Palm Oil Internet Seminar

Section 1 : Palm Oil Price Fundamentals:
Malaysia's Palm Oil Supply and Demand Balance for 1st Half 2016 & Outlook
By: Mr. N. Balu


• 33 years of experience in the palm oil industry – in the area of Market Intelligence/Research, Market Promotion & Market Development; Designing and Executing Counter-Trade / Offset Deals and Palm Oil Credit Payments Arrangement (POCPA) • Malaysian Trade Negotiator for Bilateral, Regional, Plurilateral and Multilateral FTAs & WTO Trade Negotiations (Focussing on Commodities) : Trade in Goods/Market Access, Rules of Origin and Trade Facilitation. • Former Newspaper Editor with the New Straits Times (in charge of Beriteks) • Former Economics Research Officer with the Consumer Association of Penang (CAP) • Chairman of Global Economics and Marketing Conference, PIPOC 2015 & 2017 • Chairman of Palm Oil Economic Review & Outlook Seminar, 2016 & 2017 • Chairman of Palm Industry Labour: Issues, Performance & Sustainability (PILIPS), 2016 • Chairman of Roundtable on Oils & Fats Global Situation, Palm Oil Familiarization Programme, POFP 2016 • Presenter of Seminar Papers at International Conferences


• Certificate in Middle Management, CBI, Rotterdam, Holland. • Bachelor of Social Science (Hons in Economics & Management), USM, Penang. • Graduate Diploma with Distinction (Business Studies), RMIT University, Melbourne, Australia. • Master in Business Management (International Marketing), RMIT University, Melbourne, Australia. • Certified Practising Marketer (CPM), AMI, Australia. • Fellow of the Australian Marketing Institute, Australia. • Management Representative (Services) and Lead Internal Auditor for ISO 9001:2008, MPOB


• Malaysian National Shipping Council (MNSC Treasurer) • Committee Member for Commodities Customs Classification, Royal Malaysian Customs Department.

The first half of 2016 has been a very challenging period for the Malaysian oil palm industry due to palm oil supply shortage driven by the El-Nino event, decline in Malaysian palm oil up-take by major palm oil importing countries and weak Brent crude oil prices in the world market. Between Jan-June 2016, the industry was faced with lower palm oil production as crude palm oil (CPO) production declined by 16.1% to register at 7.59 Mn T as against 9.05 Mn T recorded in the corresponding period of 2015. The decrease in production was arising mainly from the lower fresh fruit bunch (FFB) yield performance due to the prolonged impact of the El-Nino event, which started in the second quarter of 2015 and continued up until the second quarter of 2016. Imports of palm oil also showed a significant decline, especially that of CPO. This was largely caused by the introduction of the Indonesian CPO export levy of US$50/tonne, which translated into higher importing cost by Malaysian importers of Indonesian CPO. The lower CPO production and palm oil imports in the first half of 2016 was caused lower palm oil stock levels, which registered 1.78 Mn T in June 2016 as compared to 2.31 Mn T in Jan 2016. On the demand perspective, exports of Malaysian palm oil declined by 7.2% to 7.29 million tonnes as against 7.86 million tonnes. This was primarily due to the decline in palm oil exports to the major markets, such as China, P.R. (-52.3%), India (-9.6%) and EU (-13.9%), arising from higher imports of soyabean, rapeseed and Indonesian palm oil. This paper will provide an overview of the performance of the Malaysian oil palm industry for the first half of 2016 vis-à-vis the first half of 2015, covering CPO production, imports, stocks, exports, local consumption and prices, as well as the anticipated prospect for the second half of 2016.

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