Page 1

TM

MALAYSIAN PALM OIL COUNCIL

KKDN PP 14669/05/2010 (024659)

A Long Journey Ahead for India’s Oil Palm Plantations India’s oilseed sector has always been very important to the country’s domestic edible oils and fats needs. India produces more than 30 million metric tonnes of oilseeds, including soybean, cottonseed, groundnut, sunflower seed, rapeseed, sesame seed, copra and other oilseeds for non-food usage – accounting for about 7 per cent of the annual world oilseed production.

MARKETING & MARKET DEVELOPMENT DIVISION DIRECTOR Wira Adam

Muhammad Kharibi Zainal Ariffin kharibi@mpoc.org.my MARKET ANALYSTS Asia Pacific

The volume of oils and fats demand in India is based on the per capita consumption of 11kg. This is way below

Subsequently, a National Research Centre for Oil Palm (NRCOP) was established at Pedavegi in the West

40,000

40,000

35,000

35,000

30,000

30,000

25,000

25,000

20,000

20,000

15,000

15,000

10,000 5,000

Lim Teck Chai lim@mpoc.org.my South Asia

Fatimah Zaharah Md Nan fatimah@mpoc.org.my

Middle-East

Mohamad Suhaili Hambali msuhaili@mpoc.org.my

Africa

Nor Iskahar Nordin iskahar@mpoc.org.my

Europe

Azriyah Azian azriyah@mpoc.org.my

Americas

Ahmad Fadzli Abdul Aziz fadzli@mpoc.org.my

For more information, please contact Tel : 603 - 7806 4097 Fax: 603 - 7806 2272

regional station at Palode, Thiruvananthapuram in Kerala. States

near

Potential Area (Ha)

Andhra Pradesh Assam Gujarat Goa Karnataka Kerala Maharashtra Orissa Tamil Nadu Tripura West Bengal

400,000 10,000 61,350 10,000 250,000 5,000 10,000 10,000 30,000 5,000 10,000 801,350

10,000

Total Oilseed Area

5,000

Total

0

Source: Chadha Commitee (Chadha Committee Report, July 2006) and other committees

the world average and if India’s per capita consumption goes up, the country will definitely require more oils and fats. In order to meet increasing demand, India has to either increase its oils and fats production or import more. Unfortunately, the Indian oilseed sector

07/08

06/07

05/06

04/05

08/09F

Oil Year Source: Oilworld

03/04

02/03

01/02

00/01

98/99

99/00

97/98

96/97

95/96

94/95

93/94

92/93

Desmond Ng Kok Hooi desmond@mpoc.org.my

Total Oilseed Production

0 91/92

Oilseed Area ('000) Tonnes

Besides attempting to increase the acreage and productivity to cater to the growing demand, the Government of India has also looked into planting alternative oilseed crops. One of the options is to explore the possibility of cultivating oil palm in the country. The Oil Palm Development Programme (OPDP) was introduced in 1991-92 for this task.

Oilseed Production ('000) Tonnes

Of the total, the country generated about 7 million MT of vegetable oils in the last three years, but this only amounts to some 60 per cent of the edible oils and fats required by the population. Annually, India requires at least 12 million MT of oils and fats, with the demand growing by at least 3 per cent each year.

45,000

wira@mpoc.org.my

MANAGER

has not changed much in the last 15 years. Farmers are more inclined to growing rice, food grains or other cash crops instead of oilseeds, and efforts to increase oilseed production have had no impact. The oilseed cultivation area has been stagnating at 20 to 35 million hectares out of the total agriculture area of close to 40 million hectares.

45,000

VOL: 6 2009

Godavari district of Andhra Pradesh by the Indian Council for Agricultural Research on Feb 19, 1995. The objective of NRCOP was to undertake all aspects of oil palm research in the country to improve production and promote technology transfer in oil palm development. The centre has a

OIL PALM PLANTATION DEVELOPMENT Recognising the potential palm oil can contribute to reducing dependency on India’s imports of oils and fats, the government identified about 800,000 hectares of land around the country as suitable for oil palm plantations. Continued on page 7

MPOC FORTUNE


WORLD’S MOST SUCCESSFUL CRUDE PALM OIL FUTURES CONTRACT For over 28 years, Bursa Malaysia’s Crude Palm Oil Futures Contract (FCPO) has been the global price benchmark for the palm oil market. This successful track record and the current liquid market enable access for global market users to manage the palm oil price exposure and commodity hedge funds portfolios effectively.

