the world was not yet recovered from the economic aftermath of the COVID-19 health crisis. It was expected that the world would be tackling post-COVID-19 recovery. However, this process stopped because of the supply chain crisis and the massive rise in the prices of raw materials” caused by the Russian invasion. “Ukraine is a major exporter of wheat, cereals, sunflower oils and many other food products to the African continent.” He said richer MENA countries such as 20 OFI – MAY 2022

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Tunisia might cope while other countries might suffer from harsher effects, such as the Sahel and Sahara Desert countries, adding that key food importers Egypt and Algeria would also suffer. “The worst scenario is that importing countries will be left with no stock at all for next summer,” said Algerian economist Mourad Kouachi, of the University of Oum El Bouaghi, north-east Algeria. “The worst will come if the conflict continues through the harvest season which will be disrupted in Ukraine. This means famine for many poor countries,” he warned. Kristalina Georgieva, the Bulgarian managing director of the International Monetary Fund (IMF), confirmed in a meeting with the African finance ministers, central bank governors and United Nations officials on 9 March: “Africa is particularly vulnerable to the impacts of the war in Ukraine through four main channels: higher food and fuel prices, lower revenues from tourism, and potentially more difficulties in accessing international capital markets.”

Spring sowing down

In Ukraine, the vegetable oil sector and agriculture industry in general have been adapting to the brutal reality of an invasion that the UN said on April 17 had killed 2,072 civilians. With the spring sowing season beginning, Ukraine oilseed and grain plantings could fall 20%, with yields also decreasing, Ievgen Osypov, chief executive officer of Ukraine oilseed major Kernel Holding SA, said on Bloomberg Television. The company itself has been publicly appealing for assistance for the Ukraine

war effort. In a public statement, it said: “Russia started a full-scale invasion of Ukraine, where key Kernel assets are located, escalating its aggression against Ukraine which commenced in 2014.” Calling on clients and colleagues to boycott Russian media and donate money to Ukraine’s armed forces and charities aiding Ukrainians during the invasion, Kernel called on its business partners to “communicate with your governments, businesses and colleagues to intensify military and other assistance to Ukraine as well as severe sanctions against Russia”. The Association of Farmers and Private Landowners of Ukraine, issued an emotional statement calling on farmers to continue producing food, despite the war. Its president Victor Goncharenko said: “With the arrival of spring, we must sow the fields as much as possible and plant backyards. There is an urgent need to take care of everyone to provide their families with food.” He said: “The war turned our lives upside down. Many people do not raise their hands to work, it seems that life has stopped. No. It has not stopped, it must continue! We do not fall to our knees, but get up, roll up our sleeves and get to work.” Commercial farms are still receiving support from the Ukraine government. The Ukrainian State Support Fund (Ukrderzhfond) has announced it will financially support farms, including those undertaking product diversification. It is offering farms loans of up to Ukraine Hryvnia UAH1M (US$34,000) which can be repaid over five years. FEDIOL has also issued an unusually emotional statement, alongside COCERAL, the European association of trade in cereals, oilseeds, pulses, olive oil, oils and fats, animal feed and agrosupply, and FEFAC, the European Compound Feed Manufacturers’ Federation. They said they “share their deep sorrow with the Ukrainian people, as the humanitarian tragedy is unfolding in the country and the Russian Federation continues its unprovoked invasion of a sovereign state.” Oilseed and vegetable oil companies are working to protect the security and well-being of Ukrainian employees and will honour contracts, said the three associations, “conscious that the importance of Ukraine’s supply of agricultural raw materials and ingredients to the EU is such that our inability to import from that country will create severe shortages, both for the feed and food industries.” ● Keith Nuthall and Imen Bliwa write for International News Service Ltd, UK

www.ofimagazine.com

04/05/2022 09:43:49

www.ofimagazine.com

OFI – MAY 2022

TECHNOLOGY

Photo: Adobe Stock

PROCESSING

Towards green hydrogen Hydrogen is the single most abundant chemical in the universe. It makes up roughly 75% of all normal matter. However, if the element is so common, why are hydrogen end users – such as hydrogenated or hydrotreated vegetable oil producers – currently dealing with a shortage? The answer lies in hydrogen’s nature. Although abundant, most hydrogen on Earth is bound into molecules, like water or various organic compounds. As a result, pure hydrogen must be commercially produced. And, as with so many other industries, the unprecedented world events of the last few years have changed the hydrogen landscape, Tom Skoczylas, regional sales manager for Western North America, Latin America, and South Asia at Nel Hydrogen, tells Oils & Fats International (OFI). “For many commercial facilities, hydrogen is a utility, not unlike electricity or cooling water in a chemical plant. So the reliability of on-time supply is critical, and with the logistics crisis and the increased demand for hydrogen, the reliability of that supply is in jeopardy,” says Skoczylas. The current lack of reliable supply is driving edible oil reﬁners and other end users towards on-site hydrogen production, boosting investment in hydrogen production technologies. Due to the current political and economic 22 OFI – MAY 2022

Hydrogen.indd 2

Lack of reliable supply is driving edible oil refiners and other end users towards on-site hydrogen production, with green hydrogen emerging as a competitive option Ile Kauppila climate, green hydrogen is emerging as a competitive option that could lead the entire hydrogen industry to become more environmentally friendly.

