OFI May 2023

OILS

IN THIS ISSUE – MAY 2023

Price Outlook

FEATURES NEWS & EVENTS

Ukraine

26

Many challenges ahead

The palm and vegetable oil sectors are facing multiple challenges including global uncertainty due to the Russia/ Ukraine war, a drastically reduced Argentine soya crop, a new El Niño and climate change

Projects & Engineering

28 Latest news round-up

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

18 Challenges ahead

Ukraine has been moving away from exports of sunflower oil to seed while logistics remain a weak point due to its continuing war with Russia

Margarines & Spreads

Comment

2 New deforestation law

Ukraine/Russia News

Russia

30 Going lecithin-free

Margarine manufacturers have needed an affordable emulsifier alternative due to global supply chains of sunflower oil and lecithin being disrupted by the Russia-Ukraine war

22 Spoils of war

Russia is set to overtake Ukraine as the world’s largest sunflower oil exporter

4 EU states ban Ukraine imports News

6 RSPO temporarily suspends certification of Agropalma

Biofuel News

10 Shell suspends biofuels project in Singapore

Renewable News

12 KLK completes acquisition of Temix Oleo SpA

Transport News

14 Logistic bottlenecks in Brazil hit export prices

Biotech News

16 Bayer sues farmers for seed saving, dicamba spraying

Diary of Events

17 International events listing Statistics

32 World statistical data

Photo: Adobe Stock

Photo: Palsgaard

Photo: Adobe Stock

Photo: Adobe Stock

New deforestation law

MAY

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The EU’s landmark anti-deforestation law was adopted by the European Parliament on 19 April, with European ministers expected to adopt the text in May (see p8).

The new EU Deforestation Regulation (EUDR) will apply to palm oil, soyabeans, cattle, wood, cocoa, coffee and rubber, which have been identified as the main drivers of deforestation due to agricultural expansion.

To sell these commodities and products made from them in the EU, companies will have to prove they do not come from land where forest has been destroyed or degraded after 31 December 2020. They will also have to collect precise geographical information on the land where these commodities have been grown.

Not surprisingly, leading palm oil producers Indonesia and Malaysia – which together account for some 80% of global palm oil supply – have branded the law discriminatory. Meanwhile, organisations such as NGO Solidaridad, the Council of Palm Oil Producing Countries (CPOPC), and Dutch oils and fats association MVO fear the EUDR will exclude smallholders from the EU market as they may have problems proving the legality and geo-location of their land.

“Oil palm smallholders [those with around less than 50ha of oil palms] account for about 41% and 27% of total oil palm planted areas in Indonesia and Malaysia, respectively … and about 35-40% of the global production of palm oil,” the organisations said on 12 April. “They are essentially small-scale farmers growing oil palm as their primary source of income … [and] in line with the United Nations sustainable development goals, the European Commission (EC) and member states should look into how the EUDR can be implemented in a way that improves smallholder inclusivity.”

The new law also risks making voluntary certification schemes, such as the well-known Roundtable on Sustainable Palm Oil (RSPO) irrelevant, according to Wilmar International general manager for sustainability Perpetua George. “If people are being told that [voluntary certification schemes] are not going to help you meet regulatory requirements, then they are going to drop it,” she said in March at the Palm & Lauric Oils Price Outlook Conference in Malaysia.

Once adopted, large and medium-sized companies will have 18 months to comply with the new law, while smaller enterprises will have 24 months. Governments will also need to set out how to enforce the law and any penalties for breaking it. The EC will rank countries as low-, standard- or high-risk for deforestation, with low-risk countries subject to simplified due diligence.

Within two years, the EC will also look at whether to extend the EUDR to additional commodities, other ecosystems such as grasslands, peatlands and wetlands, as well as to European financial institutions which may be funding companies linked to deforestation.

“A 2021 report from Global Witness revealed that between 2016 until 2020, EU-based banks provided €30.6bn worth of deals to 20 agribusinesses accused of deforestation,” according to a Greenpeace briefing on 13 April.

The new EUDR is an important step in addressing deforestation related to key commodities. It may not go far enough for some campaigners, but it is a major first goal post in compelling companies and industries to address the sustainability of their supply chains.

Serena Lim, serenalim@quartzltd.com

EU states ban Ukraine imports

The European Commission (EC) has reached an agreement with five member states which had announced bans on Ukrainian grain imports to protect their farmers from falling prices, AgriCensus reported on 1 May.

“We reached an agreement in principle with five neighbouring member states – Bulgaria, Hungary, Poland, Romania and Slovakia – as well as with Ukraine itself,” European Union (EU) trade commissioner Valdis Dombrovskis told a press conference on 28 April following an informal Ecofin council meeting.

“The EC will propose emergency safeguard measures for the four most sensitive products – wheat, maize, rapeseed and sunflowerseed. We will launch so-called ‘safeguard investigations' on several other products as well.”

Following Russia’s invasion of Ukraine last February, Ukrainian grain exports via its Black Sea

IN BRIEF

BLACK SEA: Inspection of vessels waiting to exit or enter the Ukrainian Black Sea were suspended on 17 and 18 April, AgriCensus reports.

The inspections are part of the Black Sea Grain Initiative, signed in July 2022 and brokered by the United Nations (UN) and Turkey to allow food exports from the Ukrainian ports of Odessa, Chornomorsk and Pivdennyi.

At the time of the 18 April report, around 50 vessels were waiting for inspection.

The delays followed another stoppage on 11 April which the UN said had occurred to give all parties time to agree on operational priorities. Since 10 April, the Russian side of the Joint Coordination Center implementing the initiative had stopped registering vessels submitted by Ukrainian ports to form an inspection plan, AgriCensus wrote.

ports have been restricted and diverted into central Europe via its land borders. The resulting glut and price crash have hit local farmers hard.

Dombrovskis' announcement followed statements by EU agriculture commissioner Janusz Wojciechowski that the union could be close to implementing a temporary, limited ban on agricultural imports from

Ukraine to the five member states, while still allowing transit through these countries, the AgriCensus report said.

Wojciechowski added sunflower oil to the list of products included in the proposed ban, along with the other four, according to the report. These products accounted for about 90% of all imports from Ukraine into the EU.

In addition, Dombrovskis said that the EC would propose a €100M (US$109.32M) support package for affected farmers in the five member states, in return for the states’ withdrawal of their unilateral measures announced in April.

The proposal was subject to approval by other EU member states, the report said.

In a separate agreement, the European Parliament’s International Trade Committee agreed on 27 April to extend the suspension of EU import duties on Ukrainian exports for another year to support the country’s economy, AgriCensus wrote on 1 May. The suspension applies to fruits and vegetables subject to the entry price system, as well as agricultural products and processed agricultural products subject to tariff-rate quotas.

The extension is subject to approval by European Parliament members and the European Council.

Cargill, Louis Dreyfus and Viterra suspend export activities in Russia

Global agribusiness giants Cargill, Louis Dreyfus Company (LDC) and Viterra are suspending their export activities in Russia.

“LDC will cease grain exports from Russia from 1 July as grain export challenges continue to increase in the country and is also assessing options for the transfer to new owners of its existing Russian business and grain assets,” the company said on 3 April.

LDC operates seven inland silos in Russia with a storage capacity of 900,000 tonnes and a grain export terminal on the Don River with access to the Sea of Azov, with an annual capacity of about 1M tonnes and 50,000 tonnes of storage in 10 vertical silos, World Grain wrote on 4 April. It also operated a riverside elevator in Volgograd enabling grain exports along the Volga River and down to the Caspian Sea.

On average, LDC exported 1.5M-3M tonnes/year of grains from Russia, with products sourced from Russia and Ukraine making up 2% of LDC’s group sales last year, World Grain said.

On 30 March, Glencore’s agriculture division Viterra also announced that it would not continue its origination and export programmes

from Russia after 1 July.

“Following continued monitoring of the situation over the past year, Viterra has concluded that its activities in Russia no longer fit the long-term direction of the company,” a spokesperson told AgriCensus. “We are assessing options to transfer our business and assets in Russia to new owners.”

Viterra is the fourth largest Russian grain exporter, with 2.1M tonnes approved for export in the 16 February-30 June period this year, according to the AgriCensus report. The company owns a terminal in Rostov-on-Don and a 50% stake in a terminal in the port of Taman, while another 50% is owned by Demetra Holding, which is 45% owned by Russian state bank VTB.

On 29 March, World Grain reported that Cargill would stop elevating and handling Russian grain for export in July 2023 following the completion of the 2022/23 season. The company did not say if the decision to stop handling Russian grain meant it would sell any of its Russian assets. However, Cargill's shipping unit said it would continue to carry grain from the country’s ports, World Grain added.

Photo: Adobe Stock

The world is hungry for premium plant proteins.

ECUADOR: Leading Ecuadorian palm oil group Grupo Danec has signed a public commitment to zero deforestation and zero child labour, the Roundtable on Sustainable Palm Oil (RSPO) said on 15 February.

Ecuador had lost over 2M ha of tropical forest or 7.8% of its total surface area, in recent years, the RSPO said.

In addition, there were over 270,000 child labourers aged between five and 14 years, 7.1% of Ecuador’s child population, according to the country's Institute of Statistics and Census.

As of last year, 35% of Latin America’s total crude palm oil output had achieved RSPO certification, the report said.

EUROPE: Euronext rapeseed prices dropped below €450/tonne (US$488/ tonne) on 21 March, with May forward order prices down to €441.50/ tonne (US$479/tonne), August down to €444.50/ tonne (US$482/tonne) and November down to €449.25/tonne (US$487/ tonne), AgriCensus reported. It had been two years since Euronext rapeseed’s frontmonth contracts had traded at such a low level, AgriCensus wrote on 21 March.

Ample stocks, high imports, and a good crop expected in Australia had put pressure on rapeseed and rapeseed oil prices in Europe in recent months.

