OFI July/August 2022

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OILS & FATS INTERNATIONAL JULY/AUG 2022 ▪ VOL 38 NO 6

HEMP/CBD Successful extraction

MENA

Region on the rise

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CONTENTS

IN THIS ISSUE – JULY/AUGUST 2022

FEATURES

28

Photo: Adobe Stock

Deep Frying

22

UCO grows to supply HVO market The used cooking oil market is expanding to meet increased demand from the renewable diesel sector.

Proper UCO storage and transport are key but there is potential for fraud related to its collection

Hemp/CBD Oil Comment

Fryers face supply issues

Middle East/North Africa

Photo: Adobe Stock

The food service, deep frying and snack food manufacturing industries are facing tight supplies and high prices, which is impacting the availability of frying oils such as high oleic sunflower oil

24

NEWS & EVENTS

Transport & Storage

Photo: Adobe Stock

OILS & FATS INTERNATIONAL

31

Region on the rise The Middle East/North Africa region presents opportunities for the oils and fats sector due to increasing geopolitical stability and growth in consumer demand linked to a rising population

Successful extraction Many of the technologies and principles of continuous extraction used in the oilseed industry apply to the extraction of cannabidiol oil and production of hemp protein

Hemp/CBD Oil

34

Ambiguous laws impede growth A lack of federal regulation governing cannabis, hemp and CBD oil in the USA is impeding growth of the industry but across the Atlantic, EU rules due to come into effect in January are expected to smooth trade

2

Shipping costs

Ukraine/Russia News

4

Odessa hit by missiles despite landmark deal

General News

6

Indonesia removes export tax to boost trade

Biofuel News

10

Neste to expand capacity at its Rotterdam refinery

Renewable News

12

Evonik starts construction of rhamnolipid plant

Transport News

14

Large harvest puts strain on Mato Grosso storage

Biotech News

16

Pesticide shortage forces farmers to change plans

International Market Review

18

Palm oil leads reversal in prices

Statistics

36

www.ofimagazine.com

Contents NEW.indd 1

World statistical data

OFI – JULY/AUGUST 2022

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EDITOR'S COMMENT

OILS & FATS INTERNATIONAL

VOL 38 NO 6 JULY/ AUGUST 2022

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

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2 OFI – JULY/AUGUST 2022

Comment.indd 1

Shipping costs The war in Ukraine has brought into sharp focus the key role of shipping and logistics in global commodity markets.

It’s not just how much grain or oil crops are produced, there’s the key question of how they can get to those needing them.

“Perhaps not since the Cold War have supply chain resilience and geopolitical turmoil loomed so large in global trade,” writes shipping consultant Michael King in World Grain. “The disruptions have arguably impacted the grain shipping trade more than any other, with grain prices and shipping costs soaring.”

Just as we went to press, Russia and Ukraine signed a landmark deal to unblock grain and oilseed exports from Black Sea ports (see p4). The re-opening of the ports could lift Ukraine’s export capacity towards 5M tonnes/month – on a par with its pre-war capacity – but obstacles, such as insurance and how ships will navigate heavily-mined waters, remain.

According to S&P Global Market Intelligence, total seaborne agri-bulk shipments from the Black Sea region fell 37% year-on-year to 11.2M tonnes in second quarter 2022, with reductions from Ukraine accounting for a large part of the loss. How quickly can Ukraine clear its large build-up of grain and oilseed stocks, as this could pose a serious storage capacity issue during its July-November harvest period?

Meanwhile, exports from Russia – also a global leader in grain, oilseed, fertiliser and energy products – are being held back by quotas, sanctions and ship owners’ difficulties in procuring insurance. Much of export trade from Russia is going “dark” and obtaining information is getting harder and harder,” speciality bulk liquid ship broker Riverside Tanker Chartering Riverside wrote in its June market report.

The volatile nature of global events such as the Ukraine invasion and the COVID-19 pandemic has been reflected in shipping prices, according to King.

The Baltic Dry Index (BDI) was below 500 in May 2020 as COVID-19 began its global spread but stood at 2,240 points on 30 June. The BDI is a daily index of average prices paid to ship dry bulk products such as grains/oilseeds, coal, sugar, minerals, cement, metals and fertiliser across more than 20 routes for Capesize, Panamax, Supramax and Handysize vessels. It measures demand for shipping capacity against the supply of vessels and is viewed as an economic indicator of growth and production. The International Grains Council Grains and Oilseeds Freight Index also shows that freight costs have also risen much faster than grain and oilseed prices since June 2020.

It is unclear which way dry bulk shipping rates will head. Some analysts believe they will remain high due to high bunker (fuel) and crude oil prices; and new International Maritime Organization emission rules coming into force on 1 November, leading to more ship retirements and higher compliance costs. However, others feel that slowing economic growth, strong domestic production of bulk commodities in major importing countries, weaker demand linked to rising inflation and low ship deliveries this year might put downward pressure on rates.

As for shipping activity in vegetable oils, the entire tropical oil freight market went “ballistic” in May and rose even higher in June, with IMO2 rates from Straits (Malaysia) to Rotterdam reaching over US$170/tonne and IMO3 rates around US$120/tonne in June, according to Riverside. “Sustained demand … and ongoing market disruptions due to the war in Ukraine are expected to keep all markets firm over the summer months. Not surprisingly, this has given ship owners broad smiles. If you believe in only half of what you hear in the market place, we are all in for a challenging summer,” the company says.

Serena Lim, serenalim@quartzltd.com www.ofimagazine.com

25/07/2022 13:06:32

UKRAINE/RUSSIA NEWS

Farmers in Ukraine could face new challenges in the winter planting campaign due to high stocks, a shortage of storage and tight and costly logistics leading to current domestic prices being close to the cost of production, AgriCensus reported on 24 June.

Funding the next crop is increasingly a major concern as farmers – who normally use revenues from the previous production to fund the next year’s output – are already close to the point of working at a loss, according to the report.

Exports since Russia's invasion of Ukraine had mainly been carried out by land, trains and trucks, as well as through the river ports of Reni, Kiliya and Izmail, due to the blockage of Black Sea ports, AgriCensus wrote.

However, the alternative forms of transport had led to major bottlenecks forming on the country’s borders with its European neighbours. The situation had also led to a significant increase in logistics costs, which made it difficult to maintain Ukrainian grain and oilseed prices at the same level as global prices.

With the extreme pressure on domestic prices, farmers were likely to have to economise on the use of crop protection products, seeds, fertilisers and machinery.

With estimated production costs for wheat of around US$150-180/tonne level, around US$130-180/ tonne for corn and around US$155-175/tonne for barley, any sales below that threshold were unsustainable for farmers, according to trade sources quoted by AgriCensus.

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General News.indd 2

Odessa hit by missiles despite landmark deal

Photo: Adobe Stock

Farmers face cashflow problems

Russian forces struck the key Ukrainian port of Odessa the day after Kiev and Moscow reached a landmark deal to allow the resumption of grain and oilseed exports, the BBC reported on 24 July.

Two missiles hit the city of Odessa in the early hours of 23 July, Ukraine’s military was quoted as saying in a social media post, while two more had been shot down by air defence systems.

Under the terms of the deal struck on 22 July, Russia had agreed not to target ports while grain shipments were in transit, the BBC wrote.

The aim of the deal was to secure the passage of grain and oilseeds from three blockaded Ukrainian ports – Odessa, Chernomorsk and Yuzhny – despite the ongoing war elsewhere in the country, The Guardian reported wrote on 23 July.

Ukraine and Russia had signed the deal, backed by the United Nations (UN), following tense negotiations, with Turkey taking a leading role, the report said.

The deal – which took two months to reach – was set to last for 120 days, with a co-ordination and monitoring centre to be established in Istanbul, staffed by UN, Turkish, Russian and Ukrainian officials, the BBC wrote, with the possibility of renewal if both parties agreed.

However, the attack raised new doubts about the viability of the deal, which was intended to release about 20M tonnes of grain, according to a report by The Observer on 24 July.

Russian officials had denied carrying out the strikes, Turkey’s defence minister Hulusai Akar was quoted as saying in the BBC report.

“In our contact with Russia, the Russians told us that they had absolutely nothing to do with

this attack, and that they were examining the issue very closely and in detail,” Akar said in a short statement.

European Union (EU) foreign affairs chief Josep Borrell was quoted as saying the attack had shown Russia's “total disregard” for international law.

“Striking a target crucial for grain export a day after the signature of Istanbul agreements is particularly reprehensible,” he tweeted, adding that the EU “strongly condemns” the attack.

UN Secretary General Antonio Guterres also condemned the attack, saying that full implementation of the grain deal was imperative, according to the BBC report.

“These products are desperately needed to address the global food crisis and ease the suffering of millions of people in need around the globe,” a UN spokesperson added.

The deal had been welcomed by shipping companies and grain traders, but even before the missile strike, they had warned that several obstacles remained, including ensuring the safety of seafarers and vessels, along with securing adequate and affordable insurance to cover the transport, The Guardian wrote.

As a first step, Ukraine’s coastal waters would need to be de-mined or, at the very least, a corridor stretching several kilometres would need to be cleared, the report said.

Around 400 bulk cargo ships – designed for transporting agricultural goods between continents and each able to hold up to 50,000 tonnes – would be required for transporting the estimated 20M tonnes of grain stored in Ukraine, The Guardian said.

The deal also stated that all vessels would have to be inspected for ‘unauthorised cargoes and personnel’ – likely a reference to military hardware and trained soldiers that Russia was concerned could be smuggled to support Ukrainian forces, AgriCensus wrote on 22 July.

It also explicitly includes a guarantee that merchant vessels will not be attacked and that Ukrainian territorial waters remain exclusively under the control of Ukrainian authorities, according to the AgriCensus report.

During the blockade of Ukraine’s Black Sea ports, government officials and agricultural producers had been working to increase grain exports using road, rail and river transport, The Guardian wrote.

Those exports hit a new record of 2.3M tonnes in June, according to the International Grains Council (IGC), but this was just a third of the amount which was exported each month by sea prior to Russia’s invasion of Ukraine on 24 February. www.ofimagazine.com

25/07/2022 13:13:21

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NEWS

Indonesia removes export tax to boost trade Leading global palm oil producer Indonesian has removed the export tax for all palm oil products for a limited period between 15 July-31 August in a bid to boost exports amid an excess of domestic supply, AgriCensus reported on 18 July.

The tax would be reinstated from 1 September when a progressive rate structure would apply depending on the crude palm oil (CPO) reference price, AgriCensus quoted from an official document published on 16 July by the country’s finance ministry.

The maximum export levy for CPO was previously set at US$200/tonne from 14 June to 31 July, if the CPO reference price exceeded US$1,500/tonne, accord-

ing to the report, with Indonesia planning to raise it to US$240/tonne from 1 August.

However, a combination of rising domestic stocks, slow exports and pressure from farmers facing an oversupply of palm fruit had caused the government to backtrack on its earlier plans and consider new measures to raise export volumes.

The rise in stocks was mainly due to a three-week palm oil export ban which Indonesia introduced on 28 April in a bid to control high prices of local cooking oil, the report said. Following the lifting of the ban on 23 May, a range of measures had been introduced to boost trade including a reduction in export taxes, the launch of a

special export acceleration programme and a rise in export quotas, AgriCensus wrote.

However, figures from the Indonesian Palm Oil Association (Gapki) showed that stock levels remained at 7.23M tonnes at the end of May. High stocks had also led to palm oil mills reducing purchases of fresh fruit bunches, leading to farmer protests.

Meanwhile, palm oil stocks in second largest producer Malaysia reached their highest level in seven months in June as exports fell, Reuters reported on 5 July.

Stockpiles were forecast to rise 12.3% from May to 1.71M tonnes in June, according to estimates of eight traders and analysts polled by the news agency.

US food giant the Kellogg Company has announced plans to split into three independent companies in a bid to streamline the company and focus on its snack business.

As part of the move by the maker of Kellogg’s cornflakes, Rice Krispies, Pringles and other well-known food brands, Kellogg’s will separate its North American cereal and plant-based food businesses, the company said on 21 June.