Hydrogen comes in many colours

But what exactly is “green” hydrogen? Hydrogen itself is colourless but the diﬀerent colour codes associated with it refer to the method used to produce it. The most common types of hydrogen are: • Brown (or black) hydrogen: Hydrogen that has been produced through the gasiﬁcation of coal, which releases large amounts of CO2 and carbon monoxide into the atmosphere. • Grey hydrogen: Hydrogen produced from natural gas through steam methane reforming (SMR), which also releases CO2. • Blue hydrogen: Hydrogen sourced from natural gas where the CO2 emissions are captured and stored through carbon capture, storage, and utilisation (CCSU) technologies. • Green hydrogen: Hydrogen produced through the use of renewable energy and technologies that create zero CO2 emissions.

There are also other less common or experimental production methods, such as turquoise, purple, pink and red hydrogen. However, the quartet previously mentioned are currently the only commercially viable production methods.

Green is inching ahead

In recent years, there has been an increasing push towards green hydrogen production over other colours. According to Skoczylas, this translates to a growing adoption of electrolysis. “Green hydrogen can only be produced with electrolysers, at least commercially. That is, using electricity to separate water into hydrogen and oxygen gas,” he says. As Skoczylas explains, electrolysis – sometimes called power-to-gas – works by directing an electric current into water through a positively charged cathode and a negatively charged anode. The current splits water molecules into their two constituents, hydrogen and oxygen, with hydrogen appearing at the cathode. The hydrogen is collected and used as it is, or mixed with other compounds. The process is relatively simple, and chemistry teachers regularly showcase it u www.oﬁmagazine.com

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OFI – MAY 2022 23

PROCESSING & TECHNOLOGY u in classrooms at a small scale. Indeed, electrolysis and green hydrogen are nothing new, says Skoczylas. “Original commercial electrolysers could have been green 100 years ago if the electricity was renewable. In fact, Nel Hydrogen had many of its systems installed as early as the 1920s and 1930s, and they were green because the electricity came from hydropower.” This highlights one signiﬁcant factor in green hydrogen production: the electricity used to make it must come from renewable sources. If the power originates from a coal plant, for example, the gas is no longer green, but brown, Skoczylas says. Electrolysis may currently be the most viable green hydrogen production method, but it is not the only one. For example, American H2-Industries has received preliminary approval to build a ﬁrst-of-itskind green hydrogen plant in Egypt using the company’s proprietary thermolysis technology to convert organic, plastic, and sewage waste into hydrogen. The plant would annually transform 3.6M tonnes of waste into more than 270,000 tonnes of emissions-free hydrogen at half the cost of current technologies, H2-Industries says in a statement. The company, however, did not have a projected opening date at the time of writing.

Driving economics

The global shift towards more environmentally-friendly policies has deﬁnitely contributed to green hydrogen’s popularity. But Skoczylas emphasises that there is another major factor at play as well. “What’s really driving the forward progress with green hydrogen is that the economics are now coming into alignment to produce green hydrogen that is more competitive. That has been attributed to the reduction in electricity prices,

Edible oil producers use hydrogenation to turn liquid oils into more solid fats, as well as to increase an oil’s stability a

primarily because of the increase in installation capacities of renewable power production systems like solar and wind.” As a result of increased renewable power capacity, Skoczylas says the cost of green hydrogen has fallen below that of grey or brown hydrogen in parts of the world where solar or wind power are abundant. “The success in the renewable energy industry is what’s driving the interest in green hydrogen production, enabling cost reductions and increased interest in capacities.” However, on average, green hydrogen costs roughly US$$3-9/kg, while the price for grey hydrogen varies between US$12.50/kg, according to PWC Global.

The challenge of supply

Although the cost of pure hydrogen at the point of production has gone down in some parts of the world, that has not

transferred to the end users, such as edible oil producers. Instead, the price of the gas has only increased. “The traditional hydrogen supply mode to the market is via large centralised production facilities. The gas is repackaged and distributed by gas companies to consumers in the form of liquid or gas, hauled by trucks in cryogenic tanks or compressed tube trailers and bottles. The price of gas supplied in that manner has certainly increased,” explains Skoczylas. He sees two factors driving the hydrogen costs up. Firstly, there are the supply chain issues aﬀecting all industries in the world. Feeding into these problems is the high price of fuel. Since hydrogen is delivered to local markets in a liquid form stored in truck-hauled tankers, the basic cost of moving hydrogen is steadily heading upwards. The second issue is demand and data from the International Energy Agency (IEA) illustrates this. Hydrogen demand has been increasing steadily for the past 20 years, reaching roughly 90M tonnes in 2020, and it shows no signs of slowing down. As hydrogen producers – whether green, grey, brown or blue – can easily ﬁnd buyers, they can set their prices. Naturally, this means the prices will go up. For end users, this poses a problem. They are paying more for hydrogen but due to the logistics crisis, what they buy may not show up when they need it.

