OFI February 2023

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16 Sector holds steady

The German oilseed industry is an integral part of the country’s agricultural and bio-energy sectors but faces challenges


28 Ensuring EPA, DHA quality

Unsaturated lipids such as EPA and DHA omega-3 fatty acis are more prone to oxidation and require special handling including the use of antioxidants, blanketing with inert gases and limiting exposure to ambient air


22 Indonesia’s impact

As the world’s largest producer and exporter of palm oil, what will be the impact of Indonesia raising its blending rate of palm biodiesel in fuel to 35%?


25 Ukraine: High oleic potential

Ukraine’s high oleic sunflowerseed planted area is expected to more than halve in 2022/33 due to the ongoing war with Russia

31 New clause under fire

A new regulation designed to lower carbon emissions from shipping has come under criticism from leading charterers


2 Oil in troubled times

Ukraine/Russia News

4 Vessel inspections fall to lowest level in January


6 Indonesian palm oil exports may fall due to DMO, B35

Biofuel News

10 EU urged to include palm oil wastes for bioenergy

Renewable News

12 Henkel signs deal with Shell for surfactants

Biotech News

13 Draft policy on gene editing in EU set for second quarter

Transport News

14 Kernel buys edible oils terminal at Pivdennyi


32 World statistical data

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Oil in troubled times

The EU ban on maritime imports of Russian refined petroleum products came into effect on 5 February just as we went to press. The ban comes on top of a European boycott of all Russian seaborne crude oil on 5 December, accompanied by a G7 price cap of US$60/barrel on Russian oil.

Will the restrictions significantly reduce Russia’s cash flow as intended in retaliation for its invasion of Ukraine on 24 February? Or will it be Europe that takes the hit, having imported 25% of its oil needs from Russia, pre-war? And how will that affect freight rates for our market?

While Russia will not find it easy to re-route the 1.2M barrels/day (b/d) of oil cut off from the European market, its oil exports have remained around the 2021 average as China and India have so far absorbed most of this volume, according to BloombergNEF. Worldwide oil demand stands at about 100M b/d and EU demand – at some 15M b/d – remains extremely robust. In the short term for Europe, the USA and Norway are the most likely nations to fill the gap left by Russian oil, as well as potentially Latin America and Middle East producers. However, it’s worth noting that there are still no EU restrictions on liquefied natural gas (LNG) imports from Russia and there are ways for Russia to circumvent the crude oil price cap (by using tankers not owned or insured in the EU, the UK, G7 countries and Australia) as well as the petroleum sanctions (via re-routing Russian oil through third party countries). All this uncertainty could spell higher transport costs or higher crude oil prices.

Shipping fuel prices, meanwhile, have fallen since the record highs reached following Russia’s invasion of Ukraine. The average price for very low sulphur fuel oil (VLSFO) –the fuel used by most commercial vessels – on 2 December was US$685.5/tonne, a 39% drop from the high on 14 June, according to a report by Ship&Bunker. The average price for high sulphur fuel oil (HSFO) – the fuel burned by ships using exhaust gas scrubbers – was US$457/tonne, a 32% reduction from the 5 May rate.

Freight rates for both oilseeds and vegetable oils have also been on a downward trend.

The dry bulk and container markets witnessed a significant downward correction last year, and the easing of port congestion caused by COVID supply chain disruptions –particularly in China – could see freight and charter costs slump for grains and oilseeds.

In addition, “every conceivable edible oil trade route without exception has been on a downward trend since the start of the year,” Riverside Tanker Chartering wrote in its February report. Tropical oil freight rates, which defied gravity for most of 2022, are now lower and are finally starting to correlate with fuel prices again, the UK vegetable oil shipbroker says.

Meanwhile, inspection and wait times for vessels using the Black Sea grain export corridor remain long (see p4) with the current agreement due to expire on 18 March.

“We would expect to see some hesitance, once again, among charterers to fix forward in absence of a firm extension to this agreement being agreed,” Riverside adds.

The cancellation of war risk insurance from 1 January by a large group of reinsurers has also added to the uncertainty of shipments from Ukraine’s deep sea ports for owners and charterers.

All these factors mean there is little oil to pour on the troubled waters of Ukraine.

Serena Lim, serenalim@quartzltd.com

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RUSSIA: Poor weather conditions led to delays in grain and oilseed harvesting, according to the country’s agriculture ministry, reported by AgriCensus.

Some regions were hit by delays due to rainfall, while other areas had been affected by rain, snow or ice at the time of the 21 December report.

However, forecasts for the gross sunflower harvest remained above the previous year’s level, with a bigger harvest expected.

“Everyone hoped for 16.517M tonnes – there were higher estimates but most likely it will be 16M tonnes,” Russian Grain Union vice president Alexander Korbut was quoted as saying.

In some regions seed germination and high humidity had been recorded, the report said, with the former leading to a loss of quality and a decrease in oil content, which would lead to a reduced crop volume.

UKRAINE: The Ukrainian grain traders’ union (UGA) has asked the government to give priority supplies of electricity to grain silos to prevent damage to harvests, Reuters wrote on 13 December.

With about 10M tonnes of grain storage capacity lost due to the ongoing conflict with Russia, production processing at storage facilities had become almost impossible due to Russia’s targeting of the country's energy infrastructure with missile and drone strikes since October, the UGA was quoted as saying.

Power cuts were making it impossible to cool or ventilate grain at some sites, leading to grain spoilage and loss of funds, the UGA said.

The government said the 2022 grain crop could fall to around 51M tonnes from a record 86M tonnes in 2021 Reuters wrote.

Vessel inspections fall to lowest level in January

The number of Ukrainian grain vessels departing Istanbul after inspections dropped in January to its lowest rate since the Black Sea Grain Initiative (BSGI) was launched in July, with Ukraine blaming Russian inspection teams for intentional delays, AgriCensus wrote on 26 January.

During January, the inspection pace was 2.7 vessels/day but had dropped even lower to just 2.5 ships/day in recent days, the 26 January report said. This was a 40% fall compared to the September-October 2022 period.

"This was considered one of the lowest indicators for all the months of the existence of the 'grain initiative'. It is predominantly due to the blocking of the grain corridor by Russian inspectors," a note from the agriculture ministry said.

The overall export flow had dropped markedly, with January's total now standing at 2.4M tonnes of agriculture products, compared to 4.2M tonnes back in October, the report said.

The waiting time for inbound inspections was 20 days on average, with some vessels

waiting up to 40 days.

The BSGI was agreed between Ukraine, Turkey, Russia and the United Nations (UN) to guarantee safe passage for vessels leaving the key deep water Black Sea ports of Odessa, Chornomorsk and Yuzhny. It was extended on 17 November for 120 days.

Meanwhile, the priority given to large tonnage vessels using the grain corridor when passing through the Bosphorus Strait had been extended, APK-Inform reported the Ukraine Ministry of Agrarian Policy as saying.

The extension – introduced

by the Joint Coordination Centre (JCC) which facilitates the implementation of the BSGI –applied to ships with a payload of not less than 15,000 tonnes for all types of food products, excluding oilseeds, the 20 January report said. A 6,000 tonne payload for oilseeds also had priority.

As of 18 January, 121 vessels were awaiting inspection in the Bosphorus, AgriCensus wrote.

Exports under the BSGI reached 17.8M tonnes from August until mid-January, according to UN data reported by World Grain on 19 January.

Ukraine proposes allowing metal exports

A proposal by the Ukraine government to include metals to the list of export goods allowed through the Black Sea Grain export corridor received a lukewarm response from the grain sector, AgriCensus reported on 19 January.

“We will focus on building more storage for agricultural goods but what we need to do from a strategic point of view is to open sea ports. It’s not just about agriculture, it’s about steel,” Economy Minister Yuliia Svyrydenko told Bloomberg during the World Economic Forum annual meeting at Davos.

One of the key strategic contributors to the Ukrainian economy, the metal industry had been impacted by Russia's invasion of the country last February, AgriCensus wrote.

Allowing metals to be shipped from the Great Odessa ports – Pivdennyi, Odessa and Chornomorsk – could potentially help minimise

logistic costs and increase trade flow, according to the report. However, the proposal received a lukewarm response from the grain trade, which believed expanding the corridor to include metals could bring challenges.

Grain trade representatives said they did not see how it could be done as it was harder to make the case that metal exports had the same importance to global health as grains, AgriCensus wrote. In addition, any changes to the grain deal would have to be discussed with all interested parties including Russia which, as a major competitor to Ukraine in the metals industry, would be unlikely to agree to the proposal.

With every vessel using the grain corridor required to be inspected twice at Istanbul –once on the way in and again on the way out – another potential challenge could include exacerbating the current bottlenecks of ships.

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CHINA: A series of soyabean futures and options opened for trading on China’s Dalian Commodity Exchange (DCE) to foreign traders on 26 December, the China Daily reported on 1 January.

The items included number 1 soyabeans, number 2 soyabeans, soyabean meal and soyabean oil.

As well as allowing companies outside China to hedge their risks, the move would increase the connection between domestic and overseas soyabean prices, Tang Qijun, vice president of the China Soybean Industry Association, was quoted as saying.

Soyabean-related futures were among the first futures contracts introduced on the exchange more than two decades ago.

The DCE has made 11 varieties and tools available to overseas traders to date, the report said.

CHINA: A new joint venture between China’s largest food and agricultural company COFCO International and state grain reserves stockpiler Sinograin was due to begin operations in January, Reuters reported from a 29 December COFCO statement on its public WeChat account.

The new unit would bring together SinoGrain’s reserve management and COFCO’s warehousing resources and be 51% owned by SinoGrain, the report said.

Established in September, the China Enterprise United Grain Reserve Co joint venture was part of the country’s bid to improve the efficiency of its grain reserves and increase food security.

China was a net agricultural importer and bought corn, soyabeans, wheat and other grains from global markets to stock its state reserves, the report said.

Indonesian palm oil exports may fall due to DMO, B35

Indonesian exports of palm oil could fall due to an increase in the country’s domestic market obligation (DMO) and a 5% increase in its palm oil biodiesel blending mandate to B35 on 1 February, Mintec Global reported on 6 January.

The government’s move to change its DMO from 1:8 to 1:6 on 1 January meant that a higher proportion of palm oil that would have been exported would now find its way into the domestic market, the report said. The DMO requires palm oil exporters to sell a portion of their products domestically before they can export them.

