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Section 1: Oils & Fats Supply, Demand and Outlook:
Malaysian Palm Oil Supply and Demand Updates for 2021
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By: Datuk Dr. Ahmad Parveez Hj. Ghulam Kadir
Datuk Dr. Ahmad Parveez is currently the Director General of Malaysian Palm Oil Board (MPOB). He was appointed as Fellow of Academy Science Malaysia in 2016 and Member of National Biosafety Board (2018 – 2022). In July 2021, he was appointed as a Member of the Science Council of Malaysian Agricultural Research & Development Institute (MARDI). He sits on various other Boards; Board of Trustee of Malaysian Palm Oil Council (MPOC, 2019 -2022), Board of Trustee of Malaysian Palm Oil Certification Council (MPOCC, 2019 - 2023) and Board of Trustee of Institute of Malaysian Plantation and Commodities (IMPAC). Datuk Dr. Ahmad Parveez was previously the Chairman of Genetic Modification Advisory Committee under the National Biosafety Board (GMAC, 2010 – 2018). Recently, Datuk Dr. Ahmad Parveez was appointed as an Adjunct Professor in the Department of Biological and Agricultural Engineering, Faculty of Engineering, University Putra Malaysia (UPM). He is also very active in various professional societies including as the President of International Society for Oil Palm Breeders (ISOPB), Chairperson for the Asian Section of American Oil Chemists’ Society (AOCS) and Board Member of The International Society of Biocatalysis and Agricultural Biotechnology (ISBAB).
Datuk Dr. Ahmad Parveez was born in Taiping, Perak and obtained his secondary education at Sekolah Menengah King Edward VII, Taiping. He graduated with Bachelor of Science (UKM) in Genetics, Master of Science (UKM) in Molecular Genetics and a PhD (UPM) in Plant Genetic Engineering. He has 32 years of experience in Plant Molecular Biology, Genetic Engineering and Biosafety. He developed world first transgenic oil palm in 1997. His interest is in genetic modification of oil palm, biosafety of living modified organisms and oil palm sustainability.
He has obtained a number of prestigious awards both locally and internationally. He has 17 patents filed and six of them have been granted. He has authored and co-authored almost 100 papers in refereed journals and more than 250 conference papers. 
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The Malaysian oil palm industry experienced mixed performance during Jan-July 2021 as compared to that of in 2020. During the reference period, the industry experienced slowdown in CPO production. The CPO production declined by 8.9% to 9.89 million tonnes as against 10.86 million tonnes in Jan-July 2020. This was primarily due to low yielding period of oil palm, aggravated by COVID-19 pandemic. The prolonged closure of national border so as to curb the spread of the COVID-19 has affected the labour situation in the oil palm plantation sector. The low production has limited the capacity of the country to export palm oil and other palm-based products despite stable demand from importing countries. Exports of palm oil was down by 11.5% to 8.48 million tonnes from 9.58 million tonnes in the corresponding period in 2020. The tight supply of palm oil has put pressure on palm oil stocks in the country. In the period of Jan-July 2021, monthly closing stocks of palm oil declined between 12%-25% vis-à-vis Jan-July 2020. Meanwhile, palm oil stocks in July 2021 closed at 1.50 million tonnes, lower by 11.9% from 1.70 million tonnes recorded in July 2020. This situation has helped prices of palm oil and other palm-based products to soar to the highest level in the palm oil history. During the period, CPO price was traded higher by 66.3% or RM1,623.50 to RM4,072.00/tonne as against RM2,448.50/tonne in the same period in 2020. Despite the lower export volume, the higher prices of palm oil and other palm-based products has influenced total export revenue of palm oil and other palm-based products in Jan-June 2021 to surge by 38.5% to RM45.75 billion from RM33.03 billion in Jan-June 2020. This paper will further provide the details of the performance of the Malaysian oil palm industry for the first eight months of 2021, as well as the expected development for the remaining 2021.