Edible oil refiners Companies are increasingly exploring the possibility of on-site hydrogen production due to supply chain issues and the high cost of fuel. Photo: Nel Hydrogen 24 OFI – MAY 2022

Hydrogen.indd 4

This situation is leaving hydrogen end users in a difficult position. Among them are edible oil refiners. Although they are small in numbers compared to the largest hydrogen consumers (ammonia production and petroleum oil refining), www.ofimagazine.com

04/05/2022 10:27:41

PROCESSING & TECHNOLOGY

e an oil’s stability and shelf life

Photo: Adobe Stock

hydrogen is a vital commodity to this industry. The most common applications are the production of hydrogenated and hydrotreated vegetable oils (HVO). Edible oil refiners use hydrogenation to turn unsaturated, liquid oils into more saturated solid fats. They use a nickel catalyst (which is removed in the final product) to combine the fat with hydrogen, reducing the number of carbon-to-carbon double bonds in lipids. As a result, the oil becomes solid at room temperature, enabling it to be used to replace butter or animal fats in cooking, spreads and other food uses. Additionally, hydrogenation increases the fat’s oxidative stability and shelf life. HVO, on the other hand, is a biofuel produced from various vegetable oils and animal fats, such as canola, palm or waste cooking oil, or tallow. In the production process, the feedstock oil or fat is first hydrogenated – as in edible fats production – to remove double carbon bonds in the triglycerides. This process is followed by hydrocracking, which uses hydrogen gas to break molecules to improve the quality of the fuel. HVO is similar in quality to biodiesel and they both use the same feedstock, but biodiesel is produced through transesterification. Whether they engage in hydrogenation or hydrotreatment of edible oils, producers need their hydrogen supply to be reliable. As the global supply chains struggle, they are increasingly exploring the possibility of on-site hydrogen production, says Skoczylas. “If producers are buying hydrogen distributed to them from a gas company, the price of that hydrogen is mostly dependant on the transport distance. To make their own hydrogen, what drives the www.ofimagazine.com

Hydrogen.indd 5

cost of the hydrogen per kilogramne is the CapEx on the production equipment and electricity price. What’s really attractive about on-site production is that your cost per kilogramme of hydrogen is almost 90% electricity,” he explains. As a result of the growing appeal of on-site production, hydrogen solution companies like Nel Hydrogen are now seeing increased investment in hydrogen production equipment. However, Skoczylas notes that all of that investment is not going strictly to green hydrogen. “There are lots of assessments being done, on a project-by-project basis, on whether to choose grey or green. It’s really coming down to the economics. There’s some political pressure to go green and if the economics are favourable, chances are that the consumers will utilise green technology, but it may not be a requirement,” says Skoczylas. He adds, though, that there is another signiﬁcant factor weighing the scales towards green – public opinion. Pressure from the market may drive edible oil reﬁners and other hydrogen consumers to choose green hydrogen over grey, even if the immediate economics might not be better. Green hydrogen can allow companies to market their products as more environmentally conscious, which may give them an edge over competitors.

Rising hydrogen demand

If the demand for hydrogen is high now, it is about to grow even higher. Neither market research companies nor Skoczylas see any reason for the demand to shrink. This should give hydrogen producers a significant boost. “We see significant and tremendous growth in the next 5-15 years. You can practically categorise it as exponential growth. It’s partly because of the increased demand for green hydrogen as a function of the reduced cost of electricity from renewable sources, and the global and political drive to reduce greenhouse emissions. Electrolysis technology enables producers to achieve that,” says Skoczylas. Indeed, PWC Global projects hydrogen demand to rise from the roughly 80M tonnes to anywhere between 90-200M tonnes by 2030. By 2050, the demand could reach a high of more than 600M tonnes, depending on climate change developments and governmental policies, the professional services firm says. Industry predictions also support the view that demand is going up. For example, Data Bridge Market Research estimates that the hydrogenated oils market will grow at a CAGR of 4.3% between 2022 and 2028, with its value

more than tripling to US$100.84bn. This growth, driven by an increasing demand for hydrogenated palm oil, bakery goods, and beauty products, directly translates to a higher need for hydrogen. HVO production, meanwhile, is projected to rise from 7M tonnes in 2020 to 29.5M tonnes by 2025.

Capacity growth is coming

So, does this mean the price of hydrogen will keep creeping upwards? Not necessarily. S&B Global Platts Analytics estimates that an additional 3.4M tonnes of new annual green hydrogen capacity will come online by 2025. Total electrolyser deployment should advance even faster in the ﬁve years following, hitting 16.7M tonnes by 2030. Meanwhile, blue hydrogen production capacity is seen to increase from 2.5M tonnes now to nearly 25M tonnes by 2030, according to Quantum Commodity Intelligence. Skoczylas agrees that the capacity for green – and otherwise coloured – hydrogen is increasing. He further explains that, against some market predictions, the new capacity may not be where one would expect. Certainly, the initial spike will be in Europe, the USA and China because that is where the hydrogen is mostly consumed. Going forward, however, he says that green hydrogen production will move to other places, such as South America. “For example, take Chile. In the south, they have capacity factors for wind plants that are approaching 90%. There’s a unique region in Patagonia where the wind is very reliable and predictable. And then you have the north of Chile, which has high elevation, very good solar radiation and very little cloud coverage. It’s a lot easier to make investments in production facilities because you can expect the ROIs.” With that renewable energy, regions like Chile and the Middle East could rise to become major hydrogen producers, which could drive down the price of green hydrogen. And that, says Skoczylas, is what will ultimately entice more edible oil reﬁners and other consumers to move away from polluting grey and brown hydrogen. “All these industries are looking for two things. They want anything that can reduce the cost of the hydrogen they depend on. And if they can do it in a green fashion, then that’s just gravy on top,” he concludes. ● Ile Kauppila is OFI’s former assistant editor OFI – MAY 2022