Make FCPO part of your trading portfolio today • Manage your funds – Explore trading opportunities in the commodity market • Hedging opportunity y – Examine price risks and market volatility to hedge your position • Just trade – Exploit price discrepancies and arbitrage opportunities to maximise potential gains

Disclaimer: The information contained herein does not constitute legal, financial or investment advice and neither does it make any recommendations or endorsement regarding the product mentioned herein. Bursa Malaysia does not accept any liability for any investment decisions made on the basis of this information. You are advised to seek independent advice and / or consult relevant laws, regulations and rules prior to trading / investing.

www.bursamalaysia.com


MARKE T W at c h

May test support levels around RM2,100 to RM2,200 by Benny Lee Chief Market Strategist NextView Group

In my article last month, I mentioned that there is a strong resistance for the price of FCPO (Crude Palm Oil Futures) at RM2,800 per metric tonne and if it is not broken, the price may pull back to its long term average at around RM2,000. That was when the price of FCPO was at RM2,700 and on Jun 15 it was at RM2,400. The news about rising imports and Indonesia’s tax on CPO did not have impact on the price of FCPO and I was still convinced that the price of FCPO needed to be corrected downwards because the price is overbought. The price was quite volatile last month. From RM2,700 it went to a low of RM2,350 before rebounding back to RM2,650. However, the rally was not sustainable and price fell to the current level of RM2,400. FCPO traders are concerned about the demand sustainability and the rising US dollar which may weaken the price of FCPO. The Malaysian Palm Oil Board says in official report that Malaysian crude palm oil exports rose 2.3 per cent on-month to 1.22 million metric tonnes in

May. However, estimates from cargo surveyors expect a drop in export estimates for the first half of June. Intertek Agri Services estimated a fall of 10 per cent in exports while SGS expected a fall of 9.4 per cent. Trades have already started to look for positive catalysts to boost CPO price but the lack of strong fundamental data caused traders to continue staying out. Trading volume was relatively weaker as traders are still looking for cues from the market. The cue was pretty obvious last week when price was high and if only they knew how to read charts or this article last month, they would at least know the market vibration and know where it is heading. The price of FCPO is currently in a correction period but is still in a long term up trend as long as it maintains above the 90-day moving average (90-SMA) which is currently at RM2,260. There is a temporary support level created last month at RM2,350. The momentum in price and volume is getting weaker. The

Relative Strength Index (RSI) continues to make new lows while the Average Directional Index continues to decline. These indicators indicate weaknesses in price momentum. Daily average volume in the past one month was 10,900 contracts, 14 per cent lower than the previous corresponding month. The longer term average for the price of FCPO has increased from RM2,000 to RM2,100 per metric tonne. The weak momentum suggests that price may continue to fall and test the support levels. There is another support level that can be defined from October 2008 to the current rally which is around RM2,100. The price of FCPO may soon test the immediate support level at RM2,350 and if this support level is breached, then the price of FCPO may test support levels around RM2,100 to RM2,200. Strong resistance maintains at RM2,800 while immediate resistance level is at RM2,650. These two resistance levels can be connected by drawing a linear trend line which defines the current short term down trend and if this line is broken, we may see the price of FCPO going sideways.

Mr. Benny Lee is a private trader, trainer and sought-after speaker in the financial market. He is the Chief Market Strategist for NextView Group. NextView Group is a group of companies in the Asian region that provides a leading real-time investment tool for both professional and retail investors. NextView is also a leading Investor Education training provider. For more information, log on to www.nextview.com.

FCPO daily chart as at 15 June 2009. Charted by Benny Lee using NextView Advisor Professional

The above analysis and commentary is based on the writer’s personal opinion towards the price of crude palm oil using technical analysis and should not be construed as any form of investment advice. The writer will not be responsible for any decision made from using the above article.

