Palm Oil Climbs in Malaysia as Crude Gains on U.S. Supply Drop

Palm oil advanced on speculation that a rally in crude oil prices to the highest level in more than two months will boost demand for the vegetable oil as feedstock for biofuels.

The contract for March delivery rose as much as 0.7 percent to 2,649 ringgit ($804) a metric ton on the Bursa Malaysia Derivatives and ended the morning session at 2,641 ringgit. Futures increased 8.3 percent this year, set for the first annual gain since 2010.

Palm entered a bull market in November as output fell at plantations in Indonesia, the biggest supplier, and biodiesel demand increased. Prices may climb to 3,000 ringgit by March as demand increases for the commodity used in food and fuel, according to Dorab Mistry, director at Godrej International Ltd.

“When crude oil prices increase it makes it more profitable to produce biodiesel from palm,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank.

West Texas Intermediate crude oil traded above $100 a barrel for a second day after government data showed U.S. crude stockpiles fell more than expected to the lowest level since September. Futures were at $100.28, near the highest settlement since Oct. 18.

Soybean oil for March delivery was little changed at 39.33 cents a pound on the Chicago Board of Trade. Soybeans fell 0.3 percent to $13.1075 a bushel.

Refined palm oil for May delivery gained 0.4 percent to 6,074 yuan ($1,001) a ton on the Dalian Commodity Exchange. Soybean oilwas little changed at 6,924 yuan.

To contact the reporter on this story: Pratik Parija in New Delhi atpparija@bloomberg.net

To contact the editor responsible for this story: James Poole atjpoole4@bloomberg.net

Palm oil climbs most in two weeks

Palm advanced the most in almost two weeks on speculation that an increase in crude oil prices to the highest level in more than a month will boost demand for the tropical oil in biodiesel as production declines in Indonesia.

The contract for February delivery rose 1.5 per cent to RM2,656 a metric tonne on the Bursa Malaysia Derivatives, the biggest gain for most-active futures since November 21. Futures advanced 8.9 per cent in 2013.

Palm oil, used in everything from candy to detergents, entered a bull market last month and is heading for its first annual gain in three years as production drops at plantations in Indonesia and biodiesel demand increases. Output in Indonesia, the biggest producer, will decline by 500,000 tonnes to 27.5 million tonnes this year, Dorab Mistry, director at Godrej International Ltd, said on November 29. That’s the first drop since 1998, according to US Department of Agriculture data.

"Higher crude oil prices will mean increased usage of palm in biodiesel," said Ivy Ng, an analyst at CIMB Investment Bank Bhd, by phone from Kuala Lumpur. "Palm has generally trended down in the last few days and we are seeing some bargain buying because there are expectations that prices will rise as we head into the lower production months."

West Texas Intermediate crude oil climbed as much as 1.6 per cent to US$97.53 per barrel, the highest level since October 30, as US inventories shrank. Palm prices were also boosted by gains in soybeans, said Ng.

Soybean oil for January delivery advanced 0.7 per cent to 40.37 cents a pound on the Chicago Board of Trade. Soybeans climbed 0.2 per cent to US$13.225 a bushel.

Refined palm oil for May delivery gained 0.4 per cent to close at 6,252 yuan (US$1,026) a tonne on the Dalian Commodity Exchange. Soybean oil ended little changed at 7,262 yuan.-- Bloomberg

Read more: Palm oil climbs most in two weeks http://www.btimes.com.my/Current_News/BTIMES/articles/20131204131715/Article/index_html#ixzz2olEhScx8

18 Months After Field Planting

18 Months After Field Planting of AAR seedling. The oil palm trees starting to bear fruit.

Growing Demand For Palm Oil

         

It is playing a major role in supplying dietary oils and fats

CRUDE palm oil production in Malaysia keeps increasing over the years, rising from 4.1 million tonnes in 1985 to 18.8 tonnes in 2012. The good news is that Malaysia's production can easily meet its domestic demand for dietary oils and fats market with the excess heading for the international markets. Since 1985, palm oil has become the most consumed oil across the globe.