Prices had fallen by almost 60% from the highs in mid2022 when the Ukraine war sparked supply concerns.

RSPO temporarily suspends certification of Agropalma

The Roundtable on Sustainable Palm Oil (RSPO) has suspended its certification of Brazilian palm oil producer Agropalma, Mongabay reported on 29 March.

In place since February, the suspension followed Mongabay’s publication in December of its investigation into land-grabbing in the Brazilian Amazon. Its report claimed that more than half of the 107,000ha of land registered by Agropalma in northern Pará state derived from fraudulent land titles and a fake land registration bureau.

Part of the area overlaps ancestral land claimed by indigenous peoples and Quilombolas – descendants of Afro-Brazilian runaway slaves –including two cemeteries, which is at the centre of a seven-year legal battle led by state prosecutors and public defenders, the report said.

Following the report’s publication, RSPO representatives contacted leaders in the Quilombolas community and conducted audits in all affected areas. Latin American certifier IBD Certifications subseqently suspended Agropal-

ma’s RSPO certification, Mongabay wrote.

“Agropalma will be required to address the non-conformities and provide proposed corrective actions to which the IBD will further verify implementation of agreed actions,” RSPO wrote, without disclosing the inconsistencies which led to the suspension. “To lift the suspension, the non-conformities must be corrected and closed.”

In an e-mailed statement, Agropalma said IBD had “temporarily suspended” the RSPO certification of its plantations but it had appealed as it disagreed with the points flagged in the certifier’s report.

Agropalma – which claims to be the largest sustainable palm oil producer of the Americas – said the RSPO certificates for its refineries in Pará’s capital, Belém, and in Limeira in São Paulo state “remain valid and there is no impact on the delivery of orders”, adding that “since our first certification in 2011, we have demonstrated total commitment and solid evidence of compliance with the RSPO principles and criteria”.

Kellogg's to split into two businesses

other well-known food brands – was set for later this year.

The snacking and plantbased spin-off would be called Kellanova, adopting the Latin word “nova”, meaning new, while the North American cereal business would be known as WK Kellogg Co, named after the company’s original founder, Food Dive wrote.

However, both companies would still display the Kellogg’s name, due to consumer familiarity with the brand.

US food giant the Kellogg Company has announced plans to split its activities into two distinct businesses for snacking and cereal, each to

be given a new name, Food Dive reported on 15 March.

The re-organisation of the company – the maker of Kellogg’s cornflakes, Pringles and

The Michigan-based food manufacturer has increasingly seen value in its snacking business, which makes up around 80% of its total sales, the report said.

Argus extends platform to include UCO, UCO methyl ester

Global energy and commodity price reporting agency Argus has extended its real-time electronic price discovery platform to include used cooking oil (UCO) and used cooking oil methyl ester (UCOME) prices in Asia-Pacific.

Launched on 14 March, multiple bids

and offers were posted with trade initiated between Petrochina International (Hainan) and Guangzhou Leo-King Environmental Tech for UCOME exported from China, Argus Media said on 22 March.

"The Asia-Pacific region is a huge source of growth of biofuel production, consump-

tion and trading,” Argus Media chairman and chief executive Adrian Binks said.

The region was a major supplier of UCO, with China the largest global producer.

The Argus platform offered the real-time Asia-Pacific UCO and UCOME daily prices between 5-5.30pm Singapore time.

Argentina confirms agri dollar scheme

Argentina has confirmed the continuation of its preferential exchange rate policy for agricultural products including soyabean products and sunflowerseeds, AgriCensus reported on 10 April.

A government decree on 10 April confirmed the preferential exchange rate –known as the “agri or soya dollar” – at 300 pesos/US$ for soyabeans, soyabean meal, and soyabean oil.

The decree includes over 50 products in the regional products list that are also able to be traded within the scheme. Although

Bunge to buy port refinery from Fuji Oil

Global agribusiness giant Bunge –through its Bunge Loders Croklaan joint venture with Malaysia's IOI Corporation – has agreed to acquire a port-based refinery from Fuji Oil New Orleans in Louisiana, USA.

Located at International-Matex Tank Terminals (IMTT)’s Avondale Terminal, the newly constructured refinery complex had multi-oil refining capabilities and would enable Bunge to expand its customer base, the company said on 10 April.

Following completion of the agreement, which was subject to customary closing conditions, Bunge said it expected to serve customers with the acquired capacity starting in the second quarter of this year.

“This acquisition delivers on our long-term strategy to expand our value-added oils business by accelerating reach across North America, “ Aaron Buettner, Bunge’s president, food solutions, said.

"The facility will connect with our existing footprint and enable Bunge to better serve our customers."

Bunge has an 80-year partnership storing and shipping vegetable oils in the US Gulf with bulk liquid products handling and storage company IMTT and said it had plans to significantly expand the facility’s current capacity.

cereals were included in the list, wheat and corn were not, market participants were quoted as saying. However, barley, sorghum and sunflowerseeds were included.

The decree follows last year’s introduction of two soya dollar schemes in a bid to encourage farmers to sell their crops and increase revenues for the state amid a shortage of US dollars, AgriCensus wrote.

The scheme would run until 31 May for soyabeans and by-products, and until 31 August for regional products.

Soyabean exports from the new scheme

would generate US$5bn in revenue, the country’s agriculture secretary, Juan José Bahillo, was quoted as saying. Revenue from regional products was expected to reach US$4bn.

Only producers who had exported products in the past 18 months would be able to use the differential exchange rate, AgriCensus wrote.

Argentina is the world's top exporter of soyabean meal and oil but the worst drought in more than 60 years has taken a heavy toll on its farmers (see p8).

INDIA: A huge increase in exports of rapeseed and soyabean meal helped India record a 76.78% growth in total oilseed meal exports in the first 11 months of the 2022/23 marketing season, the Hindu Business Line reported on 17 March.

India exported a total of 3.7M tonnes of oilseed meals in the April-February period of the current marketing year compared to 2.1M tonnes in the same period the previous year, according to data from the Solvent Extractors’ Association (SEA) of India.

SEA executive director BV Mehta said falling soyabean prices had led to increased crushing and improved price parity, which encouraged soyabean meal exports.

India exported 787,000 tonnes of soya meal compared to 348,000 tonnes in the same period the previous year, a 125.82% rise, the report said.

Southeast Asian countries were the major consumers of Indian soyabean meal, Mehta said, with some European countries and the USA opting for Indian soyabean meal due to its non-genetically modified (GM) nature. The depreciation of the rupee was also a factor in increased overall exports, he said.

India exported 2M tonnes of rapeseed meal compared to 772,00 tonnes the previous year, recording a growth of 165.58%, Mehta added.

Brazil could lead exports amid Argentine soya loss

With Argentina expected to export its lowest volume of soyabean meal this year since 2003, Brazil could become the leading global exporter in the 2022/23 marketing year, according to data from the Rosario Grains Exchange (BCR) reported by AgriCensus on 4 April.

Argentina had been the world’s leading soyabean meal exporter since 1998 with the commodity being the country’s main export product.

However, the BCR had forecast soyabean meal production in Argentina at 20.9M tonnes in the current marketing year and meal exports at 20M tonnes due to the country's worse drought in 60 years, AgriCensus wrote.

Meanwhile, the US Department of Agriculture (USDA) has projected Brazil’s soyabean meal production at 40.8M tonnes and its exports at

21.1M tonnes in 2022/23.

If the BCR’s projections are realised, it would put Brazil ahead of Argentina in terms of soyabean meal exports, according to the report.

The USDA lowered its soyabean production estimates for Argentina in its 14 April forecast to 23.9M tonnes – its lowest level in 24 years.

Meanwhile, Brazil was expected to harvest its biggest soyabean crop on record this season, with the USDA estimating production at 153M tonnes and Brazilian food agency Conab putting the figure at 151.4M tonnes.

● Argentine biodiesel exports to Europe are set to fall 50% this year due to the country's severe drought, El Destape wrote on 21 March. The loss equated to US$900M in value terms, against US$1.8bn or 1.2M tonnes last year.

Canada bans lambda-cyhalothrin insecticide

products and/or with active ingredients registered for use in Canada, the report said.

The ban could affect planting decisions in the 2023/24 marketing year, the report said.

It would cover all registered commodities from the oilseeds crop group, except for flax seed, mustard seed (oilseed type), and rapeseed (including canola) and soyabeans.

Canada’s decision to ban the domestic use of lambda-cyhalothrin insecticide on all crops and commodities for animal feed from April could affect dynamics in the feed sector, according to a 27 March US Department of Agriculture

(USDA) report.

In addition to new labelling requirements, anyone delivering foreign or domestic grain to a grain handling facility in Canada would have to declare that they had only been treated with crop protection

In addition, maximum residue limits (MRL) will be reduced for nearly 50 animal, horticultural and field crop commodities to the limit of 0.01 parts per million (ppm) due to concerns over risks to human health. These MRLs would be applied domestically and on any imports of these commodities.

European Parliament adopts anti-deforestation legislation

The European Parliament (EP) adopted the EU Deforestation Regulation (EUDR) on 19 April but some oleochemical groups are concerned the law could limit key feedstocks into Europe and exclude palm oil smallholders, Argus Media wrote on 21 April.

Under the new law, companies would need to ensure products sold in the EU had not led to deforestation and forest degradation after 31 December 2020, the EP news service wrote on 19 April.

The EUDR applies to cattle, cocoa, coffee, palm oil, soyabeans and wood, as well as products that contain, have been fed with, or been made from them. Rubber, charcoal, printed paper products and a number of palm oil derivatives were also added to the list during negotiations, the EP report said.

The regulation requires mandatory due diligence from operators and traders selling and importing palm oil and derivatives, including glycerine with over 95% purity,

oleic, stearic and palmitic fatty acids and industrial fatty alcohols, Argus Media said.