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Section 1: Oils & Fats Supply, Demand and Outlook |
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Archives |
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MITIGATING THE NEXT WAVE OF MARKET UNCERTAINTIES Nov 14, '22 ~ Nov 18, '22 |
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ASSESSING 2022: MANAGING OPPORTUNITIES AND RISKS Mar 28, '22 ~ Apr 01, '22 |
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Section 2: Opportunities for Palm Oil in Asian Market Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Oils & Fats Supply, Demand and Outlook Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Price Direction Apr 05, '21 ~ Apr 11, '21 |
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Section 2 : Special Focus on the US Apr 05, '21 ~ Apr 11, '21 |
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POINTERS ON THE PRICE TRENDS Jun 22, '20 ~ Jun 28, '20 |
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Section 1 : CPO Price Trend Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Global Palm Oil Market Opportunities Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Special Focus Aug 19, '19 ~ Aug 25, '19 |
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Section 1 : CPO Price Trend Aug 19, '19 ~ Aug 25, '19 |
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Special Focus - India Feb 25, '19 ~ Feb 24, '19 |
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Section 1: CPO Price Trend Feb 18, '19 ~ Feb 24, '19 |
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Section 2: Global Palm Oil Market Focus Aug 06, '18 ~ Aug 12, '18 |
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Section 1: CPO Price Trend Aug 06, '18 ~ Aug 12, '18 |
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Section 2 : Global Palm Oil Market Focus Jan 29, '18 ~ Feb 04, '18 |
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Section 1: CPO Price Trend Jan 29, '18 ~ Feb 04, '18 |
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Section 2: Regional Focus : CIS Countries Aug 21, '17 ~ Aug 27, '17 |
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Section 1: Palm Oil Price Fundamentals Aug 21, '17 ~ Aug 27, '17 |
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Section 2: Market Challenges and Opportunities Feb 20, '17 ~ Feb 26, '17 |
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Section 1: Price Directions Feb 20, '17 ~ Feb 26, '17 |
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Section 1 : Palm Oil Price Fundamentals Aug 22, '16 ~ Aug 28, '16 |
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Section 2 : Trade Issues and Market Prospects Aug 22, '16 ~ Aug 28, '16 |
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2016 Market Direction - Twists and Turns of Palm Oil Prices Feb 22, '16 ~ Feb 29, '16 |
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Second Half 2015 - Anticipating Market Price Direction Aug 17, '15 ~ Aug 23, '15 |
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Special Focus: Indian Sub-Continent Aug 17, '15 ~ Aug 23, '15 |
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Opportunities, Challenges And Trend In 2015 CPO Price Feb 23, '15 ~ Mar 01, '15 |
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2nd Half 2014: Market Challenges, Predictions And Directions Aug 25, '14 ~ Aug 31, '14 |
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Anticipating 2014 Palm Oil Price Direction Feb 17, '14 ~ Feb 24, '14 |
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Prospects For Second Half Of 2013 - Managing Price Fluctuations Jul 22, '13 ~ Jul 29, '13 |
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Mapping The Palm Oil Price - 2013 Market Perspective Feb 18, '13 ~ Feb 27, '13 |
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Palm Oil : Challenges, Opportunities And Latest Market Directions Aug 06, '12 ~ Aug 17, '12 |
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2012 Price Direction, Issues & Challenges Feb 13, '12 ~ Feb 20, '12 |
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Challenges, Opportunities And Latest Price Trend Aug 08, '11 ~ Aug 16, '11 |
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Challenges, Opportunities And Price Direction Feb 07, '11 ~ Feb 17, '11 |
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2010 Year End Prospects - What Lies Ahead? Aug 02, '10 ~ Aug 08, '10 |
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Posted on behalf of Dr Ahmad Parveez The survey on Ganoderma disease spread in oil palm estates in Malaysia is being carried out every 5 years interval. The last survey was carried out in 2017, whereby 221,000 ha from 2,570 estates responded to the survey were affected by the Ganoderma disease. In 2010, MPOB has reported 59,148.02 ha Ganoderma infected areas. MPOB has also conducted Ganoderma survey among the smallholders under the Oil Palm Smallholders Replanting scheme (TSSPK), whereby 8,752.87 ha from 4,490 smallholders’ plantations were affected. The next Ganoderma nationwide disease survey will be conducted in 2022.
2 years ago
Posted on behalf of Dr Ahmad Parveez : PO intake by Kenya increased by 29.9% to 0.41 million tonnes due to higher re-export activities to neighbouring landlocked countries (Burundi, Uganda & Ruanda). In addition, the increase was due to higher intake of CPO for further processing due to lower import duty compared to PPO. Exports of CPO to Kenya surged by 47.7% or 110,996 tonnes to 343,902 tonnes in Jan-Sept 2021 as against 232,906 tonnes during the same period in 2020.
2 years ago
Posted on behalf of Dr Ahmad Parveez : MPOB does not impose any restrictions on investment in the oleochemical sector in Sabah and Sarawak. In fact, there are four Palm Oil Industrial Clusters (POIC) that have been established in Sabah and Sarawak – two each in Sabah and Sarawak respectively. The establishment of POIC is to facilitate the development of the oil palm industry, specifically for the development of palm-based downstream industry, that produced high value-added products. This includes the refining, oleochemicals and biodiesel sector. Other than Lahad Datu and Sandakan, Bintulu is also another major port in East Malaysia. Apart from that, there are also other ports in East Malaysia, such as Kunak, Tawau, Senari and Kuching that handle small volume of exports.