World palm oil demand is constantly on the rise
The demand for edible oils keeps rising due to the natural changes of demographic economics in terms of population increase, urbanisation proliferation, living standards improvement (growing disposable income) and eating habits. Palm oil, being an essential vegetable oil consumed by millions of households worldwide, is certainly commanding a promising outlook driven by the ever increasing demand profile.

Malaysia a key contributor
Statistics released by the Malaysian Palm Oil Council (MPOC) show that Malaysia is one of the top producers of the highest yielding crop, contributing about 39 per cent of world palm oil production and being the leading exporter (44 per cent of world exports).

The adoption of the Roundtable on Sustainable Palm Oil (RSPO) certification by major plantation companies is definitely presenting a brighter future for the industry as more standard-assurance-certified palm oil products enter the international market. This is further 'fertilised' by the versatility of palm oil through its vast applications in different industries.

Asia-Pacific dominates the market
Presently, Asia-Pacific forms the largest global palm oil market, in terms of production and consumption, driven by the growing population and disposable income across the region. The sheer size of the palm oil market in Asia-Pacific alone is evident by the fact it hosts more than half of the world's population (4.2 billion or 60 per cent of the world's population). The combination of China (1.3 billion) and India (1.2 billion) accounts for 36 per cent of the world's population. Within the same region, the combined population of Indonesia (240 million), Pakistan (180 million), Bangladesh (150 million) and Japan (127 million) constitutes another huge block of market for the palm oil industry. India is the world's largest importer of vegetable oils in which Malaysia's palm oil is a major contender. And palm oil is the most traded vegetable oil in the world, making up 60 per cent of the vegetable oils market.

Emerging markets for palm oil and its products
The Middle East and North Africa (MENA) are two emerging markets for palm oil and its products due to limited vegetable oils production capabilities in the region and the competitive commodity pricing of crude palm oil, in addition to the significant population increase. Countries studied include Algeria, Egypt, Iran, Jordan, Libya, Morocco, Saudi Arabia, Sudan, Syria and Turkey. The Middle East (17 countries) and North Africa (7 countries) are home to about 432 million people. The population growth rate in the Middle East and North Africa is among the highest in the world over the last century. The population of the Middle East and North Africa was estimated at 60 million in the beginning of the 20th century. Population of the region grew from 100 million in 1950 to 380 million in 2000, an additional 280 million in 50 years. The growth rate is 3.7 times more than any other region.

Exploring new possibilities into Europe and the US
The European Palm Oil Conference (EPOC 2013), held on Oct 8 in Paris, gathered key players from the plantation, food, non-food and energy sectors to explore issues, opportunities and challenges pertaining to the palm oil industry. The international conference featured government officials, representatives of trade organisations, corporate executives, manufacturers, researchers, end users, buyers, sellers and industry analysts to explore market dynamics and growth of the palm oil industry and work together to achieve a common goal. Earlier, the 8th Global Oils and Fats Forum, held from Oct 3 to 4 in Florida, discoursed on the worldwide market outlook in the oils and fats industry, realities on sustainability, future expectations, competitive formulations, economic benefits, health and nutrition.

Demand for vegetable oils on the upswing
The demand for vegetable oils is forecast to grow in the 21st century given the increasing global population and per-capita income in developing nations. The total output for vegetable oils is projected to increase by 30 per cent between 2011 and 2020, driven by robust demand for food and industrial uses. Palm oil production by Malaysia and Indonesia combined is projected to increase by 45 per cent, commanding some 68 per cent of the vegetable oils total exports.

The Asia-Pacific region is expected to remain as the largest consumer where China and India make up 50 per cent of the world vegetable oils imports. Both countries are expected to see an import increase of 50 per cent and 35 per cent, respectively, in this decade. And the European Union (EU) will remain the single largest buyer with 42 per cent import increase. It was recently reported in the New Straits Times that Malaysia is all geared to increase its palm oil export to Russia (from 14 per cent to 25 per cent out of Russia's total annual import of vegetable oils) in the near future.