The European Oleochemicals and Allied Products Group and the European Committee of Organic Surfactants and their Intermediates said the requirement to supply geo-location co-ordinates created a barrier to include palm oil smallholders.

Once the EUDR text has been formally endorsed, it will be published in the EU Official Journal and take effect 20 days later.

Photo: Adobe Stock

USA: Canadian renewable fuel and feedstocks supplier Targray has opened two new biodiesel terminals in Oregon state.

The new terminals are located in Portland and Eugene and are strategically positioned to supply wholesale fuel distributors, retailers and refineries in the state, which has a mandatory 5% biodiesel blending requirement in place, according to a Targray statement on 9 March.

EU: A provisional agreement on the EU’s revised Renewable Energy Directive (RED III) includes a 5.5% target for advanced biofuels, the European Commission (EC) announced on 30 March.

The proposal sets out a combined 5.5% sub-target for advanced biofuels (generally derived from nonfood based feedstocks) and renewable fuels of non-biological origin (mostly derived from renewable hydrogen and hydrogen-based synthetic fuels) in the share of renewable energy use in the transport sector in 2030.This includes a minimum level of 1% for renewable fuels of non-biological origin.

“The revision of RED is one of the ‘Fit for 55’ proposals presented by the Commission in July 2021 to make the EU’s climate, energy, land use, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels,” the EC said.

“Ramping up our production and use of renewable energy is also a key pillar of the REPowerEU Plan, the EU’s strategy to get rid of Russian fossil fuel imports as soon as possible.”

Overall, the new proposals would raise the EU’s binding renewable target to a minimum of 42.5% for 2030, up from the current 32% target.

Shell suspends biofuels project in Singapore

Global oil giant Shell has announced it will not be going ahead with a biofuel project it had proposed setting up in Singapore, Reuters reported on 30 March.

“We can confirm that we are stopping the exploration of two projects – a biofuels unit and a Group II base oil plant in Singapore,” the company said in an e-mailed statement.

“We will continue supplying base oil and lubricants, as well as biofuels, to our customers in Singapore and the region.”

Shell announced in late 2021 that it was studying a 550,000 tonnes/year project at Singapore’s Bukom Island to produce sustainable aviation fuel (SAF) to supply major Asian hubs

such as Hong Kong International Airport and Singapore’s Changi, the report said.

The company had planned to make a final investment decision in early 2023 for the project, which would have the flexibility to produce renewable diesel and bio-naphtha feedstock for petrochemicals, Reuters wrote.

Unlike Europe and the USA, there was no mandate for airlines to use SAF in Asia, and customers were not willing to accept higher costs for the fuel, an industry source said.

Shell is building a 820,000 tonnes/year biofuels plant in Rotterdam, the Netherlands, and has set a target to produce about 2M tonnes/year of SAF by 2025, according to Reuters.

Cepsa to invest in 2G biofuel plant in Huelva

Spanish multinational oil and gas company Cepsa will invest up to US$1.07bn (€1bn) in a new second generation (2G) biofuel plant at its La Rábida Energy Park facility in Palos de la Frontera, Huelva.

The new plant would secure the majority of its feedstock (organic waste such as agricultural residues or used cooking oils) through a global, long-term agreement with Apical, Bio-Oils’ parent company, Cepsa said on 14 April.

The plant – scheduled to begin operating in the first half of 2026 – would include two pre-treatment units and

the capacity for flexible annual production of 500,000 tonnes of sustainable aviation fuel (SAF) and renewable diesel.

Cepsa is aiming to produce 2.5M tonnes/year of biofuels by 2030 duce 2.5M tonnes/year of biofuels – including 800,000 tonnes of SAF – by 2030. It aimed to achieve net zero emissions by 2050.

Cepsa said it aimed to pro-

ISCC probes waste-based biodiesel imports

Leading certifying organisation the International Sustainability and Carbon Certification (ISCC) is investigating reports of a surge of advanced biodiesel imports from China produced from waste oil at least partly supplied from Indonesia and Malaysia.

“This sharp increase began late last year and peaked in January and February, with serious implications for the European biofuels market and indications pointing to potentially dubious or fraudulent origins,” the 20 April report said.

In response, the ISCC said it had intensified its mitigation measures, with its integrity programme focusing on Asia since last year, additional assessments conducted at points of origin, and an increase in the number of integrity auditors in Asia.

In addition, ISCC requirements had been increased, including a designated self-declaration for palm oil mill effluent (POME), a mandatory 100% audit for respective points of origin and guidelines for plausible yields.

Since March – following reports of suspected fraudulent activity – the ISCC said it had immediately conducted unannounced integrity audits at the companies concerned. The ISCC said it was also conducting a further 70 unannounced audits at processing units in China and Singapore.

Implausible quantities of material provided by the point of origin and false declarations of materials would be considered as critical non-conformity and would result in the withdrawal of sustainability certificates, the ISCC added.

Photo: Adobe Stock

KLK completes acquisition of Temix Oleo SpA

Malaysia’s Kuala Lumpur Kepong Bhd (KLK) said on 11 April that it had completed its acquisition of a controlling stake in Milan-based Temix Oleo SpA for an undisclosed sum.

The transaction – carried out via KLK’s oleochemicals division, KLK Oleo – was completed after receiving all necessary approvals, KLK said.

KLK Oleo is the manufacturing division of KLK, a leading Malaysian plantations

IN BRIEF

WORLD: The bio-based lubricants market is growing at 5.2% CAGR and is forecast to reach US$4.9bn by 2032, according to research by Acumen Research and Consulting, reported by Globe Newswire

Derived from vegetable oils, animal fats and synthetic esters, bio-based lubricants have low toxicity, high biodegradability, and a lower carbon footprint compared to traditional petroleum-based lubricants, the 13 March report said.

The growing demand for eco-friendly lubricants in applications such as automotive, industrial, marine and aerospace is driving the growth of the global biobased lubricants market, with Asia-Pacific expected to be the fastest-growing market, the Acumen research said.

Major players in the sector included Royal Dutch Shell, ExxonMobil, Total, Fuchs Petrolub, and Panolin AG.

group. It has manufacturing sites in Malaysia, Indonesia, China and Europe and produces basic oleochemical products such as fatty acids, glycerine, fatty alcohols and fatty esters, as well as speciality products such as methyl ester sulphonates (MES), surfactants and phytonutrients.

The products are used in the manufacture of products for home and personal care, pharmaceuticals, food and nutrition, flavours and fragrances, lubricants, poly-

mers and industrial chemicals. KLK Oleo reported annual manufacturing revenues of US$4.8bn in the 2022 financial year.

Temix Oleo produces, trades and distributes chemicals and oleochemicals, mainly based on renewable feedstocks. It has a plant in Calderara di Reno, Bologna producing 50,000 tonnes/year of fatty acids and 25,000 tonnes/year of esters.

Temix reported a turnover of €150M (US$164M) in 2022, KLK said.

BASF starts bio-polyol production in India

German chemical giant BASF announced on 9 March that it had started production of its bio-based polyol Sovermol product in Mangalore, India.

”Bio-based polyols are hydroxyl functional polymers based on raw materials like rapeseed, castor and soyabean oils,” BASF said. “Through special modification, we combine the two chemical structures of polyether and polyester into one to make a polyether/ester.”

Sovermol was suitable for applications in new energy vehicles (NEV), windmills, flooring and protective industrial coatings in Asia Pacific, BASF said. “The region is the world’s fastest growing market for NEV and coatings.

“In the past, we shipped raw materials from India to our European plant and sold the finished goods across the globe back to Asia Pacific,” BASF said. With the Mangalore facility, the company would have raw materials

available in India, reducing transportation time, enhancing supply reliability and giving a shorter lead time.

BASF said Sovermol enabled coating formulations to achieve zero volatile organic compounds (VOC) emissions, as well as offering advantages such as low toxicity, broad

adhesion, weather resistance, low shrinkage and adjustable mechanical properties.

The Mangalore site is BASF’s largest production facility in South Asia and also produces polymer dispersions, fine chemical catalysts and coatings for the paper, agricultural and automotive industries.

Joint project to study converting palm oil waste into fuel

Japanese engineering company JGC Holdings Corporation and energy firm Japan NUS (JANUS) have signed a memorandum of understanding with Malaysian natural gas, marketing and distribution company Gas Malaysia Bhd (GMB) to study the conversion of palm oil waste into fuel.

Palm oil mill effluent (POME) and empty fruit bunches (EFBs) emitted large amounts of methane gas, with a greenhouse effect 25 times that of CO2, JGC said on 3 March.

Another challenge was that the palm oil industry discarded thinned wood, waste

wood and other potential raw materials.

JGC said the project would study the feasibility of converting methane from POME and EFB into biomethane fuel and pellet fuel. Potential biocrude oil and biochemical applications for thinned and waste wood would also be investigated, along with the supply chain.

As part of the agreement, GMB would provide information on facilities with good access to feedstock in Peninsular Malaysia and on bioenergy – including natural gas –distribution networks, JGC said.

The research would extend to the use of carbon credits, biomethane certification and other systems that enhanced the sustainable value of any products resulting from the project, JGC said.

The joint study would tie in with the Asia Zero Emission Community Initiative announced last year by Japan.

JGC has experience of plant construction for liquefied natural gas (LNG), oil refineries and other facilities in Malaysia, which is the world’s second largest producer of palm oil after Indonesia.

Photo: BASF

BASF’s Mangalore site is its largest in South Asia

USA: Canadian renewable fuel and feedstocks supplier Targray has opened two new biodiesel terminals in Oregon state.

The new terminals are located in Portland and Eugene and are strategically positioned to supply wholesale fuel distributors, retailers and refineries in the state, which has a mandatory 5% biodiesel blending requirement in place, according to a Targray statement on 9 March.