2 years ago
Posted on behalf of Dr Ahmad Parveez : The Indonesian plan to stop exporting CPO will have an impact on us as both countries are the two major sources for palm oil. If it is to be materialized, then Malaysia will become the major source for CPO. This may affect our domestic processing sector as they may not have enough raw material for further processing. Thus far, the Malaysian Government has yet to announce any plan to curb the exports of CPO. Being the export-oriented industry, more than 85% of palm oil produces is exported primarily in the form of processed/refined products (PPO). Nevertheless, the export volume of CPO has seen gradually taking the portion that was made by the PPO arising from the import policy introduced by the Indian Government. MSPO will not be a substitute for RSPO or any other palm oil sustainability certification that currently exist in the market. MSPO is complementing other sustainability certification. In the bigger picture, MSPO will help Malaysia to ensure 100% of its palm oil are sustainably certified. In order to increase and strengthen the recognition of MSPO, continuous engagement and collaboration with major Malaysian palm oil export market especially EU, India and China is important to promote MSPO as a premium choice for sustainable palm oil products. As MSPO was recognized by Tokyo Organizing Committee on Olympics and Paralympic Games (TOCOG) 2020, we believe that other countries which will be organizing Olympic, Paralympic or winter games would also recognizing MSPO.
2 years ago
Posted on behalf of Dr Ahmad Parveez : The low export of palm oil during January to September 2021, which declined by 12.0 % to 11.24 million tonnes as against 12.77 million tonnes during the same period in 2020 was due to the lower production of palm oil during the period. Despite the lower export volume, demand for palm oil in certain markets are still stable. In India, exports of palm oil during the nine months 2021 surged by 60.6% to 2.49 million tonnes and Iran increased by 63.2% to 0.36 million tonnes. MPOB is committed to improve the palm oil productivity through mechanization and automation. MPOB has emphasized on the usage of high yielding planting materials in order to boost the palm oil productivity in the long term. In term of export performance, MPOB continues to enhance trade cooperation with importing countries as well as carried out promotional activities for palm oil products. MPOB’s regional office continues to carry out activities such as market visit, participating in trade fairs and giving the technical advisory services on the benefit of using palm oil in product formulations.
2 years ago
Posted on behalf of Dr Ahmad Parveez : To date, there is no collaboration between MPOC and MPOB has been established in regards to the labour issue particularly the human right issues. However, as the agencies under the Ministry of Plantation Industries and Commodities (MPIC), MPOB and MPOC have been actively providing information and ideas to the ministry in addressing these issues. Since the policies on the employment of foreign workers is beyond the jurisdiction of our ministry, our effort in addressing the issue are more focused on educating the industry players on forced and child labour and enhance labour practice through MSPO. Since August 2020 until now, MPOB together with MPIC have held seven (7) series of dialogue session with the industry player so as to educate them on the elements and the indicators of forced and child labour. These sessions were also attended by ILO representatives. This initiative is expected to eliminate the probability of the occurrence for forced and child labour cases. Hence, improving the image of the Malaysian palm oil industry. In terms of the infrastructure, plantation companies are encouraged to provide the workers with minimum standards facilities according to Act 446 (Amendment) 2019 on Workers' Minimum Standards of Housing and Amenities. The enforcement of Act 446 is under the purview of the Ministry of Human Resources.
2 years ago
Posted on behalf of Dr Ahmad Parveez : The CPO reference price for setting the export duty rate is from the Royal Malaysian Customs Department (RMCD). MPOB only provide RMCD with the monthly average of CPO price (FOB US$/T) as reported by exporters via e-Registration system of MPOB. RMCD will use their own exchange rate to determine the gazetted CPO price in Ringgit Malaysia (RM). After getting clearance from RMCD, the gazetted CPO price will be published on MPOB website for industry reference. MPOB has produced more than 50 research technologies on palm mechanisation and automation that are ready to be commercialised. Among them is the Cantas Electro – a motorised cutters for harvesting purposes which is powered by a battery system. Due to its lightweight and lesser vibration as compared to the previous Cantas version, Cantas Electro is suitable to be used by all types of planters especially the small and medium oil palm estates as well as the independent smallholders. For further information on the product, kindly contact Mechanisation and Automation Unit of MPOB at rizal.ahmad@mpob.gov.my.