In addition, Indonesia’s announcement that it would move to B35 – a 35% palm biodiesel blend in diesel fuel – from the B30 rate in place since January 2020 would lead to around 120,000 tonnes/month, or 1.44M tonnes/year of palm oil supply being consumed domestically.

As Indonesia is the largest palm oil producer globally, the changes could lower palm oil supply and lead to higher prices, the report said.

However, a trader told Mintec that good traders should have had the two factors priced in

and vegetable oils were also cheaper now, with palm oil facing more competition from other vegetable oils than it did a few months ago.

Meanwhile, the United States Department of Agriculture (USDA) has reduced its 2022/23 forecast for Indonesian palm oil production to 44.7M tonnes due to larger than expected production losses.

The 6 December Foreign Agricultural Network Oilseeds and Products Update on Indonesia set the country's food sector palm oil consumption in 2022/23 at 6.7M tonnes, slightly up from 6.5M tonnes the previous year. Domestic palm oil consumption was forecast at 17.51M tonnes in 2022/23, a 4% rise from 16.8M tonnes in 2020/21.

Palm oil exports in 2022/21 totalled 22.3M tonnes, a significant 17% drop compared to the previous year due to 2022 policies restricting or banning exports of palm oil products. The USDA said it expected Indonesian palm oil exports to increase to 29M tonnes in 2022/23 due to stronger demand from key markets.

Study points way to low-fat chocolate

Soltanahmadi said.

The results – published in the ACS Applied Materials & Interfaces journal – implied that the fat deeper inside the chocolate played a limited role in contributing to sensation and could be reduced without having an impact on how the chocolate felt in the mouth, the report said.

The findings of a new study examining the texture sensation of eating chocolate could be used to design low-fat chocolate mimicking the sensation of a high-fat product, The Guardian reported on 13 January.

A team at the UK's University of Leeds conducted its research using a luxury brand of dark chocolate and an artificial tongue – a device with a 3D-printed tongue-like texture kept at 370C and powered to

move like a human tongue.

The team found that chocolate released a fatty film that coated the tongue, giving a smooth sensation while in the mouth. After that, solid cocoa particles were released and became important in terms of tactile sensation.

“The fat layer needs to be on the outer layer of the chocolate, this matters the most, followed by effective coating of the cocoa particles by fat,” lead researcher Dr Siavash

“Our research opens the possibility that manufacturers can intelligently design dark chocolate to reduce the overall fat content,” Soltanahmadi said. “We believe dark chocolate can be produced in a gradient-layered architecture with fat covering the surface of chocolates and particles to offer the sought after self-indulging experience without adding too much fat inside the body of the chocolate.”

Similar techniques could be applied to help design healthier versions of other foods that transform from a solid to a liquid in the mouth, such as ice-cream or cheese.

NEWS 6 OFI – FEBRUARY 2023 www.ofimagazine.com
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Singapore/Saudi IPO for Olam Agri

Global food and agribusiness company Olam Group has announced plans to list its majority-owned agribusiness subsidiary Olam Agri Holdings on the Singapore Exchange in the first half of this year.

The company also planned to explore a concurrent listing on the Saudi Exchange, if market conditions were positive, Olam Group said on 10 January.

Olam Agri specialises in the processing and trading of animal feed, grains, oilseeds, rice and other products and is active in more than 30 countries.

US soyabean exports earn record $40bn

Total soyabean exports from the USA – including beans, meal and oil – earned a record US$40.42bn in the 2021/22 marketing year, representing a 17% year-on-year increase, Feed&Grain reported on 5 December.

Export volumes reported by the US Soybean Export Council (USSEC) totalled 71.79M tonnes – the second highest on record, according to the United States Department of Agriculture (USDA)’s Economic Research Service and Foreign Agricultural Service.

Whole soyabean export volumes totalled 58.72M tonnes – 7.8% higher than the five-year average – with China, the European Union and Mexico the top three markets.

Soyabean meal export volumes at 12.69M tonnes were 1.6% higher than the five-year average with Colombia, Mexico and the Philippines as the top three destinations.

At 804,272 tonnes, soyabean oil exports were 22.7% lower than the five-year average with India, Mexico and South Korea the top three markets.

According to the US Soybean Export Council (USSEC), the USA is the world’s second largest soyabean producer and exporter, with soyabeans being its top food and agricultural export.

Global soyabean foods per capita consumption increased by 24% from 2.16kg in 2010 to 2.67kg in 2020, the council said.

Olam Group said the decision to target a primary listing for Olam Agri on the Singapore Exchange followed a review to maximise the group’s long-term shareholder value and also took into consideration global agri-business trends and rising food security concerns.

“We are exploring a dual-listing in Singapore and Saudi Arabia – which would be the first of its kind – to tap into our strong Singapore and global shareholder base whilst welcoming investors in the Middle East, a region we intend to grow further,”

Sunny Verghese, co-founder and Group CEO of Olam Group and CEO of Olam Agri, said.

On 23 December, the Saudi Agricultural and Livestock Investment Company (SALIC), a wholly owned subsidiary of the Public Investment Fund of the Kingdom of Saudi Arabia, completed its acquisition of a substantial minority stake in Olam Agri for US$1.24bn.

The transaction – first announced on 25 March last year – gave Olam Agri an equity valuation of US$3.5bn.

NEWS www.ofimagazine.com OFI – FEBURARY 2023 7

INDIA: The government has discontinued its tariff rate quota (TRQ) on soyabean oil and extended its lower duty policy for refined palm oil imports, according to the United States Department of Agriculture (USDA) Foreign Agricultural Network (FAS)’s Global Agricultural Information Network (GAIN) report on 23 January.

“Domestic soyabean oil prices have stabilised following a turbulent 2022 in which the government allowed concessional import duties on soyabean and sunflowerseed oils to curb high edible oil prices and rising inflation,” the report said.

From 1 April, a 5.5% import duty would be imposed on soyabean oil imports. However, the TRQ for 2M tonnes of sunflower oil at 0% duty in the October 2023-September 2024 year remained in effect. Lower duties for refined, bleached and deodorised (RBD) palm oil product imports would also remain at the reduced 12.5% basic customs duty.

INDIA: The Securities and Exchange Board of India has extended its ban on derivatives trading of chana, crude palm oil, moong, mustard seeds, rice (non-basmati), soyabeans and wheat until 20 December 2023, Hindu Business Line reported on 30 December. In place since 20 December 2021, the ban was introduced in a bid to control rising spot market prices.

GERMANY: Speciality chemical company Evonik said on 17 January that it had integrated its alkoxides portfolio into the company’s catalysts business, which would be managed as a separate product line.

The main application of alkoxides is the production of biodiesel from vegetable oils, used cooking oils or other fat-based waste.

Adani calls off share sales following plunge in value

India’s Adani Enterprises has called off its share sale after the group’s companies saw US$108bn wiped off their market value in the wake of fraud allegations by a US investment firm, the BBC reported on 1 February.

The flagship company of the Indian multinational conglomerate Adani Group confirmed that the US$2.5bn raised from the sale on 25 January would be returned to investors following a 26% drop in share value, the report said.

The Adani Group was founded by Gautam Adani in 1988 as a commodity trading business and its companies include Adani Wilmar, a joint venture with Singapore agribusiness Wilmar International and a major edible oils producer in India.

Until calling off the sale, Mr Adani was listed as the world’s third richest man, the BBC wrote.

A day before shares of Adani Enterprises were due to go on sale, US investment firm Hindenburg Research accused the group of stock manipulation and accounting fraud in a report.

The BBC said Hindenburg specialised in ‘short-selling’ (betting against a company's share price in the expectation that it will fall) and the Adani group described Hindenberg’s report as "a malicious combination of selective misinformation" but that was not enough to stem investor fears. The group said on 1 February that it would return the share sale proceeds due to “the unprecedented situation and the current market volatility”.

The decision to return the money raised from its sale would not have any impact on existing operations and future plans, Gautam Adani said.

EU approves house crickets in food products

17 January. In addition, on 6 January, the European Commission (EC) also approved the introduction of the frozen, paste, dried and powdered forms of Alphitobius diaperinus larvae – also known as the lesser mealworm – for use in several food products.

A newly approved European Union (EU) regulation will allow food producers to use the partially defatted powder of Acheta Domesticus, commonly known as the house cricket (pictured above), in a range of food products including pizza

and pasta products, nuts and oilseeds, snacks and sauces, multigrain bread and rolls, crackers and breadsticks, cereal bars, dry pre-mixes for baked products, biscuits and chocolate confectionery, Olive Oil Times reported on

The two insect ingredients joined the list of EU-approved insect foods including dried Tenebrio Molitor mealworm and the dried powder of the migratory locust, Olive Oil Times wrote. Eight other applications for insect foods are also being evaluated by the EU.

The EC said on its website that insects “are a highly nutritious and healthy food source with high fat, protein, vitamin, fibre and mineral content".

EU court ends emergency use of neonicotinoids

The European Court of Justice (ECJ) has put an end to the emergency use of neonicotinoid pesticides, which are widely linked to the decline of bees, Euractiv reported on 19 January.

Member states would no longer be allowed to grant derogations temporarily permitting the use of seeds treated with ‘expressly banned’ plant protection product by the EU, the report said.

The ruling came in the wake of a request by campaign groups Pesticide Action Network (PAN) Europe and Nature & Progrès Belgium to

annul the derogation given by Belgium for the use of neonicotinoids on sugar beets.

Neonicotinoids are used to protect crops such as cereals, oilseed rape and sugar beet from damaging pests. They have been blamed for contributing to the decline of bees by disrupting their sense of orientation, memory and mode of reproduction. A recent report by PAN Europe said EU countries had granted more than 236 derogations on banned pesticides in the last four years, with neonicotinoids accounting for 47.5% of those.

NEWS 8 OFI – FEBRUARY 2023 www.ofimagazine.com
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WORLD: Biodiesel, renewable diesel and sustainable aviation fuel (SAF) producers face feedstock supply shortages from 2022-2027 if current trends continue, according to a December report by the International Energy Agency (IEA).

Demand for vegetable oil, waste and residue oils and fats was expected to increase by 56% to 79M tonnes during the forecast period, with wastes and residues expected to be used for 13% of biofuel production in 2027, up from 9% in 2021. In the EU, the use of used cooking oil and animal fats would exhaust nearly 100% of estimated supplies over the forecast period.

Consumption of vegetable oil for biofuel production was projected to increase by 46% to 54M tonnes during 2022-27, increasing its share of biofuel demand from 17% to 23%.