MPOC FORTUNE • 3


For more information, please contact : ICB Global Management Sdn Bhd No. 3, Jalan Sri Hartamas 7, Taman Sri Hartamas, 50480 Kuala Lumpur, Malaysia. Tel: +603 6201 6051 Fax: +603 6201 6053


M A RKE T Ins In s igh g ts

Tariff Increase Worries Russian Food Processors

Russia is a large market economy of about 145 million people. Since the collapse of the Soviet Union, Russia has made remarkable strides economically. Before the global financial crisis, Russia managed to establish itself as the world’s ninth largest economy and rising fast. This has resulted in the much needed job creation which had further stimulated the economic growth. However, the global financial crisis has had a negative impact on Russian agribusiness and agriculture production and the slowdown of the economy in the European countries may decrease foreign demand for Russian oilseeds especially rapeseed. Traditionally, Russia has never had sufficient domestic supply of oilseeds. That is why the country has to import about one million tonnes of oils and fats annually. Russia’s imports are dependent on its own domestic oilseed production as well as global prices of oils and fats. Vegetable oil is classified under the cheap

food product category and even with the economic crisis, the domestic demand for oils and fats is expected to be stable and could even show a slight increase in 2009. Last year, Russia imported nearly 900,000 tonnes of oils, comprising a mix of vegetable oils such as palm, sunflower, soybean and lauric oils. Palm oil continues to account for the bulk of Russia’s edible oil imports, amounting to about 60 per cent of the market share. Palm oil imports are estimated at 620,000 tonnes in 2008. The major exporters of palm oil to Russia are Malaysia, Indonesia, Ukraine and The Netherlands. However, palm oil imports for the 2008/09 season are estimated at 550,000 tonnes due to lower imports from October 2008 to February 2009. According to industry forecast, Russia’s imports of vegetable oils will decrease to 700,000 tonnes in 2009/10, from its estimate of 750,000 tonnes in 2008/09.

Sunflower oil accounted for about 90 per cent of Russia’s total annual edible oil output. However, Russia’s sunflower oil production capacity is not expected to increase further due to the unavailability of more suitable land for the oilseed. In fact, according to industry estimates, by 2012 its share of the country’s total domestic edible oil output is expected to decrease significantly to about 67 per cent. Instead, the production of rapeseed oil and soyabean oil are expected to increase to 17 per cent and 10 per cent respectively over the next four years. This is made possible with the availability of suitable land for the expansion of these oilseeds. According to the statement from the Department of Agriculture, Russia’s vegetable oil production is expected to exceed 3 million tonnes this season, from about 2.3 million tonnes in the year 2007/08. Import tariffs on vegetable oils vary for different oils and also depend on the usage. Earlier this year the Russian government announced it will review the zero duty for bulk imports of tropical oils. The zero import tariff for bulk imports for these oils have been extended several times since September 2007. During the same time, the government introduced a 5 per cent duty for the imports of these oils in small packages of less than 200kg. The domestic food industry, the major consumer of tropical oils, succeeded in persuading the Russian government to maintain the zero duty for bulk imports. They claimed that the tariff increase will only result in significant increase in consumer prices of confectionery products, butter and some other food products. Industry experts voiced their concerns on the timing of the government decision to increase the import tariffs for tropical oils. The Russian dairy industry has been supporting an effort to persuade the government to increase the import tariff for tropical oils, saying that the influx of cheap vegetable oil imports, in particular, palm oil, has affected the demand for milk fats in confectionery products and butter. As a result on May 8, 2009 the government

Continued on page 10

MPOC FORTUNE • 5


M A RKE T Ins In s igh g ts material costs in 2007 and 2008. The global financial crisis also caused a contraction in Taiwan’s economic growth, including industrial production, which contracted by 1.7 per cent in 2008.