Food industry remains the largest consumer
The food industry is the largest consumer of palm oil. It is a key ingredient in the manufacturing of cooking oil, shortening, margarine, vegetable ghee, non-dairy creamers, ice-cream, chocolates, instant noodles, supplements or vitamins and livestock feed. Palm oil and its derivatives are present in more than half of all processed foods, due to their 'stable' nature at room temperature for a longer shelf life. For inedible products, palm oil is necessary for the production of candles, soap, shower cream, detergent, shampoo and other surfactants (eg wetting agents, emulsifiers, foaming agents, and dispersants); cosmetic, pharmaceutical products; lubricant/ grease.
Oil palm biomass is a raw material in the manufacturing of fibreboard, particleboard, pulp and paper, plastic composites, bio-compost (fertiliser) and biofuel

Read more: GROWING DEMAND FOR PALM OIL - General - New Straits Times http://www.nst.com.my/nation/general/growing-demand-for-palm-oil-1.432844#ixzz2nethWgv3

My Oil Palm 5 year After Planting

This is how my 6 years old oil palm look like. Production start to increase unfortunately the inputs price also increased.

17 Months After Field Planting

This is how my AAR seedling look like after 17 months of field planting. The problem now is the cost of inputs has increased 100%. 

Malaysia to help palm sector with new biodiesel blend rules

KUALA LUMPUR, Oct 25 — Malaysia is set to impose a requirement for biodiesel to use 7 per cent palm oil, up from 5 per cent now, as a way of whittling down palm oil stocks and cushioning prices in the face of growing competition from other edible oils. Industry and government officials in the world’s second-biggest palm oil producer said the “B7” biodiesel blend could be mandatory from December as talks with interested parties were nearing a conclusion. “It’s targeted that B7 will be implemented in December. Once we switch to B7, there will be one grade – B7, not B5,” an official with the Malaysian Biodiesel Association with direct knowledge of the discussions told Reuters. - See more at: http://www.themalaymailonline.com/money/article/malaysia-to-help-palm-sector-with-new-biodiesel-blend-rules#sthash.S5dENcSS.dpuf

Government wants small-scale oil palm farmers to thrive

SARIKEI: The government is very protective of the oil palm industry as it currently represents the lion’s share of the nation’s agriculture sector, said Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah.

Launching Koperasi Penanaman Sawit Mampan (KPSM) Sarikei at Bintangor Community Hall near here yesterday, he said about 70 per cent of agriculture land in the country is presently planted with oil palm.

Of these planted areas, 40 per cent are developed on a small scale basis either individually by the landowners themselves or through programmes implemented by agencies such as the Malaysian Palm Oil Board (MPOB), he said.

“This shows that small-scale farmers form a major component of the industry.

“Hence, the government, through MPOB, had been coming up with programmes to help these farmers to thrive and to contribute towards the country’s gross domestic productions (GDP).”

Uggah said the formation of cooperatives would enable small-scale oil palm farmers to enjoy various benefits, such as getting reasonable prices for their produce through the provision of logistic and proper marketing facilities.

Citing statistics from MPOB, he said the price offered by cooperatives was about 20 per cent higher than middleman’s.

In addition, cooperatives could help members reduce production cost through the supply of cheaper fertilisers, pesticide and weed killer.

Cooperatives could also facilitate the disbursement of government assistance, to teach farmers the proper way of applying fertilisers, educate them about good harvesting methods and good agriculture practices (GAP).

All these were done in line with the government’s recognition of the oil palm industry as a National Key Economic Area (NKEA) that is targeted to contribute RM178 billion to the nation’s GDP by 2020, he said.

Uggah said MPOB had sent 59 extension officers (TUNAS) to nine of its branch offices and two research stations in the state to help out, and this initiative has borne positive results in the form of higher yield.

Some participants had been able to reap an average of 30 tonnes per hectare (ha). In fact, at present, 53 small-scale oil palm farmers with a total of 352 ha of oil palm had attained the 30 tonnes per ha mark, and thus belonged to the ‘MPOB 30 Tonnes Club’.