USA: The US Environmental Protection Agency (EPA) has announced renewable fuel obligations (RVOs) for 2023, 2024 and 2025 under the country’s Renewable Fuel Standard (RFS), according to Biodiesel magazine.

The agency said that proposing volume targets for more than one year would provide the market with certainty of demand needed for longer-term business and investment plans.

Published on 1 December, the proposed rule set the 2023, 2024 and 2025 RVOs at 78.8bn litres, 82.79bn litres and 85.85bn litres, respectively.

A 946M litre supplemental obligation would also be imposed for 2023, the 1 December report said, as it had been this year.

The 2023 blend target included 2.72bn litres of cellulosic fuel, 10.67bn litres of biomass-based diesel and 22.03bn litres of advanced biofuel.

EU urged to include palm oil wastes for bioenergy

The Malaysian Palm Oil Council (MPOC) has urged the European Union (EU) to include palm oil wastes and residues in bioenergy use.

The organisation made its comments following the EU’s new public input session into sustainable biofuels and biogases, which ended on 2 January.

The MPOC said that while bioenergy from first-generation sources of palm oil continued to be debated, the EU assessment of agricultural waste and residue feedstocks needed urgent review. It said the exclusion of any

feedstock with a direct connection to palm oil was based on political rather than ecological grounds.

“Palm-based feedstocks in palm oil mill waste (POME) are clearly waste residues from agricultural activities that are not fit for use in the food or feed chain ... that will not cause market distortions or create additional demand for land.”

The EU Renewable Energy Directive (RED II) has an approved list of sustainable biofuel feedstocks in Annex IX (Parts A and B). According to the Euro-

pean Commission (EC), this list must be regularly reviewed with a view to adding new materials that meet sustainability, greenhouse gas savings, and circular and waste hierarchy criteria.

The MPOC said that an assessment of feedstocks awarded by the EC to a consortium composed of E4tech (Lead), Cerulogy, the ICCT, Navigant, SCS Global Services and Wageningen University could have provided the EU with a poorly-informed decision to exclude bioenergy from palm-based waste sources.

Germany proposes to end crop-based biofuels

Germany’s environment minister Steffi Lemke has proposed phasing out production of biofuels from cultivated biomass in stages by 2030, which could reduce domestic oilseed crushing and lead to increased imports of soyabeans and soyabean meal, Oil World CEO Thomas Mielke said in a 25 January Reuters report.

About half of Germany’s rapeseed crop, (totalling 3.7M tonnes last year) is used to produce biodiesel, with about 3M tonnes blended with fossil diesel in the country each year.

“This proposal could generate changes in trade flows, with more German rapeseed oil going for export,” Mielke said. “There would also be a reduction in rapeseed cultivation. Such a drastic policy change would also reduce import demand, intensify competition with producers in exporting countries and reduce prices.”

Mielke added that he did not think it was possible to replace crop-based biofuels with wastes and used edible oil as Lemke had proposed because there was not enough waste available to produce the volumes needed.

Germany’s Union for the Promotion of Oil

and Protein Plants also said on 25 January that as protein was obtained as a by-product of biofuel production, this share should be accounted for in the debate on land requirements for biofuels. “With rapeseed having a 60% protein share, only 40% of the crop area should be allocated to the biofuels production.” (see also p16)

Indonesia to introduce B35 on 1 February

Indonesia is set to increase its blending of palm oil in diesel fuel to 35% (B35), effective 1 February. This is a rise from B30 – which has been in place since January 2020 – but not the B40 target it had been planning, after the government considered availability of crude palm oil, according to Reuters Indonesia’s biodiesel allocation for domestic consumption this year would be 13.15M kilolitres, the highest on record and an increase of

19% compared to 2022’s allocation of 11.02M kilolitres, Reuters wrote on 30 December.

Indonesia has been increasing its blending of palm oil in diesel over the years to reduce reduce crude oil and fuel imports, as well as cut greenhouse gas emissions.

As the world’s largest producer and exporter of palm oil, Indonesia – and its biodiesel policy –has a wide impact on global oils and fats supply and prices (see p22).

BIOFUEL NEWS 10 OFI – FEBRUARY 2023 www.ofimagazine.com
Photo: Pixabay About half of Germany’s rapeseed crop is used to produce biodiesel
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Henkel signs deal with Shell for surfactants

Chemical and consumer goods company Henkel has signed a five-year deal with Shell Chemical to replace up to 200,000 tonnes of fossil feedstocks with renewable surfactants for the manufacture of its most popular laundry products.

The agreement would cover Henkel’s Persil, Purex and other brands sold in North America, the company said on 17 January.

The surfactants would be produced at


USA: The Goodyear Tire & Rubber Company has launched a demonstration tyre made from 90% sustainable materials.

Comprising 17 ingredients – including carbon black, soyabean oil, silica produced from rice husk waste residue (RHA silica) and recycled polyester – the new product highlighted Goodyear’s progress towards the launch of a tyre made from 100% sustainable material by 2030, the tyre giant said on 4 January. The tyre was currently at the demonstration stage and producing it at scale would require further collaboration with Goodyear’s suppliers to identify the volume of materials needed, the firm said.

Soyabean oil is used in Goodyear’s tyres to maintain rubber compound pliability in changing temperatures.

FRANCE: Belgian bio-polymer manufacturer Futerro announced on 8 December that it planned to build a polylactic acid (PLA) biorefinery in Normandy.

The 75,000 tonnes/year plant would be located in the industrial and port area of Port-Jérôme, in the Caux Seine region, on the Seine axis between Rouen and Le Havre. It would be subject to a preliminary consultation this year and, if it went ahead, would include a lactic acid unit to process raw materials, a PLA conversion unit and a PLA recycling facility.

the Shell Energy and Chemicals Park Norco and Shell Geismar Chemicals facility in Louisiana, Henkel said.

As part of the agreement, from this year Shell would use up to 200,000 tonnes of renewable feedstocks in a combined manufacturing process (along with fossil feedstocks) to produce surfactants.

Using the mass balance approach, an independent accounting process would be applied allowing Shell to attribute the

total tonnes of renewable feedstocks used in the process solely to Henkel. This mass balance process and attribution would be verified by an independent, third-party certification organisation.

“We are investing in our chemicals facilities, including on the US Gulf Coast, to scale up Shell’s sustainable chemicals capabilities,” Robin Mooldijk, executive vice president, Shell Chemicals and Products, said.

Evonik launches new plant-based squalene

Speciality chemical company

Evonik has launched a plantbased alternative to shark liver oil-derived squalene for vaccines and other pharmaceutical applications.

Squalene is typically sourced from deep-sea shark livers, a non-sustainable and non-scalable resource. It is used as an ingredient in adjuvants, which are added to vaccines – including some for influenza and COVID-19 - to boost immune system response.

Evonik said on 6 December that its PhytoSquene ingredient was the first known amaranth oil-derived squalene on the market for use in adjuvants in parenteral dosage (non-oral) forms.

“It is alarming that biodiversity across our planet is declining at a rapid rate. That’s why we are excited about empowering our customers to create products that preserve biodiversity and ... deliver high-quality treatments to

patients,” Thomas Riermeier, head of Evonik’s Health Care business line, said.

PhytoSquene is made from the oil of amaranth (Amaranthus caudatus) which is an herbaceous plant cultivated in many parts of the world.

Compliant with European Pharmacopoeia specifications, the use of PhytoSquene involved no risk of pathogenic

transmission, Evonik said. PhytoSquene also provided an alternative for patients who could not use animal-derived products for cultural or religious reasons.

Non-GMP (good manufacturing practice) samples of PhytoSquene were now available, Evonik said, with GMP quality samples to follow this year.

Mitsui proposes bio-PET plant for packaging

Japanese trading house Mitsui & Co has proposed building a bioplastics factory in the southeastern region of the USA, creating one of the largest production sites worldwide for plantbased packaging material, Nikkei Asia reported on 14 December.

Involving an estimated US$550M investment, the proposed 400,000 tonnes/year bio-polyethylene terephthalate (PET) plastics factory could open in 2025, the report said.

Mitsui has signed a memorandum of understanding with US-based chemical company Petron Scientech to explore setting up the joint

venture, Nikkei Asia wrote.

Bio-PET is a plant-derived alternative to plastic produced from fossil fuels and is commonly used in drink bottles.

The Mitsui factory would source bioethanol made from plants such as American corn and Brazilian sugarcane to produce the bio-PET plastic, the report said. Recycled bottles would be mixed into the plastic, which would then be sold as a container material to drink manufacturers. Global bio-PET plastic production capacity stood at some 1M tonnes but that volume would surge if the plant went ahead, Nikkei Asia added.

RENEWABLE NEWS 12 OFI – FEBRUARY 2023 www.ofimagazine.com
Photo: Adobe Stock Evonik’s alternative to shark liver oil-derived squalene is made from amaranth oil

Draft policy on gene editing in EU set for second quarter

The European Commission (EC)’s draft policy on genetic editing (GE) in the European Union (EU) has been scheduled for the second quarter of this year, according to the United States Department of Agriculture (USDA).

The EC launched a policy initiative on 24 September 2021 to determine how to regulate newer GE techniques as it found its current GMO directive "not fit for prupose", the USDA’s Foreign Agricultural Service (FAS) 6 December report ‘Biotechnology and other new production technologies annual’ said.

The policy initiative and roadmap, ‘Legislation for plants produced by certain new genomic techniques’, received more than 70,000 comments in the initial feedback period.

In early 2022, shortly after Russia invaded

Ukraine, the EC noted the potential for “new genomic techniques” in its publication ‘Safeguarding food security and reinforcing the resilience of food systems’.

A 12-week public consultation period followed in April with the proposed legislation subsequently scheduled to be published in the second quarter of this year.

The commercial cultivation of GE crops in the EU was limited to 1% of the EU’s total corn area (around 68,000ha in Spain and 2,000ha in Portugal in 2022), the USDA report said.

The single variety authorised for cultivation was banned in all or parts of 19 member states and the threat of destruction by activists and difficult marketing conditions also discouraged the cultivation of GE crops in general.

Consumers can claim against Wesson Oils

After more than a decade of legal proceedings – including a rejected US$8M settlement – a federal judge has given preliminary approval for consumers to file claims against Wesson Oil’s vegetable oil containing genetically-modified (GM) soyabean or corn, CNET reported on 5 January.

A class action suit filed in 2011 alleged that ConAgra Foods, Wesson’s parent company at the time, falsely advertised the oil as “100% natural” from at least 2006 until 2017 despite the fact it was made from GM crops, the report said.