“Like the Low Carbon Fuel Standard (LCFS) programme in California, the Oregon Clean Fuels Program (CFP) is a law regulated by the state which requires a 10% reduction in transportation fuel carbon intensity over a 10-year period in order to reduce greenhouse gas emissions from the transportation fuels sector below 2015 levels by 2025,” the company added.

Targray sources, transports, stores, trades and supplies bio-based fuels, with a dedicated rail fleet and terminals in California, Oregon, Washington and the Upper Midwest, USA.

It also trades in a range of emissions-related products, as well as sustainable cotton; supplies pulses and grains out of its Dubai trading desk; and supplies solar and photovoltaic materials.

Logistic bottlenecks in Brazil hit export prices

Logistic problems, such as lack of storage, have hit export prices of Brazilian soyabeans, according to trade sources quoted by AgriCensus on 28 March.

Chicago Mercantile Exchange (CME) soyabean futures prices fell by US$57/tonne for May shipment to US$495.25/tonne on 24 March, the report said.

Paranaguá port’s average shipment waiting time had reached up to 32 days while truck flows through the main road link into the port were still affected by landslides in March, the report said. Other ports were in a similar situation, with little to no capacity to store more grains in the short-term, AgriCensus wrote.

According to the logistics department of a Bra-

zilian brokerage, “players are doing all they can to free space in their stocks, but many buyers are not even accepting offers any more due to the lack of space in their storage”.

With the ongoing harvest still pressuring stocks, “the price doesn’t have much importance, as the logistic and cash needs are forcing farmer’s cooperatives and traders to sell their beans,” Aldo Lobo, market analyst from the Brazilian brokerage Granopar, was quoted as saying.

With Paranaguá, as well as the northern ports of Santos and São Francisco facing difficulties, Rio Grande port – some 1,000km south of Paranaguá – had ended up being an option, AgRural market analyst Daniele Siqueira said.

New Canada-US-Mexico rail line created

A merger to create the first single-line railway connecting Canada, the USA and Mexico has been approved by the US Surface Transportation Board.

The Canadian Pacific (CP)/ Kansas City Southern (KCS) merger paved the way for the two companies to form the Canadian Pacific Kansas City (CPKC) railway as early as 14 April, the firms said on 15 March. The combined network would connect ports on all US coasts via a single-line, continent-wide network, Garrett Holland, a senior research analyst at Robert W Baird & Co Inc, wrote in March 2021, before CP completed its US$31bn acquisition of KCS in December that year.

CP currently moved around 1.2bn bushels of agricultural

commodities and the merger offered the potential to move these further south in the USA and into Mexico, Progressive Farmer wrote on 15 March.

KCS customers could also enjoy new access to the east and west coasts of Canada and into Mexico, Soy Trans-

portation Coalition executive director Mike Steenhoek said.

However, the US Wheat Associates and National Association of Wheat Growers said on 15 March that they were concerned the merger would impede competition and raise rates for agricultural shippers.

Proposal to curb China’s ability to exploit cargo shipping data

Proposed new shipping reforms would include a curb on China’s ability to exploit cargo shipping data, FreightWaves reports.

Speaking at a media roundtable in February, US representative for South Dakota Dusty Johnson confirmed the move would be included in the reforms that he was planning to introduce in May as part of an updated Ocean Shipping Reform Act, the 17 February report said.

In addition to addressing data security concerns for companies using the Shang-

hai Shipping Exchange, a major container freight-rate benchmark for US imports, Johnson has said he would like to disincentivise companies from using the National Transportation and Logistics Public Information Platform (LOGINK), a Chinese state-sponsored shipment tracking data exchange. According to US authorities, the Chinese government was encouraging ports, ocean carriers and freight forwarders to adopt LOGINK by providing it for free, FreightWaves wrote.

The platform could also give China’s government access to sensitive data, including commercial transport of US military cargo, insight into supply chain vulnerabilities and critical market information, according to an issue brief published by the US-China Economic and Security Review Commission.

“All this could help Chinese firms compete on an unequal footing in the nearly US$1tn third-party logistics industry, particularly the freight forwarding services market estimated at just under US$200bn.”

Photo: Adobe Stock

Canadian Pacific’s merger with Kansas City Southern has been approved

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WORLD: German chemical and biotech giant BASF outlined its latest crop protection products, seeds and traits on 15 March, including weed management solutions for farmers in the Americas and Europe for crops such as soyabeans.

New products included Tirexor Active, a protoporphyrinogen oxidase (PPO)-inhibiting herbicide, controlling weeds currently resistant to other PPO inhibitors, Bayer said.

Approved for use in Australia in 2020 and in Canada in 2022, it was expected to be introduced for soyabean farmers in Argentina in 2024 and in the USA in 2025. Introduction in other Latin America countries and Asia Pacific would follow with expansion into different crops. BASF said.

BASF said it was also developing an additional PPO herbicide product for over-the-top control of weeds in soyabeans, with a corresponding herbicide tolerance gene that would be incorporated into a new trait developed by Corteva. The soya trait pipeline collaboration was expected to be available in seed varieties in the early 2030s.

For Europe, BASF said it had introduced new weed management solutions, including the Smart Spraying Solution by Bosch BASF Smart Farming for use in corn, sunflower, sugar beet and soyabean farming.

Bayer sues farmers for seed saving, dicamba spraying

German chemical giant Bayer has launched legal action against four Missouri farmers for allegedly spraying older versions of dicamba herbicide on its genetically engineered (GE) soyabeans, as well as saving the soyabean seeds and replanting them, Investigate Midwest reported on 29 March.

Bayer alleged that the US farmers were in violation of their user agreements with it and had harmed the company’s reputation with the Environmental Protection Agency (EPA).

While investigating the allegations of saving seeds, Bayer claimed it found evidence of the farmers illegally spraying older versions of dicamba after the state’s cut-off date for spraying the herbicide, the report said.

Critics have said the lawsuits were an attempt by Bayer to blame the older version of the

weedkiller for damage caused by the widespread legal use of dicamba on crops, the report said.

Millions of acres of farmland and natural areas had been harmed by dicamba drifting from sites where it was applied following the introduction of GE dicamba-tolerant crops in 2015, the report said.

Due to the damage, a federal court banned dicamba briefly in 2020, but the EPA re-approved dicamba with additional restrictions a few months later. That approval is currently being challenged, according to the report.

A Bayer spokesman was quoted as saying the lawsuits helped “protect grower access to technologies”.

Bayer is also suing two other farmers for saving seeds, but not illegal spraying of dicamba.

L'Oréal becomes third investor in Geno

International beauty leader

L’Oréal has invested in a venture led by biotech company Geno to create plant-based alternatives to key beauty product ingredients, alongside global consumer goods giant Unilever and Japanese cosmetics company Kao.

By using Geno’s biotechnology expertise, L’Oréal said it would replace traditional ingredients in its product range with bio-based alternatives.

The move was in line with the company’s goal for 95% of its formulas and ingredients to be derived from renewable or abundant sources, L’Oréal said on 20 March.

As part of the venture, Geno said its biotechnology platform would be used to de-

velop sustainable alternatives to ingredients in everyday cosmetics, personal care and cleaning products. Its range

quality

includes Brontide butylene glycol, an ingredient for personal care products derived from plant sugars.

Study shows decline in US plantings of non-GM soya

US planting and production of non-genetically modified (GM) food-grade soyabean has fallen, according to a new study by the US Soyabean Export Council (USSEC).

The study showed that US farmers planted around 687,965ha of non-GM food-grade soyabeans in 2022, and some 849,839ha of non-GM feed-grade soyabeans. The drop in planted area was due to a range of factors including high commodity soyabean prices, perceived yield lag,

premium levels, agronomic challenges and disruptions in shipping and freight costs.

“The results suggest that the lower non-GM soyabean production in the USA is caused by the supply side,” Will McNair, director of oil and soyabean food programmes and USSEC’s deputy director of Northeast Asia, said.

“Purchasers indicated that demand is there and growing but ... farmers have less interest in raising and managing non-GM

and other identity preserved soyabeans as there is less economic value in doing so.”

Current non-GM food-grade premiums had not matched commodity prices, the report said. In 2022, soyabean commodity prices increased by about 18%, compared to 13% for non-GM food-grade soyabeans.

The study estimated that contracted planted area accounted for about 88% of production of non-GM soya, used in tofu, soya milk, natto, miso and other markets.

Calyxt says seedless hemp offered improved yields and

Photo: Adobe Stock

L’Oréal is investing in plant-based ingredients for its beauty products

30-31 May 2023

RSPO Inter-American Conference 2023 Hotel Kimpton Epic, Miami, Florida, USA https://rspo.org/first-rspo-inter-americanconference-2023-spotlights-theamericas-role-as-sustainable-palm-oilleaders/

5-6 June 2023

4th International Congress on Mineral Oil Contaminants in Food

Berlin, Germany

https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=11448&sp_id=1

7-9 June 2023

Sustainable Aviation Futures Congress Hotel Okura, Amsterdam, the Netherlands www.safcongress.com

7-10 June 2023

European Fat Processors and Renderers Association (EFPRA) Congress 2023 Naples, Italy

https://efpra2023naples.eu/

8-9 June 2023

Veg Oil Trade 2023

Rotterdam, the Netherlands www.apk-inform.com/en/conferences/ vegoil-trade-2023/about

12-14 June

International Conference on Algal Biomass, Biofuels and Bioproducts Waikoloa Beach, Hawaii, USA www.elsevier.com/events/conferences/ international-conference-on-algalbiomass-biofuels-and-bioproducts

12-14 June 2023

4th Biodiesel/Renewable Diesel Summit CHI Health Center, Omaha, Nebraska, USA https://few.bbiconferences.com/ Biodiesel.html

12-13 June 2023

IGC Grains Conference London, UK www.igc.int/en/conference/confhome. aspx

14-15 June 2023

Oleofuels 2023

Seville, Spain

www.wplgroup.com/aci/event/oleofuels

DIARY OF EVENTS

17-20 September 2023

Euro Fed Lipid Congress & Expo Poznań Congress Centre, Poland

https://veranstaltungen.gdch.de/tms/ frontend/index.cfm?l=11215&sp_id=2

24-27 September 2023

16th International Rapeseed Congress

Sydney, Australia

www.irc2023sydney.com

28-30 September 2023

Globoil India 2023

Westin Mumbai Powai Lake, Mumbai, India https://globoilindia.com/

24-27 October 2023

North American Renderers Association Annual Convention Ritz Carlton, Naples, Florida, USA

https://nara.org/about-us/events

7-9 November 2023

International Palm Oil Congress & Exhibition (PIPOC) 2023

Kuala Lumpur Convention Centre, Malaysia

http://pipoc.mpob.gov.my/

Challenges ahead

Ukraine remains one of the key suppliers of oils and fats products to the European market despite the current war affecting its infrastructure and export routes.

