Section 1: Oils & Fats Supply, Demand and Outlook:
African Swine Fever Recovery - Impact on China's Palm Oil Demand 2021
Mr. Desmond Ng
Desmond Ng holds a bachelor’s degree of Science in Nutrition and Community Health from University Putra Malaysia. He joined MPOC in July 2001 as Technical Marketing Officer before assuming the position of Market Analyst for Asia Pacific region since February 2002, handling the analysis of oils & fats market on all countries within the region designated. After pursuing his MBA (University of Strathclyde), he was promoted to Regional Manager (Asia Pacific, excluding China) in 2009 to undertake the responsibility of deriving strategies and subsequently promotional and marketing activities to improve greater use of palm products in the region. Since Feb 2012, he was posted to MPOC Shanghai as Chief Representative responsible for the promotion of Malaysian palm oil products in China. He was also being invited to speak at various conferences and seminars to share the market information on latest development of palm oil industry and its outlook.
The development of livestock industry has been the determining factor of the demand for soybean meal in China, which subsequently dictates or influences the intensity of oilseeds crushing activities and output of soybean oil. The outbreak of African Swine Fever (ASF) started in August 2018 has caused serious impact on animal feeds demand, and significantly lowered the crushing volume especially on soybean in 2019, a drop in soybean crushing volume first seen since China put in policies to encourage local crushing in mid-90s. The lower crushing volume in 2019 lowered soybean oil output and benefited palm oil, where palm oil import charted record high of 7.66 million MT in the same year. Nevertheless, with immediate action taken and also introduction of new policies to improve the management of livestock breeding, swine sector has slowly walked out from the outbreak and witnessed recovery since mid-2020, which subsequently increased the soybean crushing volume and soybean oil output. It has no doubt that the swine sector will fully recover in 2021 (to its pre-ASF level) and continue to grow, which may see soybean oil output surge beyond its peak output recorded in 2018 level. In another word, since both RBD Palm Olein (PL) and soybean oil are substitutable with each other, the higher soybean oil output means it will affect the demand for PL and finally lower the palm oil import. Nevertheless, besides soybean oil output, there are other factors or issues have taken place and this is expected to mitigate the overall impact on palm oil demand and import in 2021, which may not be as serious as many thought.
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