On incentives, Uggah said the government encouraged farmers to cut down trees that are more than 25 years old and plant high-quality seedlings in its place.

The government allocated RM902 million for the 2011 to 2013 period for this oil palm replanting programme.

Under this programme, farmers were given a subsidy of RM9,000 per ha in the form of quality seedlings, other assistance and RM500 monthly maintenance subsidy for a period of two years.

For new comers, the government also extended a RM9,000 per ha assistance, he said, adding that by last month, a total of 19,392 applicants involving 48,266 ha had been approved to participate in the programme.

On  KPSM, Uggah said 27 units had been set up across the country, comprising 13 in the peninsula, six in Sabah and eight in Sarawak.

Also present were MPOB director-general Datuk Dr Choo Yuen May and Palm Oil and Sago Industries Section secretary Aknan Ehtook.

Read more: http://www.theborneopost.com/2013/11/10/uggah-govt-wants-small-scale-oil-palm-farmers-to-thrive/#ixzz2kCMFgRJF

Oil Palm Price Update

KUALA LUMPUR: Crude palm oil (CPO) futures continued its rally to close at the highest level so far this year, lifted by persistent buying interest on output concerns.

Phillip Futures Sdn Bhd Derivative Product Specialist David Ng said the expectation of lower production in October, coupled with stronger demand stemming from China, sparked interests among buyers.

Spot month November 2013 rose RM35 to RM2,620 a tonne, December 2013 was RM48 higher at RM2,605, January 2014 climbed RM51 to RM2,598 and February 2014 improved RM49 to RM2,591.

Volume fell to 33,954 lots from 49,517 lots on Wednesday, while open interest narrowed to 180,673 contracts against 195,693 contracts.

Read more: CPO futures rally continues http://www.btimes.com.my/Current_News/BTIMES/articles/oct31cpo/Article/#ixzz2jXcRH7Pp

16 Months After Field Planting

After 16 months, my oil palm grew  well but really need a lots of hard work.

My problem would be;

1. Very hard to get reliable labour.

2. Price of input goes up and 

price of palm still not so good

Minister to resolve oil palm fresh fruit bunches price uproar

Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas will see Malaysian Palm Oil Board (MPOB) Sarawak next week to resolve complaints about differing prices of fresh fruit bunches (FFBs). "MPOB will investigate the matter because this (problem) not only happens here (Sarawak). It has been brought up in Parliament too. MPOB will look into the matter as soon as possible, especially on getting a transparent system of valuation," Uggah said. (Borneo Post)

Will palm oil survive climate change? By Datuk Dr Ibrahim Ahmad Bajunid | iabaiw@yahoo.com Writer is a deputy vice-chancellor, INTI Laureate International University Read more: Will palm oil survive climate change?

  By Datuk Dr Ibrahim Ahmad Bajunid  | iabaiw@yahoo.com 


Writer is a deputy vice-chancellor, INTI Laureate International University 

Read more: Will palm oil survive climate change? - Columnist - New Straits Times http://www.nst.com.my/opinion/columnist/will-palm-oil-survive-climate-change-1.351951#ixzz2errZsaKd

WORLD leaders met again in Rio de Janeiro, Brazil. This samba capital of the world hosted a global discourse on the fate of the planet.

The first meeting there was held 20 years ago. The subject matter remained the same. What do we do about the state of the world environment, which is increasingly under threat?

And, the threat is by us, men. Dubbed Rio+20, the meeting proved to be another platform for protests and pledges. Orators as usual had world attention with their rhetoric. Some were even repeats of the last meeting because, admittedly, nothing much has changed. Will Rio+20 be a turning point for the world? Or will it be another merry-making event?

The world climate is definitely changing. The evidence is convincing. The trend in rising global temperatures can no longer be disputed. Melting of the Arctic ice is real. And, extreme weather conditions have been occurring at disturbing regularity. Sadly, global greenhouse gas emissions have not come down. Despite various attempts, international agreements on the mechanisms have not been successful. But, one encouraging development is that more are now convinced that man is responsible. Earlier sceptics have literally disappeared.