The country is seeing a noticeable shift towards the export of oilseeds, due to limits on domestic processing. In the July-February period of the 2022/23 marketing year (MY), for example, Ukraine exported 7.6M tonnes of oilseeds, with almost 75% going to EU countries.

Oilseeds forecasts in 2023

Over the past few months, bid prices for Ukrainian oilseeds have been under pressure resulting from logistical pressures at western land borders, delayed inspections and passage of vessels through the Black Sea grain corridor, and a gradual decline in demand from European importers due to sufficient stocks.

However, despite these issues, the liquidity of oilseed crops remains relatively high in the 2022/23 MY, creating the

Ukraine has been moving away from exports of sunflower oil to sunflowerseed, due to its war with Russia inflicting limits on domestic processing. Logistics also remain a weak point because of uncertainty over the Black Sea export corridor and pressure at its western land borders

conditions for a rise in oilseed planting.

The oilseed hectarage is expected to rise during the 2023 spring planting campaign, although it will still be among the lowest level since 2016, as significant areas remain occupied by Russian troops.

APK-Inform Agency forecasts that the oilseeds planted area in 2023 will rise by 6% to 8.45M ha, accounting for 98-99% of the country's harvested area, compared with 95% in 2022. This increase will mainly be due to a fall in the area under grains in Ukraine, as well as the liberation of some territories in 2022 but will, to some extent, depend on the speed of

Svitlana Kyrychok

demining in liberated areas.

Total oilseeds production in 2023 is forecast to rise to 20.1M tonnes compared with 18.4M tonnes in 2022 (see Table 1, below).

Sunflowerseed production may increase by 15% to 12.7M tonnes, due to an expansion in planted area to 5.57M ha (+12% y-o-y). This will still be one of the lowest levels since 2016 and will depend on the ongoing war with Russia, weather conditions and seed supply.

Soyabean production may reach a four-year high this year to total 4.2M tonnes (+10%). The planted area under this crop is expected to expand by 7% to 1.7M ha, due to increased exports and the preservation of fairly high processing, as well as less dependence on the import of seed material compared to other oilseeds.

Rapeseed production in 2023 may fall but not significantly. The rapeseed planted area may reach 1.2M ha, 18% lower y-o-y. However, taking into account the significant loss of rapeseed hectarage in the spring of 2022 as a result of

Photo: Adobe Stock

Source: APK-Inform Agency

Table 1: Forecast of main oilseeds production in Ukraine, 2023 projection* vs 2022

hostilities, the harvest area in 2023 may decrease by only 1% y-o-y. Rapeseed production in 2023 may become one of the third largest in history, amounting to some 3.2M tonnes (–9% y-o-y).

Sunflowerseeds

During September-February in the 2022/23 MY, Ukraine processed around 6.5M tonnes of sunflowerseed, the lowest level for the last seven seasons.

This was mainly due to Russian attacks on the country's energy sector infrastructure, and the slow operation of the Black Sea grain export corridor due to delayed inspection of ships in Istanbul. The crisis in the energy sector also affected port operations – slowing down unloading and trans-shipments –and significantly increasing the queues of vehicles and trucks in port areas.

As a result, the actual shipment pace was significantly lower than the volumes

declared for export, and domestic sunflowerseed demand remained reserved, as plants were forced to reduce processing in order to adapt to the operation of ports.

In addition, the attractive bid prices for sunflowerseed from importers and the downward price trend in the export market of sunflower oil significantly reduced the ability of domestic processors to compete for raw materials.

APK Inform forecasts that sunflowerseed processing in the 2022/23 MY will remain unchanged at 10.5M tonnes, of which about 62% has already been processed.

Meanwhile, sunflowerseed exports from Ukraine reached a new high of 1.54M tonnes during September-February of the 2022/23 MY. This resulted in a more rapid reduction of stocks, which fell by 37% y-o-y at the beginning of March 2023, the lowest level for the last eight seasons.

Sunflowerseed exports are set to remain at 2.4M tonnes in the 2022/23 MY, 65% of which has already been shipped (see Figure 1, left).

In the last few months, there has been a gradual reduction in the export of oilseeds from Ukraine, due to the sufficient supplies in Europe, as well as increased pressure on logistics when exporting through the western Ukrainian border. Sunflowerseed exports in February fell by 15% month-on-month to 165,000 tonnes, the lowest level since May 2022.

Almost 80% of Ukraine's total oilseed exports has gone to EU countries (see Figure 2, left). Leading importers are Bulgaria (429,000 tonnes or a 28% import share) and Romania (406,000; 26% import share) [see Figure 1, left]. In addition to the EU, Turkey is also an active buyer of Ukrainian sunflowerseed.

In February 2022, an agreement on a free trade zone was signed between Ukraine and Turkey, which allowed Turkey to import up to 50,000 tonnes of Ukrainian sunflowerseed duty-free.

In addition, in January 2023, Turkey reduced the import duty on sunflowerseed and oil to zero, which will allow increasing purchases of the two products.

Sunflower oil

Ukraine was the top global exporter of sunflower oil before Russia's invasion on 24 February last year. However, the high cost of logistics, the blocking of the country's deep sea ports and the increase in delivery times have significantly limited the value of Ukrainian sunflower oil.

Bid prices for Ukrainian sunflower oil have continued to decline in February and March, also affected by external factors such as a large supply of Russian oil; US Department of Agriculture forecasts of a rise in global exports in 2022/23; as well as the expectations of a high sunflowerseed crop in Argentina.

In September-February of the 2022/23 MY, Ukraine exported around 2.7M tonnes of sunflower oil, of which 42% went to EU countries (see Figure 3, left).

The most significant reduction in exports was observed in China (–10%), Egypt (–77%), India (–59%), Iraq (–52%), Saudi Arabia (–83%) and the UK (–69%).

India used to import around 2M tonnes of Ukrainian sunflower oil each season, but almost completely ceased purchases after Russia's invasion of Ukraine, opting for cheaper alternative vegetable oils and sunflower oil from Russia and Argentina.

For the 2022/23 MY, Ukraine may export 4.15M tonnes of sunflower oil, due to lower production and the blocking of its main shipping routes.

Figure 1: Sunflowerseed exports from Ukraine, '000 tonnes

Figure: APK-Inform Agency

Figure 3: Sunflower oil exports from Ukraine, '000 tonnes

Figure: APK-Inform Agency

Figure: APK-Inform Agency

Figure 2: Sunflowerseed exports from Ukraine to EU, '000 tonnes

Rapeseed

Ukraine had a record rapeseed harvest of 3.5M tonnes this season, resulting in strong exports which totalled 3.3M tonnes during July-February of the 2022/23 MY.

Around 90% of exports went to the EU, a 68% increase, due to competitive prices, territorial proximity and well-established logistics.

At the same time, taking into account the difficulty of forming sufficient export batches of rapeseed oil or meal when unloading from ports, the volume of rapeseed processing in the current season may only amount to 170,0000, down 59% y-o-y.

Market bid/offers for Ukrainian rapeseed have been almost unchanged for several months and are under pressure from the downward price trend in the global oilseed market. In addition, increased forecast rapeseed production for 2022/23, as well as optimistic forecasts for EU production, may further push down prices.

Soyabeans

Ukraine exported 1.9M tonnes of soyabeans during the September-February period of the 2022/23 MY, a high for the last three seasons.

Around 981,000 tonnes or 51% was exported to the EU, a record high which allowed Ukraine to rise to third place from fourth among suppliers of soyabeans to the region, with a 13% volume share.

According to APK-Inform estimates, around 600,000 to 700,000 tonnes of soyabeans may still be exported from Ukraine by the end of the current season, but the pace of shipments will depend mainly on global demand, which has begun to weaken owing to current stocks and an increase in the supply of South American soyabeans.

Domestic soyabean processing of about 837,000 tonnes in the first half of the current season is only 8% lower y-o-y, which is quite a good indicator for the industry, taking into account the reduction in domestic meal consumption due to significant losses in the livestock and poultry sector as a result of hostilities.

Soyabean exports in the 2022/23 MY may reach 2.6M tonnes (+83% y-o-y), while the volume of processing may fall to 1.4M tonnes (–3%).

Looking ahead

Import demand for Ukrainian oilseeds will be affected by factors such as new oilseed crop supply from South America and stock levels in the EU.

The uncertainty regarding the expiry date of the Black Sea Grain Initiative

(BSGI) will boost the supply of raw materials in the Ukrainian market and spur traders towards more active sales to avoid accumulation of products.

The BSGI was brokered with Russia and Ukraine by the United Nations (UN) and Turkey in July last year to allow agricultural exports from the Ukrainian deep sea ports of Odessa, Chornomorsk and Pivdennyi.