Customers were “induced to pay more for Wesson Oils due to that false and deceptive claim”, according to the complaint.

By July 2017, ConAgra had removed the “100% natural”

WORLD: A new CRISPR/ Cas9 technique has been developed which could be used to improve crop yields, Phys Org reported on 3 January.

Published in Nature

Biotechnology, the technique developed by scientists at the Max Planck Institute of Molecular Plant Physiology combined grafting with a 'mobile' CRISPR tool. CRISPR-Cas9 allows the editing of the genome by removing, adding or altering sections of the DNA sequence.

The scientists grafted an unmodified shoot onto roots containing a mobile CRISPR/Cas9, which allowed the 'genetic scissor' to move from the root into the shoot. There, it edited the plant DNA without leaving a trace of itself in the next generation of plants.

This discovery would save time, money and circumvent current limitations in plant breeding and contribute to sustainable food solutions across multiple crops, the Phys Org report said.

While the project used Arabidopsis or thale cress as the model plant, the research team also grafted shoots of its commercial relative – oilseed rape – onto Arabidopsis roots.

language from Wesson packaging and stopped advertising its products that way, the report said.

Calyxt says seedless hemp offered improved yields and quality

In 2018, it agreed to a US$8M settlement to resolve the case. However, a federal judge rejected the deal as nearly US$7M of the total would be used for lawyers’ fees.

In November last year, a US$3M settlement was preliminarily approved and an official settlement site went live in December, with customers who had purchased Wesson oil for personal consumption during the specified time frame able to file for compensation, CNET wrote.

“Our novel gene editing system can be used efficiently for many breeding programmes and crop plants. This includes many agricultural important plant species that are difficult or impossible to modify with existing methods,” Dr Friedrich Kragler, who led the team of scientists, said.

India proposes new regulations for GM foods, ingredients

The Ministry of Health and Family Welfare/ Food Safety and Standards Authority of India (FSSAI) has proposed draft regulations for genetically modified (GM) foods and ingredients, according to a report by the United States Department of Agriculture (USDA)’s Foreign Agricultural Service.

“No person shall manufacture, pack, store, sell, market or otherwise distribute

or import any food or food ingredient produced from GMOs, except with the prior approval of the food authority,” the draft Food Safety and Standards (Genetically Modified Foods) Regulations 2022 proposes.

All food products (GMOs intended for food use and food ingredients produced from GMOs that contained modified

DNA) with more than 1% GM ingredients would need to be labelled with the words “contains genetically modified organisms/ ingredients derived from GMO”, the 27 November USDA 27 Global Agricultural Information Network (GAIN) report said.

The draft regulations were opened for public consultation for 60 days from the post date of 18 November.

www.ofimagazine.com OFI – FEBRUARY 2023 13
Photo: Adobe Stock

USA: Global agribusiness giant Cargill and US agribusiness co-operative CHS plan to expand the export side of their joint venture TEMCO. The addition of Cargill’s export grain terminal in Houston, Texas, would provide additional shipping access for grains, oilseeds and by-products through the port of Houston, Cargill said on 13 January.

A 24-year partnership between Cargill and CHS, TEMCO currently operates three facilities in the Pacific Northwest: Portland, Oregon; and Kalama and Tacoma, both in Washington. These three facilities distribute grain to global markets, primarily in the Asia-Pacific region.

The Houston terminal is located approximately 64km inland from the Gulf of Mexico via Galveston Bay. With 6M bushels of storage and capacity for 350 rail cars, the facility handles up to 250M bushels/year.

WORLD: Shipping fuel prices are falling despite the ongoing Russia-Ukraine conflict, FreightWaves wrote on 5 December.

Following Russia’s invasion of Ukraine on 24 February, shipping fuel prices reached record highs but had now fallen to prewar levels due to fears of future demand weakness, the report said.

Based on prices at the top 20 refuelling hubs, the price average for very low sulphur fuel oil (VLSFO) – the fuel used by most commercial vessels – on 2 December was US$685.5/tonne – a 39% drop from the record high on 14 June, according to a report by Ship&Bunker The average price for high sulphur fuel oil (HSFO) –the fuel burned by ships using exhaust gas scrubbers – was US$457/tonne – a 32% reduction on the 5 May rate.

Kernel buys edible oils terminal at Pivdennyi

Ukrainian agribusiness Kernel Holding has completed its US$19.8M purchase of OilExportTerminal, an edible oils trans-shipment terminal in the port of Pivdennyi in the Odessa region of the Black Sea, World Grain reported on 30 January.

According to the company’s second quarter fiscal year 2023 operations update, the transaction was completed in December.

In addition to truck, rail and ship loading capabilities, the terminal accepts and stores up to 49,404 tonnes of edible oils such as rapeseed, soyabeans and sunflower.

Kernel CEO Yevgen Osypov said the terminal was strategically important for the company as oil trans-shipment remained unavailable at the Mykolaiv terminals on the Black Sea following

Russia’s invasion of Ukraine on 24 February. Three Black Sea ports (Odessa, Chornomorsk and Pivdennyi) reopened under a grain corridor deal brokered by the United Nations and Turkey that was signed on 22 July by Russia and Ukraine.

Although Mykolaiv port accounted for about half of total oil trans-shipment volumes in Ukraine in the 2019-2022 marketing years, it was not covered by the Black Sea Grain Initiative, the company said on 26 January.

Kernel owns eight oilseed processing plants in Ukraine with a total capacity to process 3.5M tonnes/year of sunflowerseeds, the report said. According to its website, Kernel is Ukraine’s largest producer and exporter of sunflower oil, and a major supplier of agricultural products.

Palm oil imports through Kerala still banned

The Indian government’s Director General of Foreign Trade (DGFT) has extended the ban on palm oil imports through Kerala ports until further notice, the Hindu Business Line reported on 3 January.

It has also extended the import duty waiver on refined palm oil and palm olein oil.

The government banned imports of palm oil through Kerala ports in 2007 in a bid to protect coconut growers.

The duty waiver and imports ban had been due to end on 31 December but were extended reportedly following a request from the Coconut Development Board and various farmer organisations.

Cochin Port Users Forum had urged the DGFT to lift the palm oil import restrictions to boost the port’s revenue, the Hindu Business Line wrote.

Industry sources also noted that imported palm oil was still flowing to the state by road after being unloaded at Tuticorin and New Mangalore ports, the report said.

Sale of IMTT Gretna terminal completed

US bulk liquid storage and logistics provider BWC Terminals has completed its acquisition of IMTT’s Gretna Terminal located on the Mississippi River in Harvey, Louisiana.

The facility comprises 56 storage tanks with a total capacity of 2.2M barrels. Products handled include speciality chemicals, petroleum products, base oils, biodiesel and vegetable oils.

IMTT chairman and CEO Carlin Conner said with the reinvestment of proceeds from the sale and the completion of renewable fuel and chemical-related infrastructure projects, over half of IMTT’s revenue this year would be from

the handling of non-petroleum products, such as renewable diesel feedstocks, renewable diesel, chemicals and vegetable and tropical oils.

Following the sale, IMTT would continue to own and operate its 16 other terminals across North America, including its three Louisiana terminals located along the Mississippi River in Avondale, Geismar and St Rose, a 5 January Business Wire report said. BWC Terminals operates 18 sites with a total storage capacity of 16M tonnes. A range of renewable fuels, agriculture, speciality chemicals, food grade and petroleum-based products are stored at the facilities.

IN BRIEF TRANSPORT NEWS 14 OFI – FEBRUARY 2023 www.ofimagazine.com
Photo: Adobe Stock Palm oil imports via Kerala are banned to protect the coconut industry

Sector holds steady

Germany is one of the four largest agricultural producers in the European Union (EU) and despite its high population density, half of the national territory is used for agribusiness purposes, according to the country’s Federal Ministry of Food and Agriculture (BMEL).

The country’s gross production value in agriculture is projected to total US$37.88bn in 2022 and an annual growth rate of 0.10% is expected (CAGR 2022-2025), according to a report by Statista.

As one of the EU’s leading grain and oilseed producing/processing nations, Germany is also Europe’s top rapeseed producer and an important supplier of soyabeans, sunflowerseeds and flaxseed.

Oilseeds are used in the domestic and

commercial food and feed sectors; in the personal care, chemical, pharmaceutical and technology sectors; and as a biodiesel feedstock.

The most important buyers of oilseeds in Germany are the compound feed industry and farmers as self-mixers, according to German trade association OVID, which represents the interests of oilseed processing and vegetable oil refining companies in the country.

Germany’s total 2022/23 grain crop was 42.5M tonnes, according to the International Grains Council (IGC)’s Grain Market Report on 18 August, which was up on the previous year’s figure of 42.3M tonnes. Rapeseed production in 2022/23 totalled 4M tonnes, according to the IGC, an increase on the previous year’s total of 3.5M tonnes.

However, the country’s oilseeds sector – along with other major industries – is facing the effects of the energy crisis following Russia’s invasion of Ukraine on 24 February, along with other challenges.


The German oilseeds sector is currently facing a range of challenges, according to OVID.

“Already in 2021, low harvests, the impact of COVID-19 on supply chains, faltering logistics and steadily rising energy costs were putting a massive strain on the oil milling industry,” OVID president Jaana Kleinschmit von Lengefeld says.

The situation deteriorated further with the Russian invasion of Ukraine, impacting global availability of sunflowerseeds, oil and meal.

In addition, “bottlenecks disrupted flows of goods and volatile prices created uncertainty in 2022. Major challenges also arise in logistics, which continues to face massive problems,” Kleinschmit von Lengefeld says. Historically low river levels in Europe have only allowed transport with small loads.

“Under these conditions, German locations are increasingly in danger –together with other energy-intensive industries in Germany such as the chemical industry.”

Against this backdrop, although Germany has the largest economy in the EU, its GDP this year is forecast to be the third worst in the G20 countries (–0.3%) behind Russia and the UK, according to the Organisation for Economic Cooperation and Development. 

Production conditions in Germany are also a concern, Kleinschmit von Lengefeld adds. “This is due to unfavourable public policies and an increase in the cost of processing oil crops as a result

16 OFI – FEBRUARY 2023 www.ofimagazine.com
e oilseed processing industry is an integral part of the German agricultural and bio-energy sectors, as well as the food and animal feed industries, but faces challenges
Gill Langham
Photo: Adobe Stock

Total: 4.8 million tonnes

Total: 5.1 million tonnes

of historically high energy prices. The rapidly rising costs of gas and electricity are particularly hard on German oil mills and are increasingly endangering the local production of vegetable oils and protein animal feeds.”

