POINTERS 2014 MPOC
Palm Oil Internet Seminar
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Section 1: Price Direction:
Global Palm Oil S&D Forecast for 1st Half 2021
By: Dato' Dr. Hj. Wan Zawawi Wan Ismail

Dato’ Dr. Wan Zawawi bin Wan Ismail is currently the Chief Executive Officer of Malaysian Palm Oil Council. Prior to this, he was the General Manager for Kelantan Utilities Mubarakan Sdn Bhd in 2020. He had held many positions in Kelantan State Economic Development Corporation before he became the Group CEO of the organization in 2014. Dato’ Wan also currently serves as the Director for Amanah Ikhtiar Malaysia Sdn Bhd and PMBK Sawit Sdn Bhd and is on the Board of Trustees for Yayasan Darul Naim.

In 2016, he was awarded with Darjah Kebesaran Kelantan which carries the title Dato’. He has also received the Certificate of Excellence from Ministry of Education in 2010 and Master Trainer Certificate in 2009.

Dato’ Wan Zawawi Wan Ismail has a PhD Extension Education (Community Resource Development) which he received from University Putra Malaysia in 2017. He also has a Master’s degree in Human Resource Management which he completed in 2001 from the same university.

Dato’ Wan is a result driven CEO with over 10 years of experience in leading and enhancing growth and revenue in a number of different corporations in various industries. His main objective has been facilitating change and human capital development in ensuring optimum performance of the organization.


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As we approach the 2nd quarter of 2021, we have seen the global economy slowly but surely staging a recovery from the events of the previous year. There are positive signs that the economic activities would resume but subject to adhering to new norms as a result of the global pandemic. The dynamics of business has shifted from physical to virtual and many countries adapted to this new norm.

In reviewing the global economic performance of 2020, it could be best described as a year like no other before. Economic growth slowed down, beset by low commodities prices and this situation was further exacerbated by the Covid-19 pandemic which halted most economic activities. However, as the saying goes, every cloud has a silver lining and this was seen in the recovery of palm oil prices at the latter end of the year. The global economy slowly adapted to the challenges and demand gradually picked up. This is reflected in the rise in palm oil prices to close the year at RM3,600/MT and this upward trend in palm oil prices is expected to continue at least until the second half of 2021.

We anticipate that 2021 will see a continuous recovery both in the global economy and oils and fats prices. There will be production growth recovery among all types of oils & fats while demand will also continue to increase in tandem. Oils and fats production globally will again be led by palm oil which will play a crucial role in the global supply of oils and fats. As the two top palm oil producing countries contributing to 85% of the global palm oil production, Malaysia and Indonesia will be the focus of the international oils and fats trade. With 30% 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.

We will analyse regional issues that will affect palm oil price in 2021 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 is 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 in 2021.