The initiative was extended on 18 March but Russia has indicated that it has only agreed to a 60-day deal, with any further extension beyond mid-May dependant on the removal of some Western restrictions.

Under current conditions, Ukrainian

farmers are being forced to sell oilseeds at reduced prices because logistics remain too expensive and risky.

At the same time, a record Russian sunflowerseed harvest may be exported from the country, not only in the form of oil, but also seed, as the government is considering reducing or eliminating export duties due to excessive supply and low prices on the domestic market.

Such a decision will create additional pressure on the global oilseeds and vegetable oils market, including Ukraine. ●

Svitlana Kyrychok is an oilseeds market analyst at APK-Inform Agency, Ukraine

Russia is set to overtake Ukraine as the world's largest sunflower oil exporter, although supplies of imported agricultural machinery and seed could be an issue in the future Elena Smirnova

The Russian oils and fats sector looks set to benefit from the spoils of war and the country is poised to become the new global leader in sunflower oil exports, overtaking Ukraine, which Russia invaded on 24 February.

The disrupted Ukrainian sunflower sector – concentrated in the country's east and southeast region which has been the most heavily bombed and shelled area throughout the invasion – saw a 25% year-on-year drop in oilseed harvests in 2022, according to US Department of Agriculture (USDA) figures. The sunflower sector also switched significantly to exports of sunflowerseed rather than processed oil, due to damage and disruption to its crushing and refining plants.

Meanwhile, Russia has benefited from favourable prices partly inflated by the fall in Ukrainian sunflower oil exports.

“Last year, Ukraine retained its leadership in the world market in terms of sunflower oil exports,” Oil and Fat Union of Russia executive director Mikhail Maltsev told Oils & Fats International (OFI). “In 2023, Russia may become the new world leader, increasing its global sunflower oil supply by 70% compared to 2022, to 4.7M tonnes.”

The union also forecasts that total

Spoils of war

Russian vegetable oil exports could rise to 7.4M tonnes this year compared to 4.6M tonnes in 2022, while meal exports are expected to increase to 4.5M tonnes compared with 3M tonnes in 2022.

Maltsev says that state policy aimed at increasing oilseeds production "concerns the introduction of new agricultural land and increased productivity as a result of an enhanced farming culture".

The domestic processing sector is protected by export duties on sunflowerseeds, with Russian processing of seeds and production of sunflower oil growing in proportion with an increased sunflowerseed crop.

"As our production volume is more than triple the country's domestic needs, the main vector is export to the global market.”

The USDA projects that in the 2022/23 marketing year, Russia will export 3.7M tonnes of sunflower oil against Ukraine's 3.65M tonnes which, for Ukraine, is 45% down from the previous year. This gives Russia a 35% market share compared with Ukraine's 34%. Three years ago, the shares were 28% and 50% respectively.

In the same period, Ukraine is forecast to export 2.45M tonnes of sunflowerseed, more than 20 times its pre-war volumes, which will account for 45% of the global sunflowerseed export trade.

Record harvests

Russia grows a wide spectrum of oilseed products, sunflowerseed being the largest

by volume. In 2022, sunflowerseed production surpassed 15M tonnes, the Oil and Fat Union of Russia says.

Soyabean is the next biggest oilseed crop, reaching almost 6M tonnes in 2022, followed by rapeseed at more than 3.7M tonnes, and flaxseed at about 1.5M tonnes. Camelina, safflower and mustard seed crops are also grown in Russia, but in small volumes.

The 2022 harvest saw increases in Russian output of all oilseeds. According to a March 2023 report from Russia’s Federal State Statistics Service (Rosstat), Russian farmers harvested 29M tonnes of oilseeds in 2022, a 17% increase compared with 2021.

This included an increase in the sunflowerseed harvest from 15.6M tonnes to 16.3M tonnes; soyabeans from 4.76M tonnes to 5.99M tonnes, and rapeseed from 2.79M tonnes to 4.5M tonnes.

More exports to Asia

Russian exports of vegetable oils have grown despite unprecedented sanctions imposed by European, north American and some Asian countries restricting financial flows and other trade, but not of foodstuffs including oilseeds.

While Russia’s sunflowerseed production volume tops the different oilseeds, soyabean, flaxseed and rapeseed surpass it in terms of export volumes.

“There are hardly any exports of sunflowerseeds. They are processed in the country instead,” Maltsev says.

Photo: Adobe Stock

RUSSIA

“Moreover, Russia’s current state policy is aimed at protecting the domestic oilseeds processing market and helps to increase the export of processed products. The sale of processed, value-added goods brings additional income to the agroindustrial complex, plus taxes, jobs and regional development, which is more economically beneficial for the country.”

Turkey, China, Iran and India – none of which are sanctioning Russia – are the largest buyers of Russian vegetable oils. India is particularly notable as it increased its purchases of vegetable oils by almost 50% during 2022, according to the Oil and Fat Union of Russia.

Exports of vegetable oils to Algeria, Egypt, Libya, Iraq and Saudi Arabia also saw great growth, almost doubling in 2022. And despite sanctions, EU imports of Russian sunflower oil boomed to total €97M in 2022, up from €10M in 2021. In contrast, EU imports of Russian sunflowerseed fell to €10M in 2022 from €24M in 2021, according to data from EU statistical agency Eurostat.

Russian exports also increased despite the country imposing an export quota on sunflower oil and banning seed shipments from April to August 2022.

“It was to ensure a balance between food security and export earnings,” Maltsev explains. “The quota guaranteed a sufficient amount of oil and meal consumption on the domestic market. These protective measures were introduced in the interests of consumers. They ensured an uninterrupted supply and steadied prices for processed sunflower products, both on the shelves in stores and for industrial enterprises.”

Russian oilseed producers are also increasingly expanding into Middle East markets. For example, in March 2023, the Efko Group made the first shipment of its Sloboda bottled sunflower oil to Bandar-e Anzali port, Iran, on the Caspian Sea, the first Russian brand in Iran in this product category. Efko also has plans to expand to other Iranian cities, including Tehran. The company’s earlier export milestones this year include the start of exports of Altero sunflower oil to Egypt, and a growing presence in the Asian markets.

Price rollercoaster

Industry experts believe that 2023 will likely be less lucrative for Russian sunflower growers compared to last year since the rise in production is leading to a drop in prices. There has been a surplus of sunflowerseed on the market as of March 2023 “so even if oil plants are loaded to full capacity in the new season, at least 1.7M tonnes of oilseeds will remain”, an

Efko Group analyst, Maxim Panarin, said at Interagromash 2023, an international scientific conference on precision agriculture and the agricultural machinery industry, held in March in Rostov-on-Don, southern Russia.

Overall, global prices for vegetable oils saw great volatility in 2022. “We have not seen such a rally before,” Maltsev said. “At the beginning of the year, prices gradually increased, reaching a peak in May. But since June, prices have seen a sharp drop. As a result, in August, the cost of sunflower and palm oils decreased by 100% compared to April 2022.”

By October, the cost of vegetable oils on the world market stabilised, declining for the 10th month in a row by 2–5% month-to-month, according to the UN Food & Agriculture Organization (FAO).

Seeds and science

While Russia had a record oilseed harvest in 2022, experts are cautious about expecting the same results in the future due to a shortage of seed material, according to analysis from Russian consultants Oil World (not to be confused with ISTA Mielke GmbH Oil World)

One potential issue, which could worsen due to sanctions on machinery exports to Russia, is that the country's agricultural sector is very dependant on imported technologies, which are used to sow 70–90% of the country’s sunflowerseed, according to Russia's Oil World

There are also potential issues related to imports of growing seed. Major suppliers Syngenta, owned by Chem China; Germany-based Bayer; and Australia's Nuseed announced the suspension of shipments of sunflowerseeds to the country as of 1 February, Russian daily newspaper Izvestiya reported.

Industry watchers have described this move as a reaction to Russia’s veterinary watchdog Rosselkhoznadzor banning the import of Syngenta’s sunflower seeds starting on 1 February upon discovering sunflower Phomopsis stem canker in some samples during a routine inspection. There

were no direct restrictions made on Bayer.

Those disruptions could pose a challenge for Russia, with farmers potentially needing to rely on domestic seeds for the next harvest, which tend to bring smaller yields. State institutes, along with a handful of private companies, manage the agricultural selection in Russia but they are struggling to provide domestic substitutes for foreign seeds.

The Krasnodar, southern Russia-based AllRussian Research Institute of Oilseeds is at the forefront of oilseeds research.

However, like other institutes, it must address the shifting demands of changing climates, new viruses and pests, according to Russia's Oil World

There are efforts to decrease dependency on foreign seeds. In the Rostov region, for example, there are plans to increase the domestic share of sunflower growing seeds to 31% of market demand by the end of 2023, Russia’s National Union of Breeders and Seed Growers reports.

“It’s a tough task. We must take into account the fact that many farms already purchased imported seeds last year for the 2023 sowing season. Nevertheless, we will continue to promote domestic seed material. It is important to move away from import dependence,” the Rostov oblast’s agriculture and food minister, Konstantin Rachalovsky, said at Interagromash 2023.

To achieve this goal, Russian farmers are increasing the size of the fields dedicated to growing seed material. In the Rostov region, the area for growing corn and sunflowerseed material tripled during 2022 compared to 2021, and will now total around 2,000ha, according to Russian news outlet RBC

The All-Russian Research Institute of Oilseeds is set to grow its hybrid sunflowerseeds on these Rostov fields and institute director Vyacheslav Lukomets is optimistic that there is capacity to fill the export void with domestic seed. “We can grow as many seeds as we need next year. What we need is an order from agricultural producers,” he told the National Union of Breeders and Seed Growers.