The restructuring would result in the creation of a global snack business, with estimated net sales of about US$11.4bn, that would also include international breakfast cereal and noodles brands and Kellogg's North American frozen breakfast division.

The names of the three firms had not been confirmed but had been temporarily named

Photo: Adobe Stock

Kellogg's to split into three to focus on snacks

Kellogg's is splitting into three to focus on its global snack business

Global Snacking Co, North America Cereal Co and Plant Co. North America Cereal Co, with estimated net sales of about US$2.4bn, would be a cereal company in the USA, Canada and the Caribbean, while Plant Co, with about

US$340M in net sales, would be a plant-based food company, based around the MorningStar Farms brand.

“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward

their distinct strategic priorities,” Kellogg's chairman and CEO Steve Cahillane said.

Kellogg’s said it expected the new snack food company to be a higher growth business than the current one.

The formation of the North America Cereal Co and Plant Co was due for completion by the end of next year, the company said, although the former could take place first.

Kellogg’s said North America Cereal Co and Plant Co would both retain their headquarters in Battle Creek, Michigan, while Global Snacking Co would keep its dual headquarters in Battle Creek and Chicago, Illinois.

The company’s three international headquarters in Asia, Middle East and Africa, Europe and Latin America, would remain in their current locations.

China edible oil production forecast revised downward The Chinese government has reduced its forecast for edible oil production for the current marketing year due to a reduction in oilseed imports, AgriCensus quoted from the monthly update to China’s Agriculture Supply and Demand Estimates (Casde).

China is now expected to produce 28M tonnes of edible oil during the 2021/22 season, mainly due to a fall in oilseed imports leading to a decrease in edible vegetable oil production,” the 12 July report said. However, an increase in domes6 OFI – JULY/AUGUST 2022

General News.indd 3

tic rapeseed production would counter the decline in edible oil output.

Chinese government analysts have maintained an unchanged estimate for edible oil imports of 7.43M tonnes in 2021/22.

Of the total, imports for palm oil and soyabean oil were cut by 300,000 tonnes and 170,000 tonnes from their previous outlooks to 3.7M tonnes and 630,000 tonnes, respectively.

Consumption of edible oil was expected to be stable at 36.34M tonnes.

Accordingly, the year-end balance between supply and demand for 2021/22 dropped 150,000 tonnes from the previous estimates to minus 1.18M tonnes.

China’s Ministry of Agriculture and Rural Affairs kept its forecasts for soyabean imports and demand for the new crop year at 95.2M tonnes and 19.48M tonnes, respectively. Soyabean consumption for 2022/23 remained at 112.87M tonnes, leaving the year-end balance between supply and demand unchanged at 1.66M tonnes. www.ofimagazine.com

25/07/2022 13:13:25

NEWS

Canada to require new high fat labels The Canadian government has announced that it will be introducing new legislation from 2026 requiring companies to add special labels on food products high in sugar, sodium and fat, the Globe and Mail reported on 30 June.

Following six years of negotiations, Health Canada has officially finalised its plan to put warning labels on sugary, salty and fatty foods, while granting a last-minute exemption for ground meat.

The new rules will require packaged foods containing more than 15% of the daily recommended intake of sugar, salt

or saturated fats to display a label flagging this for consumers, the report said.

Health organisations said the move was an important step in fighting obesity and diet-related illness.

“Research shows that a simple, clear symbol on the front of food packages will help consumers choose foods lower in saturated fat, sugar and sodium,” Health Minister Jean-Yves Duclos said on 30 June.

The programme would not be fully implemented until 2026, he said, as a long transition period would be needed to give food companies time to comply.

The new black-and-white warning labels will be in addition to nutrition facts tables and will feature a magnifying glass and “high in” ingredient information in simple, bolded text.

However, Food, Health & Consumer Products of Canada (FHCP) – which represents many large food companies – said the programme would create further burdens on the industry “at a time when food and beverage manufacturers are already facing unprecedented challenges tied to inflation, labour shortages and COVID-related supply chain disruptions”.

Global food import bill to hit $1.8tn this year The global food import bill is expected to increase by US$51bn to US$1.8tn this year due to higher prices, according to the Food Outlook report by the Food and Agriculture Organization of the United Nations (FAO) issued on 9 June.

“The increasing cost of food is heightening concern and distress throughout the world,” the FAO said.

While global consumption of vegetable oils was expected to outpace production, world production of major cereals was expected to decline this year for the first time in four years, the FAO said.

Global oilseed production is forecast to contract in 2021/22, primarily driven by expected lower soyabean and rapeseed outputs, with reduced yield levels despite further expansion in harvested areas.

For oils and fats, the FAO expects global production to increase marginally, with growth in palm oil production overshadowing the estimated losses in soyabean and rapeseed oil outputs.

Global consumption of vegetable oils is expected to stagnate at the 2020/21 level, as demand rationing is anticipated for both food and nonfood uses due to higher prices.

Looking ahead to the 2022/23 season, forecasts suggested a possible sharp rebound in world production of oilseeds and derived products, with global consumption likely to resume growth at a moderate level, the report said. www.ofimagazine.com

General News.indd 4

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NEWS UK: Global agribusiness giant Cargill has announced it will close its rapeseed crushing plant in Hull by the end of the year due to “current market conditions”, World Grain said on 13 June.

Cargill had operated the 750 tonnes/day facility since 1985 following its acquisition from Croda Premier Oils. The plant produced some 323 tonnes/day of rapeseed oil and 420 tonnes/ day of rapeseed meal for use in applications including food (margarines), biodiesel and animal feed, according to Cargill's website.

SINGAPORE: Global food and agribusiness firm Olam Group is considering selling up to an additional 10% of its stake in Olam Agri Holdings, according to a 5 June circular. The proposal follows an agreement by Olam Group in March to sell a 35.4% stake in Olam Agri to Saudi Agricultural and Livestock Investment Co (SALIC), which said it expected the US$1.24bn transaction to be completed this year.

Olam Agri specialises in the processing and trading of animal feed, grains, oilseeds and rice.

The filing said Olam Group was seeking approval for the additional stake sale to SALIC and/or other potential investors. If both sales progressed, the proceeds could total US$1.59bn.

Papua province advises revoking oil palm permits The government of Indonesia’s Papua province has recommended that district officials revoke the permits of 35 of the 54 oil palm concessions operating there, Mongabay wrote on 16 June.

The move follows an evaluation of permits carried out by the provincial government since 2019 and mirrors similar revocations in neighbouring West Papua province.

Covering a combined area of 522,397ha, the affected concessions in Papua represented more than half of the area dedicated to oil palms in the province, the report said.

Head of the provincial agricultural agency’s plantation department Karel Yarangga said

the audit had found a range of administrative violations by the companies in question including lacking location, plantation and right-to-cultivate permits.

Greenpeace Indonesia forest campaigner Sekar Banjaran Aji said the organisation hoped the permits would be revoked as soon as possible.

The West Papua government started its licence audit in 2018 and, as in Papua province, had found widespread administrative and legal violations, including missing licences and abandoned land, Mongabay wrote.

As a result, 16 plantations concessions – covering 340,000ha – had been revoked.

Plant-based food sales drop as prices rise

Photo: Adobe Stock

IN BRIEF

Sales of meat alternatives by major North American producers fell by 4% last year

Sales of plant-based food have fallen due to inflationary and supply chain problems facing the entire food sector, with consumers more reluctant to pay higher prices, CBC News wrote on 5 June.

According to Bloomberg Intelligence analyst Jennifer Bartashus, sales of meat alternatives at the five biggest North American producers fell by 4% last year after growing by 13% in 2019 and

almost 40% in 2020, One of the companies, Canada’s Maple Leaf Foods which reported US$45M in sales in first quarter 2022, said it did not expect “spectacular category growth” when announcing its financial results in May. It planned to return some of its plant-based factory space to making meat products.

Although meat prices rose by more than 10% in the year up to April, prices for meat alternatives had also risen, according to Statistics Canada.

Plant-based meat was, on average, 38% more expensive at the retail level than its meat-based alternative, according to a Dalhousie University report which CBC News quoted.

Protocol for indirect purchases of at-risk Cerrado soya Six of the world’s leading food and agribusinesses have developed a new method to disclose deforestation-free soya purchases from Brazil’s Cerrado region, the World Business Council for Sustainable Development (WBCSD) announced on 21 June.

The six firms – Archers Daniels Midland (ADM); Bunge; Cargill; COFCO International; Louis Dreyfus Company and Viterra – are all members of WBCSD’s Soft Commodities Forum (SCF).

With about 30% of global production, Brazil is the world’s leading exporter of soy8 OFI – JULY/AUGUST 2022

General News.indd 5

abeans, with about half that total concentrated in the Cerrado region, the report said.

In the SCF’s seventh bi-annual report, the companies disclosed deforestation-free soyabean purchases sourced directly and indirectly from 61 municipalities in the region, representing 70% of the at-risk deforestation area associated with soyabeans.

While it was easy for SCF members to trace soyabeans purchased directly from soyabean farms, tracing sales from indirect sources (which represent about 22% of their collective soyabean purchases) was

more complex, the WBCSD said.

To address that challenge, SCF members had developed a collective protocol to monitor and trace soyabeans from indirect suppliers, the association said. Developed with the Brazilian Association of Vegetable Oil Industries, the new protocol was a sectoral approach to help equip intermediary soyabean resellers with adequate traceability systems, the WBCSD said.

The SCF had also set up a a three-year strategy with financial incentives to preserve priority Cerrado landscapes. www.ofimagazine.com

25/07/2022 13:13:29

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BIOFUEL NEWS CHINA: The country’s largest oil refiner China Petroleum & Chemical Corporation (Sinopec) produced its first batch of sustainable aviation fuel (SAF) from used cooking oil (UCO) at its facility in the east of the country, Reuters reported on 28 June.

Sinopec started developing SAF in 2009 and was awarded the country’s first airworthiness certificate for the fuel in 2014, Reuters wrote.

The 100,000 tonnes/year Sinopec Zhenhai Refining & Chemical Co facility paved the way for industrial-scale SAF production.

USA: The Renewable Fuels Association (RFA) has welcomed the passage of a bill by the House of Representatives allowing E15 – petrol blended with 15% ethanol – to be sold throughout the year, AgriCensus wrote on 16 June.

As well as extending a waiver allowing E15 sales during the summer, the passage of the Lower Food and Fuel Costs Act on 16 June would also provide US$200M in additional funding for infrastructure to support the sale of higher blend biofuels, the report said.

Neste to expand capacity at its Rotterdam refinery Finnish renewable fuels producer Neste announced on 27 June that it would invest US$1.93bn to expand renewable products production capacity at its Rotterdam refinery due to growing demand.

At 1.4M tonnes/year, Neste’s current renewables capacity in Rotterdam was the largest in Europe and the expansion would increase overall capacity by 1.3M tonnes/year, bringing total renewable product capaci-

ty to 2.7M tonnes/year.

Following the expansion, production of sustainable aviation fuel (SAF) at the Rotterdam plant would be 1.2M tonnes/ year, Neste said.

The new unit was due to become operational in the first half of 2026 and would result in “a substantial amount of renewable diesel, SAF and renewable feedstock for polymers and chemicals”, the company said.

Neste said its current global

renewable products capacity was 3.3M tonnes/year and would increase to 5.5M tonnes/year by the end of 2023 from its Singapore expansion project and a joint venture with Marathon Petroleum in Martinez, California.

When completed, the Rotterdam expansion would further increase the company’s total renewables production capacity to 6.8M tonnes/year by the end of 2026, Neste said.

Cargill completes Ghent waste-based plant Global agribusiness giant Cargill has completed building a US$150M advanced biodiesel plant in Belgium to convert waste oils and residues into renewable fuel.

The 115,000 tonnes/year plant at its existing oilseeds crushing and biodiesel facility was one of the largest waste-to-biofuel facilities in Europe and the company’s first advanced biodiesel production venture, Cargill said on 15 June.

Using BDI-Bioenergy International’s patented RepCAT process technology, the facility would convert all types of liquid waste oils and fats, including used cooking oils, tallow and residues from edible oil production, into advanced biodiesel.

The advanced biodiesel produced at the facility would be used by the maritime and trucking sectors, Cargill said.