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Questions & Answers (8) :
Peng Kong Law
7 months ago
1)Now that Malaysia has the majority of palm oil production MSPO certified, when is MPOC going to launch it as a brand? 2) Any strategies to make it acceptable to consumers as RSPO may want its name to dominate?
POINTERS SECRETARIAT:
1) Now that Malaysia has the majority of Palm Oil Production MSPO Certified, when is MPOCC going to launch it as a brand?. MSPO Logo is a Registered Trademark under Intellectual Property Cooperation of Malaysia (MyIPO) since 2014. Protected under Trademarks Act 1976 and Trademarks Regulation 1997. MPOCC has published the document for Issuance of MSPO Logo Usage License by MPOCC under the MSPO Certification Scheme on 20 September 2017(revised Publication Date 1 October 2019) Objective of MSPO Logo; 1) To indicate that the product originated from an oil palm planted area certified to the requirements of the Oil Palm Management Certification (OPMC) standard 2) To indicate that the organisation is certified to the MSPO requirement (OPMC or SCCS) 3) To support the use of MSPO certified palm oil and palm oil products MSPO Logo Usage is available for On-Product Usage (Logo Users must be certified with MSPO SCCS) and Off-Product Usage. MSPO Logo usage application available at https://mspotrace.org.my/Logo_home As such MSPO Logo has been the brand of MSPO certified palm oil and its products since September 2017. Currently, MPOCC is actively promoting the usage of MSPO Logo throughout the palm oil supply chain actor, both domestically and internationally. 2) Any strategies to make it acceptable to consumers as RSPO may want its name to dominate MPOCC is increasing its effort to promote and making MSPO acceptable in other countries, thus it will build consumer confidence. MSPO has been recognised as one of the sustainable palm oil in Tokyo 2020 Olympic and Paralympic Games Sustainable Sourcing Code. MPOCC has also signed an MoU with China Green Food Development Center in collaboration for mutual recognition of MSPO certification and China Green Food certification. Currently, MPOCC is proposing and negotiating with various international organisations to utilise the MSPO certified products in their market. We are also in the midst of devising and executing strategies to ensure that MSPO Logo are being utilised on product labels in the global market. One such strategy is the development of MSPO Simple Verification Scheme (SVS). For more information or if any party is interested in participating in MSPO SVS, kindly contact MPOCC for our further proposal and negotiations. For interested parties, kindly contact MPOCC for more information on programmes and collaboration in MSPO certification and branding through MSPO Logo. We welcome your participation. Apart from that, MPOCC also has introduced the MSPO Trace platform as a tool for consumers to identify the origin of the palm oil source of their consumed products. MSPO Trace is available in desktop and mobile version which is more convenient for the consumers to trace their product source either sustainable or not. This system ensures the Malaysian palm oil supply chain is produced from sustainable products. MPOCC is open to any collaboration on research and development for certification of sustainable palm oil products. That is not limited to the recognition of the standard but we will assist any parties or educational institutions that want to research MSPO Certification Standards and its implementation to the Malaysian palm oil industry. This could help to promote MSPO Certification to the international level simultaneously acceptance of the MSPO certified products as one of the sustainable palm oil sources. Last but not least, there is no fixed premium price set for MSPO certified crude palm oil and the pricing will be based on business arrangement . This will result in a more competitive price for a credible sustainable product to consumers.
6 months ago
MEGAT SYAZWAN SHAH
7 months ago
Assalamualaikum Dato', My question is, will the buyer change their appetite towards palm oil with the massive taxes imposed towards palm oil especially in India? Thank you
Dato' Dr Wan Zawawi:
Waalaikumussalam. Thank you for the question. India is a net importer of oils and fats. In 2019, India imported approximately 62.4% of their total oils and fats requirement to meet the gap between supply and demand. Palm oil is the largest imported edible oil in India and despite of the current high price and high import tariff in India, Malaysian palm oil is still one of the most competitively prices edible oil in the world and it is widely used in the oils and fats and food industry in India.
7 months ago
MOHD RAFIZAN BIN SAMIAN
7 months ago
In your opinion, will the price of CPO plunge dramatically after steady increase in the recent months?
Dato' Dr Wan Zawawi:
Thank you for the question. In our opinion, the price of palm oil will stay on the higher side in the first half of 2021. This is due to a combination of factors like supply constraints, labour shortages and heavy rain in January and February which led to a decline in production in the first two months of 2021. Malaysia's palm oil production registered 2.2 million for January to February 2021 which is 228,002 MT less than the production for the same period last year. MPOC forecast CPO price to move within the range of RM3,502/MT to RM4,190/MT with an average of RM3,842/MT