04/05/2022 10:27:42

COMMODITY PRICES

Record highs in 2022

Implications of invasion

Mistry said that damage to ports and infrastructure in Ukraine meant a lag of at least four to six weeks before exports could resume. There were also problems with Russian exports, meaning supply from the rest of the world had to increase. The most bullish agricultural commodities would be wheat and corn, and sunflower oil would also be very buoyant in the vegetable oil market. Meanwhile, energy prices would fuel biodiesel profitability, while fertiliser prices and availability would be a problem. The Russian economy would almost certainly be driven into a recession. “All bets are off while the conflict

2012/13 1,090 8,240 980 –

2020/21 2,880 8,210 1,950 450

2021/22 3,600 6,950 2,200 250

10,670

13,490

13,000

Table 1: Indian imports of vegetable oil, ‘000 tonnes Oil Soyabean oil Palm oil Sunflower oil Others

2020/21 +1,000 +1,000 +1,000 –2,000

2021/22 +1,000 –2,500 +3,000 +2,500

+500

+4,000

+2,500

Total supply Total demand

Table 2: Vegetable oil incremental supply and demand, ‘000 tonnes Oil Food demand Energy demand Table 3: Net effect – food and energy demand 26 OFI – MAY 2022

Commodity prices 2022.indd 2

continues. It is impossible to forecast prices while a war is raging and new sanctions are announced periodically. We are in for a wild ride.” Mistry said that high energy prices could prolong and fuel inflation all around the world and 2022 could be a year of stagflation, when inflation was high, economic growth slowed and unemployment remained steadily high. “Stagflation may inevitably lead to recession but recession and high commodity prices are not compatible. Therefore in the second half of 2022, we may see a dramatic fall in commodity prices including those of energy – simply because demand may fall.”

2020/21 +1.5 +1.0

2021/22 +1.5 +1.0

Palm oil

Source: D Mistry, POC 2022

Total

Russia’s invasion of Ukraine then lit a fuse in the oils and fats market. “High prices and a prolonged bull market had already led to ‘just in time’ and hand to mouth coverage by importers and we now have a perfect storm.”

Source: D Mistry, POC 2022

Oil Soyabean oil Palm oil Sunflower oil Others

While vegetable oil prices have hit record highs this year, there may be a dramatic fall in commodity prices later in 2022 because of falling demand, with energy self-sufficiency becoming the new mantra Dorab Mistry

Source: D Mistry

Never has the oils and fats market seen such high prices either in Malaysian Ringgits or US dollars as witnessed in 2022, Dorab Mistry, a director at Godrej International, told the Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2022) in Kuala Lumpur on 7-9 March. Even the humble by-product – palm fatty acid distillate (PFAD) - reached US$1,790/tonne and palm oil briefly became the costliest vegetable oil on the market. “How did we get here?” Mistry asked, outlining a range of macro factors that had affected vegetable oil supply including: • Two successive La Niña weather patterns in South America resulting in decreased rainfall and drought in Argentina and southern Brazil, affecting soyabean crops. • Very low canola and rapeseed crops • The heavy export levy and tax regime in Indonesia affecting palm oil exports • A critical labour shortage in Malaysia impacting harvesting and production • The COVID-19 pandemic leading to the closure of palm oil mills • Eating at home replacing dining out consumption • Successive reductions in import duty by India

For palm oil, particularly in Malaysia, production problems would continue, with Mistry forecasting a production level of just 19M tonnes. “The critical labour shortage will not be alleviated, wages will have to rise substantially and the cost of production will rise dramatically.” Mistry said Indonesian production should increase by at least 2M tonnes and the government may need to re-think its export levy, B30 biodiesel blending level and domestic market obligation policies. “The Indonesian government may face a backlash from voters if domestic prices do not fall and a reduction from B30 to B20 for one year could be a win-win for all.”

Rapeseed

Mistry said the market could expect a recovery in rapeseed production in Europe and Canada. “Indian mustard seed production hit a new high this year but, next year, we may not have the ideal combination of optimum weather and prices. Black Sea rapeseed supply would be a problem due to the Russia/Ukraine conflict.

Soyabean

Mistry said the outlook for soyabean production in North America in 2022 was

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COMMODITY PRICES not great while corn and wheat looked more bullish. “I estimate the Brazilian crop will be around 125M tonnes and Argentina’s around 41M tonnes. Relief will only come from South America in late 2022-early 2023 if plantings increase.”

“The Indian economy in the first half of 2022 is growing fast but it will not be immune to a worldwide slowdown.” The country’s vegetable oil imports were forecast to fall this year (see Table 1, previous page).

Sunflowerseed

Mistry forecast world vegetable oil demand growing at a steady 3M tonnes/year. “In 2020/21, world food demand grew by less than 2M tonnes after having shrunk due to COVID-19 the previous year. In 2021/22, demand should expand by 1.5M tonnes from the 2020/21 level.” (see Table 3, previous page). World energy demand, meanwhile, grew in 2020/21 by about 1M tonnes and was projected to further increase in 2021/22 due to capacity expansion, but only by 1M tonnes due to very high prices (see Table 3, previous page).