Island-Nation Taiwan

Palm Oil Consumption Continues to Grow Taiwan, together with South Korea, Hong Kong and Singapore, were in the 80s recognised as the four “Asian Small Dragons” because of their fast-paced progress into developed nations. Taiwan itself transformed from agricultural-based into a developed nation within 20 years from 1960 to 1980. Through aggressive conversion from agricultural to industrial activities, with the investments coming largely from the United States and Europe, greater job opportunities and an improved economy lifting the living conditions of the Taiwanese, a surge in demand for goods, ranging from basic necessities to luxury items, was also brought about. In this scenario, edible oils and fats too were among the main daily basic living needs in bigger demand. Next came China, with its open door policy implemented in the mid-80s that made its economy expand quickly, bringing to it most of the FDI directed to Asian region, especially linked to commodities such as oils and fats. China’s growth also led to the emigration of some 5 per cent of Taiwanese investors to Chinese cities such as Shanghai and Xiamen, where they has an influence on the demand for food products, since the working age group requires a higher food intake than those in other age groups. The stagnating population growth in Taiwan (0.6 per cent a year), which indicates a growing older population of 65 years and above, means less food is required, if compared with other age groups. As a result, the demand for oils and fats in Taiwan grew negatively, by 0.3 per cent annually from 1996 to 2008, or stagnating between 770,000 and 810,000 metric tonnes a year. So what is in store for palm oil exporters to Taiwan today? STABLE GROWTH OF PALM OIL IMPORTS The low population growth and low new investment in oils and fats-related activities has made the demand for oils 6 • MPOC FORTUNE

and fats almost unchanged. Taiwan’s production of oils and fats experienced a decline in the past 5 years, seeing a 1.6 per cent drop per annum. Similar to many countries, the production of oils, especially seed oils, is closely linked to the local livestock industry’s demand for feed from oilseed meals. In Taiwan, this comes from soybean oil. In the past few years, especially after Taiwan’s accession to the World Trade Organisation, the abolition of import duties on livestock products and feed ingredients led to competition between

Although imports of edible oils and fats declined between 2004 and 2008, palm oil import, however, recorded a significant growth during the same period, at 7.7 per cent, while the import of soybean oil and tallow dropped by 2.7 per cent and 3.7 per cent per year (Figure 1). Since the consumption of oils and fats was almost stagnant during this period, the increase in palm oil import, and hence its consumption, has been at the expense of the other oils and fats, primarily soybean oil. From figure 2, it can be seen that for the past 10 years, the market share of soybean oil has reduced from 65 per cent to 52 per cent, while the market share for palm oil rose from 8 to 19 per cent. What were the reasons?

Table 1: Taiwan – Oils & Fats Situation (’000 MT) 2003

2004

2005

2006

2007

2008

CAGR (04-08)

Production

485.1

444.5

473.4

513.1

491.0

447.0

-1.6%

Imports

313.8

353.5

376.8

316.0

329.1

311.0

-0.2%

Exports

13.8

16.7

14.6

15.8

18.6

23.0

10.8%

Consumption

791.1

794.3

817.5

810.0

806.0

759.0

-0.5%

Table 2: Taiwan – Oils and Fats Consumption (’000 MT) 2004

2005

2006

2007

2008

CAGR (04-08)

Soybean Oil

431.9

430.5

445.4

442.0

406.0

-2.8%

Palm Oil

124.6

131.2

147.0

138.0

141.0

7.5%

Lard

66.1

66.6

62.7

60.3

59.0

-1.4%

Tallow & Grease

65.3

71.2

55.1

52.2

57.0

-3.6%

Others

106.4

118.0

99.8

113.5

96.0

0.7%

Total

794.3

817.5

810.0

806.0

759.0

-0.8%

Y-o-Y Growth

0.4%

2.9%

-0.9%

-0.5%

-5.8%

Source: Oil World

imported ones and those produced domestically. Hence, livestock production saw a relatively slow growth, at 1.2 per cent, while production of oilseed meals decreased by 2.6 per cent annually since 2003. With lower oilseed meals production, crushing activities also slowed down and subsequently, a reduction in edible oil production in the country, forcing Taiwan to rely on imported oils and fats. Imports during this period were stagnant, with -0.2 per cent growth recorded annually. The decline led to a rise in raw

