TM
MALAYSIAN PALM OIL COUNCIL
KKDN PP 14669/05/2009
VOL: 10 2008
affordability. Thus, demand shifted to the more reasonably priced palm oil. As most contracts were booked on forward basis, the effect of the price fall in the second and third quarter of the year did not to any large extent affect prior commitments.
First Choice Flavour India’s
Export Scenario Another reason for the drop in soft oil imports by India over the first nine months of this year was the ban on the export of vegetable oils from the beginning of the year. The subcontinent’s location made it a supplier of refined soft oils to the Middle East, Bangladesh, Pakistan and even Southeast Asia. The ban put a lid on all those possibilities, thereby further killing the demand for soft oils. Domino Effect The increase in edible oil imports by India from January to September this (Continued on page 3)
Palm oil stands to gain wide usage among consumers – if the price is right
Increased
demand for vegetable oils in India, as depicted by import statistics for the period from January to September 2008, at first glance seems to paint a rosy future for palm oil in the country. What is more satisfying to see is that while soft oils have lost ground, palm and lauric oils have more than covered up for this in the current year. Does this mean that soft oils have lost their preferred position in the Indian market, and that palm oil has become
the first choice flavour for Indians? While this is what everyone related to the palm oil sector hopes for, there might be other reasons for this shift to palm and lauric oils. The following could be some that deserve thought: Trend Fever Often, a change in the market trend will bring on caution among the players. This caution might be on the part of all, or just among a specific segment. Similarly, in the beginning of 2007, India witnessed the start of a true bull run. At this point, it was noticed that globally, buyers were forced to be in a defensive position. It was a conscious decision, on the part of the buyers, to wait and see how the market would behave. Thus, at this point, demand was on hand-to-mouth basis, with demand for palm oil growing fast. By the start of 2008, the scenario had settled, with soft oil prices at levels that were way off the average man’s
MARKETING & MARKET DEVELOPMENT DIVISION DIRECTOR Wira Adam
wira@mpoc.org.my
MANAGER Sum Kum Mooi sum@mpoc.org.my Muhammad Kharibi Zainal Ariffin kharibi@mpoc.org.my MARKET ANALYSTS
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
Asia Pacific
Desmond Ng Kok Hooi desmond@mpoc.org.my
South Asia
Fatimah Zaharah Md Nan fatimah@mpoc.org.my
Middle-East
Norhaznita Husin haznita@mpoc.org.my
Africa
Lim Teck Chaii lim@mpoc.org.my
Europe
Sum Kum Mooi sum@mpoc.org.my
Americas
Fatimah Zaharah Md Nan fatimah@mpoc.org.my
For more information, please contact Tel : 603 - 7806 4097 Fax: 603 - 7806 2272
Malaysian Palm Oil FORTUNE • 3
((Continued from page p g 1))
First Choice Flavour
India’s
Table 1: Year-to-date Oils & Fats Imports Jan-Sep 2008
Jan-Sep 2007
Changes (Vol.)
Changes (%)
SFO
15,700
158,100
-142,400
-90
SBO
625,814
1,173,398
-547,584
-47
CPL
4,015
34,791
-30,776
-88
CPO
3,023,386
2,133,841
889,545
42
CPKO
96,186
71,784
24,402
34
RBDPL
495,658
79,513
416,145
523
SPKFA
0
0
0
0
PKFAD
12,311
12,417
-106
-1
PFAD
308,686
197,603
111,083
56
CPS
70,474
130,259
-59,785
-46
CCN OIL
11,017
9,997
1,020
10
OTHERS
32,812
58,138
-25,326
-44
4,696,059
4,059,841
636,218
16
TOTAL
Source: SEA Table 2 : Year-to-date Palm Products Imports Jan-Sep 2008
Jan-Sep 2007
Changes (Vol.)
