The Palm Oil

Oil palm, Elaeis guineensis, was introduced to Malaya in 1870 from West Africa. This hardy crop starts bearing fruit within 2 1/2 to 3 years and keeps bearing fruit for up to 25 years, making it the longest yielding crop in the world.

The fleshy outer layer produces crude palm oil and the seed yields palm kernel oil.

Palm oil is used in a variety of industries from the commercial manufacturing of food and beauty products to the manufacturing of non-food products.

Thursday, December 27, 2012

Palm Oil Advances to Four-Week High on China Demand Speculation


24/12/2012 (Bloomberg) - Palm oil climbed to the highest level in almost four weeks on speculation that demand will gain in China, the world’s biggest cooking oil buyer, and reduce record inventories in Malaysia, the top producer after Indonesia. 

The contract for March delivery gained as much as 1.2 percent to 2,437 ringgit ($795) a metric ton on the Malaysia Derivatives Exchange, the highest price for the most-active contract since Nov. 27, before closing the morning session at 2,425 ringgit. Futures rose 5.9 percent last week and have trimmed this year’s losses to 24 percent. 

Palm oil imports increased in November to 654,232 tons from 638,217 tons in October and 629,222 tons in November 2011, data released by China’s customs agency showed Dec. 21. Stockpiles in Malaysia rose to an all-time high of 2.56 million tons last month, the nation’s palm oil board said Dec. 10. 

“China demand is increasing before the New Year,” Yew Hong Han, a broker at OSK Futures & Options, said by phone today. Investors are buying on speculation that record inventories, which drove prices to a three-year low on Dec. 13, will decline in Malaysia after the country said it will allow exports at zero duty in January, he said. 

The average price for calculating tax on shipments was set at 2,147.81 ringgit a ton, the customs department said in a notification on Dec. 17. That’s below the minimum threshold of 2,250 ringgit a ton for tax to be applied, it said. 

Soybeans for March delivery gained 0.4 percent to $14.345 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March advanced 0.5 percent to 49.34 cents a pound.
Palm oil for May delivery climbed 0.2 percent to 6,868 yuan ($1,102) a ton on the Dalian Commodity Exchange. Soybean oil for May advanced 0.3 percent to 8,656 yuan a ton.

China To Enforce Rules on Palm Oil


27/12/2012 (New Straits Times) - Malaysia’s palm oil exporters will be trading at their own risk when selling cooking oil to China as the world’s most populous nation seeks to enforce rules, which were introduced in 2009.

“We are unable to yield to China’s cost-adding measures that are not of usual business practice,” said Palm Oil Refiners’ Association of Malaysia (Poram) chief executive officer Mohammad Jaaffar Ahmad.

This dilemma has wide implications because China is Malaysia’s biggest trading partner.
One of Malaysia’s significant exports to China is palm cooking oil for daily use. Every year, China spends some US$4 billion (RM12.3 billion) to buy close to four million tonnes of the kitchen staple from Malaysia.

It was reported that from Jan 1, China’s Inspection and Quarantine Bureau will start  enforcing a new set of technical specifications requiring the quality of imported edible oils to be of "landed quality" instead of "shipped quality".

Palm oil shipments into China that do not meet the new specifications would be turned away, said Jaaffar.

Explaining the implications of the new rules on imported edible oils, he likened the process to a consumer buying fruits from the supermarket and bringing them home.

"If you buy apples from the supermarket, you accept the quality as it is, at the time of purchase. You do not hold the supermarket responsible if, on the way home, the apples get bruised or deteriorate in quality because of oxidation from the high heat of your car parked under the sun."

The move seems to hold palm oil exporters responsible for the deterioration of the oil although the price paid is not that of door-to-door delivery.

"If the Chinese quarantine authorities want guaranteed landing quality, new cost-adding arrangements have to be paid for."

Jaaffar said the problem was not new as in the late 1970s to early 1980s, trading corporations in Pakistan and India had insisted on similar demands without wanting to pay for cost-adding arrangements.

"At that time, India and Pakistan wanted guaranteed landing quality and weight. After years of negotiation, we finally came to a compromise to give in to the cargo weight (final) but we cannot offer the quality for the same price."

Now, this demand, which was over and above trading norms, was being revisited with China.

"We've appealed on the practicalities of trading in meeting the new technical specification but the Chinese authorities seem to insist that 'off-spec' shipments will no longer be allowed to be re-refined at its shores.

"We are aware that authorities from China and Malaysia need to ensure imported cooking oil remains affordable and safe to consume by China's 1.3 billion population and, at the same time, reap steady income for palm oil exporters here," Jaaffar said.

In April last year, during his second official visit to Malaysia, Premier Wen Jiabao promised Prime Minister Datuk Seri Najib Razak closer diplomatic and trade ties.

Even though China had long been running a trade deficit with Malaysia, Wen reportedly said China had no complaints. In fact, China agreed to continue buying Malaysian palm oil.
"Malaysia and China are facing economic development challenges. Therefore, with deep cooperation, we can deal with such challenges and fulfil our mutual interests," Wen reportedly said.

Jaaffar expressed hope that both countries would come up with mutually beneficial arrangements.

"It is in the interest of Chinese consumers that they should be able to go on buying affordable and nutritious cooking oil. It is also in the interest of palm oil exporters that shipments into China should not be rejected for reasons they have no control over."