Photo: Adobe Stock

IN BRIEF

Waste oils will be among the feedstocks used at Cargill’s advanced biodiesel plant in Ghent

EU transport MEPs set ambitious targets for SAF Transport members of the European Parliament (MEPs) have set ambitious targets for more sustainable aviation fuels (SAF) to help the EU achieve climate neutrality by 2050, the European Parliament (EP) said on 27 June.

A total of 85% of aviation fuel should be sustainable by 2050, with a gradual switch to alternatives to conventional fuel such as synthetic fuel and used cooking oil (UCO).

Space should also be allowed for electricity and hydrogen to be part of the new fuel mix, with aircraft operators encouraged to include infrastructure for hydrogen refuelling and electric recharging.

MEPs on the Transport and Tourism Committee adopted a draft negotiating

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Biofuel news July.Aug 2022.indd 2

mandate on the ReFuelEU aviation rules and amended the proposed definition of SAF – a term that currently covers synthetic fuels or certain biofuels produced from agricultural or forestry residues, algae, biowaste or UCO – to include recyclable carbon fuels produced from waste processing gas and exhaust gas derived from production process in industrial installations.

MEPS also proposed that some biofuels, produced from animal fats or distillates should be used in the aviation fuel mix for a limited time (until 2034).

The EP said MEPs excluded feed and food crop-based fuels from the revised definition of SAF, and those derived from palm oil and soyabeans, and soap stock

and its derivatives, as they did not meet proposed sustainability criteria.

MEPs increased the European Commission’s (EC) original proposal for the minimum share of SAF that should be made available at EU airports, with a 2% share from 2025, increasing to 37% in 2040 and 85% by 2050, taking into account the potential of electricity and hydrogen in the overall fuel mix (proposed at 32% and 63% respectively).

Following approval of the draft by the whole European Parliament, MEPs would begin talks with EU governments on the final details of the legislation.

Civil aviation currently accounts for 13.4% of CO2 emissions from EU transport. www.ofimagazine.com

25/07/2022 09:56:20

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RENEWABLE NEWS

Evonik starts construction of rhamnolipid plant Speciality chemical company Evonik started construction work on a new biosurfactant rhamnolipid plant in Slovakia on 29 June.

The new triple-digit millio-euro plant in Slovenská Ľupča was the world’s first commercial rhamnolipids production site and was scheduled to come on stream in two years, the company said.

Rhamnolipids are a class of biosurfactants which are manufactured via fermentation, with their foam-forming properties making them suitable for use in household cleaners and personal care products.

SOUTH KOREA: Chemical and life sciences company SK Chemicals announced on 9 May that it had started the mass production and supply of biopolyol (polyoxytrimethylene ether glycol or PO3G).

The company has built a mass production system to produce several thousand tonnes of the ECOTRION material, which was made from 100% plant-based raw materials and designed to replace petrochemical-based polyols, SK Chemicals said.

A type of alcohol, polyol is a raw material used to manufacture spandex, polyurethane (artificial leather, foam and other products) and urethane elastomer.

SK Chemicals said ECOTRON had been certified by the US Department of Agriculture and Belgian accredited inspection and certification organisation VINCOTTE, and was softer than existing materials when applied to textiles and artificial leather.

hold cleaning product anywhere in the world,” Unilever said in January. “Following this pilot and the biosurfactant’s introduction into our Sunlight hand dishwash in Vietnam, we were keen to roll it out across our global hand dishwashing portfolio.”

Unilever said its partnership with Evonik also opened the possibility of using rhamnolipids in other areas of home care.

Evonik said the new facility at its biotech hub would expand its biotechnology platform, part of the company’s Nutrition & Care life sciences division.

Oleo gels developed to aid pill swallowing US researchers have developed new oil-based or oleo gels to help children and adults who have problems swallowing pills to take medicine, Science Daily reported on 27 May. The research team at the Massachusetts Institute of Technology and Brigham and Women’s Hospital showed in animal studies that the gels could be used to deliver medication in the same doses compared with pills or tablets.

Several types of plant-derived oils – including sesame, cottonseed and flaxseed oils – were combined with edible gelling agents such as beeswax and rice bran wax, creating different textures, from a thickened drink to a yoghurt-like substance. Such gels are commonly used in the food industry to change the texture of oily foods and raise the melting point of chocolate and ice cream.

Although other methods were available to deliver medication to children and adults

Photo: Valeria GB, Pixabay

IN BRIEF

Evonik is using European corn sugar as the main raw material.

“This use of biogenic carbon requires no petrochemical feedstocks or tropical oils ... which means they are a sustainable alternative to conventional surfactants” said Evonik, which will supply consumer products giant Unilever in an exclusive partnership which began in 2019.

“When we started using [Evonik’s rhamnolipids] in Unilever’s Quix dishwashing brand in Chile in 2019, it was the first time the biosurfactant had been used in a house-

Some children and adults have problems swallowing pills

with difficulties swallowing, such as suspending drugs in water, they required clean water and the drugs needed to be refrigerated once mixed, and this approach was not possible for drugs that were not water-soluble, the report said.

As the new gels were stable without refrigeration, it could make it easier to deliver them to children in developing

nations while helping adults, such as the elderly or people who have had a stroke.

The gels were tested with three water-insoluble drugs from the World Health Organization’s list of essential medicines for children: praziquantel to treat parasitic infections; lumefantrine to treat malaria; and azithromycin to treat bacterial infections.

OASA to build bio-propylene glycol plant in Indonesia Indonesian construction engineering company Protech Mitra Perkasa, also known by its stock symbol OASA, has announced plans for a US$50M bio-propylene glycol plant in Indonesia, the Jakarta Globe writes.

Construction of the 30,000 tonnes/year facility on Java Island is due to begin next year, according to the 24 May report.

Protech Mitra Perkasa president-director 12 OFI – JULY/AUGUST 2022

Renewable news.indd 2

Bobby Gafur Umar said the company’s entry into the chemical industry was in line with its commitment to the green industry.

As Indonesia did not currently produce propylene glycol domestically, it was dependant on imports of the chemical, he said. However, the country had “huge potential” as a bio-propylene glycol producer.

“Biodiesel is also an oleochemical industry

that produces glycerol, [and it is] an industry that is growing at a rapid rate in Indonesia.

So, there is an abundance of glycerol [as a feedstock] for bio-propylene glycol.”

OASA said it would be working in partnership with Japanese general trading company Sojitz, which would supply it with crude and refined glycerine, while also distributing the bio-propylene glycol. www.ofimagazine.com

21/07/2022 15:36:28

TRANSPORT NEWS USA: US agribusiness co-operative CHS announced on 14 June that it will be building a new grain storage facility in Erskine, Minnesota, due to become operational in 2023.

The facility would provide 1.25M bushels of additional storage capacity and expand the plant’s total storage capacity to 4.55M bushels.

“This facility is a key location in the flow of grain from the Upper Midwest to export terminals in the Pacific Northwest,” Rick Dusek, executive vice president of CHS ag retail operations, said.

UKRAINE: The port of Mykolaiv was hit by a second missile attack on 22 June, with at least two grain and vegetable oil terminals hit by missiles, AgriCensus reported local sources as saying on the day.

Viterra – which is partowned by commodities giant Glencore – said that its Everi vegetable oil terminal had been on fire but there were no casualties. The Greentour grain terminal, owned by Bunge, was also affected in the attack.

Bunge said no employees were injured as the plant had been closed since 24 February, the date Russia invaded Ukraine.

Mykolaiv was Ukraine’s second largest port in terms of grain and oilseeds exports, accounting for around 28% of all grains, oilseeds and meals exported from 1 July to 22 February.

Large harvest puts strain on Mato Grosso storage The Brazilian state of Mato Grosso is facing storage issues in the face of projected increases in soyabean and corn output, AgriCensus reported market sources as saying.

With a total storage capacity of approximately 39M tonnes, the state – Brazil’s largest grains and oilseeds producer – did not have sufficient capacity to accommodate this year’s soyabean and corn output, which was expected to be double last year’s volumes, the 30 June report said.

Producers had delayed soyabean sales since the start of the marketing year in the hope of getting better prices, AgriCensus wrote, and this had increased the challenge to accommodate the 39M tonnes of corn expected to be harvested this season, heightened recently with the second

corn crop harvest progressing at a fast pace.

Against an uncertain backdrop in the soyabean market, Brazilian producers from Mato Grosso had around 8.5M tonnes of soyabeans remaining to trade – taking into account only the volume still with producers – according to data from the state’s agriculture institute IMEA. A total of 78% of the soyabean crop, estimated at 40.5M tonnes, had been sold, compared to 88.2% at the same point the previous year, IMEA data published in June showed.

According to Brazil’s soyabean producers’ association Aprosoja, Mato Grosso needs to expand its static capacity to 125M tonnes until 2030 to keep up with the increase in production.

Trucker protest blocks Argentine exports Trucks loaded with grain were blocked from getting to Argentina’s largest port on 29 June due to a truck driver protest against high diesel prices and fuel shortages, Reuters reported that day.

Truck owner organisations blocked loaded trucks on different roads in Sante Fe, home to port city Rosario, the gateway for around 80% of Argentine agricultural exports, according to the local Road Safety Agency.

Argentina is the world’s top exporter of processed soyabean oil and meal, the second largest exporter of corn, and a major global supplier of wheat and beef, the report said.

Rosario terminals on the Paraná River received 889 grain trucks, 76% less than

Photo: Adobe Stock

IN BRIEF

More than 80% of Argentine grain for export is transported by trucks

the previous year, the Rosario Grains Exchange said.

“As of (29 June), we are missing more than 400,000 tonnes (of merchandise), so we are close to running out of grains,” Gustavo Idigoras, the head of the grain export-

ers and crushers chamber in Buenos Aires, told Reuters.

The country’s transport minister Alexis Guerrera said that the diesel shortage should be resolved within 15 to 20 days with the arrival of ships carrying fuel imports.

FAO announces $17M storage and logistics project for Ukraine The Food and Agriculture Organization of the United Nations (FAO) announced a new US$17M project to help Ukrainian farmers save their upcoming harvest while ensuring exports of critical agricultural goods to international markets on 5 July.

Funded by Japan and implemented jointly with Ukraine’s Ministry of Agrarian Policy and Food, the project aims to restore grain 14 OFI – JULY/AUGUST 2022

Transport news.indd 2

storage capacity and supply chain functionality from harvest to export, the FAO said.

Ukraine exports more than 45M tonnes/ year of grain and has 18M tonnes of last year’s cereals and oilseeds in storage waiting for export, according to the ministry.

The country was expecting to harvest up to 60M tonnes of grain this season but 30% of available storage space for the new

harvest was filled with last season’s crop, the FAO added.

The new project would address storage issues by providing polyethylene grain sleeves, grain loading and unloading machinery to smallholders and a range of modular storage containers to medium-sized producers in 10 regions in the east, centre, south and north of Ukraine. www.ofimagazine.com

25/07/2022 13:19:46

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OFI – JULY/AUGUST 2022

15

BIOTECH NEWS CANADA: BASF Canada is short on supplies of Liberty herbicide due to a lack of sufficient raw materials to make the weedkiller at its Regina plant in Saskatchewan, according to an 18 June tweet by Western Producer. Liberty 200 SN herbicide is suitable for use on canola, corn and soyabeans, the BASF website says.

INDIA: The government has approved an additional 550,000 tonnes of imported soyabean meal, including genetically modified (GM) soya meal, to continue until 30 September, the Foreign Agricultural Service (FAS) of the United States Department of Agriculture (USDA) wrote on 23 May. The move was made to alleviate high soya meal prices experienced by India’s poultry and livestock industry, in which meal was a critical feed input, the report said.

The 550,000 tonnes of imports was the remaining amount of a previous 1.25M tonnes quota announced last August that had been unused.

The imports are permissible through the eight ports: Nhava Sheva, Petrapole, Mumbai, Tuticorin, Vishakhapatnam, Ghojdanga, Kolkata, and the Ranaghat railway station.

Last year, the USDA said India imported approximately 650,000 tonnes of soyabean meal primarily from Argentina, Thailand and Vietnam.