2 years ago
Posted on behalf of Dr Ahmad Parveez : The Malaysian oil palm planted area as of September 2021 had decreased to 5.77 million hectares from 5.86 million hectares as of September 2020, partly due to the delay in replanting activities arising from the prolonged MCO in Malaysia. In addition, the reduction in planted area is also attributed to the changes in MPOB licensing procedure of the independent smallholders in order to track and certify all independent smallholders with MSPO, whereby the renewal of the license is no longer on automatic basis but upon the application of the smallholders themselves.
2 years ago
Posted on behalf of Dr Ahmad Parveez : In order to increase the FFB yield, the problem of labour shortage needs to be addressed immediately. The government’s announcement of permission to bring in 32,000 foreign workers is expected to help the industry in raising the level of palm oil production back to the target of 20 million tonnes a year. On top of that, the plantations companies are encouraged to increase level of mechanisation and in a situation where CPO prices are currently high then it is a good time for plantation companies to invest on mechanization to reduce reliance on manual labour and thus increase their productivity.
2 years ago
Posted on behalf of Dr Ahmad Parveez : It is expected that the situation in the remainder of 2021 will not change much from the current situation. FFB production is likely to decrease in the coming months, especially in November and December, due to the upcoming monsoon season and shortages of harvesters in the plantation sector, thus will affect Malaysia's CPO production in 2021. Coming 2022, as Malaysia is currently in the midst of the endemic phase transition of COVID-19, the Government of Malaysia has permitted foreign labour to enter the country. For the starting, around 32,000 foreign workers have been approved to be brought in to address the labour shortage in the oil palm plantation. This is expected to improve the labour situation in the oil palm plantation, hence Malaysia is expected to gain some recovery in palm oil production in 2022.
2 years ago
Posted on behalf of Dr Ahmad Parveez : Malaysia does not have any moratorium to limit the oil palm plantation area like Indonesia. However, the Government of Malaysia is committed in limiting the total oil palm cultivated area to 6.5 million hectares, as well as maintaining at least 50% of its landmass under forest cover as pledged during the Rio Earth Summit in 1992. Based on available statistic from the Ministry of Energy and Natural Resources, Malaysia has 55.3% of land consisted of forested areas.
2 years ago
Posted on behalf of Dr Ahmad Parveez : Analysts estimate that the price of CPO is expected to stay at high levels (above RM4,000 per tonne) until early first quarter of 2022. The current high price can be lasting if the fundamental and market sentiment factors continue to support the prices. Starting November-December 2021, the price is expected to be stabilized around RM4,000 - RM4,500 per tonne. For the record, the highest average daily price in the history of Malaysian palm oil industry was recorded at RM5,366.50 per tonne on 21st October 2021 with the highest and lowest traded contract were at RM5,430.00 per tonne and RM5,200.00 per tonne respectively.
2 years ago
Posted on behalf of Dr Ahmad Parveez : The decline in export of Malaysian palm oil to China was due to strong competition from the Indonesian exporters in view of the revision in export tax and levy that raises its price competitiveness. For the period January to August 2021, Malaysia’s palm oil exports to China reduced by 43.2% to 1.04 million tonnes. On the other hand, exports of palm oil from Indonesia increased by 51.0% to 2.99 million tonnes. Similar to China, the decline in export of palm oil to Bangladesh was also due to higher uptake of palm oil from Indonesia. During January-August 2021, Malaysia’s export of palm oil to the country declined by 66.1% to 0.74 million tonnes whilst export of palm oil from Indonesia rose by 23.2% to 0.83 million tonnes. For the EU, the decline in export of palm oil was due to the tightening supply of palm oil due to lower production and lower demand from the edible and non-edible sectors.
2 years ago
Posted on behalf of Dr Ahmad Parveez : MPOB Washington DC had already established contact with the US Customs and Border Protection (CBP) even before the imposition of the Withhold Release Orders (WRO). MPOB Washington DC had convened discussions with the two respective Malaysian companies imposed with the WRO and provided related updates and recommendations based on information obtained from the CBP. MPOB shall continue exchanging information with these companies and shall provide the latest updates in due course. On top of that, MPOB continuously collaborates with the Malaysian Palm Oil Certification Council (MPOCC) to strengthen and promote the Malaysian Sustainable Palm Oil (MSPO) Certification Scheme to the Bureau of International Labour Affairs (ILAB) under the US Department of Labour (DOL). The main purpose of the MSPO is to get the entire industry, large plantations and smallholders, to adopt more sustainable practices in the industry.
2 years ago