Rosier outlook for palm oil in 2021

KUALA LUMPUR: The palm oil industry outlook is expected to be rosier this year with business resumption, improved production by producers and higher consumption in traditional markets, a plantation expert said.

Palm oil price will rise despite already having increased by 40 per cent, and it is finally coming back, tracking more market share. This could also be due to the Covid-19 vaccine availability. Dorab Mistry

“Palm oil price will rise despite already having increased by 40 per cent, and it is finally coming back, tracking more market share. This could also be due to the Covid-19 vaccine availability.

“In India, for example, which is the largest palm oil buyer, vaccine is the key to growth and the Indian pharmaceutical industry is very good and innovative,” said Dorab Mistry, director of Godrej International Trading & Investments Pte Ltd, in the third day of the virtual Malaysian Palm Oil Trade Fair and Seminar 2021 ( POTS Digital 2021) yesterday.

Following that, the Indian government expected strong demand growth in 2021, he said, adding that the Indian currency is stronger at present.

As for China, Dorab said the Chinese is consuming more good quality vegetable oils and reducing consumption of animal fats.

“Chinese consumers are more health- conscious and discarding used cooking oil faster,” he said.

At the close of trading yesterday, crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives continued to rally for a third consecutive day with the benchmark March 2021 closing at a fresh high of RM3,877 per tonne.

It breached above RM3,800 per tonne, the highest level recorded since February 2011.

On production, Dorab said palm oil production in 2020 was below expectations, but it would likely recovery in the second half of 2021.

He estimated Malaysia’s palm oil production to hit 20 million tonnes while Indonesia was projected to record 50 million tonnes – a total jump of about four million tonnes from 2020.

“The crop production would eventually recover post

Ramadan month ( April/ May) and this would lead to lower prices,” he added.

He also predicted the commodity to stage a short, sharp correction in early January-February before recovering and rally again.

“The year 2021 will be a year of two halves. But overall it will be a good-to- great year for the world economy.”

Oil World executive director Thomas Mielke shared the same views with Dorab, saying that he sees a moderate setback for palm oil this year.

However, he voiced concern in terms of production due to labour shortage, which he hoped would push for higher investments in mechanisation in 2021 and 2022.

“Global demand for palm oil will recover in 2021. Satisfying world import demand requires Indonesia to increase its exports by 2.1 million tonnes this season,” he added. — Bernama

KUALA LUMPUR: It is prime for the palm oil industry to collaborate more comprehensively with competing seed oil producers, offering a multioils solution as a way for a sustainable industry in post-pandemic.

IOI Corporation Bhd group managing director and chief executive officer Datuk Lee Yeow Chor said the seed oil sector is also equally important for the socio- economic development of a country, similarly in the same way that palm oil has been important for Malaysia and Asia.

“Innovations keep coming in, so having a multi- oils solution will create a sustainable business as different food applications require different fats composition,” he said during the second day of the virtual Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021).

Besides that, he opined that the industry should also regionalise commodity-based palm oil trade, especially the cooking oil since the COVID-19 pandemic highlighted the risk to long supply chain and implication on food security.

He said the strategy would also fit with the population distribution between the underdeveloped and emerging countries, as well as the developed countries.

“We also could develop special applications of palm oil for high-value products for hygiene, pharmaceutical and renewable fuel while making the palm oil’s competitive position more secure and sustainable in the long run,” he added.

PBB Oil Palms Bhd executive director and Wilmar International Ltd chief sustainability officer Jeremy Goon said sustainability palm oil is the key to access lucrative global markets, multi-national customers and brands with bigger investors, especially in post- COVID-19 pandemic.

“We need to figure out a proper sustainable business plan, especially in terms of meeting transparency, as well as the International Organisation for Standardisation ( ISO) and Roundtable on Sustainable Palm Oil (RSPO) standards or else the business might only end up in local markets,” he said.

On the recent ban by the United States ( US) Customs and Border Protection (CBP), he hopes the new administration of President- elect Joe Biden, which is expected to take over the White House on Jan 20, would give an appropriate view in addressing the action taken.

The US CBP had issued a Withhold Release Order ( WRO) on palm oil and products containing palm oil produced by Sime Darby Plantation Bhd and its subsidiaries, joint ventures, and affiliated entities, allowing it to detain shipments based on alleged forced labour involvement. — Bernama