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MITIGATING THE NEXT WAVE OF MARKET UNCERTAINTIES:
Palm Oil's Significance in the Volatile Edible Oils situation
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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. VIEW PROFILE
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As we approach the final quarter of 2022, we have seen the global commodity market going through record highs in the first and second quarters followed by a period of rapid decline especially in the third quarter of the year. What caused the initial price rise was the geo-political conflict in Russia-Ukraine which caused concerns about supplies and disruptions in the supply chain due to port and shipping lines being either closed or limiting their operations.
This was followed by the world is entering into a protracted period of weak growth and high inflation as energy prices rose rapidly and has seen many countries struggle to manage their economies. Compounding this challenge is the soaring exchange rate of the US dollar which has made economists worry that the sharp rise is increasing the likelihood of a global recession.
Overall, the oils and fats production globally will again be led by palm oil which will play a leading role in the global supply of oils and fats. This presentation will analyse issues that will affect palm oil price especially in the final quarter of 2022 such as demand and supply situations of oils and fats. Malaysian and Indonesia will be the focus of the international oils and fats traders as about 30% of the global oils and fats production coming from both countries and the role played by both countries is vital in forecasting palm oil price. We will also take into account the influence of the other competing oils as it will affect demand and price of palm oil. Based on these factors, we will aggregate and analyse the demand and supply scenarios at the global level to forecast the price in 2022.
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| MITIGATING THE NEXT WAVE OF MARKET UNCERTAINTIES |
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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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Malaysian palm kernel oil exports are mainly to Europe, North Asia and USA which is used in the non-food industry. For more details we suggest that you go to their website https://bepi.mpob.gov.my/index.php/en/ or contact the Malaysian Palm Oil Board at dila@mpob.gov.my
6 months ago
Malaysia has launched the Malaysian Sustainable Palm Oil which is compulsory for all Malaysian palm oil companies to comply with. This scheme has successfully covered 98% of the oil palm plantation areas. As for the demand for sustainable palm oil, it normally originates from countries or regions that have legislation about use of sustainable vegetable oils such as in Europe, USA and Australasia regions. Other countries such as Pakistan and India may also import RSPO certified palm oil especially if they are used in the making of products which are re-exported to Europe and USA. Malaysian palm oil exported are MSPO certified and has been widely accepted in many importing countries.
6 months ago
The increase in exports of Malaysian palm oil and derivatives were contributed mainly by products such as processed palm oil, advanced downstream products and finished products. Imports from countries such as Turkiye, Saudi Arabia and Kenya increased significantly as they opted for Malaysian palm oil due to Indonesia withholding their exports earlier this year. The increase is also attributed to factors such as many countries’ economies resuming their economic activities completely and have seen the demand from the food preparation sector going up significantly. The anti-palm oil campaigns from the west particularly in Europe has not diminished despite shortfall in production of local edible oils. Despite being more affordable and meeting various sustainability standard requirements, palm oil still remains the main target of environmental NGO’s in Europe and remains unabated till today.
6 months ago
Initially in early 2022 there were concerns that demand could outstrip supply due to regional conflict and weather issues. However, these concerns were allayed by higher than expected production of sunflower and soybean oils so far this year. The opening up of most economies will also see demand increasing in 2022/23 but based on our estimates, supply will outstrip demand.
7 months ago
In Malaysia only 7% of rubber plantings are in plantation companies while the rest are smallholders. If there are to be rubber planted areas being converted to oil palm it would likely be done by plantation companies as it is a capital intensive exercise which they would have the financial capability. It would be unlikely for smallholders to convert to other crops such as oil palm as they might not have the financial means and it would also affect their income while waiting for the crop to mature.
7 months ago
Malaysia successfully implemented the B5 and B7 programs and is currently implementing the B10. The B20 was launched in early 2020 in a few selected regions which was just before the Covid-19 pandemic which caused a setback to its progress. We would also like to emphasize that the decision of higher biodiesel blending is a matter for government policymakers.
7 months ago
The increase in stocks will no doubt be sufficient for human consumption. Thank you for your comment.
7 months ago
Historically, it has shown that there has always been a negative correlation between CPO price and stock levels. This situation holds true not only to palm oil but also to all other vegetable oils as well as commodities such as crude oil and minerals As for our forecasting model we have always included this factor to forecast palm oil price.
7 months ago
Netherlands is the biggest importer of palm oil in Europe and it is not only for domestic consumption but also for trans-shipment to other countries especially within Europe. Malaysian palm oil exports to Netherlands have declined by 20.1% in the first three quarters of 2022 which is mainly attributed to the restrictions of palm oil usage in the biofuel sector. While it’s true that palm oil is the major feedstock, under the EU RED II, palm oil phase out from the EU Biofuel sector will start from 2023 and it is to be completely phased out till 2030. Although Russia – Ukraine conflict created disruption in the supply of sunflower oil but Sunflower Seed supplies were ample in 2021/2022, due to unusually large crops harvested in the autumn of 2021 in Romania, Bulgaria, Hungary, and France. Booming imports of Sunflower Seed since May 2022 further raised total supplies in the EU-27.
7 months ago
MPOC is aware of the challenge from Indonesia in regards to palm oil exports. Indonesia production of palm oil is more than double that of Malaysia so it is natural that they would also have a bigger export share. Nonetheless, we have taken cognizance of the different challenges in different regions and among our strategies to regain and not lose market share are as follows:- · Highlighting the sustainability of Malaysian palm oil. Since palm oil produced from Malaysia has to adhere to the Malaysian Sustainable Palm Oil (MSPO) standard, we have capitalized on this to promote palm oil from Malaysia. · Focus on marketing high value downstream and advanced downstream products. Malaysia has the lead insofar as technology and these products will generate a higher export value especially in advanced economies. · Strengthening current market where Malaysia has the lead by conduction regular market visits and B2B meetings as well as G2G meetings to address issues of concern affecting Malaysian palm oil · Opening up new markets which have yet to use palm oil extensively and conduction promotion activities in collaboration with Malaysian palm oil producers
7 months ago
When the conflict started, there were genuine concerns about the supply oil as both countries are the main producers of sunflower seed and oil. It should be noted that production of sunflower seed was record high in 21/22 and seed can be stored for a long time before crushing. Despite lower sunflower seed production, except during the initial period of the conflict, crushing activities were almost uninterrupted as they were adequate stocks from the previous season.
7 months ago
“Thank you for your question. Indonesia is the largest producer and supplier of palm oil in the world and any policy decision they make has an immediate impact on the market. We saw this in the first two quarters of the year when they restricted the supply of palm oil out of Indonesia and when the export ban was lifted in the end of May 2022. As far as the market share is concerned, Indonesia will continue to be the main supplier of palm oi in the market due to their overall size of the area under plantation, however, we could see more domestic consumption by Indonesia especially if they proceed ahead with their biodiesel program. Indonesia currently has B30 biodiesel program but Indonesia is targeting to launch B40 and has targeted complete the road trials by the end of 2022 and provide technical recommendations for B40 implementation policies. As far as the price forecast is concerned, it will most likely remain frim and trade between a range of between RM3,900/MT to RM4,400/MT until Q2 2023.
7 months ago