The association is calling for Germany and Europe to make major investments in renewable energies to secure the competitiveness of the industry, while in the short term, increasing the energy supply of conventional energy sources.

Oilseed production

Germany processed a total of 13.1M tonnes of oilseeds in 2021, comprising 9.5M tonnes of canola and 3.4M tonnes of soyabeans, according to OVID statistics, although that total was expected to be lower in 2022.

“In 2022, it is estimated that German oil mills will have processed about 1M tonnes less oilseeds than in the previous year. This means that total processing is expected to fall to around 12M tonnes,” OVID president Kleinschmit von Lengefeld says. “The most significant decline is in rapeseed, by around 800,000 tonnes.

“The volume of protein feed from domestic processing to supply farm animals will also be correspondingly lower.”

The forecast decline in oilseed processing was due to a range of factors, Kleinschmit von Lengefeld says, including high energy prices, availability of energy and bureaucracy.

Oilseed imports

The increasing demand in Germany for high-quality agricultural products and their limited supply in the country has resulted in increased imports, according to a Global Monitor report.

Some major product categories, including soyabeans and dairy foods, have

Total: 2 million tonnes

been heavily dependent on imports for many year, the report says.

For example, a total of 33% of the protein contained in animal feed in Germany is imported, mostly as soyabeans from Argentina, Brazil and the USA, according to a BMEL report ‘Understanding Germany’, published in November 2020.

A large proportion of the oilseeds processed in German oil mills are also imported from North and South America, Southeast Asia, Western and Eastern Europe, OVID says.

According to OVID data, Germany imported a total of 9.4M tonnes of oilseeds in 2021, including 3.6M tonnes of soyabeans, 5.2M tonnes of rapeseed and 0.3M tonnes of sunflowerseeds.

For soyabeans, 1.5M tonnes were imported from Brazil, with 0.1M tonnes, 0.4M tonnes and 1.4M tonnes from Canada, the EU-27 and the USA respectively.

Rapeseed imports totalled 5.2M tonnes, with 1.1M tonnes from Australia and 0.8M tonnes, 0.2M tonnes, 0.8M

tonnes, 0.3M tonnes, 0.2M tonnes and 0.5M tonnes from France, Hungary, Netherlands, Poland, Romania and Ukraine respectively.

Oil and fats

In 2021, German edible oil production totalled 4.8M tonnes, which included 4M tonnes of rapeseed oil and 0.6M tonnes of soyabean oil (see Figure 1, above).

Imports of oils and fats totalled 2.7M tonnes, with 0.2M tonnes of coconut oil, 0.4M tonnes of palm kernel oil, 0.7M tonnes of palm oil, 0.3M tonnes of rapeseed oil and 0.5M tonnes of sunflower oil.

Edible oil consumption in Germany totalled 5.1M tonnes, with rapeseed oil making up 59.7% of that volume (see Figure 2, above).

Germany exported a total of 2M tonnes of vegetable oils and fats in 2021, including 0.3M tonnes, 1.2M tonnes and 0.2M tonnes of palm oil, rapeseed oil and soyabean oil respectively, according to OVID data (see Figure 3, above). 

18 OFI – FEBRUARY 2023 www.ofimagazine.com
Source: OVID 2022 from Oil World Figure 2: Edible oil consumption in Germany, 2021 Source: OVID 2022 from Oil World
other* 1.3% Soya oil 13.6% Sun oil 1.2% Rapeseed oil 83.9%
oils values rounded Values
Figure 1: Edible oil production in Germany, 2021
* Linseed & corn
Source: OVID 2022 from Oil World Figure 3: Edible oil exports from Germany, 2021
Values rounded

Meal production and imports

Germany produced 8.5M tonnes of oilseed meal in 2021, including 5.4M tonnes of rapeseed meal and 2.7M tonnes of soyabean meal.

Imports of oilseed meal totalled 4M tonnes, including 2.3M tonnes of soyabeans, 0.7M tonnes of rapeseed meal, 0.4M tonnes of sunflower meal and 0.2M tonnes of palm kernel meal.

Meanwhile, exports of oilseed meals from Germany totalled 4.3M tonnes in 2021, including 2M tonnes of rapeseed meal and 1.8M tonnes of soyabean meal.

Crop-based feedstocks

In Germany, rapeseed is the most important raw material in biodiesel production (see Figure 4, right).

According to figures from BMEL, biofuels consumption in Germany totalled 3.7M tonnes in 2021 and 493,000ha of farmland were used for rapeseed production for use as a biodiesel feedstock.

The percentage of biofuels from rapeseed, palm oil and waste/residual materials marketed in Germany in 2021 totalled 26%, 34% and 34% respectively, according to BMEL data.

The use of biofuels in Germany saved 11.1M tonnes of CO2 in 2021, according to a report by the country’s Union for the Promotion of Oil and Protein Plants (UFOP) on 7 December.

According to UFOP, which published a status report ‘Biodiesel & Co 2021/2022’ providing an overview of the current legal framework in Germany and initiatives for legal changes, sustainably certified biofuels remain the most important option for decarbonising the transport sector.

“The oilseed and grain crop sectors make an indispensable contribution to both the human food and animal feed supply chain, and also to the supply of climate-friendly biofuels,” the report says.

“The current energy crisis demonstrates in no uncertain terms that Germany’s reliance on fossil gas and crude oil supplies has to be drastically reduced.”

In 2020, bioethanol and biodiesel contributed around 4.5M tonnes of fuel to Germany’s transport sector supply, the UFOP report says.

However, against a backdrop of rising food costs and declining supplies of agricultural products caused by the disruption of exports from main suppliers Ukraine and Russia following the latter’s invasion of Ukraine and the ongoing conflict, the German government has proposed phasing out the use of biofuels produced from food and feed crops by 2030.

A working paper released by the

ministry proposed lowering the use of crop-based biofuels to comply with Germany’s greenhouse gas (GHG) emission reduction quota to 2.5% in 2023, from 4.4% in 2022, according to an Argus Media report on 17 May last year.

The cap would subsequently fall to 2.3% in 2024, 2.1% in 2025, 1.9% in 2026/27, 1.2% in 2028/29 and then to zero the following year.

To offset the reduction, the working paper suggested increasing the multiplier for electricity used to charge e-cars to four, from three currently, and the multiplier for the use of green hydrogen and PtX-fuels to three, from two.

In addition, the cap for waste-based biodiesel produced from used cooking oils (UCO) and animal fats could be lifted slightly, but no numbers were given in the working paper.

Since the initial working paper was released, Germany’s federal environment minister Steffi Lemke, who is a member of the Green Party in the country’s centre-left three-party coalition with the Social Democrats and Free Democrats, announced on 17 January that the country would go ahead with proposals to introduce a stricter cap on the use of crop-based biofuels.

If the proposals go ahead, the curb would be stricter than those defined in the EU’s updated Renewable Energy Directive (RED) II, which caps food-based biofuels at a maximum of up to 1% higher than member states’ 2020 levels.

The government’s proposals would have a serious impact on the biofuels sector, while putting the climate goals of Berlin and Brussels at stake, according to OVID.

“In Germany, climate protection in road transport has so far been achieved almost exclusively with biofuels. They reduce

annual greenhouse gas emissions by more than 11M tonnes. That is the footprint of a large city like Hamburg,” Kleinschmit von Lengefeld says.

“A phase-out would also be a huge setback for Germany’s energy sovereignty, because we would have to compensate for the loss of fossil fuels, making us all the more dependent on problematic countries of origin.”

Any such move would also affect domestic food security, she adds.

For example, biodiesel production using agricultural feedstocks produces the natural emulsifier lecithin, glycerine and protein, which is used as domestic protein animal feed and could be used in human nutrition in the future. This protein is an alternative to imported soyabean meal and is used to feed cows, chickens and pigs.


The oilseeds sector is “cautiously optimistic” about the future, according to OVID.

“Last year has taught us that forecasts for the future are difficult and surprises are always possible,” Kleinschmit von Lengefeld says. “Shipments from Ukraine have returned to 2020 levels, while the new rapeseed sowings in Germany give cause for optimism. The area under cultivation has increased by 50,000ha to about 1.1M ha and is now rising for the fourth consecutive year.”

Supply is also supported by good harvests in Europe, Canada, Australia and probably also in South America.

However, even with good yields in Germany, Kleinschmit von Lengefeld says German oil mills remain dependent on rapeseed imports. ●

Gill Langham is the assistant editor of OFI

20 OFI – FEBRUARY 2023 www.ofimagazine.com
Source: UFOP
2019 2020 2021 2022
Figure 4: German biodiesel/HVO consumption and raw material composition

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Indonesia is set to increase its blending rate of palm oil in diesel to 35% in February.

What will be the impact on the global vegetable oils market of the B35 mandate by the world's largest producer and exporter of palm oil? And what are the policies driving and supporting the country's biofuels programme? OFI

As the world’s largest producer and exporter of palm oil, Indonesia – and its biodiesel policy – has a wide impact on global oils and fats supply and prices.

The country is set to increase its blending of palm oil in diesel fuel to 35% (B35), effective 1 February. This is up from B30 – which has been in place since January 2020 – but not the B40 target it had been planning, after the government considered availability of crude palm oil, according to Reuters

Indonesia is also likely to be the driving force for the global biodiesel market over the next decade, according to the FAO and OECD Agricultural Outlook Report for 2022-2031.

Global biodiesel consumption is likely to increase by 7% over the period, with Indonesia responsible for two-thirds of this increase. The country’s vegetable oil production is forecast to grow some 23% or roughly 8M tonnes over the decade to achieve this increase in biodiesel production, according to the outlook.


Indonesia began adopting national-level biofuel policies in 2006 to alleviate poverty and unemployment; drive domestic palm oil production; and reduce domestic fossil fuel consumption, according to the US Department of Agriculture (USDA) Global Agricultural Information Network (GAIN)’s Biofuels

Annual report on Indonesia, published in July 2022.

The National Energy Policy (KEN) is now the key basis for the country’s biofuels programme.

KEN targets 23% renewable energy use economy-wide by 2025 and 31% by 2050. The contribution of biofuels towards meeting these goals roughly translates to 13.9bn litres and 52.3bn litres of biofuel use, respectively.

Indonesia's impact

The blend rate for biodiesel is set at 30% for 2025 and 2050, totalling 6.9bn litres and 17.1bn litres in volume respectively (see Table 1, p24). For bioethanol, the blend rate is 20% in 2025 and 2050, with volumes of 2.6bn litres and 11.4bn litres respectively.