Pesticide shortage forces farmers to change plans Farmers in the USA are cutting back on their usage of common weedkillers, looking for substitutes for fungicides and changing their planting plans due to ongoing shortages of agricultural chemicals, Reuters reported on 27 June.

Reducing herbicide usage and turning to less-effective fungicides increased the risk of weeds and diseases, which could hit crop production, the report said.

Interviews with more than a dozen chemical dealers, manufacturers, farmers and weed specialists showed that shortages had disrupted US growers’ production strategies and raised their costs, Reuters wrote.

Shawn Inman, owner of distributor Spinner Ag Incorporated in Zionsville, Indiana, said supplies

were at their tightest level in his 24-year career.

Shortages further reduced options for farmers battling weeds that had developed resistance to glyphosate after decades of overuse in the USA, the report said. Prices for glyphosate and glufosinate, another widely-used herbicide, had increased more than 50% compared with last year, according to dealers. These herbicides are commonly used with genetically modified seeds bred to be resistant to them.

Agrichemical companies said the agri-chemical shortages were due to the COVID-19 pandemic, transportation delays, a lack of workers and extreme weather. Meanwhile, the US Agriculture Department had launched an enquiry into competition in the sector, Reuters wrote.

UK proposes relaxing gene editing rules The UK government has introduced a bill to pave the way for genetically edited plants and animals to be grown and raised for food in England, The BBC reported on 25 May. Initially applicable only to plants, the proposed new legislation would relax regulations for gene-edited (GE), but not genetically modified (GM) products, the report said.

GE was currently not approved for use in England due to rules set by the European Union (EU) but Brexit had given the UK the ability to set its own rules, the BBC wrote.

Gene editing involves switching genes on and off in an organism by snipping out a small piece of DNA, compared with the GM process, which involves adding genes, some-

Photo: Adobe Stock

IN BRIEF

Calyxt hemp offered improved and quality times says fromseedless a different species. islationyields was criticised by some

The UK government believes GE will lead to crops that are resistant to pests and diseases and more resilient to the impact of climate change, according to the report.

However, the proposed leg-

environmental campaigners and organic farming bodies, with non-profit campaign organisation GM Freeze director Liz O'Neill saying the new regulations would take away much needed scrutiny.

Supreme Court rejects Bayer's bid to dismiss Roundup cases The US Supreme Court has rejected German chemical giant Bayer’s bid to dismiss claims that its Roundup weedkiller causes cancer, Reuters reported on 21 June.

The justices turned down the Bayer appeal and left in place a lower court decision that upheld US$25M in damages awarded to California resident Edwin Hardeman, a Roundup user who claimed his cancer had been caused by the company’s glypho16 OFI – JULY/AUGUST 2022

Biotech news.indd 2

sate-based weedkillers, the report said.

Bayer had said it should not be penalised for marketing a product deemed safe by the US Environmental Protection Agency (EPA) and on which the EPA would not allow a cancer warning to be printed.

A US jury has also found that Bayer’s Roundup weedkiller did not cause an Oregon’s man’s cancer – the company’s fourth consecutive trial victory over such claims,

Reuters reported on 18 June.

Glyphosate is the active ingredient in Bayer brands such as Roundup and RangerPro and has been at the centre of mass litigation in the USA brought mostly by residential gardeners claiming the weedkiller caused their cancer.

Roundup is used by farmers in combination with the company’s genetically modified seeds. www.ofimagazine.com

25/07/2022 13:23:27

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INTERNATIONAL MARKET REVIEW

The year 2022 to date has demonstrated that there is never room for complacency over supplies of raw materials for food.

Global palm oil supply growth had been slowing in recent years but nobody expected top producer Indonesia to impose, without warning, a more or less total export ban to protect its own consumers from rocketing domestic costs.

Coming so soon after top sunflower oil supplier Ukraine’s forced export halt (who expected a Russian invasion before February?) and last year’s collapse in top rapeseed supplier Canada’s crop, it would have been surprising if this had not caused something akin to panic on the markets, not to mention the impact on consumers.

The irony is that the Indonesian ban did not achieve its objective in bringing domestic palm prices down to target levels as we went to press. There was clearly a lot of market ‘sentiment’ in the domestic/ global palm oil price boom, borne of fears it would gain unsustainable demand from customers like top importer India, unable to buy Ukrainian sunflower oil.

The ban did, however, stir predictions of a surge in Malaysian palm oil exports, resulting in some record prices trading on the Bursa Malaysia futures market – equivalent to over US$1,600/tonne at one point, against the US$600-800 range of several years past (see Figure 1, right).

The swift end to the Indonesian ban was inevitable given: • The importance of palm oil to Indonesia’s foreign exchange earnings.

• The lack of tank storage for a 7M tonne stockpile at the start of June.

• Market talk of inflation/recession curbing global demand for oils.

18 OFI – JULY/AUGUST 2022

John Buckley July.Aug 2022.indd 2

Figure 1: Malaysian palm oil prices (Bursa US$ equivalent) since 2015

Graph: John Buckley

Larger palm, soyabean and rapeseed crops, along with more cottonseed, groundnut and palm kernel oil supplies, should moderate oil prices over the coming months.

A slower pace of growth in global food oil consumption may also contribute to more restrained pricing John Buckley

Graph: John Buckley

Palm oil leads reversal in

Figure 2: CBOT soyabean futures prices (US$ cents/bushel) • The ban’s ineffectiveness in controlling prices.

• A storm of protests from millions of Indonesia’s smallholder farmers.

• The industries involved in palm oil’s journey to market.

Things could get overdone on the downside. Top importer India is already forecast to take far larger quantities as the palm oil price dips further below that of chief rival soyabean oil. Other customers may respond similarly. In addition, Malaysia is still struggling with labour shortages and may not match expected production outlooks, even during the approaching seasonal peak period of fruit collection.

Although recently seeming to go all-out to reclaim its export role with expanding quotas and reduced export duties, Indonesia has still been moving to raise its palm biodiesel mix from 30% to 35%.

Both Indonesia and Malaysia recently indicated their supplies would probably not rebound as much as markets hoped in second-half 2022.

Indonesia’s government has forecast calendar year 2022 production rising to 48.24M tonnes from 2021’s 46.85M tonnes, while its own consumption has jumped almost 7M tonnes in the last five years. Malaysian first-half 2022 output is meanwhile only fractionally ahead of last year’s at 8.36M tonnes. Still tight rapeseed and sunflower oil supplies could also slow the palm oil price descent.

But against that, Malaysian exports are falling and key importer China could impose new COVID restrictions that curb demand in its restaurant sector, which account for half the country’s vegetable oil consumption. China’s vegetable oil imports have already plunged by almost 63% in first quarter 2022 to under 1.05M www.ofimagazine.com

25/07/2022 09:45:19

INTERNATIONAL MARKET REVIEW

l in prices tonnes. China is the world’s second largest importer of vegetable oils (after India), accounting for near 16% or 13M tonnes of the world’s total imports.

By mid-July, the markets had taken a mostly bearish view of this mix of factors, with Bursa Malaysia futures prices back to the equivalent of mid-US$850s/tonne.

Given that palm oil accounts for some 36% of global vegetable oil consumption, other oils had to take notice of this about-turn.

eased back below US$0.58c. This partly reflected the steep fall in rival palm oil’s prices, and also concerns that slowing demand for energy due to recession might restrain expansion in biodiesel use.

The USA is expecting to use 5.4M tonnes for biodiesel next season against 4.85M tonnes in 2021/22 and 4M tonnes in 2020/21.

Including food use, the USA consumes about 11.5M tonnes of soyabean oil in total. Rising demand has helped support crush margins, enabling some record monthly figures in recent months.

Global soyabean meal consumption is expected to grow by around 4% to

some 251.7M tonnes after stagnating in 2022/22 amid zero growth in soya supplies and their much higher cost in the wake of the Latin American crop shortfalls.

A bit less oil used in biodiesel and a slower pace of growth in world food oil consumption may also contribute to more restrained pricing, especially if China’s COVID lockdowns curb its restaurant use for soyabean oil. China takes around 60% of world soyabean exports.

The USDA recognised some of these restraints in its July World Agricultural Supply and Demand Estimates (WASDE) report, slashing its seasonal 2022/23 forecast for Chinese soyabean oil imports u

Weaker soyabean oil prices

Some oils have already started to lose value, either on their own improving fundamentals or recognition that the recent price boom had reached its peak.

The second largest consumed oil, soyabean, should benefit from much larger crops sown or planned in the main producing countries of Argentina, Brazil and the USA. As long as Latin America evades the hot, dry weather of another La Niña, which last year cut its crop by 11% or 22M tonnes, the regional total could rebound by a hefty 21% (36.4M tonnes) to a new record high of 210M tonnes.

The USA is, meanwhile, estimated to have increased planting by about 4.4%, with currently favourable weather promising to boost the crop to a record 126M+ tonnes. That could boost world soyabean oil output by at least 2M tonnes – more if crush margins encourage more crop into consumption and less into global carryover stocks, which the US Department of Agriculure (USDA) currently sees expanding from this year’s low of 86M tonnes tonnes to as much as 100M tonnes.

The market reaction so far has been cautious. The crops still need to be grown and in Latin America region, won’t be sown until October onwards.

Nonetheless, Chicago Board of Trade (CBOT) soyabeans have recently traded down to four-month lows (see Figure 2, left). This was despite market talk that a heatwave threatening the Chinese crop could expand its demand for US and South American soyabeans.

China is already forecast to import 98M tonnes in 2022/23 against 90M tonnes this season as it recovers from depressed meal demand during a swine fever epidemic and the ending of renewed COVID lockdowns.

Meanwhile, the futures price of soyabean oil – which in late April briefly exceeded US$0.87c/lb – has recently www.ofimagazine.com

John Buckley July.Aug 2022.indd 3

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19

25/07/2022 09:45:19

Figure 3: Crude vegetable oil prices (US$/tonne) u from 950,000 tonnes to 350,000 tonnes.

Hardly was the ink dry on that than Chinese customs reported the country’s total edible oil imports during June collapsing to just 245,000 tonnes – 20% below May and a staggering 75% under the June 2021 total.

Rapeseed price down

Rapeseed/canola oil supply is expected to benefit from Canada’s crop rebound as better weather lifts its yields from last year’s drought-depleted levels.

With larger crops in Europe as well (+600,000 tonnes), another larger-thanusual harvest in Australia and indications of similar supply from Russia and Ukraine (from crops planted last autumn before the war disrupted spring oilseed sowing), global rapeseed oil output is expected to rise by almost 1.9M tonnes or about 6.5%.

Amid lower palm and soyabean oil prices, this hoped-for recovery has already taken rapeseed prices down to their lowest level for over a year.

A wild card is the currently volatile energy market sending mixed signals to the biodiesel sector, on which rapeseed oil consumption depends so heavily. Crude mineral oil prices fell below US$100/barrel recently after months of seemingly endless rises.

Against the expected crop rebound, rapeseed stocks are seen dropping to their lowest level for many years by the start of the 2022/23 season.

So until Northern Hemisphere crops are harvested, more volatility cannot be ruled out.

Canada has not planted more canola as huge increases in input costs seem to have outweighed the gain in cash prices, especially with other, cheaper-togrow commodities also offering sky-high returns. Last year’s Canadian canola crop 20 OFI – JULY/AUGUST 2022

John Buckley July.Aug 2022.indd 4

Figure 4: USDA estimates of world vegetable oil output

area increased by over 8% but a summer drought and heatwave collapsed yields by 40%. All now depends on a yield bounce but even with that, Canada is among producers starting with an unusually small carry-in stock – just 400,000 tonnes compared with the 3.5M/1.7M tonnes of the previous two years.

The Winnipeg futures market recently fell to C$830/tonne levels against the peak C$1,200+/tonne it hit in late April, while Paris futures dropped from €1,094/ tonne to €650/tonne levels. Rapeseed oil is coming down as well, with the USDA monthly average for June at US$$2,055/ tonne against US$2,223/tonne in April.

Ukraine still key for sunflower

Prices of crude sunflower oil on the Rotterdam market fell to an average US$1,777/tonne in June against a peak of US$2,570 after Russia’s invasion of Ukraine in February stopped that trade in its tracks.

