POINTERS: Global Oils and Fats and CPO Price Outlook 2020

By: Marketing And Market Development Division, MPOC

The Marketing & Market Development Division spearheads the promotion and marketing activities of Malaysia Palm Oil in the effort to make it the leading oil in the global oils and fats market. The aim is to create and establish a positive image for Malaysia Palm Oil in order to maximise returns to the Malaysian palm oil industry.

Market Expansion

This Division enhances the growth of the Malaysia Palm Oil market through new developments and the expansion of existing markets. To compete successfully, innovative approaches are developed. Various proactive programmes targeting trade and consumer markets are carried out to extend into new markets. In addition, new opportunities for investment, cooperation abroad and joint marketing are constantly being sought out to obtain a greater market foothold.

Seminars

Trade fairs and seminars such as Palm Oil Trade Fair and Seminars (POTS) showcase the products and services of palm oil producers and sellers, while broadening their business opportunities. At these events, business contacts and participants are updated with information and knowledge about the palm oil industry.

Market Networking

The development of a market intelligence network, market linkages and awareness programmes helps foster closer ties with industry-related bodies. These strategies help to educate and influence those who have a keen interest in Malaysia Palm Oil, i.e. policy makers, the trade community, consumers, scientists, medical professionals and researchers.

VIEW PROFILE

The year 2019 saw the oils and fats situation going through an unprecedented production period which severely affected price movement. Palm oil had a capricious year in terms of prices as the volatile market saw palm oil prices dipped below RM2,000/MT in January but ended the year at above RM3,000/MT. Palm oil production was higher in 2019, but not as high as earlier anticipated due fluctuating weather conditions especially in the second and third quarters of 2019. The higher OER in 2019 was also a factor which contributed to the increased production of palm oil.

For the year 2020, we will analyse issues that will affect palm oil price in 2019 such as demand and supply analysis and we will also take into account the influence of the other competing oils especially in the first half of this year. Demand for palm oil from major consuming countries such as India, China, EU and USA is nevertheless, expected to remain upbeat and we will take these factors into account. The regional analysis on the demand and supply scenarios will be aggregated at the global level to forecast the price, demand and supply balance in 2019.

We anticipate that there will be continued production growth among all types of oils and fats but demand will also continue to increase. In this year the oils and fats production globally will again be led by palm oil which we forecast will be close to 78 million MT and will play a crucial role in the global supply of oils and fats. As the two top palm oil producing countries contributing to 84% of the global palm oil production, Malaysia and Indonesia will be the focus of the international oils and fats trade. With about 28% of the global oils and fats production coming from Malaysia and Indonesia, the role played by both countries is vital in forecasting palm oil price.

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Questions & Answers (8) :

Edmund Yong

3 years ago

Any process needed to overcome GE contents?

POINTERS SECRETARIAT:
Posted on behalf of MMD : GE is formed at high temperature (>220°C). During normal refining, the deodorization temperature is at >260°C and GE will formed. GE can be removed via post refining, in which the RBDO will go through bleaching again and deodorized at lower temperature about 220°C. It is believed that acid in the bleaching earth will remove GE. Post refining is a promising solution but the oil need to be processed 2 times. As for now, the industry is trying to find solution to control the formation of GE from the very beginning.
3 years ago

Edmund Yong

3 years ago

Why Glycidol Esters (GE) been the issue brought up by EU?

POINTERS SECRETARIAT:
Posted on behalf of MMD : In refined vegetable oils and fats, GE are food contaminants found at highest levels. GE are hydrolysed into glycidol in the gastrointestinal tract. Glycidol is a genotoxic and carcinogenic compound. In view of the genotoxic and carcinogenic potential of glycidol, it is therefore appropriate to establish a maximum level for the presence of GE in vegetable oils and fats placed on the market for the final consumer or for use as an ingredient in food.
3 years ago

Tey Poh Leng

3 years ago

What are the measure been taken from Malaysia Palm Oil industry to overcome 1-MCPD issue now?

POINTERS SECRETARIAT:
Posted on behalf of MMD : Mitigation of 3-MCPD presents a much bigger challenge to the refining industry as once 3-MCPD formed during refining it cannot be easily removed. Refiners will therefore need to go through a combination process of pre-treatment followed by low temperature deodorization. Getting a good quality CPO with lower chlorine precursor also helps in mitigating 3-MCPD. Chlorine was known as the main precursor of 3-MCPD formation. Thus, as for now, MPOB has come up with the method of CPO washing (pre-treatment) to remove the chlorine in the oil. The Malaysian government has allocated fund to assist the industry to reduce the formation of 3-MCPD and GE in refined palm oil. Industrial trials has been carried out in collaboration with selected palm oil mills, refineries and technology providers to reduce the level of 3-MCPD and GE to the level accepted by all parties.
3 years ago

Edmund Yong

3 years ago

How to control GE contends in our Palm Oil?

Edmund Yong

3 years ago

What are the cost or process involve to overcome 3-MCPD?

POINTERS SECRETARIAT:

There will be an additional costs in mitigating the formation of 3-MCPD and GE as the oil need to undergo more procedures to achieve the permissible level. The formation of 3-MCPD can be reduced by using the method mentioned below:

1. Reduce chlorine in FFB by changing the fertilizers used

2. Reduce FFA and DAG in palm oil by ensuring milling is within 48 hours.

3. Washing of FFB to reduce chlorine precursor

4. FFB sterilization with steam without chlorine

5. The use of natural clay (Bleaching)

6. Low temperature deodorization (<230 C)

3 years ago

Edmund Yong

3 years ago

What is the requirement of 3-monochloropropane-1, 2-diol (3-MCPD) specification to our palm for exporting to EU market now?

POINTERS SECRETARIAT:
Posted on behalf of MMD : As for now, there are two proposed levels for vegetable oils and fats and fish oils for the final consumer, or for use as food ingredients: • 1.25 ppm for unrefined oils, refined oils and fats from coconut, maize, rapeseed, olives (except olive pomace oil) sunflower, soybean and palm kernel and mixtures of oils and fats from this category only. • 2.5 ppm for other refined vegetable oils (including live pomace oil), fish oil and oils of other marine organisms and mixtures of oils and fats from this category only. • For mixtures of oils and fats from the two different categories, those used as ingredients must comply with the maximum level set for each oil and fat. If the quantitative composition of the mixture is not known, then the sum of 3-MCPDs and 3-MCPDEs should not exceed 2.5 ppm.
3 years ago

Hafiz

3 years ago

Understand that Malaysia has implemetned B20 prgram in certain areas and may be fully expanded by 2021. Please advise how much the additonal local consumption of palm oil once the B20 programme fully kick-off.

POINTERS SECRETARIAT:
Posted on behalf of MMD : Based on calculations made by industry sources, if the B20 program is fully implemented, an additional 750,000 MT palm oil will be consumed domestically in Malaysia.
3 years ago

Hafiz

3 years ago

Hi there. Regarding the Supply Scenario for Indonesia, recently there is a news that B30 implementation is not as smooth as expected. Will this factor affecting the forecasted quantity for domestic consumption and also the global supply?

POINTERS SECRETARIAT:
Posted on behalf of MMD : At the moment, Indonesia is going ahead with their B30 program despite some resistance from the automative industry. If it is not fully implemented, the additional palm oil available will likely be diverted to other uses and the additional amount available will be negligible at best.
3 years ago