Climate change is bound to impact on oil palm. This is worrying. With the rise in temperature, incidences related to water stress may become more prevalent. During times of drought, oil palm yield suffers significantly. This has become evident during the many El Nino periods when water scarcity hit the oil palm sector. Unless something is done to develop a drought-resistant variety, the supply of palm oil for the world market will come under intense pressure. But, climate change is not just about dry periods. The highly uncertain and extreme nature of climate is another common feature. In the case of oil palm, unusually long periods of flooding have also negatively impacted on the supply because of harvesting difficulties.

Destruction of biodiversity is another issue of climate change. It has also become a growing concern of the palm oil industry. Already, some markets are taking potshots, blaming palm oil for the loss in tropical biodiversity through deforestation. They are coming out with all kinds of import restrictions on palm oil.

Greenhouse gas emission is the common criteria used. While the importing countries show palm oil failing to meet the minimum emission levels, the assessment by palm oil exporters shows otherwise. There is a need to come together to agree on the method of assessment.

What is needed is a more comprehensive study. It would be a pity if palm oil is wrongly judged. There is no doubt the growing world population will need more food. Oils and fats are important in man's overall nutrition. In fact, food will not taste as good without fats. In Malaysia, fried kway teow would not taste the same. In South Asia, what would happen to the taste of briyani?

While the world needs more oil, the land to grow them is growing scarce. Climate change is going to make it worse. For example, rain-fed oilseeds region of India is now under intense pressure because of the changing monsoon patterns. But, oil palm offers the best option because of its extremely high yield. In fact, there is potential to increase it further with recent advances in palm oil genomics.

As an important world resource, it is clear that oil palm is not spared from the rigours of climate change. It can be concluded that palm oil will be impacted on both the supply and demand sides.

On the supply side, yield will suffer because of climate-induced water stress situation.

On the demand side, palm oil may be misjudged on its true contribution to climate change and may be wrongfully penalised. Unless these issues are addressed, they will upset the supply and demand equation for palm oil. Its price movement may become volatile, which is not good for both suppliers and buyers of palm oil. But, of more concern is that the world may be denied the benefits of a highly productive oil source! Will it survive?

Read more: Will palm oil survive climate change? - Columnist - New Straits Times http://www.nst.com.my/opinion/columnist/will-palm-oil-survive-climate-change-1.351951#ixzz2errM6gy6

Palm Reserves Climbing as Production Expands for Sixth Month By Ranjeetha Pakiam September 06, 2013 6:59 AM EDT

Palm oil stockpiles probably increased in August as output in Malaysia, the second-largest producer, advanced for a sixth month to the highest level this year, according to a Bloomberg survey.

Production climbed 3 percent to 1.72 million metric tons from 1.67 million tons in July, the median of six estimates from plantation companies, analysts and traders showed. That would be the highest since December, according to data from the Malaysian Palm Oil Board. Reserves expanded 3 percent to 1.71 million tons, while exports gained 6.3 percent to 1.51 million tons, the survey showed. Imports declined 20 percent to 40,000 tons, according to the median of five estimates. The board will publish the dataon Sept. 10.

Palm, used in everything from candy to biofuel, is produced year-round with supply accelerating in the second half because of growing cycles. While output jumped 18 percent in July from a month earlier, growth in production slowed in August as workers were on leave for the Eid festival, said Abah Ofon, a Singapore-based analyst at Standard Chartered Plc.

“Even if we had to discount the break during Eid, I don’t think we would have seen a huge increase in output,” Ofon said in a phone interview. “One of the things we’re coming to terms with is that we’re not going to see similar expansion in production as we saw last year. Just looking at the way outputtrended in April, May and June, there’s reason to believe that you won’t see a huge spike in the second half.”

Production Flat

Production from April to June fell 1.3 percent from the first quarter compared with a 12 percent surge a year earlier, board data show. Production may be unchanged or slightly lower in 2013 from 18.8 million tons last year, said Ofon.

