POINTERS 2014 MPOC
Palm Oil Internet Seminar
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ASSESSING 2022: MANAGING OPPORTUNITIES AND RISKS:
2022 Key Trends and Palm Oil Market Direction
By: Wan Aishah binti Wan Hamid

Puan Wan Aishah binti Wan Hamid was appointed as the Chief Executive Officer, Malaysian Palm Oil Council (MPOC) on 1 November 2021.

She started her career at IBM World Trade Corporation, Malaysia and later worked at several international computer companies before moving into the telecommunication and aviation industry at the beginning of the wave of privatization in Malaysia.

She was involved in the formation of mobile telecommunication infrastructure from the analog era into the digital era as well as the acquisition of spectrum allocation from International Telecommunication Union for Malaysia. Through the mergers and acquisitions of companies within the group, both domestically and abroad, she was appointed on most of the Board of companies of which several were listed on Bursa Malaysia such as Technology Resources Industries Berhad, Malaysian Airline System Berhad, Naluri Berhad and Orbcomm Global, L.P. listed on the NASDAQ stock exchange in the USA. She was one of the earliest corporate executives involved in the formation of the Malaysian Industry-Government Group for High Technology (MIGHT). After leaving the corporate world, she is now actively involved in the private businesses, which include being a financial consultant and guest speaker. She is a former member of PRIMA Corporation from October 2020 until December 2021.

Puan Wan Aishah holds a Master in Business Administration (Investment) and Bachelor of Science (Finance) from Southern Illinois University, USA.


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After almost two years since the onset of the COVID-19 pandemic, the global economy has seen a gradual recovery and is poised to stage a robust recovery in 2022. Global economic growth is expected to accelerate this year, largely on the strength of higher consumer spending in major economies.

Demand for vegetable oils has seen a growth in tandem with the economic recovery but supply disruptions has seen vegetable oil prices has increasing to record high levels especially over the past six months. The geo-political instability in Eastern Europe has resulted in increasing crude mineral oil prices and this has also pushed up vegetable oils prices and coupled with inflation rates are taking their toll on consumption of food and other commodities. World stocks of vegetable oils were slightly below the year-ago level and insufficient production is seen keeping stocks low.
Palm oil prices have skyrocketed in February 2022 and established new record highs, supported by current low stocks and lower than expected production in the two predominant producing countries. The Indonesian government’s decision to monitor exports and domestic supplies of palm oil was the latest in a series of chain reactions and the upward trend in palm oil prices is expected to continue at least until the third quarter of 2022.

We anticipate that 2022 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 and 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 recent issues that will affect palm oil price in 2022 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 2022.