Palm oil consumption in the cooking oil market has yet to record significant achievement because in this temperate country, the clouding property of the oil deters consumers from purchasing it, as it is perceived as unhealthy. Taiwan’s cooking oil market size between 2003 and 2007 was not stable, fluctuating between 97,000 metric tonnes and 106,000 MT. Of these volumes, soybean cooking oil accounted for 30 per cent of the cooking oil market share, while sunflower cooking Continued on page 9


MARKET Insights In s g

the OPDP project were uprooted by farmers who planted other agriculture crops that could give them a more immediate income. Now, oil palm cultivation is being taken up by private companies with support from State governments. Three companies are actively involved in this. PALM TECH INDIA LTD Palm Tech India Ltd has a concession of 280,000ha of gazetted land in the States of Andhra Pradesh and Karnataka for integrated oil palm development. To date, the company has planted about 10,000ha with oil palm in Andhra Pradesh and Karnataka, and has another 10,000ha to plant the crop in the State of Mizoram.

Continued from page 1

A Long Journey Ahead for India’s Oil Palm Plantations

Palm Tech gets its seedlings from Papua New Guinea, Malaysia, Indonesia and Costa Rica. Palm Tech is also permitted to import 1.3 million seedlings from Malaysia, but its supplier, Ecofirst Consolidated Bhd, disposed of its stock

Estimated Acreage Owned by Selected Companies Company

Estimated Planted Area (Hectares)

Location

Palm Tech India Ltd

10,000

Andhra Pradesh, Karnataka

Godrej Agrovet Ltd

6,500

Andhra Pradesh, Karnataka and Goa

Oil Palm India Ltd

3,464

Kerala

Considering various factors such as weather and soil conditions, as well as groundwater potential, coastal Andhra Pradesh and certain districts of Karnataka are the most suitable for oil palm cultivation, having 80 per cent of the total area identified as suitable for growing it. Under the OPDP, India developed only 87,000ha of oil palm plantations. The programme faced many challenges, slowing its development despite financial and technical assistance provided to farmers under the OPDP to encourage them to grow oil palm. Another reason was the severe weather conditions India faced during 1998-99, destroying the oil palm grown earlier. India needs an extensive irrigation system to grow oil palm, which was not done. Gradual reductions on import duty of edible oils and fats as well as liberalisation of import of vegetable oils under the open general licence (OGL) also discouraged farmers from planting oil palm. Negative results from the projects resulted in the uprooting of oil palm trees in some areas. It is estimated that about 30,000ha of oil palm areas planted under

in 2007 and the supply of seedlings from Malaysia has discontinued. In terms of processing capacity, Palm Tech has established a palm oil mill at the Peddapuram Industrial Development Zone, with a capacity of 30 MT FFBs/hr. The company is also planning to build two more mills in Andhra Pradesh and Karnataka. GODREJ AGROVET LTD The oil palm division of Godrej Agrovet Ltd was established in the early 90s with the intention of reducing the gap between demand and production of edible oils in India. The company is based in Mumbai and has a research and development centre in Bangalore. Over the years, Godrej Agrovet developed 6,500ha of oil palm plantations in Andhra Pradesh, Goa and Karnataka and set up oil mills in Andhra Pradesh and Goa. It is also planting oil palm in Gujarat, Orissa and Mizoram. As part of the company’s efforts to improve oil palm productivity in the country, Godrej Agrovet set up one-stop outlets, providing farmers with seeds, fertilisers, pesticides, technical guidance on cultivation and 100 per cent guarantee on buyback of fresh fruit

