Palm Oil Internet Seminar

Section 2 : Special Focus on the US:
US-China Trade Dispute under Biden: Its Effects on Global Agricultural Trade and US Edible Oils
By: Mr. Paul Bloemendal

  • Paul Bloemendal is active as Enterprise Risk Management & Strategic Reframing Specialist under his company PRETB Pte Ltd in Singapore.
  • He brings in extensive experience as commodity trader having managed agricultural sourcing, shipping and trading desks in companies like Cargill, Noble, Ruchi and a range of risk management service providers with a strong focus on edible oils.
  • He writes a weekly market guidance update for the CME group and has worked regularly as speaker in partnership with MPOB in the past under the POTS series.
  • Besides his consultancy work, he is also an active entrepreneur, investor and mentor to pre-seed start-ups.
  • The most recent project that his is leading is called Paper Trader, reshaping the face of markets.
  • Paper Trader is digitizing the way we execute our paper and physical cargoes with embedded controls and risk management tools. It is expected to go live for the palm oil industry in Q3-2021.

• General topic: “Where does the USA stand in terms of global trade after 4 years of America first with bilateral trade focus vs the growing multilateral trade deals under Chinese influence and how does this affect the global agricultural trade

• Parts I will cover in likely around 25-30 minutes:
o Global agricultural markets with a focus on China and the USA
o The recent regional partnerships changing the political maps: RCEP/CAI
o China vs the US, what happened so far and why do they need each other?
o Implications and expectations of the Biden transition from Trump and the 14th 5-year plan in China
o From trade war to strategic competition
o Impact on agricultural commodities with a focus on Soybeans and Palm oil
o Recap

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Questions & Answers (6) :
Sarah Salihah Che Razali
3 years ago
Hi Sir, Sorry Sir, may I get back your slide?
Anthony Yap
3 years ago
Hi Paul; as the trade war between USA vs China continued. The latest development ban on XingJIang cotton industry. Cotton been ban for importation to USA and EU via BCI related to force labour issue. It also happened in Malaysia ; eg :similar cases against Malaysia Palm Oil ( 2 conglomerate plantation company) and Rubber product (Big Glove producer company) facing similar bans via CBP. Do you think that is this effort by USA to force small country to support them and to take side for this USA China conflict?
Hi Anthony, great questions, and something to consider. I don't think they do this for countries to take sides, but really to try to enforce their ways of viewing labour laws and employment practices. Personally, I don't believe that punishing an industry will help in getting a country to work on your behalf. Also, the whole conflict is more about global domination than about an actual conflict. Power is something people have to give you (just like respect) and forcing others by bans and duties is not in line with that.
3 years ago
3 years ago
Thanks Clarence, I don't think many people really care too much about Britain after Brexit in terms of palm oil demand. Ones out of the EU, they are just a single country that imports mainly refined palm via Rotterdam (in EU) to the tune of 390kmt. I don't see this changing in the near future. There won't be an opportunity to import it duty-free from GB to the EU, even if they sign up for some of the global trade pacts. Data can be found on https://www.statista.com/statistics/299573/palm-oil-uk-import-united-kingdom/ Biodiesel flows will compete for feedstock (UCO) but not particularly for the underlying normal CPO and products in my opinion.
Clarence Tee
3 years ago
Thank you for sharing the interesting presentation. Your paper discusses on developments in world trade following the conflicts between China and US. On world trade there is a third force in Britain through Brexit which is of interest to the palm oil industry. There is an interest to know the opportunities created for palm oil from the exit of Britain from EU. Would you be able to shade some light on this issue.
3 years ago
May I know what's your take on US vs China trade dispute and its effect on palm oil market in Malaysia, especially under Biden? Would the clean energy revolution and biodiesel initiative would impact the palm oil import in near term? Thank you
Thanks Kisho, I doubt there will be a lot of impact on the Malaysian palm oil markets from a US point of view. Some upside in imports, but it will never become a market that really makes a difference on the balance sheets. 1.5-1.7mmt max in my opinion. Additional biodiesel demand would be covered by soybean and waste oil mainly with more canola oil imports from Canada. In the Western world, using food products for energy will not be seen as sustainable ones it goes mainstream. So the main effects will be trade flow changes (more beans from Brazil to China and more Canola from Canada to the US) with limited direct impact on our markets. If China gets into a fight and there are no beans available, palm will be the balancing product to cover short term additional needs on the edible oil side.
3 years ago
Mohd Feroize
3 years ago
Any details from your end on how the US handles climate change and animal conservation.issue? Can you shade some light from the angle whether it is impeding edible oil trade especially palm oil imports. Our main interest in US-China trade dispute is whether China will again restrict soybean imports under the Biden administration. What is your take on this?
Hi Mohd, great set of questions and hard to reply here in 1 place. In general, the US is focussing a lot more on climate change as is seen in the US Infrastructure roadmap (https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/) but details there are still thin and unclear. What I believe is that the US will go absolutely full blast on locally produced biodiesel out of Soybean oil and waste oil. This will result in higher local crush + perhaps more canola oil imports from Canada. Palm oil is not really widely used for food so there could be some upside but there is no downside on the technical demand. Overall, I use 1.5-1.7mmt in total palm demand for the next year or 2 (no real change, some upside). As for China import restrictions on soybeans, there is little use on this. It will just change the flow as we saw in the past. Brazil will win with a larger export flow while the US will cater for EU and partially even South American imports. There are enough beans, but the logistics could be strained now under COVID. I doubt there will be any bans or hard restrictions as they are in no ones interest to start. Better to keep what is already a fairly firm stand from both sides and see how it pans out. The US needs to sell beans, and China needs to import as we saw a few years ago. For now, its easier to buy beans and stick at least to the agreement, while filling your reserves.
3 years ago
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