Changes (%)
CPL
4,015
34,791
-30,776
-88
CPO
3,023,386
2,133,841
889,545
42
CPKO
96,186
71,784
24,402
34
RBDPL
495,658
79,513
416,145
523
PKFAD
12,311
12,417
-106
-1
PFAD
308,686
197,603
111,083
56
CPS
70,474
130,259
-59,785
-46
OTHERS
32,812
58,138
-25,326
-44
4,043,528
2,718,346
1,325,182
49
Total
Source: SEA
year was still less than what it could have been had the market crash not taken place. The crash showcased some unfortunate circumstances where commitments were dishonoured, and thus shipments had to be cancelled. Had this not been the case, the increase would have been more pleasing to statisticians in the palm oil industry. The crash in edible oil prices may bring about the “trend fever” during the remaining part of the year where, once again, purchases and imports could be on a hand-to-mouth basis. If this does happen, there is no doubt that palm will be the leader in vegetable oil imports into India due to its price advantage. However, with soft oil prices also having fallen and with winter arriving on the subcontinent, it may be that palm would have to cut a slice off its increased share in India, giving up to soft oils coming in from the West. Added to this, with the oilseed harvest season around the corner, trade officials have asked the government to revisit the import duty structure and lift the stock limit order to prevent a price slump and its concomitant effect on farmers. The government slashed import duties on crude and refined oils to zero and 7.5 per cent respectively in April this year to combat food price inflation. But now, since prices of various oils are on a downtrend and the kharif harvest is due to start, the duty cuts could, in the opinion of local associations, further lower the prices. BHAVNA SHAH
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
4 • Malaysian Palm Oil FORTUNE
Exploring the
Adriatic Market Opportunities abound for greater palm oil exports
While
the Adriatic region is economically significant for tourism and recreation, it is also a major transport hub for energy resources and one of Europe’s most highly developed industrial areas. The Adriatic Sea is part of the Mediterranean Sea, positioned between the eastern coastline of Italy and countries of the Balkan Peninsula, from Slovenia and south through Croatia, Montenegro, Bosnia and on to Albania. With a total population of 15 million, the Adriatic region is also closely interconnected and relies on the import of oils and fats to meet domestic requirements. Table 1: Population of the Adriatic Sea Countries. Countries
Population
Croatia
4,493,312
Slovenia
2,009,245
Albania
3,600,523
Serbia/Montenegro
684,736
Bosnia and Herzegovina Total population
4,552,198
Oils and Fats Demand The demand for oils and fats has increased steadily between 2002 and 2007, registering a growth of about 12.8 per cent. Total consumption of oils and fats registered 628,900 metric tonnes (MT) in 2007, with Serbia/Montenegro recording the highest consumption at 44 per cent and Croatia, 21 per cent.
accounting for nearly 40 per cent. More than 65 per cent of the oils and fats are produced in Serbia/Montenegro. Since some of these oils is exported to other European countries, consumption for edible and non-edible purposes in the Adriatic countries is therefore met through the import of a variety of oils and fats.
The four major vegetable oils consumed are rapeseed, soybean, palm and sunflower oils and account for nearly 66 per cent of the total vegetable oils consumed. Sunflower oil is the largest consumed, at 249,800 MT or 39 per cent, followed by soybean oil at 105,200 MT (17 per cent), palm oil (six per cent) and rapeseed oil (four per cent).
Current Share of Palm Oil in Imports Total import of oils and fats in 2007 was estimated at 264,600 MT. In 2007, about 37,100 MT of palm oil were imported – or 14 per cent of the total imports. This amount is double the 2004 figure.