For sunflowerseed, the Black Sea production belt was now the conflict zone. “We shall carry forward stocks of sunflowerseed into the new season but sowing of new crop starts in April and is likely to be affected. We must be pessimistic on the Ukrainian crop for harvest in August 2022.”

Major edible oil importers

Mistry said China faced a problem in sourcing corn and, to some extent, soyabeans and was likely to try and pump up growth in its economy. “China will not be immune to a slowdown if the world slips into recession and will be actively sourcing palm oil in 2022.” India had aggressively lowered its vegetable oil import duty, with high prices stimulating domestic production of oilseeds.

Growing demand

Outlook

In the short term, Mistry said that Black Sea sunflower oil exports of at least 600,000 tonnes/month would need to be replaced, creating a very bullish situation for the product. “Volatility will be high as news will sway prices and all over the world, corn and

wheat will attract acreage.” High prices would lead to some demand destruction. Post Ramadan (1 April-1 May), palm oil production would pick up and weigh on prices. “Prices could fall sharply from May onwards as interest rates rise, production picks up, stocks around the Black Sea are unfrozen and economic growth slows down.” Bursa Malaysia Derivatives (BMD) thirdmonth palm oil futures should decline to Malaysian Ringgit 5,000 (US$1,185)/ tonne and eventually to Malaysian Ringgit 4,000/(US$948) tonne by September. For lauric oils, which were much more linked to economic growth, prices should begin a descent post-Ramadan and settle around $US1,200-1,500 cif Rotterdam. Coconut oil should also regain its premium over palm kernel oil. A world economic slowdown would weigh on prices and energy selfsufficiency would be the new mantra in 2022. “Depending on Brent crude oil prices, biodiesel production and demand will remain strong. This will be a huge support and will prevent vegetable oil prices from declining too much.” ●

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25/10/2021 10:37 04/05/2022 11:12:01

NEW ZEALAND BUTTER New Zealand’s dairy sector is the country’s largest exporter, with butter shipped to more than 80 different markets. While the industry was hit by COVID-19, export sales have returned close to prepandemic levels, with positive growth ahead Barbara Barkhausen New Zealand’s butter industry is thriving, despite the disruption of COVID-19 and Russia’s invasion of Ukraine, with strong export demand, particularly from China, but also from other markets worldwide, especially in the ASEAN (Association of Southeast Asian Nations) bloc. Major exporter Fonterra is also looking ahead to a world that increasingly cracks down on carbon emissions, introducing the first carbon-zero certified organic butter made in New Zealand, reflecting how consumers are seeking more sustainability in their food purchases. The past five years have seen the butter manufacturing industry in New Zealand performing strongly. The industry relies heavily on export markets – unsurprising given its domestic market comprises just 5M people. Overseas sales have boosted industry performance from 2017 to 2022. According to a report from research company Ibis World, ‘Cheese, Butter and Milk Powder Manufacturing in New Zealand’, the country’s dairy industry generated revenues of NZ$22bn (US$15bn) in 2020-21 from exports and domestic sales of all products, while its revenue is expected to increase by 5.6% in 2021-22 as recovering economic conditions globally increase world dairy prices. “Demand for industry products is projected to increase in export markets such as China over the next five years,” Ibis World says in its recent New Zealand dairy update, released in March 2022. “Products from New Zealand have a high-quality reputation, which is likely to become a key selling point to increasingly health-conscious consumers.” According to dairy industry organisation the Dairy Companies Association of New Zealand (DCANZ), New Zealand butter was exported to more than 80 different markets in 2021. “Overall, the dairy industry is New Zealand’s largest 28 OFI – MAY 2022

NZ butter p28, 29.indd 2

Strong export de exporter, accounting for around a third of all export revenues,” says executive director Kimberly Crewther.

COVID-19 impact

Like many other industries, New Zealand’s butter export industry felt the impact of the COVID-19 pandemic. According to S&P Global’s Global Trade Atlas, the value of New Zealand’s total butter exports decreased from US$1.3bn in 2019 to US$1bn in 2020. However, in 2021, exports returned close to prepandemic levels and the value of New Zealand’s butter exports increased to US$1.2bn, a 15.5% increase on 2020. During the pandemic, New Zealand’s butter exporters struggled like the rest of the world, with global supply chain issues caused by a range of problems including port closures, container shortages and travel restrictions, says a statement from New Zealand dairy major Fonterra, a dairy co-operative owned by about 10,000 farming families. The cost of shipping and freight has also increased since the start of the pandemic. The country’s relative geographic isolation did not help. The Fonterra

statement stresses that in 2021, shipping companies often bypassed New Zealand, with available shipping capacity dropping by 20% and shipping ‘schedule integrity’ (the reliability of maritime shipping schedules) plunging from a long-term average of 80% to below 35% in the year. Exporters also faced temporary port closures and restrictions due to port congestion, as well as a container shortage. However, despite these challenges, Fonterra shipped a total of 2.59M tonnes of dairy products, including butter, for the year ending 31 July 2021, an increase of more than 4% year-onyear. According to Statista, a German company specialising in market and consumer data, New Zealand produced around 470,000 tonnes of butter in 2021, a major export commodity. Apart from Fonterra, there are other leading players in the butter market in New Zealand, such as Whitestone Cheese and Lewis Road Creamery, both of which manufacture butter. Although New Zealand also exports its dairy products to countries like Australia, Indonesia, Japan, Malaysia, the www.oﬁmagazine.com