The seasonal average to date is still around US$1,747/tonne against last year’s US$1,350/tonne and the previous 10-year range from US$719-US$1,404/tonne.

A return to anything like the old lows looks unlikely until the Black Sea conflict is resolved. The USDA expects Ukrainian sunflower oil production to plummet from last year’s record 17.5M tonnes to just 9.5M tonnes following a 35% fall in planted area and a 16% drop in average yields.

As we went to press, Ukraine and Russia had just signed a United Nations-backed deal to allow Ukraine’s wheat, maize and oilseeds to be shipped. However, obstacles still remain to moving millions of tonnes of crops from blockaded Black Sea ports including de-mining Ukraine’s coastal waters, ensuring the safety of seafarers and vessels, and securing adequate and affordable insurance to cover the transport.

Graphs: John Buckley

INTERNATIONAL MARKET REVIEW

There are large stocks of old-crop sunflowerseed and oil still waiting to be shipped out. However, the new crop gap will probably still keep forward prices of both sunflowerseed and oil firm.

Russia’s crop is expected to hold steady at around last year’s peak of 15.5M tonnes, implying another year of better than usual export availability, although much will depend on the extent and manner with which the government intervenes in the market with quotas and duties. Russia recently cut its sunflower oil export tax sharply to offset the rouble hitting multiyear highs.

The EU also expects another larger than usual harvest of around 10.5M tonnes while Argentina’s crop is seen rising from 3.35M tonnes to 4.2M tonnes after farmers increased planted area by around a quarter in response to high prices and sunflower’s less heavy needs for increasingly expensive fertiliser.

The USA has also raised its sunflower planted area by 25% this year to a sevenyear high of 1.65M ha.

By drawing down some of the past year’s sunflowerseed stocks, the USDA estimates that global sunflower oil output can still match or even slightly exceed last season’s 19.5M tonnes, with exports reaching 10.4M tonnes.

EU food industry majors are expected to shift some consumption of sunflower oil – normally about 4.3M tonnes or over a third of the EU food oil total – to rapeseed (18% or 2.3M tonnes). Last season, the EU imported 9.9M tonnes of vegetable oil including 1.6M tonnes of sunflower oil and 314,000 tonnes of rapeseed oil, as well as 5.8M tonnes of rapeseed and 1.15M tonnes of sunflowerseed, chiefly from the Black Sea region. ● John Buckley is OFI’s market correspondent www.ofimagazine.com

25/07/2022 09:45:19

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DEEP FRYING The food service, deep frying and snack food manufacturing industries are facing tight supplies and high prices across the vegetable oils market, which is impacting the availability of frying oils such as high oleic sunflower oil Gary Lewis Tight supplies and high prices across the global oils and fats market – exacerbated

by Russia’s invasion of Ukraine in February – is having a significant impact on the food service and deep frying industries.

Vegetable oil prices have soared more than 50% in the past six months due to labour shortages in Malaysia, droughts in Argentina and Canada, and the RussiaUkraine conflict.

Ukraine is the world’s largest exporter of sunflower oil and is responsible for up to 31% of sunflowerseed and safflower oil production, while Russia accounts for around 27%.

The conflict has also impacted the global market for high oleic sunflower oil (HOSO) for fryers – with prices up, and availability low.

High oleic sunflower oil

Derived from special varieties of sunflowerseed bred to contain higher levels of oleic acid, HOSO has become increasingly popular with deep fryers.

While regular sunflower oil is relatively high in polyunsaturated (PUFA) linoleic acid, which makes it unsuitable for commercial frying since it oxidises rapidly, HOSO has a lower PUFA content but nearly 80% monounsaturated oleic acid, ideal for high temperature frying.

It resists oxidation and despite being 10% more expensive than ordinary sunflower oil, it lasts two to three times longer, with a comparable lifespan to other popular deep frying oils such as palm oil, palm olein and beef dripping.

HOSO has a lower level of saturated fat than these alternatives. It also has a neutral flavour profile that does not impact on the flavour of ingredients, and does not suffer from the controversial reputation of palm oil.

Prior to the Ukraine crisis, HOSO provided a good value, cost-effective option for frying.

While the current geopolitical situation and supply chain challenges have 22 OFI – JULY/AUGUST 2022

Deep frying 1.75pg version.indd 2

Fryers face supply significantly affected HOSO supplies, the oil should see continued growth when the situation stabilises.

Alternatives to HOSO

With HOSO in short supply, deep fryers, snack food manufacturers and food service users have already been forced to switch to alternatives.

Although both high oleic rapeseed oil (HORO) and high oleic soybean oil (H-OSBO) do exist – these are not widely available, and global markets are too small to provide a viable widespread alternative to HOSO in the near term.

In food service, most outlets are switching to direct alternatives for deep frying, such as palm oil and palm olein.

In the UK snack food sector and specifically with potato crisps, which depended heavily on HOSO, many major players have switched to rapeseed – despite the fact it is not an ideal alternative.

Due to the state of the market, the industry has been prepared to sacrifice some performance and lifespan for an

increased surety in supply.

Some producers are also switching to blended oils. Frozen food potato giant McCain Foods GB & Ireland, for example, announced in late June that it would be using a blend of rapeseed and sunflower oils from 1 July.

“This will allow us to continue operating as normal, maintaining competitive prices for consumers,” said Howard Snape, regional president of McCain Foods GB & Ireland.

“Rapeseed oil, like sunflower oil, is naturally low in saturated fat and high in unsaturated fat and a widely used alternative around the world. With any change to our products, our priority is to ensure they remain at the same high level of quality and taste consumers expect, and we believe the transition we have outlined will achieve that.”

High performance frying blends Another solution lies in specialist deep frying blends.

High performance frying blends are a type of long-life oil which are better

www.ofimagazine.com

25/07/2022 13:31:08

DEEP FRYING High performance frying blends are a type of long-life oil which are better at withstanding high temperatures and repeated exposure to oxygen, water and food, compared to other oils.

Photo: Adobe Stock

Benefits of long-life oils

pply issues at withstanding high temperatures and repeated exposure to oxygen, water and food, compared to other oils.

These blends are typically a combination of palm oil fractions and rapeseed oil – which vary in proportion based on the frying requirements. The palm oil used is double fractionated palm olein, which provides excellent stability for heavy duty frying.

Some products may also contain natural antioxidants such as deodorised rosemary extract, or synthetic alternatives, but this is not usually required thanks to the inherent performance of the double fractionated palm olein.

Although all oils do eventually degrade, specialist long-life blends with double fractionated palm olein are much more durable than standard frying oils – meaning they bring financial and practicality benefits to deep fryers.

Fryers have been making the switch to specialist long-life blends because of the performance benefits for several years, and the current crises look likely to accelerate this trend. www.ofimagazine.com

Deep frying 1.75pg version.indd 3

As specialist frying blends last longer, they require less maintenance and need to be changed less frequently. Ultimately, this means fryers use less oil, and use less resources changing it.

This is beneficial for heavy duty fryers, as it allows them to cut costs on one of their key overheads. It is also especially valuable in volatile periods such as now, when prices are high and availability is low.

Palm oil-based oil frying blends are also suitable for a vegetarian and vegan diet, unlike alternatives such as beef dripping.

April last year, leading UK manufacturer and distributor of edible oils, KTC Edibles, launched a new heavy-duty frying oil which blends Roundtable on Sustainable Palm Oil (RSPO) segregated CSPO, and rapeseed oil Its Super Plus Hi-Fry oil is designed to last two-and-a-half times longer than standard vegetable oil and is part of the company’s Hi-Fry range, which uses only RSPO segregated CSPO. "This makes it the natural choice for customers who care about environmentally friendly, ethical solutions," KTC says. 

The effects on sustainability

Gary Lewis is president of the UK National Edible Oil Distributors’ Association (NEODA) The challenges affecting fryers may have a and head of business for oils and fats at KTC knock-on effect on sustainability.

Edibles Ltd Food service players and deep fryers have been making good progress in choosing sustainable frying oils, such as those made from certified, sustainable palm oil (CSPO).

In 2019, 70% of total palm oil imports into the UK Maximize the life of your frying oil. were sustainable.

There has been Our experts will work with you to optimize further, more your frying operations and oil quality. limited progress The addition of DALSORB® oil purifier since, but there is will extend the life of your frying oil and still a long way to go. improve overall product quality.

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Photo: Adobe Stock

MIDDLE EAST/NORTH AFRICA

Region on the rise The Middle East and North Africa (MENA) region presents opportunities for the oils and fats sector due to increasing geopolitical stability in the area and growth in consumer demand linked to a rising population Gill Langham

24 OFI – JULY/AUGUST 2022

Africa GL draft.indd 2

Stretching from Iran in the East to Tunisia and Morocco in the West, the Middle East/North Africa (MENA) region – with its rising population and subsequent increase in demand for oils and fats – offers growth opportunities for the sector.

Comprising 25 countries with a population of almost 700M people, representing about 10% of the global population, the MENA region spans three continents and has a culturally diverse demographic. It also has vast reserves of oil and natural gas.

Although there is no specific way to define the MENA region, the general understanding is that it includes Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates (UAE) and Yemen.

Opportunities

The opportunities for packaged oil and speciality fats in the MENA region, were discussed by Sandeep Singh, the founder and director of trading consultancy The Farm Trade, in his presentation at the Palm Oil Internet Seminar (POINTERS) webinar hosted by the Malaysian Palm Oil Council’s (MPOC) on 28 March-1 April.

With a focus on palm oil demand and Malaysia’s market share, Singh joined a panel of industry experts to discuss the opportunities and challenges facing

the sector, against a backdrop of the COVID-19 pandemic, rising freight rates, and record high palm oil prices.

Topics covered included major markets in the MENA region and the overall demand for oils and fats.

His discussion also focused on the shift to local packaging at destination and the benefits of developing long-term partnerships.

The harsh terrain in some areas of the region did not support the production of agricultural commodities, he said.

Apart from the problematic terrain issues in some of the region, regional conflicts in the area have also been driving food and commodity price increases, he said.

“Conflict is driving MENA’s food security problems.

“Technological change and trade development need to be much faster to prevent food insecurity from worsening in the near term.”

Potential for growth

The region is heavily dependant on imports to supplement domestic demand for oils and fats, Singh said, and would remain so in the medium and long-term.

With a good population growth rate, the second fastest globally just behind Sub-Saharan Africa, the region presents opportunities for expansion in the sector. u

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“This region holds good potential as a fast-growing market with increasing geopolitical stability and growth in consumer demand,” he said.

"With the market reaching record highs this year, the benefits of long-term relationships become imperative. It is equally important to develop a long term supply chain so that the production and distribution processes are not disrupted."

Growing consumption

The MENA region consumes approximately 15M tonnes of oils and fats, according to Singh, with a per capita consumption of about 20kg, although there is a wide disparity with some countries like Somalia, Sudan and Yemen having a per capita consumption of less than 10kg.

The region’s consumption comprises 40% palm oil, 40% sunflower oil and soyabean oil, and 20% other oils.

However, the vast region is not without its challenges, Singh added.

“Regional integration in the MENA region is still lacking,” he says.

“With the exception of Gulf Cooperation Council (GCC) countries, most of the region is interconnected but not integrated.

"If we have more cooperation in the region, a lot of movement between the countries would become more seamless and there would also be better management in terms of stock.”

There had also been some positive developments, he added, including the discussion of an African Continental Free Trade Agreement (AfCFTA).

“What is lacking is not a rationale or capacity to integrate, but rather a sense of urgency to prioritise and move forward with integration.

"In anticipation of the AfCFTA agreement, now is the time to expand and deepen the existing platform for regional cooperation.”

There have also been some recent positive developments in terms of the reconstruction of Iraq and certain social and economic reforms in Egypt and Saudi Arabia, Singh said.

“Over time, we expect there will be more reconstruction and more economic reform in the region and that will help the growth in demand especially for the food industry.”

Palm oil share

Out of total imports into the MENA region of about 15M tonnes/year, palm oil’s share is about 5.5M tonnes/year, representing about 40% of total edible oil imports, Singh said.

26 OFI – JULY/AUGUST 2022

Africa GL draft.indd 3

“With the versatility of palm oil, this particular demand and volume will continue increasing.”