The Russian agriculture ministry is also optimistic about import substitutions, reporting that there are enough stocks of sunflower growing seeds for the 2023 sowing season. Russian farmers also bought surplus seed supplies last year –20% more than needed – which should be enough to cover the upcoming 2023 season, says an official. ●

Elena Smirnova writes for International News Services Ltd, UK

‘Russian exports of vegetable oils have grown despite sanctions on financial flows and trade’

Global uncertainty against the backdrop of the Russia/Ukraine conflict, ongoing labour shortages and low yields are among the main issues affecting the palm oil sector, the Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2023) held on 6-8 March in Kuala Lumpur, Malaysia heard.

Forecasts of a drastically reduced soyabean crop in Argentina and regulatory changes – such as the European Union Deforestation Regulation (EUDR) which some in the sector claim is discriminatory against palm oil – were also of concern, the almost 2,000 delegates heard.

However, with forecasts of a new El Niño in July/December and/or in January/ June 2024, climate change and extreme weather events, were set to be the most pressing issues, according to Godrej International director Dorab Mistry, with prices reflecting the “vagaries of climate”.

“A new El Niño could drive prices higher so as to destroy demand. Without El Niño, we can see lower prices after August,” Mistry added.

In addition, Mistry said Malaysian stocks could drop below 2M tonnes due to output disruptions caused by heavy rainfall and rising exports following Indonesia’s curbs on palm oil exports.

Despite the pressures weighing on the sector and with some in the sector claiming regulatory changes discriminated against palm oil, Carl Bek-Nielsen, vice chairman and chief executive director of United Plantations Berhad, said that palm oil demand would increase globally.

“The reality is that in 2030, demand for palm oil will increase [globally],” he said.

While palm oil demand in Europe was expected to decrease by 2.1M tonnes – a drop of 26% - by 2030, demand in India was expected to increase by 6.95M tonnes (86%) with global demand expected to increase by 36% to 27.4M tonnes.

However, he pointed out that in vast parts of Indonesia and Malaysia timely replanting had been neglected, which was one of the reasons for stagnating palm oil yields.

Many challenges

Labour shortages

The COVID-19 pandemic had accentuated manpower shortages in the country and Malaysia’s Deputy Prime Minister and Minister of Plantation and Commodities Fadillah Yusof said labour issues continued to affect plantation operations as people’s movements remained restricted.

Against this backdrop Sime Darby Plantation Berhad group managing director Mohamad Helmy Othman Basha presented a futuristic vision of how palm oil plantations could operate in the future.

“COVID was a watershed moment, with no workers from outside Malaysia,” he said. As a result, the company had been working on the development of advanced technology and robotics in a bid to automate plantation work.

Some of the ideas were still in the concept stage but a harvesting machine was “a work in progress” and would be

available in the next two to three years.

If a higher percentage of plantation jobs could be mechanised they would be less laborious and more likely to appeal to the local workforce.

“We want to redesign the plantation and change the prevailing perception that plantation work is a 3Ds – dirty, dangerous and difficult – industry. By the end of 2027 the aim is to employ 100% local workers,” he added.

Slowdown in palm oil production

Although palm oil production was likely to recover this year due to improving labour issues compared to 2022, Thomas Mielke, executive director of ISTA Mielke - Oil World, said that “palm oil has lost its growth dynamics” (see Figure 1, below).

Annual palm oil production growth in major producing countries was likely to slow to 1.9M tonnes or less in the 10 years to 2030 compared to an average

The palm and vegetable oil sectors are facing multiple challenges including global uncertainty due to the Russia/ Ukraine war, a drastically reduced Argentine soya crop, a new El Niño and climate change

Gill Langham

Figure 1: Global palm oil production, 1981-2003 (million tonnes)

Figure: Oil World ,

ahead

annual growth of 2.9M tonnes in the decade to 2020, he said.

“Area expansion has slowed down considerably and insufficient replantings and management constraints are keeping yields below potential,” he added.

In addition, Mielke said palm oil exports from top producer Indonesia were also set to decline this year due to the country’s ambitious biofuel mandate.

Meanwhile, Mielke also expected the “incredible” increase in canola production to slow down in 2022/23.

Although there had been a significant increase in global production of oils and fats, with consumption expected to jump by 5M tonnes in April/September, he was concerned that the vegetable oils sector was moving into a production deficit in the second half of this year (see Figure 2, below).

“Global vegetable oil supplies are currently sufficiently large with world stocks about 3M tonnes above a year earlier, but this is likely to change from July or August onward,” he said.

The Argentine soyabean crop, which could be as low as 25M tonnes, was also a concern, he said.

“Severe dryness in South America has tightened world soyabean supplies in early 2023, with at least 20M tonnes lost so far in Argentina and 3M tonnes in Brazil.

"At the moment, palm, rapeseed and sunflower oils can compensate Argentine losses, but for how long?” Mielke added.

Biofuels

Mielke also expressed concern that the biofuel market was being over-stretched, with some countries too ambitious and with no temporary reductions of mandates imposed at times of limited supply.

“Fulfilment of the current biofuel targets would contribute to a bullish scenario shaping up for the second half of 2023 as well as for 2024,” he said.

According to UR Unnithan, co-founder and CEO of DIBIZ, global biodiesel production and consumption will increasingly shift to the use of waste oils and used cooking oils (UCO) as feedstocks.

EU RED II restrictions would see palm methyl ester (PME) exports to EU decline further with a more than proportionate increase in UCO/Waste oil exports, he added.

“The world is seeing rising HVO [hydrotreated vegetable oil] capacity but sourcing sustainable raw materials will be the big challenge especially if RED III takes away ‘double counting’ for UCO,” he said.

Malaysian exports of UCO jumped to their highest level in December – an 18% year-on-year increase – due to strong demand from the EU to meet increasing usage of UCO in biodiesel blending.

However, biodiesel shipments from Malaysia fell by around the same pace as plant-based feedstocks were increasingly being reduced due to the impact of the EU RED II directive, he said.

In 2020, Europe had the largest HVO capacity worldwide, at 3.5M tonnes, followed by North America with 1.9M tonnes, according to data published by Statista presented by Unnithan. HVO capacity in North America was forecast to surpass Europe, reaching 12.6M metric tonnes by 2025.

Indonesian outlook

In his presentation, Dr Mohamad Fadhil Hasan, director of corporate affairs at PT Asian Agri, spoke about the outlook for the Indonesian palm oil sector this year amid a world economic recession.

Indonesian palm oil production was

expected to show a downward trend between 2005-2025, with growth of 10% between 2002-2010 declining to 7.4% in 2010-2015 and dropping further to 3.2% in 2015-2020, he said. In the last three years, growth had been in negative figures.

Production reached 51.6M tonnes in 2021, comprising 46.9M tonnes of crude palm oil (CPO) and 4.4M tonnes of palm kernel oil (PKO). Production in 2022 was more or less stagnant.

Meanwhile, yields had been declining in Indonesia since 2010, Hasan said.

While exports from Indonesia were on a downward trend, domestic consumption showed a considerable increase from 2015-2020 due to the country’s mandatory biodiesel blending programme, he added.

Overall, there had been a shift in Indonesia from an export-orientated sector to more domestic consumption, with consumption’s share of the market now around 34%, according to Hasan.

The government’s move to increase the biodiesel blending policy to 35% (B35) in February and plans to further increase this to 40% in June/July, would mean an additional 2M-2.5M tonnes of CPO would be consumed domestically, he said.

Conclusion

Although palm oil production has been declining, the sector has been resilient with labour shortages improving compared to last year and demand increasing, analysts agreed.

On a positive note, Godrej's Dorab Mistry pointed out there had been a recovery in rapeseed production in 2022/23, driven by Canada, palm oil imports to India were rising again and China was seeing a return to higher consumption and growth although vegetable oil stocks there remained high.

“China demand has not been buoyant and we need to wait for an upturn, which will come,” he said.

Global food demand for vegetable oils was growing at a steady 3M tonnes/year, according to Mistry.

However, sustaining the palm oil sector would involve finding high-value niche markets and automating plantation work to make it more appealing to the local workforce, the conference heard.

In Malaysia, for example, the palm oil sector employs more than 500,000 plantation workers and contributes more than 3.06% or MYR45.9bn (US$10.4bn) to the country’s annual Gross Domestic Product (GDP), the country’s Deputy Prime Minister and Minister of Plantation and Commodities Fadillah Yusof said. ● Gill Langham is OFI's assistant editor

Figure 2: Half-yearly production and consumption of eight oils (million tonnes)

Figure: Oil World , POC 2023

PROJECTS & ENGINEERING

Global round-up of news

Oils & Fats

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

IN BRIEF

USA: Crown Iron Works said on 14 April that it had recently completed its liquids pilot plant, offering testing, validation, scaling and commercialisation for renewable diesel, sustainable aviation fuel and biodiesel; edible oils; oleochemicals; and speciality products.

The supplier of oilseed extraction technology said the plant featured:

• The Crown RD Ready Pretreatment System that doubled hydrotreater catalyst life and maximised contaminant removal.

• A Double Shell Packed Column continuous deodoriser, which offered superior performance over tray deodorisers and accommodated six stock changes per day.

• Fat splitting technologies allowing for variations in feedstock quality and a multi-purpose distillation column for cleaner biodiesel and fatty acids.

• A full suite of analytical lab testing.

Scoular

EU approves plant-based solvent for oil extraction

The plant-based solvent methyloxolane has been approved for use in the extraction of vegetable oils in Europe, Belgian chemical developer and manufacturer, the Minafin Group, announced on 20 February.

Methyloxolane, which the group supplies under the EcoXtract brand, is produced from agricultural co-products such as sugarcane bagasse and does not compete with food production, the company says. It can be used as a substitute for hexane, which is derived from petroleum and is currently the most used solvent for the extraction of edible oils.

Minafin said the European Parliament and European Council had amended Directive 2009/32/EC to add methyloxolane as a permitted processing aids in the manu-

facture of food ingredients.