Palm oil for November delivery climbed 1.3 percent to close at 2,444 ringgit ($735) a ton on the Bursa Malaysia Derivatives. Prices gained 7.5 percent in August, the biggest monthly gain since December 2010, supported by a rally in soybeans on concern hot, dry weather in the U.S. Midwest would hurt crops. Soybeans are crushed to make a substitute oil.

The median survey estimate for reserves in August was about 19 percent lower than the 2.11 million tons a year earlier, according to board data. End-year stockpiles will not reach the record 2.63 million tons in December, said Ofon.

“While we have a big decline in inventories, I don’t think we’re going to see a huge rally,” said Ofon. “I would expect a slight pullback in prices because demand tends to be relatively weak at this time and we’ll also see an improvement in soybean yields as we head into the harvest in the U.S.”

Diwali Festival

Global palm stockpiles will surge 21 percent to a record 9.7 million tons by the end of 2013-2014, while demand expands 4.6 percent, the least in 12 years, the U.S. Department of Agriculture estimates.

Demand will recover next month as Indiabuys before the Diwali festival which falls in November, said Ofon. Imports by India, the world’s biggest consumer, declined for the first time in three months in July after a slump in the rupee to a record increased costs for refiners.

Inbound shipments of crude and refined palm oils dropped 5.2 percent to 568,254 tons from 599,128 tons a year earlier, the Solvent Extractors’ Association of India said on Aug. 14.

        Aug. 2013 (Survey)   July 2013 (MPOB)   Aug. 2012 (MPOB)
Output         1.72              1.67               1.66
Stockpiles     1.71               1.66               2.11
Exports        1.51               1.42               1.44
Imports        0.04               0.05              0.065
Figures are in millions of tons.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur atrpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole atjpoole4@bloomberg.net

0 COMMENTS

AAR Seedling Started Fruiting on the second year

Planted in July  2012. I admit my management was not so good. I did not follow exactly  the guideline on fertilizing due to high fertilizer price.

My oil palm garden located at Kpg Batu Bedang, Mongkos about 85 km from Kuching City. The SEPOM mill located about 10 km from my garden to ensure sustainable oil palm production. 

MPOC: Palm oil price to increase by year-end Read more: MPOC: Palm oil price to increase by year-end

Palm oil price is expected to increase by year-end due to low production of substitutes such as vegetable and soybean oils, the Malaysian Palm Oil Council (MPOC) said today. 

The US Department of Agriculture has been reported to have cut soybean production by about five per cent and this could lead to low supply globally. 

"This is an advantage to Malaysian palm oil. 

"With low soybean oil supply, it can help boost palm oil prices as more global market players will seek for the commodity (palm oil), of which Malaysia is the second biggest producer after Indonesia," council chairman Datuk Lee Yeow Chor told Bernama on the sidelines of the Palm Industry Leadership Forum 2013. 

For the past eight months, the council has been monitoring the palm oil inventory, which saw the commodity's stock level steadily dwindling to 1.6 million tonnes as at July, Lee said. 

He expects the inventory to further fall by year-end. 

Meanwhile, Cargo Surveyor, Intertek Testing Services, has estimated higher palm oil exports to 880,979 tonnes for the August 1 to 20 period versus 798,482 tonnes in the same period in July. 

The improved export figures were mainly attributed to China, the world's largest consumer of edible oil that began restocking of palm oil ahead of its September Mid-Autumn Festival. 

Earlier, in his speech, Lee said through the forum, the council was confident that the palm ol industry would be able to overcome the challenges faced by the industry. 

"Currently, palm oil price is at its lowest level in over two years, while the Asian economy is still struggling to come to terms with the impact of the US Federal Reserve winding down its bond purchases or quantitative easing programme. 

"Currencies in Indonesia, Malaysia and Thailand have weakened in recent years while the Indian rupee has plunged to another historic trough. 

"All these factors will invariably have an impact on the palm oil price," he added. 

At present, palm oil is being traded within the RM2,300-RM2,400 range versus RM3,000 a tonne in the same period last year.-- Bernama

Read more: MPOC: Palm oil price to increase by year-end http://www.btimes.com.my/articles/20130827153019/Article/#ixzz2dXt4xYAX