Malaysia has a reasonable market share in the region of 2.134M tonnes/year or 39%, with the Middle East consuming 1.696M tonnes/year and North Africa consuming 0.4M tonnes/year.

The leading importers of palm oil in the region from Malaysia are Iran and the UAE, and also Turkey, which borders the MENA region, according to Singh, where the products are mainly used in the frying, margarine and vanaspati sectors with “huge growth” also seen in use by bakery and confectionery producers.

The signing of a free trade agreement (FTA) between Malaysia and Turkey in 2015 contributed to the increase in Malaysian palm oil’s share of the Turkish market, he said.

Malaysian palm oil dominates the Iran market, with a 92% share, he said, while its share of the market in Saudi Arabia is 26%.

“Ethiopia was one of the major markets for Malaysia, but due to financial reasons, that market has taken a bit of a dip.

However, we are sure this market will come back as one of the major buyers going forward,” he said.

Effects of COVID

There has been a change in the type of demand for oils and fats over the last two years due to the effects of the COVID-19 pandemic, Singh said.

“What we have seen is a paradigm shift both in terms of prices but also in the way business is operating.”

Container freight rates have gone up by six, eight and even ten-fold, he said.

“As operators are very price sensitive, these big increases in freight rates were not really helpful in reaching out to the market,” he added.

“While container shipments have decreased, bulk shipments to these countries increased.”

As an example, Singh cited Afghanistan, which was importing huge volumes from Malaysia prior to the pandemic but, since then, a lot of shipments had started to move from the UAE or Pakistan where freight rates were much cheaper.

Freight rates from Malaysia to Karachi, for example, rose from around US$200US$250/tonne to as high as US$2,500US$3,000/tonne, he said.

Due to high freight rates, there had been increased refining operations and packaging facilities in the region.

“This is only happening because the bulk freight rates were cheaper. These refineries are able to reach out to the

region with shorter haul freight or even land transport at much cheaper rates and also on a faster shipment basis.

“There was an economy of scale for these refiners to run the plants at a higher capacity. And these refiners are able to reach out to the markets in the region.”

Possible solutions

To solve some of the challenges in the area, Singh said the focus should be on developing a seamless supply chain with buyers in the region.

“More free trade agreements also need to be made which will help food security in the region,” he said.

There was also the potential for barter agreements in the region, he added, with opportunties with countries who traded in coffee or mineral oil, for example.

As described in the World Bank Group’s approach to regional integration in Africa, Singh said it was also critical to strengthen and enable the strong historical and socio-economic linkages that exist between countries of the Maghreb – the North African countries of Algeria, Libya, Mauritiana, Morocco and Tunisia – and those of Sub-Saharan Africa.

Singh highlighted the role that the Malaysian Palm Oil Board (MPOB) and Malaysian Palm Oil Council (MPOC) had played in developing measures to develop palm oil trade in the region, with their efforts helping Malaysian palm oil to reach out to different corners of the world.

Looking ahead

On a positive note, Singh said there had been a recent trend in terms of an increase in sustainable oil sales to the region.

"The region's import of Roundtable on Sustainable Palm Oil (RSPO)-palm oil, palm olein and palm stearin is on the rise as more and more multinationals, who have good footprints in the area, expand their base in the MENA region.

“This volume is expected to increase much faster compared to any other region.”

Overall, the prospects for the oils and fats sector in the region are promising, he says.

“As we know, the MENA region and particularly the GCC countries are wellconnected in terms of oil and gas and they have a major position in the world as an exporter for these mineral oils, so the structure is there, only a bit of strategy needs to be developed so that the edible oil industry also flourishes and is co-ordinated in a better way in the region”. ● Gill Langham is the assistant editor of OFI

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25/07/2022 14:13:43

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27

TRANSPORT & STORAGE

UCO grows to supply HVO market

Growing environmental concerns and rising awareness of sustainable energy resources are driving considerable growth in the global used cooking oil (UCO) market. Production is also being boosted by recent technological advancements in UCO processing, expanding supplies from the food service industry, and government to promote UCO for industrial use.

The global UCO market is expected to grow from US$6bn in 2021 to US$10.1bn in 2028, equating to a CAGR (compound annual growth rate) of 7.8% over the period, according to a January 2022 report by market research firm Fortune Business Insights. And, although 2020 saw a 12.5% decline in production due to the COVID-19 pandemic, the market began to bounce back in 2021 once consumers resumed eating out and restrictions hampering the collection, processing and transport of UCO were lifted.

Industry experts agree that the UCO market growth is being driven by the uptick in its use as biofuel, the main application in recent years.

In Europe and the USA, UCO has been used for biodiesel production in the past 15 years to support the decarbonisation of road transport, notes Leonidas Kanonis, director of communication and analysis at the European Waste-based & Advanced 28 OFI – JULY/AUGUST 2022

UCO 2pg.indd 2

Biofuels Association (EWABA).

Since 2011, use of UCO for biodiesel (including renewable diesel) has tripled and now represents almost 20% of total biofuel production in Europe, adds Emanuela Peduzzi, spokesperson for the European Federation for Transport and Environment, commonly known as Transport & Environment.

UCO is also an important feedstock for renewable fuels for maritime shipping and aviation, while also being used to make animal feed in China, India and the USA. Its use in the oleochemicals industry for producing soap and other products, however, is negligible.

The key to the growth of UCO for biofuels is favourable government policy and legislation, says Tenny Kristiana, associate researcher at the fuels programme in the International Council on Clean Transportation (ICCT).

As a “low-carbon feedstock for biofuel that is both technologically mature and commercially available,” UCO “is ideal for meeting biofuel mandates in Europe and the United States,” notes a February 2022 report by the ICCT. The European Union’s (EU) renewable energy directive (RED II), for example, incentivises the use of UCO biofuels to meet renewable energy targets in transport, while UCO is “an attractive

Photo: Neste

The used cooking oil (UCO) market is expanding to meet increased feedstock demand from the renewable diesel sector. Correct UCO storage and transport are key but there is potential for fraud related to its collection Kathryn Wortley

option” to help meet California’s Low Carbon Fuel Standard in the USA, the paper continues.

According to Transport & Environment, UCO accounted for about 20% or 3M tonnes of the feedstock used in biodiesel production in Europe in 2020. However, the region does not produce enough UCO for its biodiesel consumption.

Data from the ICCT shows that Asian UCO imports are crucial, with China, India, Indonesia, Japan, Malaysia and South Korea being the main Asian producers exporting to Europe as well as the USA. There is also intra-Asia trade among these six Asian producers, particularly in exports from China and Indonesia to Malaysia and South Korea and from Japan to South Korea.

“The EU is the main producer [of UCO] and the largest buyer of UCO globally,” says Kanonis, pointing out that in 2020, Europe imported around 1.7M tonnes of UCO, mainly from Asia.

Correct storage and transport

With UCO an important global commodity, its correct storage and transport is key, both for the food service industry and households; and relating to country-wide systems or international trade.

According to the European Biomass u Industry Association, there are three

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u

TRANSPORT & STORAGE u main options for industry and household storage and transport of UCO – door-todoor collection by a collection company, centralised collection by producers, or a combination of UCO collection and cooking oil supply by a collection firm.

In the case of businesses, if the UCO is to be transported from the fryer to a collection tank, specialised industry equipment should be used, says Illinoisbased UCO recycling company Mahoney Environmental in a note. Once the oil has cooled to 150C, the extender of the company’s shuttle device can be attached onto the spigot of the fryer, allowing the oil to drain into the extender.

For this method, Oregon-based largescale biodiesel producer SeQuential warns of the risk of theft of UCO (either by siphoning from the container or theft of the container) for selling on the black market. When keeping UCO outside, the company says that lights, security cameras or locks are recommended.

Other storage options are the portable filter machine, which has a hose that can be connected to the fryer to receive the UCO and then to the tank to pump out the UCO, and the direct connection system, a closed loop set-up where all the UCO is transported via piping, according to Mahoney Environmental.

For households and municipal facilities, the ‘Not a Drop!’ system run by Hungarybased Biotrans Ltd is an example of good practice according to EU-funded cooperation programme Interreg Europe.

Launched in 2020, the scheme allows anyone in a community to deposit their UCO into a 240-litre container that includes a drip tray underneath to avoid contaminating the ground underneath.

Once large volumes of UCO are collected, there are no particular technical challenges, says Dr Dave Howells, UK-based director of the Feed Oil Company Ltd, a member of the UKbased Federation of Oils, Seeds and Fats Association (FOSFA) technical committee and former senior partner at UK-based Advanced Liquid Feeds. However, he adds that the industry does have to follow additional environmental controls regarding storage and transport as it is classified under EU Category 1 Animal Fats and related UK regulations.

Howells says that in shipping, there are tighter restrictions on which vessels are prepared to take UCO, adding that edible oil shipments should not go through a tank where the immediate predecessor is UCO. This can raise logistical issues but as large companies tend to arrange storage for the long-term, it is “in practice not a burden in the operation of the industry”.

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UCO for FAME and HVO

Within the biofuel sector, UCO can be used to produce biodiesel such as fatty acid methyl ester (FAME) and used cooking oil methyl ester (UCOME), or hydrotreated vegetable oil (HVO), also known as renewable diesel.

According to Finland-based renewable diesel and sustainable aviation fuel (SAF) producer Neste, HVO not only has better storage properties, but also lower emissions than standard biodiesel.

Sweden-based biofuel company Biofuel Express also recognises the material’s benefits to the market, stating in a note that “HVO can be used immediately without modification of engines or infrastructure. In addition, HVO has better combustion, filterability and cold temperature resistance than other diesel products on the market.”

HVO is appealing due to its ease of use as a drop-in fuel but is more expensive than UCOME, with consumption of both increasing yearly, according to Kanonis.

Howells says major growth in recent years has been with HVO. “There is the older production capacity for manufacture of biodiesel [FAME], which is still being used, but the newer, larger plants have moved towards the Neste-type process of HVO.” Kristiana says she is also seeing many new facilities or converted oil refineries becoming biorefineries to produce renewable diesel and SAF. Retrofitting refineries to become biorefineries which can produce HVO is possible with few modifications, thereby assisting growth in the HVO sector, she says.

In Europe, FAME production is stable, growing from 10,400–13,000M litres/ year from 2012 to 2021, while annual HVO production rose from 960M litres to 4,000M litres over the same period, says Kristiana, noting that HVO growth is only set to increase further.

Indeed a 2021 report by the International Energy Agency (IEA) predicts that demand for HVO is likely to nearly triple from 2020 to 2026 under policies that support greenhouse gas reductions in Europe and the USA. Kristiana stresses that growth in biodiesel usage in Asia and Latin America will also boost demand in these regions.

Potential for fraud

The further expansion of the biofuel market is welcome news to UCO traders but comes alongside increased sustainability standards covering biofuels.

In the EU, biofuels must comply with RED II sustainability criteria.

Under these regulations, auditors work

closely with certification bodies to check if biodiesel facilities, UCO collectors, traders and other supply chain partners are implementing the relevant quality requirements.

And, as with any industry, there is scope for fraud.

Howells notes that “the scope for gross abuse is limited” but Transport & Environment’s Peduzzi says the current certification schemes “can’t fully guarantee the sustainability of the biofuels used in Europe, including UCO”.

Dutch independant research and consultancy CE Delft has identified a few weaknesses in the biofuels certification schemes that may lead to these practices, he says. These include “low transparency along the supply chain, low traceability (down to the point of origin), lack of verification in the voluntary schemes and opportunity for double book-keeping”.

Kristiana of the ICCT goes further, citing concerns about the possibility of fraud: “We are worried that ambition in the recently proposed climate legislation in the EU, including changes to the RED II, will drive UCO fraud,” she says.

“We therefore suggest the EU put a cap on waste oil (UCO) in both the proposed ReFuelEU Aviation and FuelEU Maritime regulations” promoting biofuels in these transport sectors, thereby aligning the rules with the RED II. As for what importers and buyers can do to detect tampered product, she adds: “Let’s say 30% [virgin] vegetable oils are mixed into 70% UCO; it is hard to see the difference or test for it.”

Other issues in the UCO market have included the COVID-19 outbreak and subsequent lockdowns, Kanonis says.