According to information published on the National Center for Biotechnology Information’s US website, research into greener and biodegradable solvents has grown due to the fact that n-hexane, one of the main constituents of extraction grade hexane, is sourced

from fossil resources and is registered under the REACH Regulation as a category 2 reprotoxic and category 2 aquatic chronic toxic product, EcoXtract managing director Laurence Jacques said methyloxolane could be used at production facilities designed to extract with hexane, with minor modifications.

LDC to expand canola facility in Saskatchewan

Global agribusiness giant Louis Dreyfus Company (LDC) announced on 11 April that it would expand its canola processing complex in Yorkton, Saskatchewan, Canada.

Construction of an additional canola crushing line was due to start later this year and would more than double the facility’s crushing capacity to over 2M tonnes/year.

LDC has operated the facility, which produces food grade canola oil and feed meal, since 2009.

“This investment supports the group’s strategic growth plans by reinforcing core merchandising activities, in this case with additional capacity to originate and process Canadian canola seeds to provide nourishment for people and livestock,” LDC’s CEO Michael Gelchie said.

“It also positions LDC as a strategic feedstock provider to renewable energy producers and accelerates our contribution to a global energy transition.”

to convert sunflower plant into soya/canola crush unit

US employee-owned agribusiness

Scoular is converting a sunflower facility in Goodland, northwest Kansas, into a soyabean/canola crushing plant.

The converted plant, which Scoular purchased in 2021, was expected to become operational late next year, the company said on 14 March.

Switching between canola and soyabean

crushing according to availability, the facility would process 11M bushels/year of oilseeds, Scoular said, adding that it could also process low-carbon crops, such as camelina, as they developed in the future.

The firm said canola was of value in the growing renewable diesel and sustainable aviation fuel markets due to its high-oil content. Scoular said it was also partnering

with Kansas State University to advise farmers on best practices for growing canola.

Nebraska-based Scoular buys, sells, stores, handles and processes grain and ingredients, operating 48 country elevators and 15 processing plants in North America, according to Sosland Publishing Co’s 2023 Grain & Milling Annual

Photo: Adobe Stock

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Going lecithin-free

With global supply chains of sunflower oil and lecithin thrown into disarray due to the Russia-Ukraine war, margarine manufacturers needed an affordable emulsifier alternative ... and fast Hamed Safafar

The sunflower is the national flower of Ukraine and the country was – until 24 February 2022 – the world’s largest supplier of sunflower oil and lecithin.

The invasion by Russia – the world’s second-largest sunflower oil producer – reduced exports to a trickle, with household margarine manufacturers left scrabbling for soyabean or rapeseed alternatives as global prices rocketed.

Many businesses use sunflower lecithin alone or in combination with mono- and diglyceride emulsifiers, but after the war started, supplies were drying up.

A lot of table margarine producers had been using sunflower lecithin in their recipes for many years and it was difficult

to comprehend that, essentially, this product had ceased to exist.

Some producers did not have enough supply in the warehouse to carry on manufacturing and many did not want to switch to soya lecithin as this has to be declared on labels as an allergen.

More than 80% of the global soyabean crop is also genetically modified, which is a big issue for European consumers.

The result was increasing demand for rapeseed lecithin and soaring prices.

An alternative was therefore needed very quickly – an affordable, balanced product made from a blend of emulsifiers which could imitate, or even improve, the functionality of sunflower lecithin.

Lecithin's role

The world’s first commercial emulsifier, which revolutionised the margarine industry, was invented in 1917 by the founder of Danish emulsifier and stabiliser company Palsgaard.

By the 1930s, lecithin – a naturally occurring emulsifier derived today mainly from sunflowerseeds, soyabeans or rapeseed – was being used in margarine for its broad range of functions, including making margarine spreadable straight from the fridge, imparting taste and mouthfeel,

delivering excellent baking performance, and creating a good browning effect when frying.

Lecithin molecules have a lipophilic end attracted to fats and a hydrophilic end with an affinity for water, enabling them to bind together substances that do not otherwise blend smoothly, such as oil and water.

Margarine is a water-in-oil emulsion, with lecithin essential for enabling the water and oil to mix well. This emulsifying action improves the texture and inhibits bacterial growth by separating the water molecules, thereby extending the shelf life of the margarine. It also cuts down on spatter when frying and enables good aeration in a cake batter, creating a soft light bake.

An alternative lecithin-free product needs to satisfy all these requirements. And with margarine and spread manufacturers operating in multiple locations, from Europe to Africa, with different recipes and processing conditions for each region, it was important to learn the effects of process conditions and fat recipes on the functionality of any new product.

Clean labels

With Palsgaard working to produce a

Photo: Adobe Stock

lecithin-free emulsifier and the increasing importance of leaner, cleaner labels, one of the development team’s goals was to streamline the raw ingredients in the new emulsifier to just two E numbers.

The first thing Palsgaard was make a product with citric acid esters of monoand diglycerides [E472c], and mono- and diglycerides [E471]. After two months of intense experimentation, the company came up with a completely lecithin-free recipe that worked well and was ready to be tested on customer sites. Another two months later, Palsgaard was sending out samples.

The two emulsifiers produced by Palsgaard are based on Roundtable on Sustainable Palm Oil segregated (RSPO SG), certified palm oil or rapeseed.

"Our RSPO SG-certified palm oil product is readily available and has a far higher yield than sunflower or rapeseed, but for those who prefer to be palmfree, we have also created an option with rapeseed, which is cultivated widely in many regions, including Europe and Canada," the company says.

“As we worked to optimise the blends, we must have gone through more than 200 trials. But just two months after taking on this challenge, the new products

were ready to be tested in customer sites, and we were sending out samples four months into the project, with many of our customers using them immediately.”

Fulfilling rising demand

Palsgaard says it would have produced lecithin-free emulsifiers even if the Ukraine war had not happened although development would have been slower as it typically takes a year for a new product to come to market.

Lecithin cannot provide all the functionality many manufacturers require, and not every producer wants to use it.

It is not the strongest emulsifier so it has to be used in relatively high ratios, which has a cost implication. It is also naturally dark in colour, which can affect product appearance. Another issue is that because lecithin contains some liquid oil, it can become a bit sticky in higher temperatures, which presents a handling problem.

Palsgaard says its new lecithin-free products are white and therefore have no influence on margarine colour.

The new products create a stable emulsion that does not get sticky even in a warm climate where no cold transport chain is available, says the company.

Two other key areas where the new lecithin-free emulsifiers deliver are taste neutrality and stability, according to Palsgaard.

“Lecithin’s phospholipid balance is affected by crop condition, which means every new batch has to be tested and balanced, as there is always variation.

“With our lecithin-free emulsifiers, any variation is extremely low, so it’s much easier for customers to rely on them for continuous production,” the company says.

The end result is a product which confers greater stability, better texture, a slightly higher melting point and better spatter control, Palsgaard says.

As well as providing a portfolio of standard recipes and processes for the new lecithin-free emulsifiers, Palsgaard also has a small-scale pilot facility capable of producing batches of up to 30kg, where manufacturers can be helped to develop products for specific applications without needing to produce tonnes of margarine.

"Customers can also potentially use less compared with lecithin-containing products, which is a cost advantage." ●

Hamed Safafar is the application manager and senior applications scientist for lipids at Palsgaard A/S, Denmark

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GLOBAL CROP - GOLDEN OPPORTUNITIES

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Prices of selected oils (US$/tonne)

STATISTICAL NEWS

Peanut oil

The Chinese peanut oil price fell by 2.8% month-onmonth (m-o-m) to ¥26.77/kg on 12 April, attributable to expectations of a year-on-year (y-o-y) increase in domestic output this season. According to the US Department of Agriculture (USDA), Chinese peanut oil output for this season is estimated to increase by 2% y-o-y to 3.3M tonnes. While this has limited upside movements to domestic prices, a 0.6% m-o-m decline in global production estimates, has tightened global supplies. Production declines are expected in Argentina, India and the USA this season, which is likely to reduce global exportable supplies. Unseasonal rainfall in Gujarat state in top peanut oil exporter India and a decrease in planted area have led to production declines.

Sunflowerseed and sunflower oil

The Mintec Benchmark Prices (MBP) for sunflower oil FOB Northwest Europe (6 ports option), declined by 9.1% m-o-m to €919.54/tonne on 14 April due to limited buying interest and a supply glut. High stock levels have built up as a result of large sunflowerseed purchases from Ukraine as the country has limited crushing ability due to the ongoing war with Russia. This has led to waning demand for sunflowerseed and oil over the past months, with the Russia-Ukraine conflict remaining the key market driver in these markets. On 18 March, the grain corridor deal allowing for exports from the Black Sea region was extended, albeit with little clarity on its length.

According to the USDA, global sunflowerseed supply for the 2022/23 marketing year (MY) is expected to decline by 11.9% y-o-y to 50.4M tonnes due to a significant reduction in output from Ukraine (–40.6% y-o-y) on the back of destruction of planting areas. Russia, on the other hand, is expected to produce a record crop this season, up by 4.4% y-o-y to 16.3M tonnes.

Butter

Butter demand fell markedly during March/April, with prices falling 2.7%, to €4,550/tonne as of 12 April. According to market sources, buyers covered their demand for March in January, when price levels were low. Increasing production supported a build-up of butter stocks across the EU, and increasing milk fat availability supported the production of butter. Seasonal increasing milk intakes and milk solids led to better availability of milk fat throughout March, with butter production expected to increase as a result. The USDA forecasts that global butter output will rise in 2023, marking the sixth consecutive year that production has increased globally. It is anticipated that output from India, the world’s biggest supplier of butter, will continue to expand this year.

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Groundnut oil price – Chinese yuan/kg

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Butter prices, unsalted EU, Mintec Benchmark Price (MPB) – €/tonne

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Sunflower oil price, Mintec Benchmark Price (MBP) – €/tonne

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