03/05/2022 13:59:56

NEW ZEALAND BUTTER Fonterra says that New Zealand’s grass-fed farming model means that its milk has a lower carbon footprint than the global average and has recently launched the country’s ﬁrst carbon-zero certiﬁed organic butter. Photo: Adobe Stock

industry is not anticipating signiﬁcant direct trade impacts,” executive director Crewther says. “Demand for dairy products, including butter, is strong globally and this strength of demand, coupled with tight supply conditions, has resulted in a notable uplift in prices over the last six months,” says the industry association. Apart from dealing with Russia’s invasion of Ukraine, the New Zealand butter industry has also had to assess commercially important changes in consumers’ demands across Europe and North America.

t demand Philippines, Saudi Arabia, South Korea, Thailand, the United Arab Emirates (UAE) and the USA, China remains the most important market. Fonterra spokesperson Henry Acland says there is strong demand from Chinese buyers for New Zealand butter. “For Fonterra, in 2021, our greater China (mainland China, Taiwan, Hong Kong and Macao) normalised EBIT (earnings before interest and taxes) increased 10% to NZ$403M (US$276M), driven by higher sales volumes and improved margin in the food service channel,” he says, citing data from the Fonterra 2021 Annual Report. The company has also exported products – primarily butter – to Russia until March, totalling about 1% of its annual exports. While food, including dairy, is generally exempt from international sanctions imposed on Russia, Fonterra advised in a 28 February e-mail that it had “suspended shipments of product to Russia while we continue to monitor developments”. The DCANZ stresses that Russia is only a small market for New Zealand dairy exports and “as such, the New Zealand www.oﬁmagazine.com

NZ butter p28, 29.indd 3

Consumer demands

“Global customers and consumers want to know where their food comes from and the environmental impact it leaves,” says Fonterra spokesperson Acland. “We believe New Zealand milk is the most valuable milk in the world due to our grass-fed farming model, which means our milk has a carbon footprint one-third the global average for milk production.” According to the most recent report on the dairy industry in New Zealand from market researcher Euromonitor International, these demands are also being made by New Zealand consumers. It notes that New Zealanders are increasingly aware of the environmental impact of dairy production, which can include run-oﬀ polluting inland waterways, and the release of greenhouse gas emissions from cattle methane.

Cutting greenhouse gases

Recently, Fonterra has responded to this concern by launching New Zealand’s first carbon-zero certified organic butter. The product has been audited and verified by independent NZ certifier Toitū Envirocare. According to the Euromonitor report, this new product also looks to reduce emissions across the supply chain. Named Carbonzero Certified, it has won the ‘Most Innovative Dairy Product Award’ at major food and beverage trade

exhibition Gulfood 2022. According to Fonterra’s Acland, products such as Carbonzero butter are initial short-term solutions to help customers and the environment, while Fonterra works towards net zero aspirations for its entire output. The dairy co-operative aspires to be net zero carbon by 2050 and intends to invest around NZ$1bn (US$680M) in sustainability initiatives over the next decade. “Much of this will be required to upgrade our core manufacturing assets as we look to decarbonise our footprint and improve water use and quality,” says Acland. This will involve Fonterra investing in technologies to reduce agricultural emissions, including new dairy fermentations that can be fed to cows to inhibit the production of methanogens that create methane. The project works with the co-op’s methane-busting Kowbucha probiotics. These stem from Fonterra’s own dairy culture collection stored at the Fonterra Research & Development Centre (FRDC). Working with AgResearch, one of New Zealand’s largest Crown Research Institutes, Fonterra scientists were able to show that some Kowbucha probiotic strains reduce methane by up to 50%. Overall, the New Zealand dairy industry is working in partnership with other New Zealand primary resource sectors (such as forestry and other agricultural sectors) and the national government to support farmers who cut greenhouse gas emissions. According to DCANZ, this includes targets for all farmers to have individual farm greenhouse gas reports by the end of this year as well as a system for pricing agricultural emissions. These requirements are included in NZ climate change legislation (the Climate Change Response – Zero Carbon – Amendment Act) and will be delivered through ‘He Waka Eke Noa’, a ﬁve-year industry-government-Māori community-farm sector partnership set  OFI – MAY 2022

03/05/2022 13:59:57

PLANT & EQUIPMENT

Oils & Fats International reports on some of the latest projects, technology and process news and developments around the world

BDI completes Crimson biodiesel unit in California

Photo: BDI-BioEnergy

Focus on global projects

Austrian biodiesel plant manufacturer BDI-BioEnergy International has completed work on a new biodiesel plant in Bakersfield, California (pictured) for Crimson Renewable Energy. The plant would mainly operate with waste oils and fats collected in the local region, particularly from central and southern California, BDI said on 15 April.

Feedstock would come from restaurants, industrial kitchens and food processors, and rendering facilities. The plant would also utilise BDI’s patented RepCAT technology, featuring a recyclable catalyst. “With this newest generation of biodiesel plant, we can respond to any changes in raw material availability and achieve the maximum possible flexibility,” Crimson CEO Harry Simpson said. The Bakersfield project followed an earlier collaboration between the two companies in 2016, when BDI retrofitted Crimson’s first biodiesel plant. Following the latest partnership, Crimson’s total production capacity at Bakersfield would be more than 140M litres/year (37M gallons/year), BDI said. Crimson Renewable Energy Holdings is a leading producer of biodiesel in western USA and one of the largest used cooking oil (UCO) and grease trap collection companies on the West Coast.