This led to a significant fall in UCO collection globally (particularly in China, a major supplier of UCO to Europe) and pushed prices to all-time highs. Flexitank and ISO tank freight rates from Asia also increased from around US$40-50/tonne to US$200-250/tonne, increasing costs for smaller vessels and encouraging larger players to trade UCO in bulk.

Despite these challenges, experts agree there is immense potential for the UCO market, particularly in densely populated countries with nascent UCO sectors.

Kanonis says China, Indonesia and Malaysia are among the countries where industrial collection still has some way to go.

An increase in dining out globally also bodes well for greater UCO collection and supply to support growing demand, according to the report by Fortune Business Insights.  Kathryn Wortley writes for International News Services Ltd, UK

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Photo: Adobe Stock

HEMP/CBD OIL

Sucessful extraction Solid liquid extraction has been described as the removal of a soluble material from an insoluble permeable substrate with a liquid solvent.

Keeping in mind that water and alcohol are solvents, solvent extraction has been around for thousands of years for tinctures, nutraceuticals, flavours and coffee. As a unit operation, extraction can be broken down into at least four separate steps including: • Diffusion of the solvent into the solid particle • Dissolution of the extract into the solvent within the solid • Diffusion of the dissolved extract from within the solid to the surface • Washing the extract-rich solvent from the surface of the solid particle Solvent extractors must be designed to carry out these steps efficiently, at low cost, while minimising the labour force required to run the plant.

To date, the largest and most industrial application has been the extraction of vegetable oil from oilseeds – such as soyabeans, canola, sunflower and new crops such as pongamia and camelina – most often using hexane as the solvent.

Plant capacities can be as high as 12,000 www.ofimagazine.com

Hemp.CBD processing.indd 2

Many of the technologies and principles of continuous extraction used in the oilseed industry apply to the extraction of cannabidiol oil and production of hemp protein Richard Ozer tonnes/day, with plants managed by a single operator at the control station.

Alternate solvents such as hydrous ethanol allow extraction of sugars and other phytochemicals from de-oiled vegetable seeds resulting in vegetable protein concentrates. These products have been used to retain moisture in meats during cooking and are the backbone of the meat analogue business currently taking the world by storm. From there, applications have grown to include salt from gels, polyester from shirts, purifying polymers, to hemp and hemp protein.

Based on these well-developed extraction technologies, hemp has been successfully extracted with a variety of solvents, according to several considerations including: • Extraction efficiency.

• Final end user perceptions.

• Thermal values of the solvent and its effect on operating costs.

• Components extracted by the solvent

and its effect on overall operating costs, for example, the extraction plant, winterisation and refining.

Continuous extraction

From batch and earlier extraction processes, the solvent extraction industry has grown and matured to involve a continuous process with well-integrated unit operations to facilitate safe, efficient, and easy-to-operate facilities.

Many of the principles of continuous extraction in the oilseed industry apply to the extraction of cannabidiol (CBD) oil and production of hemp protein.

A continuous solvent extraction plant is broken up into several unit operations: • Solvent extraction.

• Desolventisation of the solids – where the oil is the principal product – where the solids are the principal product.

• Distillation to recover solvent from the oil. u • Off gas handling.

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21/07/2022 14:48:51

HEMP/CBD OIL

Large scale percolator extractor

Weirs & hoppers

Active percolation

desolventisation method is whether the spent marc is waste material, as in the case of CBD oil extraction, or is it the primary product, as in the case of hemp oil extraction for protein.

With regards to solvent recovery, the vast majority of the solvent must be recovered for economic and environmental reasons.

Small-scale percolator

Figure 1: Percolator extractor

Immersion extractor

Immersion extractor internals

Figure 2: Immersion extractor Vacuum stripper for protein

Source: Crown Global Companies

Vertical desolventiser with cooler

Figure 3: Desolventisation and stripping u Currently, most large capacity extractors (+1M tonnes/day) are continuous and counter-current for several reasons.

Firstly, continuous extractors are fed and discharged automatically, requiring minimal operator attention, and are therefore safer to operate. A single operator can run plants from 1- 10,000 tonnes/day, significantly reducing labour costs.

Secondly, counter-current extractors extract more product using less solvent per kilo of product fed (the solventto-feed ratio) and are therefore less expensive to operate.

While there are many adaptations, there are primarily two types of extractors in common use today. The first is the percolation extractor (see Figure 1, above) which recirculates solvent over the solids in much the same manner as old-style coffee percolators. The material is moved from feed to discharge over a stationary screen. These extractors can range in capacity from 1-10,000 tonnes/day of input and work well with flakes or, in the case of hemp, a coarsely ground leaf.

The second is an immersion extractor (see Figure 2, above) which draws the solids through a bath of solvent that is flowing counter-current to the flow of 32 OFI – JULY/AUGUST 2022

Hemp.CBD processing.indd 3

solids. The solids generally stay totally immersed in the bath until just before final drainage and solids discharge. Immersion extractors are able to work with finer solids that sink in the solvent or solids that percolate too well and are tough to keep wet. An example of tough products to keep wet would be hemp that has been pelletised for shipment and then ground to expose the surface area for extraction.

Immersion extractor capacity is limited to 50-60 tonnes/day of input.

In any continuous extractor, there are two inputs which enter the extractor at opposite ends. The first is the solids feed and the other is the fresh solvent at the other end of the extractor, which travel in opposite directions.

There are two primary outputs from the extractor: • Spent marc which is the combination of extracted solids with solvent amd water.

• Full miscella which is the combination of extract with solvent.

Desolventisation of solids

Desolventisation of solids is basically the recovery of the solvent from the spent marc. The primary question that must be answered before selecting a

Desolventising low-value solids In CBD oil extraction, where the solids can be desolventised without concern for product quality, a vertical desolventiser called a DT (desolventiser toaster) can be used with great effect (see Figure 3, left).

The vertical desolventiser is made up of a series of steam-heated trays arranged vertically in a cylindrical vapour-tight housing. Material enters on the top tray and is distributed by sweep arms mounted on a centre shaft. Gates and sails maintain levels on each tray to make sure that all solids spend enough time on heat transfer surfaces to be fully desolventised.

Steam is often employed as a stripping agent on the bottom tray which, along with +1000C discharge temperatures, achieve parts per million (ppm) solvent levels in the desolventised or spent material. The desolventised spent solids are generally a waste material where recovery of solvent is the primary concern and final product quality is not as important.

Desolventising high-value solids Desolventising hemp heart protein or proteins in general is another matter entirely, where product quality is a direct function of the heat input during desolventisation. In this case, the product must be gently desolventised while maintaining product quality and minimising solvent loss.

Desolventisation of solids containing valuable proteins needs to take place below the denaturisation temperature.

With soyabeans, this is close to 800C but the temperature is specific to each protein. Often, this requires two-step desolventisation where the majority of desolventisation is carried out in the primary desolventiser and final stripping occurs under vacuum to maintain product quality (see Figure 3, above). A stripping agent such as steam or nitrogen is employed in the stripper to bring the solvent down to ppm levels.

Since product temperature is directly related to the boiling point of the solvent, solvent selection comes into play. For instance, the boiling point of hexane is ~690C, which is below the denaturisation temperature of the protein. Therefore,

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a good portion of desolventisation can take place at atmospheric pressure in the primary desolventiser. As product temperatures rise during final desolventisation or stripping, it becomes necessary to operate the stripper under vacuum to lower the boiling point to acceptable levels.

In contrast, the boiling point of ethanol is ~790C, which is too close to protein denaturisation temperatures to allow the primary desolventiser to operate at atmospheric pressure. With ethanol, it is necessary to operate both the primary desolventiser and the stripper under vacuum.

Whether desolventising a primary product or waste material, operators cannot afford to lose solvent for economic and environmental considerations.

Accordingly, a well-designed desolventisation facility will include condensers and other equipment required to recover the evaporated solvent vapours.

Distillation

Distillation is the process of recovering the solvent from the extract by continuous distillation. At the highest level, the design of the system is a function of the solvent used.

Hexane is a non-polar solvent that is immiscible with water so that an essentially water-free solvent can be recovered in a solvent water separator, commonly called the work tank.

Solvent from the work tank can be re-used in the solvent plant with no additional treatment. Wastewater from the work tank contains a minimal amount of solvent that is easily stripped before being sent to the sewer.

In contrast, ethanol is a polar solvent infinitely miscible with water that removes the water from the solids along with the extracted components. This water is retained by the ethanol after distillation and must be removed from the ethanol before it can be recycled back to the plant and re-used for extraction. As ethanol is azeotropic with water (a mixture of two liquids with a constant boiling point and composition throughout distillation), rectification or removal of this water is an expensive process.

The next concerns are the components being extracted with each solvent and their effect on product quality and overall operating costs.

With CBD oil extraction, components extracted can include the CBD oils themselves along with terpenes, chlorophyll and waxes. Given the volatility of terpenes, it is not easy to get a clean split between the extract and vapours. www.ofimagazine.com

Hemp.CBD processing.indd 4

Source: Crown Global Companies

HEMP/CBD OIL

Figure 4: Typical distillation system in oilseed industry Hexane has been proven to carry less wax than ethanol, reducing if not eliminating the need for winterisation or the cleaning of miscella exiting the extractor prior to distillation.

Hemp oil during hemp extraction focused on protein production separates more easily and follows a distillation strategy more akin to traditional oil extraction lines.

For CBD oils, there are several types of evaporation strategies that can be employed including multi-stage rising film evaporators, which is the traditional approach in oilseed extraction of soyabean, canola and sunflowerseed.

This staged approach facilitates efficient energy usage, taking advantage of waste heat generated in various parts of the process.

A typical distillation system in the oilseed industry is shown in Figure 4 (above). The system includes the first stage evaporator, which accomplishes the majority of the evaporation using waste heat, followed by a steam-heated second stage evaporator to further concentrate the oil.

Final recovery of the solvent from the oil is often called stripping, which can be accomplished in a thin film evaporator (TFE) or in a more traditional stripping column. With the elevated temperatures in the stripping step of the process, decarboxylation might also take place.

Off gas handling

The solids entering the system contain a great deal of air (non-condensables) that becomes saturated with solvent as it passes through the extraction plant.

Solvent contained in the air and other non-condensable vapours (CO2 from decarboxylation) needs to be recovered

before the vapours are released to the atmosphere.

Condensing a bulk of condensable vapours (the solvent) contained in a vent stream utilising cooling water or other colder fluids via a vent condenser and a chilled vent condenser is a common approach to all solvents.

Finally, the scrubbing process is dependant on the solvent being used. For ethanol, a water scrubber is used with great effect.

A Mineral Oil System (MOS) is used when working with hexane or heptane and is considered the best available control technology (BACT).

The MOS recirculates mineral oil between the absorber and stripper on a continuous basis. The absorber scrubs the solvent from the non-condensables before the air is discharged to the atmosphere.

The stripper removes the solvent from the mineral oil before returning the mineral oil to the absorber and solvent back to the plant.

Overall system design and testing

Any solvent plant includes a number of unit operations that need to be integrated into a coordinated package that incorporates savings from heat recovery and minimises manpower to run the plant.

Ideally the controls package should allow a single operator to manage the plant.

The hemp marketplace is a constantly changing environment where new products are constantly being brought to market. It is almost always worthwhile to test these new approaches in a pilot plant before installing in the field. ● Richard Ozer, is global technical sales manager, speciality extraction and drying, at Crown Global Companies OFI – JULY/AUGUST 2022

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21/07/2022 14:48:55

HEMP/CBD OIL A lack of federal regulation governing cannabis, hemp and CBD oil in the USA is impeding growth of the industry but across the Atlantic, EU legislation due to come into effect in January 2023 is expected to smooth trade and ease operations Jens Kastner Demand for cannabidiol (CBD) oil has steadily been on the rise due to its growing usage in food, pharmaceuticals, supplements, nutraceuticals, lotions, shampoos, soaps, bath gels, massage oils and cosmetics.