15,340,014 Local production of vegetable oils is mainly confined to soybean, sunflower and rapeseed oils, with sunflower oil
Source: World Fact Book 2007, July 2007 estimates
Table 2: Total Consumption of oil and fats by the Adriatic Countries (’000 MT) 2002
2003
2004
2005
2006
Croatia
79.3
86
113.2
120.9
126.1 132.3
10.78%
Bosnia
48.7
42.8
57.2
55.6
57.2
56.4
2.98%
Albania
29.2
35.2
38.1
39.3
41.4
42.8
7.95%
Slovenia
43.8
45
59.1
61.8
68.4
68.5
9.36%
Serbia&Montenegro
143.3
136.3 222.4
252.3
282
277.5
14.13%
Macedonia Total Consumption
Croatia at 46 per cent accounts for the highest share of palm oil imports into the Adriatic region, followed by Serbia/Montenegro at 35 per cent. Most palm oil is imported through European
Figure 1: Consumption by Type of Oils
2007 Growth (%)
-
-
40
45.3
47.1
51.4
8.72%
344.3
345.3
530
575.2
622.2 628.9
12.81%
Others 34%
Palm oil 6%
Source: Oil World
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
Soybean oil 17% Rapeseed oil 4%
Sunflower oil 39%
Malaysian Palm Oil FORTUNE • 5
Figure 3: Growth in Palm Oil imports 40
15%
35
13%
30 11% 25 9% 20 7%
15 10
2004
2005
2006
2007
Top 2 Importers
Total Palm Oil
ports, with small volumes coming from Malaysia. Malaysia’s exports of palm oil to these countries are in the form of double fractionated palm olein and cooking oil, with about 15 per cent in the form of solid fats. Potential for growth According to Oil World, the per capita consumption of oils and fats by the EU-27 is 57.4kg a year, with that in the other parts of Europe being 32.5kg. The current per capita consumption in the Adriatic countries is about 24kg, which is slightly above the world average of 23.16kg a year. If these countries in transition, including Croatia which is seeking accession into the European Union by 2010, were to increase their consumption to 30kg, this would mean an additional import potential of 145,000 MT. It is noteworthy that countries like Bosnia & Herzegovina and Albania have a predominantly
5%
PO as % Total Imports
Muslim population, thus palm oil and its products could be the most appropriate option for their needs. Perhaps with the further development of logistics networks, the Adriatic Sea region could offer opportunities for greater palm oil access into these
Table 3: Total Imports of oil and fats into Adriatic Countries (2002-2007) (‘000 tonnes)
2002
2003
2004
2005
2006
Croatia
38.8
38.8
46.2
43.1
54.2
53
6.44%
Bosnia
49.2
39.9
59.7
50.7
49.5
45.6
-1.51%
Albania
32.4
38.7
37.8
37.1
44.9
40.4
% 4.51%
Slovenia
-
-
45.1
55.5
60
56.4
4% 7.74%
23.2
14.9
25.8
37.8
30.7
5% 12.95%
31.2
35.5
38.6
38.5
6% 7.26%
234.9
247.7
285
264.6
5% 14.05%
Serbia&Montenegro 16.7 Macedonia Total Imports
137.1
140.6
Source: Oil World
countries. At the moment, the biggest palm oil logistics centre in Europe is in Rotterdam, where palm oil is imported and moved to almost all European countries. Although trade in palm oil in the Adriatic region has less appeal to exporters who still prefer the traditional bulk markets, the volume can be developed to be big enough for the local industry to re-export palm based products to Eastern Europe and Adriatic Sea region. More palm oil can find its way into these markets through any one of the southeast European countries, which can act as strategic points for further distribution within the region. For example, the geographical distance of Croatia from Switzerland, Germany, Austria, the Czech Republic, Slovakia, Romania, Bulgaria, Macedonia, Albania and Greece is less than 500km. Entrepreneurs could start exploring the potential to increase this region’s palm oil business in years to come by studying further the region’s infrastructural development and the technical assistance available.