7 months ago
MOHD RAFIZAN BIN SAMIAN
7 months ago
The total consumption of palm oil was lower in 2020 when compared to 2019. Does this happened because of the palm oil boycot in EU?
Dato' Dr Wan Zawawi:
Thank you for the question. There are a number of factors which contributed to the decline in consumption of palm oil in 2020 as compared to 2019. The biggest factor was the Covid-19 related restrictions which forced almost the entire world to go in to a different degree of lockdown which severely impacted the HORECA segment around the world which is one of the major consumer of palm oil. The production of palm oil in 2020 also decline due to adverse weather which was also a contributor to lower consumption. The decline in the consumption of palm oil in EU in 2020 was not because of the restriction on palm based biofuels in EU as that comes into effect from 2024. The decline in consumption was also related to lockdowns as EU was the worst hit continent by Covid-19.
7 months ago
Anthony Yap
7 months ago
Dato' Dr Wan Zawawi; industry players were talking on labour shortage in plantation last year (2020) till currently. Why Malaysia still can produce 19.14 million mt CPO (or FFB equivalent) despite labour shortage and with COVID19 restriction?
Dato' Dr Wan Zawawi:
Thank you for the question. According to the data from MPOB, Malaysia produced 19.14 million MT of CPO in 2020 which was 0.7 million MT lower than the 19.8 million MT produced in 2019. COVID-19 was one of the reasons for the decrease in production.
7 months ago
Samuel Avaala
7 months ago
A VERY GOOD OUTLOOK FOR PALM OIL - THIS WILL BENEFIT THE MILLIONS OF SMALLHOLDERS WHOSE LIVELIHOODS DEPEND ON PALM OIL
LAW CHOON SHENG
7 months ago
Y.Bhg. Dato Dr.Wan Zawawi, Congratulations to Y.Bhg Dato on your appointment as new CEO of MPOC. The palm oil price has gone up a lot which is a very good sign since Y.Bhg.Dato took over the helm. I find the presentations very interesting and will spend next few days going through them. Well done to the team who did POINTERS. I have a few questions which I hope Y Bhg can enlighten , if you do not mind:- 1) Good news that Saudi Arabia is going to buy more palm oil. I guess sustainability certification e.g.MSPO, RSPO is not enough. What other certifications may be needed? e.g halal and what else? If so, can these other certifications be plucked from somewhere else and apply to palm oil? 2) Malaysian Government has gone to WTO for dispute on discrimination on palm oil in January 2021. Can Y Bhg Dato share with us , what is the outcome so far? Any good news? 3) Malaysian palm oil always face strong competition for market from Indonesia. MPOC under Dato's new stewardship , any new vision or strategies to manage this issue? Thank you. LAW C.S.
Dato' Dr Wan Zawawi:
Thank you for your questions. The reply is as follows: 1) Malaysian palm oil exporters need to comply to the request set by the customs and importers of any countries. Certain importers seek additional certificates in addition to those required by customs, such as halal certificate, MSPO certificate, and RSPO certificate. 2) Malaysia has filed a legal action with WTO, against the European Union regarding measures adopted by the EU and its member states affecting palm oil and palm crop-based biofuels. At this stage no information can be divulged as it is an ongoing case. 3) We are expanding our promotional and market development efforts through tapping into new growing market segment. China, EU, ASEAN, Saudi Arabia and Africa will be the major target for export destinations. Research into new areas and product diversification are the other strategies to counter Indonesian competition.
7 months ago
HCLeow
7 months ago
Dear YB, Is the 2021 production forecast of 19.6m tonnes factoring in the labour shortage? and if not what would be the potential loss from the labour shortage? What was the total areas replanted in 2020? 2020, Malaysia palm oil exports were indirectly benefited as Malaysia palm prices were more competitive than Indonesia especially in 1H20. Do you with the new Indonesia exports duty structure, Malaysia is still able to exports more in 2021? Is this exports forecast is at best case scenario or base case? Thank you.
Dato' Dr Wan Zawawi:
Thank you for your questions. The reply is as follows: 1) The labour shortage was already factored into the CPO production outlook. Production forecast is higher in 2021 as the COVID situation has eased. Production in 2021 is also expected to increase with better fertiliser application as the CPO price has improved since 2019. 2) Total replanted area is officially monitored by MPOB. We suggest you to redirect this question to MPOB speaker. 3) In 2020, Malaysian palm oil export was low as compared to the export in 2019 due to multiple factors. However in 2021, export is forecast to increase to 17.5 million MT, increasing by 0.57%, driven mainly by low global edible oil supply. The tightness in global edible oil supply in 2021 is indicated by lower edible oil stock usage ratio which is forecast at 13.01%, decreasing by 2.9% compared to the previous year. Overall, palm oil will benefit most under this scenario since it is the most competitively priced edible oil.
7 months ago
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