With the growing liberalisation of cannabis products containing CBD compounds (and, to a lesser extent, the psychoactive tetrahydrocannabinol [THC] compound), sales are growing in the major market of the USA. As of May 2022, 19 US states allow recreational cannabis use and 38 permit medical sales, with US legal cannabis sales growing by 40% year-on-year in 2021 to US$25bn, according to research from New York-based BofA Securities Inc. Of this total, approximately 50% of sales related to oils, says Oregon-based hemp consultancy Whitney Economics.

Another statistical snapshot by UKbased market researcher Euromonitor International shows that North American (USA and Canada) retail sales of tinctures and sprays for prescription medical uses and non-prescription medical uses that are extracts of cannabinoids dissolved in oils (as well as alcohol, vinegar and/or glycerine) totalled €1.7bn in 2021.

With cannabis completely legalised across Canada, boosting sales in North America, Euromonitor predicts CBD

Ambiguous laws impede growth solution sales of €1.9bn this year.

While Europe has yet to follow the liberalised Canadian model on THC (although CBD oils are widely available), sales are forecast to grow to €1.8bn this year, against €1.2bn in 2021.

“In Germany and Switzerland, tinctures and sprays as well as topicals are the most

Cannabis, hemp and CBD: the differences Cannabis is a family of plants with two primary classifications – Indica and Sativa.

While marijuana can be considered a member of either classification, hemp is a member of the Sativa family. Cannabis contains a variety of different compounds called cannabinoids, the two most common ones being cannabidiol (CBD) and tetrahydrocannabinol (THC). THC induces psychoactive effects (a ‘high’) while CBD does not contain any psychoactive properties. Hemp contains a very low concentration of THC (0.3% or less) while marijuana has 15%-40% THC. As a result, hemp is mainly grown for industrial purposes while marijuana is grown for recreational and medicinal purposes. However, with the fast-growing popularity of CBD, hemp is also used to produce a wide variety of THC-free CBD products.

34 OFI – JULY/AUGUST 2022

Hemp.indd 2

dynamic categories in CBD whereas the Swiss market has reached somewhat more maturity compared to the German market, where CBD products are still a relatively new lifestyle product,” Euromonitor told Oils & Fats International (OFI).

In truth, legalisation for various kinds of cannabis products is a developing process.

Lack of federal regulation in USA

In the USA, hempseed oil has been legalised federally since 2018, when hemp made from the Cannabis sativa L variety, including products with CBD, was legalised under the 2018 Farm Bill, where it has no more than 0.3% THC content.

However, the regulatory picture for other cannabis varieties is less clear because of the lack of federal regulation.

Cannabis industry insiders told OFI that CBD oil market dynamics will be much stronger once regulatory ambiguity is removed, as large players are still shying

www.ofimagazine.com

25/07/2022 14:22:06

HEMP/CBD OIL away from getting involved in grey zone operations.

This includes hemp oil given that in the USA, the federal level-regulation of cannabis is the responsibility of the United States Department of Agriculture (USDA) while the plant is still in the ground, whereas the United States Food & Drug Administration (FDA) regulates once the plant has been harvested.

And while the USDA approved regulations to produce hemp under the 2018 Farm Bill in March 2021, the FDA has yet to do so in terms of rules for processing, retail and consumer safety.

The California-based Hemp Industries Association (HIA) hopes this could happen later this year.

With cannabis from other varieties still a controlled substance under federal law, receiving payments for products across state lines can be legally problematic.

And even though CBD oil from hemp is federally legalised, the lack of FDA regulation means there is no way of shipping it legally from one US state to the other, with the perceived legal risks discouraging investors and university researchers,” says Jody McGinness, executive director of the HIA. Speaking to OFI, he adds that “we are waiting for the FDA to provide clarity for manufacturers and researchers and safety for the consumers, as the latter still face a lot of unregulated products on the shelves”.

McGinness says the persistent regulatory ambiguity has promoted market instability, as the hemp-CBD legalisation in 2018 attracted many farmers and processors into the business at a premature stage when there was no developed market for their products. This led to an oversupply of hemp in 2019-21, with extractors closing their processing plants and many forced to sell their equipment at bargain prices. As a result, a consolidation of the CBD oil extraction sector occurred, accelerated by US states still requiring vastly different licence fees in the absence of a complete federal regulatory approach.

“In Louisiana, where a licence costs around US$150, extractors can use ethanol for inexpensive small-batch CBD oil extraction whereas, in California, the fees are so high that only large-scale CO2 extraction is feasible,” McGinness says, referring to the two main CBD oil extraction systems – using ethanol or CO2.

Changes in EU legislation

In Europe, cannabis liberalisation is also proceeding, albeit at a slower pace than in North America, notes the European www.ofimagazine.com

Hemp.indd 3

Industrial Hemp Association (EIHA).

It has welcomed the latest update to the European Union (EU) Common Agricultural Policy (CAP) – approved by the European Parliament in December 2021). This authorises maximum THC levels for hemp (the Cannabis sativa L variety), rising from 0.2 % to 0.3 %.

Moreover, once the new CAP enters into force on 1 January 2023, EU member states can also authorise hemp with higher THC levels for their jurisdictions, (for example 0.6% in Italy; and 1% in the Czech Republic).

Another looming regulatory change is an amendment of the European Commission Regulation No. 1881/2006 (3), which mandates maximum levels of THC in final cannabis hemp variety products derived from seeds, including oils, of 3mg/kg. This change also comes into effect on 1 January 2023.

“The new regulation will smooth trade – there will be no more border issues within the EU, and operators will be relaxed, as it will be easier to avoid a quick and costly product recall under the EU’s RASFF [Rapid Alert System for Food and Feed],” says Lorenza Romanese, the EIHA managing director.

“Nevertheless, as hemp is grown in open fields and therefore subject to weather, birds and insects, THC contamination will still be something processors will have to tackle.”

Romanese adds that the higher THC threshold will allow EU countries to maximise the benefits of different hemp plant varieties under varying climatic conditions across Europe.

This is a promising aspect for food production, says Bruno Xavier, associate director of the Cornell Food Venture Center, in New York state, USA, whose unit is part of the Ivy League Cornell University.

“There seems to be a lot of opportunity to improve the plant – via traditional breeding or even using genetic modification – aiming, for example, to further reduce irrigation needs and pesticide use, or make the materials easier to process on a commercial scale,” Xavier says.

Researchers at the neighbouring Cornell AgriTech unit support the New York state hemp industry by researching the most viable commercially available varieties, fostering the development of new cultivars and navigating barriers related to seed problems, diseases and insect pests.

“Nevertheless, it all depends very much on political decisions because you will need processing facilities that are as large as those used for soyabeans or corn to

make them financially viable, and we are certainly not even close to that point, given the regulatory ambiguity,” adds Xavier.

Beau Whitney, founder of Whitney Economics and chief economist for the National Industrial Hemp Council of America (NIHC) and the National Cannabis Industry Association (NCIA), also stresses that market success will be underpinned by decisions by politicians and regulators. The latter, he says, are currently overwhelmed with the hemp industry’s steady stream of confusing new products. Whitney stresses that hemp is currently grown on some 40,000ha of land worldwide, compared to corn’s 34M ha in the USA alone.

But he predicts that the sector is undoubtably very promising for oil processors: “We see major growth potential not only for food or pharmaceutical uses, but also industrial lubricants, as hemp oils do not contain hydrocarbons and do not involve environmentally-precarious mining.”  Jens Kastner is a freelance journalist

Ethanol and CO2 extraction

Solvent extraction is used to extract vegetable oil from oilseeds (see p31). In the case of CBD extraction, a solvent (typically ethanol) is mixed with the hemp plant matter. This strips the cannabinoid compounds into the liquid, which is then evaporated to leave behind a concentrated oily residue containing hemp compounds.

Supercritical CO2 extraction runs pressurised carbon dioxide across the hemp plant to strip away the desired phytochemicals. The liquid form of CO2 is heated and pressurised until it becomes ‘supercritical’, meaning the CO2 has properties of both gas and liquid: it is able to fill a container like a gas, while also having the density of a liquid.

In this supercritical state, CO2 acts as a solvent when applied to the hemp plant without denaturing any of the compounds.

Once the supercritical CO2 has been passed through the hemp extract, the resultant solution is passed into a separator to be separated. The desired hemp compounds are removed and taken to the next step in the process.

Extracted from Vitality CBD website OFI – JULY/AUGUST 2022

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25/07/2022 14:22:06

STATISTICS STATISTICAL NEWS

Rapeseed oil price, fob Rotterdam (Mintec Category Index) – €/tonne

Mintec

Rapeseed and rapeseed oil

The Euronext rapeseed price decreased by 10.7% monthon-month (m-o-m) to €679/tonne on 12 July. The global rapeseed crop for the 2022/23 marketing year is forecast to increase by 11.3% year-on-year (y-o-y) to 80M tonnes, mainly due to a recovery in production from Canada following adverse weather conditions in 2021/22, which had kept the global rapeseed market tight.

In addition, the average Mintec Benchmark Price (MBP) for EU rapeseed oil decreased by 6.2% m-o-m but remained up by 51.9% y-o-y to €1,670/MT in June. The decline was attributable to demand rationing following improvements in palm oil supply after top global palm oil exporter Indonesia revoked its palm oil export ban on 23 May. Additionally, expectations of higher domestic and global output for the upcoming 2022/23 marketing year further supported prices. The ongoing Russia-Ukraine war has kept EU rapeseed prices elevated, with price volatility expected to continue due to tight supply conditions of alternative vegetable oils, particularly, sunflower oil. High input costs, logistical disruptions and inflationary pressure could also pose an upside risk to prices.

Global soyabean oil supply and demand – million tonnes

Mintec

BO40 - Castor oil IN – €/tonne

Mintec

Soyabean and soyabean oil

Prices of selected oils (US$/tonne) Jan 22

Feb 22

Mar 22

Apr 22

Soyabean

1,421.8

1,537.3

1,922.7

Crude palm

1,320.1

1,497.0

1,669.6

Palm olein

1,223.3

1,422.3

Coconut

1,928.3

2,145.3

Rapeseed

1,773.7

Sunflower Palm kernel Average Index

May 22

June 22

1,868.3

1,859.2

1,695.9

1,578.6

1,623.8

1,440.5

1,605.4

1,445.6

1,515.3

1,406.0

2,180.4

2,000.8

1,698.3

1,645.5

1,666.0

2,057.6

2,120.9

1,909.0

1,746.8

1,390.8

1,517.0

2,351.0

2,136.0

2,096.8

1,774.9

2,017.5

2,262.5

2,320.0

1,977.3

1,724.8

1,474.1

1,582.0

1,721.0

2,015.0

1,875.0

1,755.0

1,598.0

375.0

408.0

478.0

444.0

421.0

379.0

36 OFI – JULY/AUGUST 2022

Stats.indd 1

The CBOT soyabean price declined by 13% m-o-m to US$496/tonne on 13 July due to weakened demand and expectations of a record crop (122M tonnes) in the USA for the October 2022-September 2023 marketing year.

Weather conditions in the USA from now until August will continue to drive sentiment in the soyabean market.

Furthermore, global soyabean output is forecast to increase in the 2022/23 marketing year (up by 11% y-o-y to 391M tonnes) on improved production in Brazil and Argentina, following a decline in output in 2021/22 on the back of adverse weather conditions.

The MBP for EU soyabean oil fell by 15.1% m-o-m to €1,410/tonne on 15 July, a fall from the record high of €1,950/MT reached on 29 April. Improvements in global supply conditions of alternative vegetable oils (sunflower oil and palm oil), contributed to the decline from the unprecedented levels reached in March and April. Additionally, slower import demand from China due to COVID-19 lockdowns further supported the price decline.

Castor seed and castor seed oil

The Indian castor seed price declined by 3.3% m-o-m to INR72,650 (US$909)/tonne on 15 July. However, the price remained up by 34.5% y-o-y. The Indian castor oil price was down by 2.8% m-o-m due to reduced global export demand, particularly from China. However, the price remained up by 33% y-o-y at INR148,300 (US$1,855)/ tonne on 14 July.

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

www.ofimagazine.com

25/07/2022 09:47:51

Techn ology me ets YOU

International Trade Fair for Technology and Innovations

September 12–16, 2022 Messe München, Hall C3 Munich, Germany

O+F-22-Anzeige-185x265-E.indd 1

20.06.22 11:16