Figure 2: Imports by Type of Oils Palm oil 14%
2007 Growth (%)
Others 8%
Soybea Soybean oil 12%
Ra R peseed Rapeseed oil 5% o Sunflower oil 61%
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
6 • Malaysian Palm Oil FORTUNE
A New Energy Future
Working With Malaysia’s Palm Oil Industry Hawaii, Hawaiian Electric In Company Inc has been looking for a new energy future. Ideally, this future would reduce Hawaii’s dependence on imported oil, shrink the carbon footprint and provide economic benefits as the State substitutes imported fossil fuel with locally-produced energy. This desire has led to a four-part strategy: • Encourage the efficient use of energy by conservation, investment in efficient energy systems and optimise the operation of the electrical grid by shifting when electricity is used; • Harvest greater amounts of renewable energy using technology available today such as wind, wave power and photovoltaics; • Reduce use of petroleum in the transportation sector with electricity-based transportation, such as plug-in hybrid vehicles and mass transit; and • Use biofuels, such as biodiesel and crude palm oil, in existing power plants to green these assets. This fourth strategy has led to Hawaiian Electric’s outreach efforts with the Malaysian palm oil industry. During a recent visit to Malaysia, several members of the growing Hawaii biodiesel industry were able to gain first-hand knowledge of the
tremendous success of the Malaysian palm oil industry. According to Hawaiian Electric’s Vice-President (Customer Solutions), David G. Waller, his focus during the visit was two-fold: To collect information and obtain firsthand knowledge that would support Hawaiian Electric’s environmental policy for procurement of biodiesel and biodiesel feedstock; and to gain more general knowledge of the biodiesel industry structure and technology. In August 2007, Waller said, Hawaiian Electric began implementing its Environmental Policy for the The eight main components of the Policy 1 Local feedstock mechanisms
support
2 Sourcing requirements for palm oil 3 Additional baseline criteria for all biodiesel feedstocks 4 Chain of custody feedstocks and oils
tracking
Procurement of Biodiesel from Palm Oil and Locally-grown Feedstocks. The policy was jointly developed with the Natural Resource Defense Council and Hawaiian Electric. (The full policy can be viewed at http://www.hawaiisenergyfuture.com/ NRDC/index.html). The policy was developed to ensure Hawaiian Electric procured palm oil and other biodiesel feedstocks from sustainable sources. It has become even more critical because various NGOs have intervened in the Hawaii Public Utility Commission and State Legislative proceedings to stop the use of biodiesel in power plants. “Our visit to Sime Darby’s plantation, the Palm Oil Trade Awareness Programme and presentations during the 2nd International Palm Oil Trade Fair & Seminar, or POTS, clearly demonstrated the unprecedented
for
5 Greenhouse gas emissions accounting and reporting 6 Establishment of a Biofuels Public Trust Fund 7 Public review and notification 8 Public progress contingencies
reporting
and (Continued on page 8)
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
BIPORT BULKERS SDN.BHD.
BIPORT BULKERS SDN.BHD.
Biport Bulkers Sdn.Bhd. (BBSB) is the newest gem of Bintulu Port Holding Berhad (BHB) after Bintulu Port Sdn.Bhd. (BPSB) which are a wholly owned subsidiary of Bintulu Port Holdings Berhad. BBSB was established to manage and operate a vegetable oil bulking terminal to cater for ever growing palm oil industries in the state of Sarawak, Malaysia specializing in the storage and the main outlet for vegetable oils.
STORAGE TANK CAPACITY
BERTHING FACILITIES
8 • Malaysian Palm Oil FORTUNE Participants were given a brief tour of the Sime Darby's plantation in Carey Island
(Continued from page 6)
be applicable to the production of biodiesel in the United States, Waller said, given recent changes in the ASTM standards requiring cold flow testing.
A New Energy Future
Working
With Malaysia’s Palm Oil Industry efforts by the Malaysian palm oil industry to brand this industry as a global leader in sustainability,” Waller said. Plantation and Processing Plant Visits Seeing the plantation practices firsthand re-enforced several key points. The use of fire to clear plantation land has been mischaracterised by many NGOs, the Hawaiian delegation found. Sime Darby’s zero-burn policy demonstrated that burning is not necessary and does not occur. Predator management with barn owls, recycling of empty fruit bunches and the treatment of palm oil mill effluents were examples of state-of-the-art practices used by the Malaysian palm oil industry, the visitors discovered.
RSPO The cornerstone of Hawaiian Electric’s environmental policy is the procurement of RSPO-certified biodiesel. Waller and his team were able to confirm, through discussions with biodiesel suppliers, presentations at POTS and plantation visits, that key players in the Malaysian palm oil industry were committed to achieving RSPO certification. At the POTS event, they learnt of a number of plantations gaining RSPO certification. Conclusion Hawaiian Electric’s strategy and programmes to find a different energy
future in Hawaii, Waller said, have been substantially improved through its relationship with the Malaysian palm oil industry. The work to develop and implement sustainable practices, and the sharing of this information, has proven invaluable to the Americans. “From our perspective, the critics of Malaysia’s palm oil industry have not really aken the time to see and understand this industry. We would like to sincerely thank the Malaysia Palm Oil Council for allowing us to participate in POTS and the Palm Oil Trade Awareness Programme,” Waller added. The above article was based on the feedback submitted by Dave Waller, Vice President - Customer Solutions of Hawaiian Electric Company.