bunches. To strengthen its position in oil palm in India, Godrej Agrovet established a joint-venture with IJM Plantations Malaysia Bhd and Blessed Resources Ltd. The JV with IJM is for oil palm development in Karnataka and Goa while the JV with Blessed Resources Ltd is to develop it in Andhra Pradesh, Gujarat, Mizoram and Orissa. OIL PALM INDIA LTD Oil Palm India Ltd is a joint venture of the Central and Kerala governments. The company was established in 1977 to encourage oil palm cultivation in the State of Kerala. It has been assigned to promote oil palm cultivation among smallholders in Kerala, with the State and Central governments extending subsidies for the cultivation. So far 1,600ha of oil palm has been cultivated in Kerala, of which 85ha was developed as a frontline demonstration site in Kariland in Kuttanad district. Some 2,665 small and marginal farmers are benefiting from this scheme, and the procurement of the fresh fruit bunches (FFB) is done directly by Oil Palm India Ltd. INDIA’S LIMITATIONS Oil palm requires ample sunshine and an annual rainfall of almost 2,000mm throughout the year if it is to grow ideally. But this is not the situation in India, where weather conditions for growing of oil palm are not optimum. More than 15 years of planting oil palm are yet to produce any significant result, even if the targets have been achieved in a few areas. Among other factors inhibiting the expansion of oil palm plantations are the long cycle before the fruits are produced, poor irrigation infrastructure resulting in low productivity, price fluctuation of FFB, lack of processing facilities and negative perceptions about palm oil that have discouraged farmers from planting it. Policy issues in the country also affect the development of oil palm, one of these being land policy. The Land Reform Act in various States restricts the size of land holdings by individual farmers and purchase of farmland by non-agriculturists. At the moment, land ceiling is fixed at 20ha, which is too small for commercial growing of oil palm. Also, farmers are not allowed to procure land to expand their oil palm acreage. All in all, India is a very long way from achieving self-sufficiency in edible oils and fats through oil palm cultivation. MPOC FORTUNE • 7


MARKET Insights In s g

Island-Nation Taiwan

CONCERNS OVER TRANS FATS In Taiwan, palm oil is mainly imported and traded by Japanese companies such as Mitsui and Mitsubishi, which have vessels plying the Malaysia-Japan route. The bulk of the palm oil in Taiwan – more than 96 per cent – originates from Malaysia. Since the local press started picking up articles on trans fatty acids in 2005, there has been a gradual rise in concern about trans fatty acids among the people. Subsequently, Taiwan’s Bureau of Food Safety has come out with a standard on trans fatty acids and labelling of trans fatty acids, which was enforced on Jan 1, 2008. In anticipation of the greater concerns of the public about trans fatty acids and health, some food manufacturers and solid fats producers have started switching from soybean oil to palm oil. This included the Kentucky Fried Chicken chain in Taiwan, where

Palm Oil Consumption Continues to Grow

Continued from page 6

Figure 1: Taiwan – Import of Major Oils and Fats (’000 MT)

160.0 140.0 Import ('000 MT)

120.0 100.0 80.0 60.0 40.0 20.0 0.0

2003

2004

2005

Soybean Oil

2006

Palm Oil

2007

2008

Tallow & Grease

Source: Oil World Figure 2: Taiwan – Market Share of Major Oils and Fats (1998 & 2008) 1998 9% 10%

65% 8%

2005

2006

2007

2008

CAGR (04-08)

Instant noodles

53.2

53.1

52.3

51.9

51.7

-0.7%

Snacks

48.5

50.1

51.5

53.2

54.9

3.1%

8%

Table 4: Taiwan – Production of Margarine and Shortening (MT)

52% 8%

Soybean Oil Palm Oil Lard

2004

Source: Euromonitor

2008 13% 8%

Table 3: Taiwan – Sales of Instant Noodles and Snacks (’000 MT)

19%

2003

2004

2005

2006

2007

CAGR (03-07)

Margarine

37,958

32,106

33,363

34,731

32,525

-3.8%

Shortening

49,668

61,741

79,685

75,930

66,980

7.8%

TOTAL

89,629

95,851

115,053 112,667

101,512

3.2%

Source: Taiwan Margarine Industries Association

Tallow & Grease Others

Source: Oil World oil was second, accounting for 25 per cent. Other major types of cooking oil are canola and rapeseed oils, each accounting for 12 per cent market share in 2007. The sector using palm oil as its major frying medium, the instant noodle market, actually recorded negative growth between 2004 and 2008. Hence, the additional consumption of palm oil was not by the instant noodles segment but by the snacks market, which between 2004 and 2008 saw demand for snack foods grow by 3.1 per cent a year. With oil content in snack foods estimated at 30 per

cent, the increase in snack food volume to cen 6,400 metric tonnes will only demand 6,4 1,920 MT of oils, which was a fraction (12 per cent) of the total increase in palm oil demand in Taiwan between 2004 and 2008. In the production of solid fats in the country, Nam Chow Chemical Industrial Co Ltd is the biggest player. Although information is only available up to 2007, the production of shortening has increased while that of margarine has declined. Nevertheless, total solid fats produced still recorded an increase between 2003 and 2007, at 3.2 per cent a year. Since shortening can be very competitively produced with palm oil, the increase its production is also linked to the increase in palm oil consumption over the years. However, this should not lead to any significant substitution of soybean oil with palm oil.