While biodiesel targets for on-road transportation have been achieved, no progress has been made in fulfilling the bioethanol mandate.

CPO fund and biodiesel subsidy

Indonesia’s biodiesel programme based on blending palm oil-based fatty acid methyl ester (FAME) was unstable until a more reliable financial support mechanism was introduced in 2015,

according to the USDA report.

Provision of subsidies was switched from the national state budget to the crude palm oil (CPO) fund, which was set up in 2015 to collect a levy on exports of palm oil products.

The subsidies cover the price spread between biodiesel and fossil diesel. In 2021, the price of biodiesel and fossil diesel increased 47% and 74% respectively. The biodiesel subsidy averaged IDR4,409 (US$0.30)/litre in 2021, 9% higher than in 2020.

Over the past few years, the Indonesian government has frequently adjusted its export levy scheme to maintain the solvency of its CPO fund amidst palm oil price fluctuations, the USDA report says.

22 OFI – FEBRUARY 2023 www.ofimagazine.com BIODIESEL
Photo: Adobe Stock

In December 2018, the export levy formulation changed from a flat rate structure to a progressive price-based structure in response to declining CPO prices. As the price decline continued into 2019, the government halted CPO levy collection altogether, leading to no new revenues for the whole of 2019.

In 2022, after palm oil prices rebounded to above US$1,000/tonne, the government adjusted the progressive levy structure again to include a new top tariff bracket for palm oil prices reaching between US$1,000 and $1,500.

This new top bracket was added to fund the country’s cooking oil subsidy, introduced to fight sustained high cooking oil prices. The government also added new taxable categories of palm products, including used cooking oil (UCO) and palm oil mill effluent (POME), which are both used as biodiesel feedstocks.

The latest levy structure, modified in June 2022, covers 26 products, with the highest tariff rate set at US$194/tonne for palm methyl ester (PME) and a flat rate export levy of US$35/tonne for UCO and US$5/tonne for POME.

The rise in palm oil prices and the adjustment of the levy structure has yielded a record CPO fund collected since 2015. The estimated levy collected in 2021 was IDR72 trillion (US$4.9bn), more than all the funds collected between 2015 and 2020. In 2022, levy collection is projected to reach between US$3.7-4.6bn.

The vast majority of the CPO fund has been distributed as a biodiesel subsidy, with less than 10% for replanting, research, and promotion.

Blending mandate

Since 2015, Indonesia has aggressively expanded its blending programme from covering only public sector industries to a nationwide B20 programme in 2018, the B30 mandate in January 2020 and the B35 rate due in February.

A B40 blend rate is targeted for some time between 2023 and 2025, pending the results of B40 road tests and assessments on the feasibility of raising enough funds to subsidise such a high rate, the USDA report says.

The aim is for biofuels to constitute 46% of the country’s transportation energy sources by 2050, as set out in the updated Nationally Determined Contributions (NDC) and Long-term Strategy on Low Carbon and Climate Resilience 2050 (LTS-LCCR 2050) plan.

Allocation and consumption

The government has been setting annual domestic biodiesel supply allocations since

2019, according to the USDA report.

The Ministry of Energy and Mineral Resources (MEMR) establishes volumes for fuel retailers and assigns production allocations to biodiesel producers, who supply palm oil-based biodiesel for blending. State-owned oil and gas conglomerate Pertamina alone receives around 80% of the total biodiesel allocation volume.

Indonesia’s biodiesel allocation for domestic consumption this year will be 13.15M kilolitres, the highest on record and an increase of 19% compared to 2022's allocation of 11.02M kilolitres.

The country’s fuel consumption fell by almost 11% in 2020 due to severe COVID-19 restrictions on business operations and travel but the government maintained its B30 mandate by raising its CPO export levy and providing an additional US$195M subsidy from the state budget.

With the easing of pandemic-related travel restrictions in late 2021, the government revised its biodiesel allocation volume up to 9.4bn litres in November 2021.

Biodiesel consumption in 2021 reached 9.3bn litres, 10% higher than in 2020 and was expected to rise to 10.15bn litres in 2022, according to the USDA report.

Fuel transportation is a major contributor towards biodiesel consumption, followed by the industrial sector, including electricity generation. The transportation sector accounted for 85% of biodiesel consumption in 2021.

Production and trade

Indonesian palm oil production is forecast to reach 51-52M tonnes this year, according to the Indonesian Palm Oil Producers Association (GAPKI).

Biodiesel production was forecast to reach 10.6bn litres in 2022, an increase from 9.55bn litres in 2021, the USDA report

says. Nameplate capacity was expected to rise to 16.6bn litres in 2022, based on planned expansions of current producers and the addition of a new refinery.

Indonesia does not currently produce commercial volumes of hydrotreated vegetable oil (HVO) or renewable diesel.

Pertamina plans to increase refinery production capacity for drop-in renewable diesel up to 4,000 barrels/day (636,000 litres) in Cilacap, Centra Java and palmbased jet fuel up to 20,000 barrels/day (3,180,000 litres) in Plaju, South Sumatra. Another refinery in Dumai, Riau is ready to produce 1,000 barrels/day of renewable diesel.

Biodiesel production mainly serves the country’s B30 mandate programme, with only a minor portion for export purposes.

Exports in 2022 were forecast to remain limited at 200M litres, the USDA report says. Between January to April, biodiesel shipment totalled 26M litres, mostly to China and South Korea. In 2021, Indonesia exported 193M litres of biodiesel, mainly to China (44%), Peru (18%) and Spain (15%).

Indonesia palm biodiesel exports to the USA remain limited due to high countervailing and anti-dumping

u www.ofimagazine.com OFI – FEBRUARY 2023 23 BIODIESEL


duties. Palm biodiesel is not eligible for Renewable Identification Numbers (RINs) in the USA, nor permitted to meet biofuels obligations under the Renewable Fuel Standard (RFS), which requires US oil refiners to blend biofuels or buy credits.

The EU has also imposed 8-18% countervailing duties on Indonesian biodiesel since December 2019.

Sustainability and certification

The European Union (EU)'s focus on biofuel sustainability criteria weighs heavily on the Indonesian biodiesel sector, the USDA GAIN report says.

The EU’s sustainability criteria is outlined in its Renewable Energy Directive (RED) and updated RED II.

RED II entered into force in December 2018 and EU member states transposed its provisions into national law in June 2021. In March 2019, the EU Commission

adopted a delegated act which set criteria for:

• determining high indirect land use change (ILUC)-risk feedstocks

• certifying low ILUC-risk biofuels

The commission determined that palm oil qualified as a high ILUC-risk feedstock which must be capped, then gradually phased out after 2023 to zero by 2030.

Several EU member states have already begun an earlier phase-out including Austria, Belgium, France and Germany.

However, some palm biodiesel production, under certain conditions, may be considered in the low ILUC risk category.

The phase-out is only for palm oil-based fuel, not palm oil products for other uses such as food.

The Indonesian government continues to challenge this policy, requesting a World Trade Organization (WTO)

consultation in December 2019. A dispute panel was established in July 2020 and in December 2021, the chair of the panel announced that the panel would issue its final report no sooner than the second quarter of 2022.

The government enforces sustainability standards for all oil palm plantations through a regulation mandating all companies and smallholders to adopt Indonesia Sustainable Palm Oil (ISPO) certification by 2025.

Sustainability certification covers a range of criteria, including greenhouse gas (GHG) emissions, land use, biodiversity and labour.

In addition to mandatory ISPO requirements, there are several voluntary sustainability certification schemes in place to support palm oil product exports, such as the Roundtable on Sustainable Palm Oil (RSPO).

Indonesia is preparing a regulation to broaden the scope of its ISPO domestic sustainability certification to downstream products such as cooking oil, biodiesel and oleochemicals, according to the USDA report.

The regulation is expected to apply to companies that process, produce and export ISPO-certified palm oil products.

Market impact

With Indonesia's move to B35, around 120,000 tonnes/month or 1.44M tonnes/ year of palm oil supply will be consumed domestically, according to UK market intelligence firm Mintec.

"Combined with the domestic market obligation (DMO) [regulation], this could mean that Indonesia may have less palm oil to export," Mintec wrote on 6 January.

The DMO requires palm oil exporters to sell a portion of their products domestically before they can export them.

The government changed its DMO proportion to 1:6 from 1:8 on 1 January, meaning that a greater proportion of palm that would have been exported will now find its way into the domestic market.

"It shouldn't come as a shock that the DMO has changed," a trader commented to Mintec. "What is more surprising is that the B35 mandate finally has a start date as it has been up in the air for some time.

"These two factors combined are likely to sap supplies from Indonesia but I don't think prices are going to go up significantly".

This is because good traders should have priced in these factors, and vegetable oils are now broadly cheaper, with palm oil facing more competition than it did a few months ago, the trader said. ●

24 OFI – FEBRUARY 2023 www.ofimagazine.com
Blend rate Volume (billion litres) Blend rate Volume (billion litres) Blend rate Volume (billion litres) Biodiesel Bioethanol Bioavtur (bio jet fuel) 2016 20% 2.5 5% 0.1 2% 0.0 2025 30% 6.9 20% 2.6 5% 0.1 2050 30% 17.1 20% 11.4 10% 2.7
Source: USDA Gain report Table 1: Indonesia – biofuel provision for transportation, presidential decree 22/2017
2018 152 5,600 28 1,772 3,750 258 31 11,357 49.3% 5,152 2,982 24,984 11.9% 33,268 2017 110 2,800 9 187 2,572 152 32 11,547 24.2% 2,576 1,963 23,877 8.2% 31,441 2016 94 3,500 0 476 3,008 110 30 10,898 32.1% 3,220 2,263 21,567 10.5% 30,039
Source: Presidential decree, 22/2017 Source: USDA GAIN report
2022e 390 10,300 0 200 10,100 390 33 16,656 61.8% 9,476 8,184 28,585 28.6% 35,770 2021 329 9,550 0 193 9,296 390 32 14,415 66.3% 8,786 7,945 27,752 28.6% 34,728 2020 294 8,500 0 39 8,426 329 31 11,357 74.8% 7,820 7,341 25,255 29.1% 31,230 2019 258 7,700 0 1,271 6,393 294 31 11,357 67.8% 7,084 5,238 26,753 19.6% 33,169
Source: Trade Data Monitor, Ministry of Energy Mineral
biodiesel association
Calendar year Beginning stocks Production Imports Exports Consumption Ending stocks No. of biorefineries Nameplate capacity Capacity use (%) CPO use for fuel ('000 tonnes) Market penetration Biodiesel, on road use Diesel, on road use Blend rate (%) Diesel, total use Production capacity (million litres) Market penetration (million litres)
Table 2: Indonesia biodiesel – production, supply and demand statistics (million litres)

Ukraine: High oleic potential

Ukraine's high oleic sun owerseed planted area is expected to more than halve in 2022/23 due to the ongoing war with Russia, although demand remains steady for the oilseed and oil Svitlana Kupreeva u


● Horizontal agriculture

● Local mechanical processing

● Patented system of energy recovery

● Complex approach

● Unique combination of extruders and screw presses

effective technology and complex services

www.ofimagazine.com OFI – FEBRUARY 2023 25 SUNFLOWERSEED/OIL


Global sunflowerseed production stands at around 55M tonnes with high oleic (HO) sunflowerseed comprising around 7-8% of this total.