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Questions & Answers (9) :
Logan Toh
3 months ago
Dear Pn Aishah, Thank you for the updates on the information on palm oil market. Since Indonesia is making a policy U-turn and raising its export levy for crude palm oil, what would be the outcomes of this move on crude palm oil price in global?
WONG YQ
3 months ago
Deaer Pn Aishah, Thank you for your informative presentation. Looking at the crisis in Sunflower oil, and the fertilizer price surging, I believe that palm oil will no longer cheap oil. Palm oil as the feedstock for biodiesel, will government continue support the B10-B20 programme ? thanks
POINTERS Secretariat:
The use of fertilizer makes up a significant production cost of oil palm plantations which is about 30% to 35% of ex-mill cost. It was reported that smallholders are expected to cut down on inputs as prices of nitrogen and phosphate have risen by between 50%-80% since mid-2021, while plantation firms may face challenges due to supply constraints. In addition to this, the labour shortage situation is still not fully resolved and will impact palm oil production. Palm oil will still remain the most competitively priced vegetable oil despite the higher cost of production due to these factors and will still remain cheaper relative to other vegetable oils despite the higher prices. As for the use of palm oil as the feedstock for biodiesel, Malaysia will continue with the biodiesel program despite the high price of palm oil. The B20 palm oil biofuel program is also part of the government’s National Agri-commodity Policy 2021-2030 announced on March 9, 2022 which was also emphasised by the Hon. Minister recently.
3 months ago
MOHD RAFIZAN BIN SAMIAN
3 months ago
Dear Pn Aishah, Based on the presentation from MPOB, the export of CPO from China and EU were declining. What's MPOC plan to mitigate this issue? Thanks
POINTERS Secretariat:
Thank you for the question. As for the EU market, 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, where MPOC is closely cooperating with the Ministry of Plantation Industries and Commodities on the WTO case. At this stage no information can be divulged as it is an ongoing case. As for China market, China does not import CPO to be refined locally. It is a refined market. As of the recent drop in import of palm oil, it is mostly due to the narrow spread between palm oil and soybean oil.
3 months ago
LAW CHOON SHENG
3 months ago
Dear Puan Aishah, How has the runaway prices of the main vegetable oils which are also used as biofuel feedstocks affected the countries which have biofuel programmes? Thanks.
POINTERS Secretariat:
There are a few factors which many countries consider in the biodiesel program. The most important consideration is the palm oil-gas oil price spread (POGO Spread). The narrower the POGO price spread, the more attractive it will be for biodiesel to be produced. The average price spread in 2021 was just below USD300/MT and so far in 2022 has risen to above USD350/MT. At existing prices and POGO priced spread, this would make the cost of producing biofuels higher. As such, countries with a mandated biofuel program will continue with their respective programs, while countries with discretionary blending will probably revise their blending rates.
3 months ago
MOHD RAFIZAN BIN SAMIAN
3 months ago
Dear Pn Aishah, First of all, thank you for the updates on oil palm market. My question is the appetite towards palm oil is increasing due to supply reduction of other fats and oil. Do you think the appetite towards palm oil will sustain after the recovery?
POINTERS Secretariat:
In the current situation, the shortfall of sunflower oil will inevitably lead consumers to look for other oils to fill the supply gap caused by the shortage of sunflower oil. The supply situation of sunflower oil will invariably recover and it will have a minor impact in the demand of palm oil. This is due to the competitive price of palm oil as well as the abundance of supply. Based on latest data, in the international market CPO is trading at a discount of USD300/MT to soybean oil although CPO traded at a premium to soybean about three weeks ago. Based on these factors, we foresee that appetite for palm oil will sustain after the recovery and any impact on demand will be minor. Palm oil being the superior oil for frying and other applications we are confident that consumers and manufacturers will prefer to continue using palm oil even after the supply situation eased.
3 months ago
Peng Kong Law
3 months ago
Dear Puan Wan Aishah, There are countries such as EU which are anti palm oil saying that it is linked to deforestation and causing climate change etc. With the shortage of sunflower oil, are these countries still able to hold their stand not to buy palm oil? Or they have no choice but to buy palm oil which they hate. What does MPOC market statistics tell us?Thank you.
POINTERS Secretariat:
EU countries are very vocal in their anti-palm oil stance. The shortage of sunflower oil supply has already had an impact as can be seen by the action of Iceland supermarket who are vehemently anti palm oil. The shortage in supply of sunflower oil has made them rethink their stand and they have publicly announced that they will start procuring palm oil for their products. Demand for palm oil will increase as it is the most abundantly available and reliable in supply.
3 months ago
Andrey Golovach
3 months ago
Dear Mrs. Wan Aishah On your slide #8 "Top MPO Export destinations" there are three countries significantly increased their import of palm oil: Egypt, Turkey, Vietnam. Obviously the values higher than 100% do not mirror the actual local palm oil consumption growth. It is probably replacing other oils or re-export (with additional processing or without it) to other countries. In second case Malaysian producers/sellers lose their potential surplus value by giving it to re-sellers or re-processors in these countries. If you think the second variant has a place to be then what must happen the situation changed and both final cunsumer and Malaysian producer win?
POINTERS Secretariat:
Increase in Malaysian palm oil export to destination such as Egypt, Turkey and Vietnam is to fill the gap leave either by short of palm oil import form other suppliers of short supply of other competing oils. In case of Egypt, the increase in of Malaysian palm oil import is reflecting the switch from Indonesian palm oil to Malaysian palm oil as the price of the latter is more competitive due the imposition of Indonesian palm oil export levy. Whilst in Turkey imports of Malaysian palm oil escalating as the country’s production of sunflower seed was lower in 2021, plus import of sunflower oil from Russia was disrupted by the recent Russia- Ukraine crisis. Russia supplies 65% of Turkey’s sunflower seed requirement. At present, freight cost is another factor which prompted country like Egypt to import bigger parcel as to reduce freight cost. Besides supplying for local market, Egypt is also function as re-export hub for other neighbouring Africa markets. As much as we want to export more value added products, freight cost, import tax factor on finished products can be the obstacles and best is to export raw materials or semi-finished for further processing in the destination countries. One way or another, Malaysian palm oil suppliers will have to weight all factors to make sure their products sells, either direct to end consumers or through re-export hub.
3 months ago
William Yap
3 months ago
Dear Puan Wan Aishah binti Wan Hamid, There seems to be a decline in export to China in Jan - Feb 2022 compared with Jan - Feb 2021, could this situation happen with exports to India with ongoing high cpo price, tight supplies and high bulking rates , demand from India turn to use more rapeseed oil
POINTERS Secretariat:
Thank you for your question. The decline of Malaysian palm oil exports to China in the first two months of 2022 is mainly due to the release of soybeans from the state reserves by the China Government to counteract against the expected shortfall of sunflower oil. As for India, they are still importing CPO despite the high price as it is still the most competitively priced vegetable oil in the market. Rapeseed oil is still between USD150 to USD200 per tonne higher than palm oil and for a price sensitive market like India, they will prefer to look for the most competitively priced oil. Although there will be tight supplies of other oils, palm oil is still the most reliable to fill the gaps caused by the shortage of other oils.
3 months ago
George Teh
3 months ago
Good day Puan Wan Aishah You projected that the 2022F SUR will dip below 9%, the lowest level since 2017. With declining production trend and rising consumption trend between 2017 and 2022F, do you have a view on how low a level of SUR would still be deemed "healthy" going forward? Thank you.
POINTERS Secretariat:
Dear Mr. Teh, Thank you for your question. The Stock Usage Ratio usually has an inverse relationship with price. The decline in production coupled with the rise in consumption has seen SUR to gradually go down and in 2022 we forecast it at just below 9%. This will be mainly due to the shortfall of sunflower oil production as a result of the Russia-Ukraine crisis. On your question of what level would be deemed to be” healthy”, in our opinion it should be in the range of between 9% to 13% as anything outside this would indicate a serious shortage of either production or consumption and will have negative impact on price.
3 months ago
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