hydrogenated soybean oil used for frying has since the end of 2006 been gradually switched to palm oil. With giant food retailers such as KFC making public announcements on their switch to palm oil, the other players, ranging from giants such as Pizza Hut and McDonald’s to small food retail outlets that promote healthy eating, have also dropped trans fatty acids from their food. While the continued switch from soybean oil to palm oil may not be that drastic in the years to come, the continuous growth of the food industry will surely require more palm oil in the country. It is projected that consumer food services outlets and transactions will grow at 1.3 per cent and 2.6 per cent annually between 2007 and 2012. Therefore, Taiwan’s palm oil consumption is expected to grow in the years to come.

MPOC FORTUNE • 9


MARKET Insights In s g Continued from page 5

Tariff Increase Worries Russian Food Processors introduced a decree to increase import duties for the specific category of tropical oils to 10 per cent. It was put into force one month after the date of its official publication and will be valid for nine months. It is not clear whether the increase in the tariffs will affect the import of tropical oils during the next months. Some experts think the introduction of additional import duty on tropical oils will lead to further reduction of imports and may result in the increase in production costs and prices of foodstuffs, including confectionery products, spreads and ice-cream. They stressed that under current financial crisis, with the reduction of disposable income and decreasing consumer demand, this measure seems to support only the dairy industry at the expense of other industries and consumers. This has raised major concerns among many food processors and manufacturers, mainly those using palm oil and other tropical oils

in their manufacture. However, some industry experts feel that it is impossible to fully avoid palm oil use today, as it is an irreplaceable raw material for certain food-processing industry in Russia. These are products cannot be easily substituted by sunflower oil. They argued that palm oil products have perfectly proven to be a reliable raw materials and for their adaptability to manufacture. Palm oil is used in the manufacture of inexpensive food products that will always be in demand. The prices of finished goods may increase a little but this will not affect the demand for these products. On the other hand, they pointed out, the 10 per cent duty may cause the

production of specialty fats by Russian companies to be unprofitable. As a result, the imports of both raw materials and finished goods may increase substantially. It was reported that efforts are already under way by several industry groups to convince the government to reverse its decision to increase the imports tariffs. They are expressing their concerns to the highest Russian authority. According to industry sources, it is too soon to determine whether they will succeed but they hope to get the reversal put in place before demand for these raw materials pick up around September.

Course on Commercial and Operational Aspects of Palm Oil Trade 10 - 11 August 2009 Sheraton Subang Hotel & Tower, Subang Jaya, Selangor

THE PALM OIL REFINERS ASSOCIATION OF MALAYSIA

About the Course This one and a half-day course aims to provide participants with an overview of the various commercial and operational aspects of palm oil trade, including PORAM contracts, quality and shipping issues related to the palm oil industry. The course will cover topics on: • Product Knowledge - Introduction to Processing and Uses of Palm Oil • Palm Oil Quality Standards for Trading • Salient Features of Contracts • Export Documentation & Letter of Credit • The Shipping of Palm Oil - Chartering Vessels & Documentations • The Shipping of Palm Oil - Heating Instructions, Loading & Unloading • Marine Cargo Insurance - Risk Management & Handling Claims • Regulations Related to Transportation of Palm Oil • Common Disputes in the Sales and Carriage of Palm Oil Trade • Observations on Arbitration Cases in The Palm Oil Trade This course is designed for all level of managements and supervisors, and also suitable for the middle and junior personnel new to the industry. The course also serves as refresher for senior personnel.