HO sunflowerseeds have been bred to contain higher levels of oleic acid (80% or higher) than its conventional counterpart, producing an oil that is resistant to oxidation and ideal for high temperature frying.

As a leading producer of sunflowerseed and the world's top exporter of sunflower oil, Ukraine also produces HO sunflowerseed and oil.

However, the country's HO sunflowerseed planted area is expected to more than halve in the 2022/23 marketing year compared with the previous season, due to the ongoing war in the country (see Table 1, below).

Russia's occupation of Ukraine has reduced land available for planting. In addition, the 55% forecast fall in HO sunflowerseed planted area is also the result of uncertainty and risks leading to lower sunflowerseed exports in the most productive sales months – February and March.

In the 1 September 2021-30 August 2022 marketing year, Ukraine's HO sunflower planted area fell by 10% compared to the previous season. However, the 2021/22 harvested crop rose by 6% compared to the previous marketing year to total 1M tonnes, due to higher yields (see Table 1, left).

Farmers had enjoyed a HO sunflowerseed premium at the start of the 2020/21 marketing year of around UAH550-570 (US$15-15.50)/tonne.

However, from January 2021, HO sunflowerseed was selling at the same price as regular sunflowerseed and was being partially processed with it. This was the main reason for the reduction in plantings in the 2021/22 marketing year.

At the beginning of the 2021/22 season in September, the market witnessed a recovery in the HO sunflowerseed premium from UAH500 (US$15)/ tonne to UAH1,400 (US$38)/tonne at the beginning of the war with Russia in February 2022.

Currently, the premium is in the range of UAH1,400-1,500 (US$38-40)/tonne, supported by stable demand from EU countries.

Planted area

Ukraine's planted area of HO sunflowerseed was 440,000 tonnes in 2021/22, down 10% from the previous season (see Table 1, left)

Production of HO sunflower oil was 330,000 tonnes in 2021/22, a 23% fall compared with 429,000 tonnes in 2020/21.

Exports of HO sunflower oil also fell by 24% to 323,00 tonnes, due to the ongoing war and Russia's blockade of Ukrainian ports, as well as logistics constraints (see Figure 1, left).

In March 2022, monthly shipments of HO sunflower oil fell to a low of 1,300 tonnes but recovered to 25,000-30,000 tonnes/month by the end of the 2021/22 season.


Ukraine managed to retain its HO sunflower oil export markets in 2021/22, with the oil shipped to more than 50 countries. Top importer, the EU, increased purchases in 2021/22 (172,700 tonnes, +2% compared with 2020/21), along

26 OFI – FEBRUARY 2023 www.ofimagazine.com
Planted area ('000 ha) 190 110 250 420 490 440 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Harvest ('000 tonnes) 448 230 600 1,067 1,018 1,080 Oil production ('000 tonnes) 188 96 250 459 429 330 Oil export ('000 tonnes) 183.4 95.1 248.3 453.3 426.4 323.0
Source: UkrAgroConsult Table 1: High oleic sunflowerseed planting & harvest + oil production & export
Source: UkrAgroConsult
2021/22 marketing year 2020/21 marketing year
EU 43% USA 9% UK 6% Other 30% Turkey 4% Malaysia 5% China 3% Figure 2:
– high
% share Other 36% EU 29% China 15% India 3% Malaysia 5% USA 5% UK 7% u
Figure 1: Ukraine – high oleic sunflower oil exports, 2015/16 to 2021/22 ('000 tonnes)
Source: UkrAgroConsult
Ukraine oleic sunflower oil importers by country/region and

with the USA (38,000 tonnes, +18%) (see Figure 2, below left).

However, exports to countries such as the UK (25,600 tonnes in 2021/22) and Malaysia (19,600 tonnes) fell by 34% and 36% respectively compared with 2020/21.

A handful of top producers account for more than 80% of HO sunflower oil exports from Ukraine.


Looking ahead to 2022/23, the planted area of HO sunflowerseed is expected to fall substantially by 55% to 200,000-

World sunflower oil market to be worth US$38bn

The value of the global sunflower oil market will reach US$21.4bn in 2023 and is forecast to rise to US$38.4bn by the end of 2033, according to market research firm Fact.MR.

"Over the course of the next 10 years, worldwide shipments of sunflower oil are predicted to increase at 6% CAGR," it said.

Growing demand for healthy processed foods; the increasing adoption of healthy cooking oil; supportive initiatives to promote sunflower production; and rising awareness of the health benefits associated with sunflower oil would bolster market development in the future, Fact.MR said.

The growing use of sunflower oil in manufacturing vegan cheese and vegan mayonnaise is also expected to offer rewarding business scope going forward, according to the company.

Fact.MR said sunflower oil offered a better shelf life, a neutral taste and a healthier alternative to some vegetable oils. Factors that would drive increased use of sunflower oil in the next decade included:

• The growing use of processed sunflower oil in the food service industry, which accounts for a high market share due to the increasing establishment of restaurants and the growing popularity of dining out.

• The growing consumption of snacks and processed foods.

• Increasing demand for healthy foods. with natural ingredients.

250,000ha compared with the previous year. As a result, the crop will fall to 450,000-550,000 tonnes.

This market segment, like others, has been adversely affected by the war.

However, the sector does offer significant potential in view of steady demand for both HO sunflowerseed and oil, crushers resuming operations due to the United Nation's deep-sea ports grain export corridor, and current attractive prices and premiums.

This article is based on a 2 November report written by Svitlana Kupreeva, oilseed market analyst, UkrAgroConsult, Ukraine

www.ofimagazine.com OFI – FEBRUARY 2023 27
Source: Adobe Stock

Unsaturated lipids such as EPA and DHA omega-3 fatty acids are more prone to oxidation and require special handling including the use of antioxidants and blanketing with inert gases, refining oils in a vacuum and limiting exposure to ambient air

Ensuring EPA, DHA quality

Marine oils are highly susceptible to oxidation due to their high level of polyunsaturated fatty acids (PUFAs) which, if left unchecked, can lead to unpleasant or fishy smells in fish oil supplements.

Fish oils are a source of the two important omega-3 fatty acids –eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA).

These essential fats are necessary for human health and play a crucial role in brain function, as well as normal growth and development, with research showing they may also reduce heart disease risk and inflammation.

Because the body can only produce EPA and DHA to a limited extent, food and supplements are the main sources of these fatty acids.

The use of EPA and DHA omega-3 oils as ingredients in consumer products such

as dietary supplements, food additives, pharmaceuticals, clinical nutrition and infant formula is growing, totalling 115,031 tonnes in volume in 2021 and worth US$1.53bn, according to a market report by the Global Organization for EPA and DHA Omega-3s (GOED).

The value was 5.5% higher than in 2020, while the volume represented a 2.1% year-on-year increase, the industry body says.


Oxidation is a key concern in the manufacture of omega-3 supplements as it negates nutritional benefits and produces volatile compounds with offflavours and undesirable odours.

“All lipids containing unsaturated fatty acids oxidise over time, regardless of whether they come in the form of cooking

28 OFI – FEBRUARY 2023 www.ofimagazine.com OXIDATION/ANTIOXIDANTS
Oxidation in omega-3 supplements can lead to off-flavours and odours Photo: Adobe Stock
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oils or fish oil capsules, and this can ultimately lead to the oil becoming rancid,” according to a white paper prepared by the GOED and the US Council for Responsible Nutrition (CRN).

“When fatty acids react with oxygen from the surrounding air, the chemical bonds in the fatty acid molecules break down to form a variety of oxidative products such as fatty acid peroxides, alcohols and aldehydes.

“Some specific oxidation products resulting from the lipid peroxidation of highly unsaturated fatty acids include 4-hydroxy-2-hexenal (4-HHE), 4-hydroxy2-nonenal (4-HNE), and a wide variety of isoprostanes, the presence of which are often measured as signs of oxidative stress in clinical trials,” the white paper says.

Multiple factors contribute to the rate at which lipids oxidise, including exposure to oxygen, light, heat and the degree of unsaturation of the fatty acids.

“Highly unsaturated lipids, like EPA and DHA, are more prone to oxidation and generally require special handling to avoid off-flavours from developing. These include the use of antioxidants to slow the rate of oxidation, limiting exposure to ambient air during manufacturing, refining oils in a vacuum, and using blanketing storage containers with inert gases such as nitrogen that displace oxygen.”

The white paper says these strategies are widely applied in the manufacturing of omega-3 products.

Measuring oxidation

There are three primary analytical methods used to measure oxidation in omega-3 oils – the peroxide value (PV), the para-anisidine value (pAV) and total oxidation value (TOTOX).

Peroxide value (PV) is a measure of how much peroxide is present in oil, according to the GOED white paper.

“When polyunsaturated fatty acids oxidise, the first compounds created are peroxides, so PV is a measure of primary oxidation. This method is used in a wide variety of oils but while the PV initially increases as oil oxidises, it can actually decrease as the peroxides are consumed during further oxidative reactions. Therefore, a low PV is not necessarily an indicator of high quality oils.”

This means that measures of secondary oxidation are also often used to determine the true ‘freshness’ of an oil.

Secondary oxidation products are formed from the initially-formed peroxides during further steps in the oxidative process, and include chain-shortened aldehydes and alcohols.

The p-anisidine value (pAV) is a colourimetric method where the absorbance of a specific wavelength of light – 350nm – by a solution of oil and acetic acid is measured after paraanisidine is added.

“This method primarily measures the presence of 2-alkenals and 2,4-alkadienals, secondary oxidation products that react with para-anisidine in acidic conditions to turn yellow, absorbing that specific wavelength of light.”