Tuesday, December 18, 2012

Palm News December 14 2012



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Palm News December 17 2012



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POINTERS on Price Trends 2013



POINTERS on Price Trends 2013

Mapping the Palm Oil Price - Market Outlook 2013

The year 2013 is going to be a volatile year for the oils and fats players due to uncertain global economic situation and erratic weather behaviour that will distort the supply and demand of oils and fats complex especially palm oil. With record high palm oil stock to start the year, forecasted lower oilseed production and uncertainty of the soybean complex, it is interesting to see which way will the palm oil price direction go.
That's why for Palm Oil Internet Seminar (POINTERS) on Price Trends 2013, we've lined up experts in forecasting commodity price trends and major players of the oils and fats industry to share with you their views on market development. You will also have the chance to interact with the speakers and start a discussion with other participants.
The papers will be available for download from 18 - 25 February 2013. So hurry up and register, today!
Register Now!

Palm Oil News December 18 2012



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Tuesday, August 28, 2012

Roundtable Initiatives: What Are They And What's Next?

22/08/2012 (CSR Asia) - In the realm of sustainability initiatives, a plethora of certification systems for different commodities  has developed in the last 20 years. Business leaders and civil society have created “Roundtables” on a range of such commodities including forestry products, fish, palm oil, and coca. A new initiative – the Sustainable Rice PlatformDuPont Crop Protection, the Kellogg Company, Mars Food Europe, NestlĂ©, and Syngenta. (SRP)– has recently kicked off with the support of the International Rice Research Institute (IRRI) here in Asia, after being initiated by the United Nations Environment Programme (UNEP). Founding corporate members include:

There is a lot of confusion about the effectiveness of many of these certification systems. Are they really good for the environment, people and communities? Can they really deliver sustainable practices? My view is that global roundtables have the potential to deliver strong conservation results and rapid change but they are very challenging to set up and run effectively.

What are they? Roundtable initiatives bring together diverse stakeholders – brands, retailers, processors, producers and traders, not-for-profits and academics to work together to improve the sustainability credentials of a product’s supply chain and assure consumers of sustainability. The initial aim is to build consensus round 6-8 key impacts, assess the range of global performance against those impacts and then develop performance-based standards to reduce the impacts. The goal is transformation of global commodity markets.

At the core of the system is a standard which is a defined set of social, environmental and economic criteria. Each standard determines who has a voice in setting the performance requirements, how it evolves over time, who does the audits and certifies compliance, who accredits the certifiers, and how compliance is signalled.
By tying the work to sustainability performance, not practice, the roundtables remain scale and technology neutral, so the onus is on each producer to find the best way to improve. If done well, these performance standards encourage innovation rather than compliance.

An example of “success”: Given the unique nature of sustainability issues facing each commodity, it would be dangerous to generalise about success. So let’s examine one example: the Roundtable on Sustainable Palm Oil (RSPO). The RSPO is one of the most successful round tables as measured by comprehensiveness: Global production of certified palm oil production reached 10 percent of global palm oil production in August 2011 and multi-nationals and industry players including New Britain Palm Oil and Wilmar have pledged to have 100% of their outputs certified sustainable by 2015.

Conservation NGOs including WWF have evaluated the RSPO and have said that the best performers in the industry have “turned commitment into action and transformed the market”. That being said, they have called for broader commitment amongst members and there is continued criticism as a result of continued deforestation.
Even though RSPO is considered the most successful agricultural sector certification program, in recent years some factions have broken away from the unifying strength of RSPO to set up their own standards. The result? A mind-boggling variety of palm oil certifications because, it is hard to please everyone.

What’s next: Rice presents a unique challenge for any quality control system because it is mostly grown by hundreds of thousands of poor farmers who have only very small farms of less than 1 hectare each. Moreover, 90% of rice is grown in developing countries in Asia, where access to knowledge and support is limited.

The SRP’s underlying philosophy is to “pull sustainable practices from the front”– meaning that farmers can be encouraged to adopt sustainable practices by rewarding them with lower costs and/or higher prices. This is happening on a small scale in northern Malaysia where NestlĂ© is offering rice farmers a premium for farming using specific standards. It is recognised amongst players in the rice sector that a standard developed by the multi-stakeholder platform has the potential to be much more successful than individual players going it alone.

Over the next 3 years, the SRP aims to develop a set of globally relevant management standards and quantifiable sustainability targets that suit a range of conditions. Key environmental challenges to be addressed include the use of water, fertilizer, herbicide and insecticide.   The Platform will seek to reduce poverty as farmers stand to gain by higher incomes through reduced input costs, higher production, and/or getting a premium on their rice. If successful, consumers and processors purchasing rice grown on the SRP will be assured it is good for the environment and farmer welfare.

It is too early to tell if the SRP will be successful. We know from experience that roundtables (and the resultant certification) are effective if there is sufficient majority of industry players and a highly recognised certification standard among the end consumers. In addition, there must be a strong consensus amongst a range of stakeholders on how to move forward in a unified way.

With many existing roundtable initiatives to learn from, the SRP has the potential to bring about changes in production practices as farmers and others in the supply chain support better practice and performance. Like the RSPO, it will not be a panacea to solve all of the challenges in the sector. At CSR-Asia we will follows its developments with interest and hope to see it accelerate positive change.