10 • MPOC FORTUNE

To register : Palm Oil Refiners Association (PORAM) 801C/802A, Block B Executive Suites Kelana Business Centre 97, Jalan SS7/2 47301 Kelana Jaya Selangor, Malaysia Tel : 603-7492 0006 Fax No : 603-7492 0128 E-mail: poram@poram.org.my contact: En. Asrul / Ms. Susila


MPOC Offices Worldwide Malaysian Palm Oil Council (MPOC) 2nd Floor Wisma Sawit Lot 6, SS 6, Jalan Perbandaran 47301 Kelana Jaya, Selangor Tel: 603-7806 4097 Fax: 603-7806 2272 www.mpoc.org.my American Palm Oil Council Suite # 690, 21515 Hawthorne Blvd. Torrance CA 90503, USA Tel: +1 (310) 944 3910 Fax: +1 (310) 944 3544 www.americanpalmoil.com E-mail: kassim@americanpalmoil.com Contact: Mohd Salleh Kassim MPOC Africa Regional Office 5 Nollsworth Crescent, Nollsworth Park La Lucia Ridge Office Estate, La Lucia 4051, KwaZulu-Natal, South Africa Tel: +27 (31) 5666 171 Fax: +27 (31) 5666 170 E-mail: kumar@mpoc.org.za Postal Address: P.O.Box 1591 M.E.C.C. 4301, South Africa Contact: Uthaya Kumar MPOC Bangladesh 62-63 Motijheel Commercial Area, 7th Floor, Amin Court Building, Dhaka, Bangladesh Tel: +88 (02) 9571 216 Fax: +88 (02) 9551 836 E-mail: fakhrul@mpoc.org.bd Contact: Fakhrul Alam MPOC Shanghai, China Shanghai Westgate Mall Co. Ltd. Room 1610B, 1038 Nanjing Rd. (w) Shanghai 200041, P. R. China Tel: +86 (21) 6218 2085 / 6218 2086 Fax: +86 (21) 6218 1125 E-mail: teah@mpoc.org.cn Contact: Teah Yau Kun MPOC Pakistan 11 – 3rd Floor, Leeds Centre Main Boulevard Gulberg, 111 Lahore, Pakistan Tel: +92 (42) 5716 600 / 5716 601 Fax: +92 (42) 5716 602 E-mail: faisal@mpoc.org.pk Contact: Faisal Iqbal

ADVERTISING OPPORTUNITIES TM

Advertising in the Malaysian Palm Oil FORTUNE is probably one of the most economical methods of advertising. Discounts of 5%, 10% and 20% are available for placements of 3 months, 6 months and one year, respectively. For enquiries, please e-mail: fortune@mpoc.org.my or contact: Tel: 603-7806 4097 (Mr. Muhammad Kharibi Zainal Ariffin)

MPOC India S-4, New Mahavir Building, Cumballa Hill Road Kemps Corner, Mumbai 400 036 Tel: +91 (22) 6655 0755 / 6655 0756 Fax: +91 (22) 6655 0757 E-mail: bhavna@mpoc.org.in Contact: Bhavna Shah MPOC Europe Regional Office 31 Avenue Emile Vendervelde 1200 Brussels Belgium Tel: +32 (2) 7748 860 Fax: +32 (2) 7794 371 E-mail: zainuddin@skynet.be Contact: Zainuddin Hassan MPOC Cairo 3 Gamal E1-Din Afify Street, Nasir City Zone No.6, 11371 Cairo, Egypt Tel: +20 (2) 2273 8108 Fax +20 (2) 2273 8106 E-mail: kazmi@mpocegypt.com Contact: Kamal Azmi MPOC Istanbul Guzel Konutlar Sitesi Dilek Apartment Daire 3 Balmumcu, Besiktas - Istanbul, Turkey Tel: +90 (212) 2668234 Fax +90 (212) 2668236 E-mail: haznita@mpoc.org.my Contact: Norhaznita Husin

MPOC Fortune - Vol06 June 2009  

The Malaysian Palm Oil FORTUNE is MPOC's (Malaysian Palm Oil Council) monthly market update covering the latest development in the oils and...

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