The white paper says there is significant variance in pAV results between various types of oils and the GOED only recommends the test for EPA and DHA oils in triglyceride or ethyl ester form that do not contain natural pigments or added ingredients, other than antioxidants.

“The p-Anisidine test is not appropriate for measuring secondary oxidation in omega-3 oils that have a strong colour or contain added flavourings,” the white paper says.

“Oils like krill oil or virgin salmon oils naturally contain levels of carotenoids, such as astaxanthin, which interfere with

the p-Anisidine assay and yield invalid results. In addition, challenges in properly dissolving polar lipid oils like krill oil can preclude reliable measurements of pAV.

“Flavourings consist of a variety of compounds. In many fruit-derived flavours, the desirable odours, taste and colours are carried by compounds containing aldehydes. Since pAV measures the presence of aldehydes, these flavourings can often interfere with pAV results when added to oils.”

Total oxidation value (TOTOX) is a third way to measure oxidation and is a calculation combining PV and pAV. It was conceived as a way to give a complete picture of oxidation by including primary and secondary oxidation measurements, according to the white paper.

“However, although a convenient measure of oxidation, TOTOX also has its limitations. If one of its components – PV or pAV – cannot be reliably determined, for example, because the oil is flavoured or strongly coloured, TOTOX cannot be calculated."

This could be the case with flavoured oils, krill oils and virgin salmon oils.

Analytical tests

In 2002, omega-3 industry representatives established the Council for Responsible Nutrition (CRN) Voluntary Monograph, now known as the GOED Voluntary Monograph.

This set limits for EPA and DHA oils lower than other edible oils.

The peroxide limit for refined vegetable oils in most countries is 10meq/kg and 20meq/kg for extra virgin olive oil, the white paper says. The British Pharmacopoeia, European Pharmacopoeia and Australian regulatory authorities also have limits for refined omega-3 oils at 10meq/kg.

The GOED monograph’s limits for EPA and DHA oils is:

Peroxide value (PV): 5 meq/kg

p-Anisidine value (pAV): 20

Total oxidation value (TOTOX): 26

“The more than 2,000 test results available from scientific literature, thirdparty testing labs, and GOED’s industry testing programme show that more than 94% of products meet the stricter GOED limits for peroxide value and nearly 98% meet the limit for p-anisidine value,” the white paper concludes. ● This article is based on the white paper, 'Oxidation in Omega-3 Oils: An Overview', prepared by the Global Organization for EPA and DHA Omega-3s and the Council for Responsible Nutrition

u 30 OFI – FEBRUARY 2023 www.ofimagazine.com
Anchovy is a source of fish oil, along with menhaden, sardine, sprat, mackerel, krill and sandeel Photo: Adobe Stock

New clause under re

The CII assigns each ship a rating from 'A' (best) to 'E' (worst) based on its annual carbon intensity in relation to an IMOset target that will reduce over time. CII focuses on ship operations, not vessel hardware (which is the focus of a separate new regulation, EEXI).

Leading charterers are saying they will refuse to use a new contract clause within a new shipping regulation designed to combat global warming.

Devised by the United Nations (UN)’s International Maritime Organization (IMO) and in force since 1 January, the Carbon Intensity Indicator (CII) aims to lower carbon emissions by increasing the efficiency of container ships, tankers, bulkers, car carriers and other vessels.

For the CII regulation to be effective, there must be agreement between shipowners and charterers – the companies that lease ships from owners – on how responsibility for emission reduction is divided, according to a 21 December Freight Waves report.

“Cooperation is key,” leading marine insurer Gard was quoted as saying.

The terms of that cooperation are included in the charter agreement or 'charterparty', with a charterparty clause covering CII finalised by shipping association BIMCO on 16 November.

However, a group of the world’s largest vessel charterers sent a letter to BIMCO on 20 December saying they would refuse to use the clause because “it places the obligation to comply with CII disproportionately on charterers”, Freight Waves wrote. The 23 signatories included shipping lines Maersk, MSC, CMA CGM and Hapag-Lloyd; agricultural shipping giants ADM, Bunge and Louis Dreyfus; and top trading houses Trafigura and Vitol.

With the first CII rating due to be determined in 2024 – based on the carbon intensity of ship operations for the annual period starting on 1 January 2023 – voyage planning would need to start taking CII strategies into account, the report said.

A ship’s carbon intensity is calculated by multiplying its annual fuel consumption by a carbon-emission factor assigned to the fuel type used, then dividing that total by the annual distance travelled, multiplied by the ship capacity.

In practice, shipowners would want to avoid getting an 'E' rating in any one year, or a 'D' over three consecutive years, according to Freight Waves. If that happened, the shipowner would need to update the vessel’s Ship Energy Efficiency Management Plan (SEEMP) by developing a corrective action plan and following it.

A number of shipping sector participants have pointed to major problems with the regulation.

“CII cannot be used to achieve desired decarbonisation goals,” dry bulk shipping association Intercargo was quoted by Freight Waves as saying. “There are significant flaws.”

A central criticism is that the formula is based on ship capacity, not cargo carried, when the goal should be to reduce the carbon intensity per tonne of cargo transported, according to the report.

Ship owners and operators were already trying to increase fleet productivity by reducing empty legs, so they could carry more cargoes each year, dry bulk shipping company Oldendorff said.

For example, a bulker that carries soyabeans from the US Gulf to China, then picks up a cargo of coal in Indonesia and drops it off in Europe on its way back toward the Atlantic Basin for another load will emit less carbon per tonne of cargo than a bulker that goes from the USA to China, then sails back to the USA empty, according to the Freight Waves report. The same 'triangulation' concept applies to all shipping markets.

“Even though a ship consumes more fuel during laden voyages, improved utilisation [via triangulation] decreases the emissions per tonne carried, which is beneficial for the environment and should be the objective,” Oldendorff said.

However, this was not how the new regulation worked, and a ship could improve its CII rating by increasing its empty ballast time, which reduced fuel consumption – but increased emissions per tonne of cargo carried, Freight Waves said.

“The most inefficient vessel can achieve a good CII rating by simply ballasting with no cargo,” Oldendorff was quoted as saying.

According to a spokesperson for container shipping line MSC, it would be better to have an operational indicator that rewarded more productive ships, including being based on cargo carried rather than on a theoretical value that may not correlate to transport work performed.

A further criticism of CII was that the equation’s denominator included distance travelled, with the shorter the distance travelled in a year leading to a worse CII score, the report said.

With, for example, port waits generally outside the control of shipowners, the MSC spokesperson pointed out that the CII methodology “could lead to a situation in which a vessel’s rating would worsen simply because it spends more time in port”.

A new regulation designed to lower carbon emissions from shipping has come under criticism from leading charterers OFI
www.ofimagazine.com OFI – FEBRUARY 2023 31 SHIPPING
Photo: Adobe Stock


Sunflowerseed and oil

The Mintec Benchmark Price (MBP) for EU sunflower oil fell by 4.6% month-on-month (m-o-m) and by 10% yearon-year (y-o-y) to €1,098/tonne on 20 January, with vegetable oil prices declining from the elevated levels reached in the first half of 2022. Good stock levels in the EU, combined with a lack of buying interest and good crushing activity, have contributed to the price decline.

Global sunflowerseed supply for the 2022/23 marketing year is expected to decline by 11% y-o-y to 51M tonnes on the back of a significant decline in Ukrainian sunflowerseed production (–43% y-o-y), amid the ongoing Russia-Ukraine war.

Soyabean and oil

The Chicago Board of Trade soyabean futures price rose by 1.9% m-o-m to US$554/tonne on 20 January.

The soyabean and oil markets have recently been driven by cuts to US and Argentinian crops. In its January World Agricultural Supply and Demand Estimates (WASDE) report, the US Department of Agriculture (USDA) revised this season’s US soyabean crop to 116M tonnes, down by 1.6% from the December report due to a reduction in harvest area.

Similarly, the Argentinian crop was revised down by 8% to 45M tonnes, on the back of ongoing drought in the country. However, Brazil, another major South American soyabean producer, is expected to have a record crop this season, up 20% from the five-year average. This record crop is expected to offset losses in Argentina, bringing total South American production higher by 16% y-o-y.

Meanwhile, the MBP for EU soyabean oil fell marginally by 0.8% m-o-m to €1,265/tonne on 20 January, with easing global vegetable oil prices putting pressure on soyabean oil prices. In the EU, many buyers have substituted with lower-priced sunflower and rapeseed oils, leading to lower demand and prices. Weather conditions in South America and China’s demand direction following the end of its zero-COVID policy remain watch-out factors for soyabean and oil prices.

Rapeseed and oil

The Euronext rapeseed oil price was down by 4% m-o-m and by 30% y-o-y to €533/tonne on 20 January. Rapeseed and rapeseed oil prices have declined from the elevated levels reached in the first half of 2022 on the back of improved global supply.

Global rapeseed and rapeseed oil production are projected to rise by 14% y-o-y and by 9% y-o-y to 85M tonnes and 32M tonnes, respectively, in the 2022/23 marketing year. This follows improvements in Canadian output this season (+38% y-o-y).

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

STATISTICS 32 OFI – FEBRUARY 2023 www.ofimagazine.com July 22 Aug 22 Sept 22 Oct 22 Nov 22 Dec 22 Soyabean 1,501.8 1,537.6 1,536.5 1,569.0 1,601.8 1,388.4 Crude palm 1,096.7 1,118.9 1,045.7 1,058.8 1,114.3 1,086.4 Palm olein 1,009.4 1,023.8 918.1 927.0 977.3 962.4 Coconut 1,462.9 1,367.3 1,215.9 1,132.4 1,211.1 1,169.3 Rapeseed 1,702.4 1,488.3 1,329.9 1,369.3 1,357.4 1,252.5 Sunflower 1,509.1 1,498.0 1,305.2 1,345.2 1,334.8 1,234.5 Palm kernel 1,249.1 1,257.6 1,227.7 1,045.3 1,097.7 1,091.0 Average 1,362.0 1,327.0 1,226.0 1,207.0 1,242.0 1,169.0 Index 323.0 315.0 290.0 286.0 294.0 277.0
of selected oils (US$/tonne)
Mintec benchmark EU sunflower oil price – fob NW Europe (DH-0) Mintec Mintec benchmark EU rapeseed oil price, fob Rotterdam (DH-0) Mintec Global soyabean and oil production, consumption & ending stocks Mintec Soyabean Soyabean oil
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