Visits to the Cary Island biodiesel plant and Jomalina Food Industries Sdn Bhd also impressed the visitors who said the plants were “obviously well designed and well run”. The use of partial crystallisation to improve the cold flow properties of biodiesel at the Cary Island plant was seen as a fine example of the technical capabilities of the Malaysian biodiesel industry. This technology may
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
10 • Malaysian Palm Oil FORTUNE
Palm’s Up
Dr Pramod Khosla stressing a point to the audience
United States-based Wayne State University’s Department of Nutrition and Food Science graduate programme director Dr Pramod Khosla has evaluated palm oil’s potential for reducing transfats in US food products.
on trans-FA in restaurants. In July this year, California became the first State to legislate a complete ban on trans-FA – from 2010 in restaurant products and all retail baked goods by 2011. Other states can be expected to follow suit, Khosla believes.
Speaking at the 2nd International Palm Oil Trade Fair & Seminar in Kuala Lumpur, Malaysia, in late August, he noted that the adverse health effects of dietary trans monounsaturated fatty acids (trans-FA) have been the subject of intense scrutiny. Intense lobbying at State and local levels resulted in New York City and Boston imposing bans
Therefore, replacing trans-FA in the food supply is of primary importance to manufacturers and retailers. Such replacements must be readily available, affordable, healthier and suitably functional. Khosla believes an opportunity exists for palm oil to fill the niche created by the gradual removal of trans-FA. Palm oil is now steadily and increasingly making its way into
the US. In 2007, the US imported 500,000 metric tonnes (MT) of palm oil. Between January and June this year, the amount had increased to 750,000 MT. “As has been shown repeatedly, blends of palm oil with soya, canola and corn allow for complete elimination of trans-FA without compromising cost, functionality or health,” Khosla said. “Theoretical calculations reveal that all trans-FA in the US food supply can be replaced with a mix of palm and soya oils. As far as the palm oil industry is concerned, the fact remains that palm oil is trans-free. However, that can no
Malaysia Palm Oil. A Gift From Nature. A Gift For Life
Malaysian Palm Oil FORTUNE • 11
Blends of palm oil with soya, canola and corn, allow for complete elimination of trans-FA without compromising cost, functionality or health. – Khosla
Major Consumers of Palm Oil China 15%
E.U. 12%
Indonesia 11%
Others 42%
India 10%
Pakistan 4%
Malaysia 6%
Source: Wira Adam, Palm Oil Trade Awareness Program
longer be used as its sole selling point,” he said. Palm oil must compete with new oils (produced by interesterification or genetic modification) coming onto the marketplace, many of which are trans-free. Differentiating Malaysian palm oil in the global marketplace emerged as a key topic during the course of the seminar. The MPOC’s Dr Yusof
Basiron unveiled the industry’s efforts to do just that.
sustainability, reliable consistent quality.”
“The time has come,” Yusof announced, “to give an identity to Malaysian palm oil ... this identity will come in the form of a brand name for Malaysian palm oil. The brand will signify all the good qualities of Malaysian palm oil – grown on legally agricultural land, with good management practices ensuring its
As the Minister of Plantation Industries and Commodities Datuk Peter Chin explained, such a branding procedure will position Malaysian palm oil as a premium ingredient, and he is confident that the branding strategy will help producers and add value to distributors and their customers.
supply
and
The above article was written by William A. Roberts, Jr, Business Editor of Prepared Foods from USA, who expressed that he had a wonderful time and learned so much about the industry and its efforts in the food and biodiesel industries during his stay in Malaysia in conjunction with the 2nd International Palm Oil Trade Fair & Seminar, Kuala Lumpur.
Malaysia MalaysiaPalm PalmOil. Oil.AAGift GiftFrom FromNature. Nature.AAGift GiftFor ForLife Life
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 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 Dubai #202, Al-Safeena Building, Near Lamcy Plaza Zabeel Road Dubai, UAE Tel: +97 (14) 3358 571 Fax: +97 (14) 3358 572 E-mail: fatema@mpoc.ae Contact: Fatema Jasem Hamidi 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
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