NEW ZEALAND BUTTER u up in late 2019 to support farmers to measure, manage and reduce agricultural greenhouse gas emissions. Farms of over 80ha, or a dairy farm with a milk supply number, or a cattle feedlot as defined in the National Environmental Standards for Freshwater, will need to know their farm’s annual methane and nitrous oxide emissions by December 2022. By January 2025, they will need to have a written plan in place for managing and reducing those emissions. The resulting ability to stress the sustainability of NZ butter in overseas markets will be more important in the short term, given that as pandemic restrictions in New Zealand ease, domestic sales of butter and plant-based spread are expected to decline, according to Euromonitor. New Zealanders will again spend more time outside of their homes, with increased visits to restaurants and cafes, resulting in less butter consumption. However, a more positive trend for butter producers is “a more pronounced move away from margarine and [other non-dairy] spreads by consumers as they look for less processed options” Euromonitor analysts say. If butter can establish a sustainable 30 OFI – MAY 2022

NZ butter and PE p30,31.indd 4

profile, marketers will tap environmentallyconscious consumers and potentially price-sensitive customers opting for a private label butter of good quality, with better-off consumers attracted to organic or artisanal products, such as Bellefield Butter. Despite this, Euromonitor predicts that smaller butter companies could struggle to be profitable in the current market. They also foresee more subdued growth rates for major margarine and other New Zealand plant-based spread players like Upfield Holdings and Goodman Fielder New Zealand.

Chinese investment

One company to look out for as part of the positive butter-orientated trend is Westland Milk Products. The New Zealand company received an investment of NZ$40M (US$27M) from China’s Yili Group, which acquired the New Zealand butter producer in 2019. The considerable financial boost – named Project Goldrush – should allow Westland to double its retail and foodservice sales, which includes its butter product Westgold, along with ice cream, milk powder and yoghurt. Westland CEO Richard Hickson said in

March 2021 that a resulting upgrade of its butter manufacturing plant in Hokitika, South Island, would increase Westland’s consumer and food service butter production to a total of 42,000 tonnes/ year, doubling its current capacity. “We will be replacing the existing single churn that was commissioned in 1978 with two German-built churns. These will offer greater quality control and production efficiencies,” Hickson said. “New packaging lines will also allow us to package different formats and, at the back end, we’re upgrading palletising to give us greater efficiency, speed and stacking combinations to suit the varying requirements of international markets.” Project Goldrush should enable Westland to increase its export capabilities and deliver its goods to a global consumer butter market that includes China, Japan and the USA. Such growth, and the overall positive butter sales outlook, should enable this key New Zealand export sector to thrive throughout this decade and beyond. ● This article was supplied by International News Services Ltd, UK, and written by Barbara Barkhausen a freelance journalist based in Sydney, Australia

www.ofimagazine.com

04/05/2022 11:01:42

PLANT & EQUIPMENT

Photo: Evonik Catalysts

Evonik catalyst plant reduces water usage

Catalysts and adsorbents producer Evonik Catalysts’ new zero liquid discharge (ZLD) plant in India features technology aimed at boosting sustainability, including reduced water usage. The facility in the Dombivli region of Western Maharashtra (pictured) specialises in the manufacture of catalysts for hydrogenation of oils and fats, as well as catalysts for the production of pharmaceuticals, agrochemicals and other speciality chemicals. Featuring a refining facility, the company says the plant can recover and re-use raw materials, such as precious and other metals, improving sustainability by reducing the need to mine new metals. The ZLD advanced water treatment process purifies and recycles wastewater at the end of the industrial process, improving water usage levels and quality, Evonik says. For over a decade, China and India have been the driving forces behind ZLD technology, according to the company, and the process has become common practice for wastewater treatment in

countries with rising populations and water in short supply, such as in Europe and Australia. Evonik’s new ZLD plant has been designed to reduce the amount of fresh water the site requires for its production processes. The ZLD process can lead to a 65% reduction in the plant’s freshwater requirement, and the target is to reach a 75%-85% reduction in the future. In addition, Evonik says the process also turns material previously considered as waste into a saleable by-product. “We put sustainability at the core of our daily work.” says Sanjeev Taneja, head of BL Catalysts. “Our catalysts are a key enabler for a sustainable chemical industry and our solutions enable our customers to increase and implement resource efficiency into their processes to make their business future-proof. The ability to re-use water and products extracted from it, in line with circular economy principles, is key.” In Evonik’s ZLD process, wastewater entering the ZLD plant goes through a four-stage process and the by-products

undergo further processing. An estimated 600m3 of wastewater – the equivalent of between 12 and 18 tankers – enters the ZLD plant daily leading to the production of 15-20 tonnes of sodium sulphate and mixed salt, along with approximately 300-350m3 of processed water. The sodium sulphate extracted during the cleaning process is packaged by the plant’s automatic bag filling systems in preparation for sale. Other mixed salts are disposed of while the processed water goes through stages of reverse osmosis to extract any remaining sodium sulphate.

