The latest tax adjustment will depress the Indian refiners’ margin

The latest tax adjustment according to him, would see the difference between CPO and Refined Bleached Deodorised (RBD) palm olein decreased to 7.50 per cent from the previous 10 per cent and this will depress the Indian refiners’ margin.

He expects India, which is 70 per cent import-dependent on edible oil to feed it’s over a billion population, will import 10.20 million tonnes of palm oil in 2019 to 2020 from 9.41 million tonnes previously.

Meanwhile, the demands for CPO for biodiesel will also see a definite upswing as Indonesia, Malaysia, and Thailand increase their national blends of diesel and fatty acid methyl esters (FAME) to make the clean and renewable fuel.

For instance, Indonesia will increase its mandatory biodiesel policy from B20 to B30 in January 2020.

“The policy is expected to see an additional 3.3 million tonnes of CPO being absorbed domestically to produce 9.6 million kilolitres of FAME by 2020,” said Yusof.

Similarly, Malaysia is also planning to increase its biodiesel blend from B10 to B20 for the transportation sector and B7 to B10 for the industrial sector in 2020.

The move is expected to absorb more than 1.3 million tonnes of CPO domestically.

“In other words, if the CPO supply is limited due to lack of fertiliser application and extreme weather, the biodiesel implementation will further limit the palm oil supply from both Indonesia and Malaysia; therefore the outlook for palm oil (price in) 2020 will be positive,” according to the CPOPC executive director.

Efforts by the industry to become more sustainable will be more crucial in 2020 especially if companies or countries in the European Union (EU) begin restricting the use of palm oil.

Yusof said there are fears that the EU, which wants to phase out palm oil use in biofuel, may look to the food sector next.

He advised the palm oilproducing countries that the EU’s proposed limits on 3-MCPD esters may impact the usage of palm oil in food products and is set to be enforced legislatively to meet acceptable safety levels of the food processing contaminant.

“CPOPC has agreed that one maximum level of 3-MCPD at 2,500 ug/kg for all vegetable oils should be adopted, as the acceptable safety limit for consumption,” he said.

CPOPC’s Forum on 3-MCPD and GE’ in Jakarta, Indonesia on Feb 7, 2020, is aimed to focus on the topic to prepare the industry to meet this level.

Meanwhile back home, the national sustainable certification scheme or the Malaysian Sustainable Palm Oil would be made mandatory for growers effective January.

Under this certification, growers of the crop are expected to meet certain standards on protecting the environment and workers’ rights.

Noting the significance of palm oil industry for the country economic well being, the Prime Minister Tun Dr Mahathir Mohamad in his new year message shared his view about the important industry and how the positive price of the commodity had benefited the people.

He also advised them to be prepared for “rainy days”.