Increased sustainability

As part of its drive to develop a selfsufficient plant, Evonik Catalysts has also discontinued the use of coal and oil, opting to use natural gas from a thirdparty supplier to power the plant. The company says it is also planning to source 20% of its electricity from solar farms. “At Evonik, we see responsibility and long-term business success as two sides of the same coin,” says Vinod Paremal, regional president, Evonik India Subcontinent. “This new ZLD initiative carries forward that sustainable outlook.” According to the United Nations (UN), 4bn people face severe water scarcity for at least one month/year and, due to the unsustainable use of freshwater and other resources, water stress is set to continue rising, as the world’s population continues to grow and the impacts of climate change increase. For this reason, Evonik says it is important that industrial users make efforts to install available solutions – or use suppliers who do – to reduce the impacts of their production processes to protect this natural resource and make use of material otherwise regarded as waste.

Marathon partners with Neste on Martinez conversion project US refiner Marathon Petroleum Corporation and leading renewable diesel producer Neste announced on 1 March that they have entered a 50/50 joint venture to produce renewable diesel. The joint venture, which is subject to regulatory approvals, will involve the production

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NZ butter and PE p30,31.indd 5

of renewable diesel following the conversion of Marathon’s refinery in Martinez, California. Renewable diesel production is due to begin in the second half of this year and is expected to increase Neste’s renewable products capacity by slightly over 1M tonnes/year. The facility is expected to

reach its full capacity of 2.1M tonnes/year by the end of 2023, the companies say. The production output will be split evenly between the joint venture partners, with each company responsible for marketing the products under its own brand. Both firms will be responsible for feedstock

sourcing and the facility will be operated by Marathon. Neste’s renewable diesel and residue sourcing platform in the USA includes used cooking oil (UCO) collector and recycler Mahoney Environmental and independent renewable waste and residue fat and oil trader Agri Trading. OFI – MAY 2022

04/05/2022 11:01:51

STATISTICS STATISTICAL NEWS

Mintec

Soyabean oil market

Soyabean oil (Mintec Benchmark Price) – €/tonne

The Mintec Benchmark Price (MBP) for EU soyabean oil increased by 4.3% month-on-month (m-o-m) and 60.2% year-on-year (y-o-y) to a record high of €1,810/tonne on 19 April. Global soyabean supply has been tight in the 2021/22 marketing year on the back of adverse weather conditions in top soyabean producing countries Brazil and Argentina, driving EU soyabean prices higher. However, the EU soyabean price has been more recently supported by the price rally in the wider vegetable oil complex following Russia’s invasion of Ukraine on 24 February. Vegetable oil costs fluctuate as oils are often substituted for each other. Thus, the limited supply of sunflower oil from top sunflower oil producers and exporters Russia and Ukraine has led several countries to turn to other edible oils, such as soyabean oil, to offset sunflower oil losses; driving soyabean prices higher. In addition, rising input costs have continued to support prices.

Mintec

Ground (peanut) oil market

Indian groundnut oil price – €/tonne

The Indian groundnut oil price rose by 5.7% m-o-m and 9.7% y-o-y to a record high of €2,003/tonne on 19 April. After a four-month downward trend, groundnut oil prices began to rise in February on the back of the Russia-Ukraine geopolitical conflict which sent global vegetable oil prices to unprecedented levels due to shortages of sunflower oil. Additionally, global groundnut oil production for the 2021/22 marketing year has been revised down slightly by the United States Department of Agriculture (USDA) to 6.45M tonnes from an initial estimate of 6.5M tonnes. However, groundnut crush processing from top producer India has reportedly increased in line with domestic prices to replace sunflower oil shortages.

Mintec

Butter market

EU butter price (€/tonne)

Prices of selected oils (US$/tonne) Nov 21

Dec 21

Jan 22

Feb 22

Soyabean

1,387.7

1,383.1

1,421.8

Crude palm

1,327.1

1,265.0

1,320.1

Palm olein

1,234.7

1,147.4

Coconut

1,898.6

1,781.4

Rapeseed

1,696.8

Sunflower Palm kernel Average Index

Mar 22

Apr 22

1,537.3

1,922.7

1,868.3

1,497.0

1,669.6

1,578.6

1,223.3

1,422.3

1,605.4

1,445.6

1,928.3

2,145.3

2,180.4

2,000.8

1,729.9

1,773.7

1,666.0

2,057.6

2,120.9

1,412.4

1,385.5

1,390.8

1,517.0

2,351.0

2136.0

1,941.0

1,743.8

2,017.5

2,262.5

2,320.0

1,977.3

1,558.0

1,491.0

1,582.0

1,721.0

2015.0

1,875.0

369.0

353.0

375.0

408.0

478.0

444.0

32 OFI – MAY 2022

Stats May 2022.indd 1

The price of EU butter hit a record high of €7,205/tonne on 13 April, up by 76% compared to the same period last year. Availability remained tight while demand for fats was strong. Since Russia’s invasion of Ukraine, buying interest has picked up and buyers have found it difficult to stockpile. Due to the uncertainty around rising input costs, including logistics disruptions, manufacturers slowed forward contracting. With active butter demand, manufacturers feel confident to delay contracting as a way of protection against cost uncertainties. In addition, high cream and vegetable fats prices have boosted butter prices during the last quarter.

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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04/05/2022 10:36:26

OFI May 2022

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